As part of Retail Insider Reports, this Q2 2026 Retail Loss Prevention & Security Report analyzes Canadian retail trends by sector, market segment, ecosystem category, channel, and broad industry theme. Drawing on Retail Insider reporting, industry research, and public data, this report examines the evolving risk landscape facing Canadian retailers and how loss prevention functions are changing in response. The full report series is available through the Report Hub.
This report examines retail loss prevention, physical security, cybersecurity, fraud prevention, shrink reduction, payments security, and retail risk management.
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Retail risk in Canada is becoming more complex, more costly, and in some cases more dangerous.
Retailers are contending with rising organized retail crime and violence while simultaneously confronting cyber threats, fraud, and operational vulnerabilities that are expanding the responsibilities of loss prevention teams well beyond traditional theft prevention. The perimeter of retail risk has expanded dramatically.
Loss prevention is no longer simply about protecting merchandise. It is becoming an enterprise-wide discipline focused on protecting people, inventory, data, operations, and customer trust.
Market Context: Retail Risk Continues to Evolve
Canadian retailers face risks that are becoming both broader and more interconnected. The industry continues to contend with organized retail crime, repeat offenders, employee safety concerns, and growing levels of violence during theft incidents. At the same time, retailers have become deeply dependent on digital infrastructure, exposing them to cyber threats, payment fraud, and operational vulnerabilities that would have been considered information technology issues only a few years ago.
Security, operations, technology, and customer experience are now deeply interconnected within modern retail organizations. Retailers are responding by investing in new technologies, strengthening partnerships with law enforcement, redesigning stores, and adopting more sophisticated approaches to risk management.
Broad Overall Themes
Canadian retail loss prevention and security in Q2 2026 reflected several interconnected themes:
- Organized retail crime and violence remain major challenges.
- Retail crime is reshaping store operations and investment decisions.
- Retailers continue to balance security measures with customer experience.
- Security technology investment continues to accelerate.
- Fraud and financial crime are becoming more sophisticated.
- Cybersecurity is emerging as a core retail risk.
- Operational integrity and data accuracy are becoming loss prevention issues.
- Collaboration between retailers, law enforcement, and governments is increasingly important.
Organized Retail Crime and Violence Escalate
Retail crime has become one of the most significant challenges facing Canadian retailers, with theft now costing businesses more than $9 billion annually and shrink estimated to account for approximately 1.5 per cent of total retail sales.
The seriousness of the issue is underscored by the fact that Retail Council of Canada-led retail crime blitzes resulted in the seizure of 121 weapons in 2024. More than three-quarters of retailers reported increased violence during theft incidents, and 81 per cent said organized retail crime offenders had become more violent.
The issue has evolved well beyond merchandise loss. Organized retail crime increasingly affects employee safety, customer experience, insurance costs, and retailers’ willingness to invest in certain communities and locations. For frontline employees, the threat of violence and intimidation has become one of the most serious workplace issues facing the retail industry.
Repeat offenders accounted for 17.7 per cent of arrests during RCC-led enforcement initiatives, illustrating the persistent nature of the challenge. Safety concerns can also make it more difficult to recruit and retain employees, particularly in locations experiencing persistent crime and disorder.
For many retailers, organized retail crime has become both a business issue and a public safety issue.
Retail Crime Reshapes Store Operations and Investment Decisions
The impact of retail crime is having a growing influence on operational decisions.
Retailers are redesigning stores, increasing security staffing, installing barriers, limiting access to high-theft merchandise, and making difficult decisions about where and how they operate.
Recent Canadian examples illustrate the severity of the issue. 7-Eleven warned that multiple locations in Winnipeg could face closure due to crime and theft concerns. In Vancouver, London Drugs closed its Woodward’s location in the Downtown Eastside after years of operating losses and persistent safety challenges.
In Toronto, Dudley’s Hardware publicly cited break-ins, vandalism, and neighbourhood safety concerns as contributing factors in its decision to downsize and eventually close its long-standing downtown location.
In other communities, retailers have reduced operating hours, limited product availability, increased security investments, or reconsidered future expansion plans. In some cases, persistent crime and safety concerns are affecting access to essential retail services as retailers reconsider operating hours, investment plans, and even the viability of certain locations.
The economics can become particularly challenging in certain retail categories. Statistics Canada reports that health and personal care stores, including drugstores and pharmacies, generated a pre-tax profit margin of approximately 5.7 per cent in 2023. Industry sources say some urban drugstores have experienced exceptionally high shrink rates, illustrating how theft can quickly overwhelm store profitability and threaten the viability of individual locations.
The loss of pharmacies, convenience stores, and other essential retailers can also have broader implications for communities, particularly in urban neighbourhoods where residents depend on nearby services.
In these situations, crime is no longer simply a security issue; it becomes a fundamental business and investment issue.
Balancing Security and Customer Experience
Retailers face a difficult balancing act.
Measures designed to reduce theft can sometimes create new challenges for customers. Locked merchandise, barriers, increased product controls, and enhanced security procedures may help reduce shrink, but they can also create friction that discourages purchases and negatively affects the shopping experience.
This challenge is becoming increasingly measurable. Research from DALBAR and Competitor IQ found that 38 per cent of shoppers abandoned purchases because of security measures and in-store friction.
The industry is also continuing to evaluate the role of self-checkout. While self-checkout can improve convenience and reduce labour requirements, many retailers have reported higher levels of shrink and fraud in certain store formats, particularly in categories such as drugstores and convenience retailing.
The challenge for retailers is finding the right balance between protecting merchandise and preserving convenience and trust.
Retailers Respond with New Security Measures
Retailers are responding with a combination of technology, store redesign, and operational changes.
Investments in artificial intelligence, video analytics, electronic article surveillance, access-control systems, product locking, and security personnel continue to rise. Some retailers are also deploying body cameras, improving incident reporting systems, and increasing employee training.
Partnerships between retailers and law enforcement agencies have also expanded, with companies increasingly sharing information and intelligence related to organized retail crime patterns and repeat offenders.
The growing adoption of these measures underscores how loss prevention is evolving from a shrink-control function into a broader business discipline focused on safety, resilience, and operational continuity.
Fraud Expands Beyond Traditional Theft
Retail risk now extends well beyond traditional theft prevention.
Retailers are contending with return fraud, chargeback abuse, gift card scams, account takeovers, identity fraud, and other forms of first-party fraud that can generate significant financial losses.
Equifax Canada recently reported that first-party fraud increased by 31 per cent year over year, illustrating how economic pressures and digital commerce are creating new challenges for retailers and financial institutions.
These forms of fraud can be difficult to detect because they often exploit digital systems, customer service policies, and payment processes rather than physical stores.
Retailers are also paying closer attention to cargo theft and supply chain vulnerabilities, recognizing that risk increasingly extends beyond the four walls of the store.
Cybersecurity Becomes a Core Retail Risk
Retailers now depend heavily on technology to operate their businesses.
Payments, loyalty programs, customer data, inventory systems, mobile applications, and digital commerce platforms all rely on secure technology infrastructure. As a result, cyberattacks have become a major business risk.
Ransomware attacks, data breaches, phishing campaigns, and AI-enabled cyber threats have the potential to disrupt operations, compromise customer information, and damage brand trust.
The financial consequences can be significant. IBM recently reported that the average cost of a Canadian data breach reached nearly $7 million in 2025.
Retailers’ growing dependence on digital ecosystems means cyber incidents now have direct implications for customer trust, business continuity, and corporate reputation. Cybersecurity has become a core component of loss prevention rather than simply an information technology function.
Protecting digital assets is now fundamental to protecting the business itself.
Data Integrity and Operational Resilience Become Security Issues
Some of the most important loss prevention challenges are operational rather than criminal.
Inventory accuracy, audit trails, handheld devices, supply chain integrity, and data governance all have significant implications for shrink and profitability.
Inventory inaccuracies can lead to phantom inventory, replenishment problems, fulfillment errors, lost sales, and operational inefficiencies that directly affect financial performance.
As retailers become more dependent on technology and data, operational integrity itself is becoming a critical component of loss prevention. The modern loss prevention function now sits at the intersection of physical security, operational excellence, and technology management.
Policy, Enforcement and Industry Collaboration
Governments, retailers, and law enforcement agencies are increasingly recognizing the seriousness of retail crime.
Recent federal legislative changes targeting repeat offenders and organized retail crime, including tougher bail provisions and new aggravating factors related to retail theft, demonstrate growing political attention to the issue.
At the same time, retailers continue to call for stronger enforcement, greater information sharing, and increased collaboration between industry participants and police agencies.
Addressing retail crime will require sustained cooperation between retailers, governments, law enforcement agencies, landlords, and local communities.
Editor’s Take
Q2 2026 demonstrated that Canadian retail loss prevention is entering a new era.
Organized retail crime remains a serious and growing challenge, with increasing violence affecting retailers, employees, and customers across the country. At the same time, fraud, cyber threats, operational vulnerabilities, and data integrity issues are expanding the responsibilities of loss prevention professionals well beyond traditional theft prevention.
The economics of theft are also becoming more difficult to ignore. Rising shrink, security investments, and fraud losses place upward pressure on operating costs and can influence pricing, capital allocation, and investment decisions. In some retail categories, sustained shrink can threaten the viability of individual locations and influence decisions around store investment, operating hours, and long-term market presence.
Retailers that continue to view loss prevention primarily as a shoplifting issue may be underestimating the breadth of today’s risk environment.
The most resilient retailers will increasingly treat loss prevention as an integrated discipline that protects people, inventory, data, operations, and customer trust.
The perimeter of retail risk continues to expand, and the consequences now extend far beyond merchandise loss to include employee safety, customer experience, operational resilience, and the long-term viability of certain retail locations.
Representative Articles
- Cyber threats hurting retail sector: EY – Mario Toneguzzi – 2026-04-16
- AI-powered cyber attacks hit 1 in 3 Canadian businesses: QBE research – Mario Toneguzzi – 2026-05-26
- First-party fraud rises amidst economic pressures: Equifax – Mario Toneguzzi – 2026-04-20
- Retail security measures driving customers away: DALBAR study – Mario Toneguzzi – 2026-04-24
- Retail theft in Canada is now a data integrity crisis—and retailers are missing the biggest risk – Mario Toneguzzi – 2026-06-22
