How to Protect From Theft Without Losing the Sale

Hardware retailers confronting theft face an uncomfortable balancing act: Protect merchandise aggressively enough to reduce shrink versus keeping your store customer friendly and easy to shop.

That tradeoff is the focus of the July 2026 white paper “The Complex Relationship Between Shrink Management & On-Shelf Availability: Finding the Balance to Drive Incremental Sales,” by David Haylings, an innovation and transformation specialist at Sekura Global, a retail loss-prevention and security company. (Download the white paper here.) The report examines how theft prevention can affect on-shelf availability, inventory accuracy, employee efficiency, and the customer experience.

For independent hardware retailers, the issue often plays out in categories such as batteries, power tools and power tool accessories, electrical products and other compact, higher-value merchandise. Locking them up can reduce that exposure, but every additional step between a customer and a purchase carries consequences.

Jeff Leopold, owner of six Ace Hardware stores (Standard 5 & 10 Ace, Marin Ace Hardware, Laurel Ace Hardware, Oakley Ace Hardware, Pittsburg Ace Hardware, Antioch Ace Hardware) in the California Bay area has watched that tradeoff play out firsthand. After persistent losses in tools, the company eventually gated the tool departments in all its stores. Some locations also lock up spray paint, while particularly vulnerable products such as circuit breakers are kept in behind glass cases, too.

The approach has reduced losses, but Leopold acknowledges the cost.

“Once you do that, sales go down. No question, sales go down,” he says. “But it’s less than the shrink, and now we don’t have the loss from theft in those departments.”

Protect the Product—and the Sale

Based on the white paper, here are steps retailers can take to protect merchandise while preserving sales:

Consider the sales cost before locking merchandise away. Haylings reports that moving merchandise from open sale to dummy-card systems can reduce sales by up to 30%, while moving products behind a counter can produce declines exceeding 50%. Those figures aren’t hardware-specific, but the principle translates readily to a store where customers expect to browse products, compare options and make purchases without waiting for assistance.

Leopold experienced some initial push back when the company began restricting access to high-theft departments. While complaints have eased over time, the inconvenience remains. Customers may have to push a button and wait for an employee before entering a gated tool department.

Once inside, however, Leopold wants associates to let customers shop rather than make assumptions about who poses a theft risk. Employees then take merchandise from the secured area to the register for purchase.

Create friction for thieves rather than customers. Even when merchandise remains openly displayed, Haylings reports that poorly designed security measures can drive sales declines exceeding 10%. He argues that effective deterrents should make theft more difficult while remaining largely unobtrusive to legitimate shoppers.

For Leopold, employee interaction remains the first line of defense.

“I tell the staff that the No. 1 defense against theft is customer service,” he says.

Asking a shopper, “What can I help you find today?” can serve two purposes: helping a legitimate customer while letting a potential thief know an employee is paying attention.

The more restrictive measures come when the numbers show that customer service and lighter deterrents aren’t enough.

“Dive into the departments and classes and see where the losses are,” Leopold says. “Use your numbers. Use the data from your system.”

Watch What Theft Does to Inventory

The cost of a stolen item can continue long after it leaves the store. Here are two tips: 

Look for phantom inventory. When merchandise is stolen without employees realizing it, the POS system can continue showing inventory that no longer exists. Haylings notes that if the discrepancy remains above an automatic replenishment trigger, the system may see no reason to reorder. The retailer sees an empty peg while the inventory system says product is available.

Leopold addresses that with frequent inventory counts. The six stores use Mango, an inventory analytics program, to identify products that warrant attention. Employees count about 300 items in each store every month, with high-theft merchandise among the products monitored.

Store employees also use mobile devices while fronting, facing and downstocking departments. When they encounter an empty location, they check the inventory system and confirm whether the product is actually out of stock.

“Sometimes it shows phantom inventory—stolen or an off vendor count,” Leopold says.

The objective goes beyond calculating shrink after the fact. Finding those discrepancies helps the stores correct inventory records so merchandise customers want can be reordered and returned to the shelf.

Keep high-risk products available to paying customers. Haylings reports that on-shelf availability for high-shrink products can fall below 50% in individual stores. Actual theft is part of the problem, but retailers can compound it by reducing facings, limiting shelf quantities or making replenishment cumbersome.

Leopold’s experience also illustrates why retailers need to distinguish between a few problem SKUs and a department-wide issue. A handful of vulnerable products may warrant individual cases or electronic security devices. Persistent losses throughout a department can justify a larger response such as the gated tool areas in his stores.

Account for the Labor

Loss prevention also consumes something every independent retailer watches closely: employee time. Here are two ways retailers can reduce that burden:

Make security measures easy for employees to manage. Tags must be applied and removed. Cabinets have to be unlocked. Protected fixtures can take longer to replenish. Haylings argues that poorly designed protection increases the labor required for restocking and can result in less frequent replenishment.

At Leopold’s stores, call buttons in secured departments are tied into employees’ walkie-talkies so an associate knows when a customer needs access. Employees also accompany merchandise from secured areas to the register.

Those procedures add steps to the sale, making it important to reserve them for merchandise where the losses warrant the additional labor and customer inconvenience.

Match the response to the actual risk. Haylings cautions against a one-size-fits-all approach, recommending that protection reflect the category, store environment and local risk.

That mirrors Leopold’s approach. Conditions vary among his company’s six stores, with theft a more persistent concern at some locations than others. The company continually monitors shrink and adjusts its response by store, department and product rather than assuming every location requires the same level of protection.

For independent hardware retailers, a successful loss-prevention strategy also keeps inventory accurate, shelves stocked, employees productive and legitimate customers buying.