How to Reduce Retail Losses During the Holidays: Practical Tips and AI-Driven Solutions

Retail shrinkage reached $132 billion in 2024, up from $112 billion in 2022. This escalating issue continues to impact retailers globally, especially during the holiday season when foot traffic peaks. While there are various contributors to shrinkage—ranging from shoplifting to employee theft and fraud—modern retail environments need more than just conventional security measures to stay ahead of these challenges.

The holiday season, now in full swing, brings with it a unique set of risks. Increased store traffic presents more opportunities for theft, both external and internal. With events like Black Friday and Cyber Monday now behind us, retailers are shifting their focus to the remaining busy shopping days in December. These final weeks of the year are critical, as studies show that 30% of annual retail shrinkage occurs during the final quarter, meaning the risk doesn’t stop once the holiday rush is over. To combat these ongoing challenges, retailers need a multi-layered approach to security that goes beyond just monitoring store traffic.

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Upgrading Retail Security: The Role of Next-Gen Technologies 

In an era where retail theft and fraud continue to evolve, traditional security measures, such as basic CCTV systems, simply aren’t enough to protect valuable assets. While cameras can record footage, they do not offer the intelligence required to detect fraud in real time or provide actionable insights. This is where AI, computer vision, and video AI technology come into play, offering transformative solutions for retail loss prevention.

AI and computer vision are at the forefront of a technological revolution in retail security. These tools allow retailers to monitor their stores with precision, helping to prevent incidents before they escalate. Instead of relying on reactive measures, these technologies enable proactive responses to suspicious activities as they occur, reducing shrinkage and increasing operational efficiency.

AI-Powered Video Surveillance
Video AI, powered by computer vision algorithms, provides retailers with an ability to analyze live video feeds in real time. Unlike traditional systems that simply record footage, AI systems process video to detect behaviors such as shoplifting, employee theft, or even unattended transactions at self-checkouts. The system can also identify patterns in shopper behavior, such as suspicious movements or unusual groupings of customers, all without human intervention. This type of advanced monitoring results in up to 40% fewer missed incidents compared to manual monitoring.

Real-Time Incident Detection and Alerts
Video AI’s ability to recognize patterns and behaviors in real time means immediate alerts are sent to security personnel or management when suspicious activities occur. For example, if an individual bypasses checkout or engages in a suspicious refund request, the system immediately flags the activity for review. This fast response can dramatically cut down on potential fraud, especially during high-risk periods like the holidays.

Improving Surveillance Accuracy with Computer Vision
Computer vision technology can detect and differentiate between everyday activities and behaviors that may indicate potential theft or fraud. For example, it can identify when a customer attempts to steal an item, even in crowded environments, by analyzing motion patterns and facial recognition. Furthermore, this advanced analysis reduces the likelihood of false positives, which often plague older systems relying on basic motion detection or human judgment.

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Practical Steps to Minimize Losses: AI in Action

Now that we’ve explored why leveraging AI is crucial, here’s how retailers can practically apply these technologies to prevent losses during the holiday season and beyond:

1. Integrate AI-Driven POS Exception Reporting
   By connecting AI-powered surveillance with point-of-sale (POS) systems, retailers can automatically flag suspicious transaction behaviors, such as frequent voids or refunds with no customer present. AI integrates seamlessly with transaction data, providing a comprehensive view of incidents that may indicate fraud, ensuring faster identification and intervention.
2. Behavioral Analysis for Real-Time Fraud Prevention
   Video AI analyzes shopper behavior patterns in real time, allowing for immediate identification of potential theft or fraudulent activity. AI-powered surveillance systems can flag instances where customers are not scanning all of their items at self-checkouts, for example, or when employees scan items repeatedly but fail to complete the sale.
3. Optimized Store Layout with AI Insights
   AI helps retailers optimize their store layouts by analyzing traffic patterns and identifying high-risk areas. Computer vision algorithms track customer movement throughout the store, providing valuable insights that can be used to position high-value products in areas that are most visible or monitored by cameras. With this proactive approach, stores can minimize the likelihood of theft while maximizing store flow.
4. Leveraging AI for Return Fraud Prevention
   The holiday season often sees a rise in returns, some of which are fraudulent. AI-driven surveillance can cross-check transaction data with video footage, ensuring that the same customer who made a purchase is the one returning the item. Additionally, it can detect unusual return patterns, such as excessive returns or items returned without receipts, making it easier to identify and prevent fraud.

A Holistic Approach to Loss Prevention with Dragonfruit VMS+

As retailers continue to combat losses during the holiday season and plan for a successful new year, VMS+, powered by Dragonfruit’s cutting-edge AI and computer vision technologies, provides an all-in-one solution.  VMS+ integrates a wide range of capabilities into one unified system, making it easier for businesses to manage security and surveillance across multiple locations. Here’s what to expect:

• AI-Powered Real-Time Video Surveillance: Monitor live and recorded footage with the added benefit of AI-powered analytics that identify potential security threats in real time.
• POS Exception Reporting: Flag suspicious transaction behaviors like voided sales or refunds without customers present.
• Seamless Search and Tracking: Leverage advanced search functionality to track individuals across multiple cameras and locations, offering a complete view of any incident.
• Centralized Case Management: Manage incidents more efficiently with all relevant data, video footage, and reports in one platform.
• Scalable Integration: Whether you have a single store or a nationwide operation, VMS+ scales to fit your needs, integrating smoothly with existing camera systems and POS infrastructure.
• Real-Time Alerts and Notifications: Receive immediate notifications for critical incidents, allowing your security team to respond quickly to potential threats.
• Customizable Dashboards and Reporting: Access detailed reports and dashboards to analyze trends, monitor performance, and make data-driven decisions.

Ready to see how Dragonfruit VMS+ can elevate your retail security? Learn more about how our solution can help protect your assets and streamline your operations. 

Reach out today.