Brent Brown is the general manager of North America for Sensormatic Solutions.
Evolving technology coupled with shifting consumer habits and the desire for a frictionless shopping experience has led to significant changes in nearly every industry — retail possibly more than others.
In this always-connected world, managing shrink is a critical problem retailers are focused on. Retail shrink refers to a loss of inventory, whether deliberate or accidental, and includes everything from shoplifting to employee theft, return fraud to administrative errors.
Shrink is not only a common problem in retail but also an expensive one. According to the 2020 National Retail Security Survey, retail shrink totaled $61.7 billion in 2019. In light of the current pandemic, the issue has become even worse. Retailers are continuously looking for ways to solve this problem, or at least control it. So, what can they do?
Improved visibility into losses is key. Better insights and analytics can help retailers go from reactive to proactive strategies. Retailers who prioritize and evolve their loss prevention (LP) solutions can help enhance the way they protect merchandise and manage inventory.
As someone who has been in the industry for over 30 years, serves as the strategic counsel for some of the world’s leading retail brands, and as general manager in a company specializing in loss prevention tech, I’ve seen firsthand how innovative technology can help retailers take their loss prevention efforts to the next level.
Let’s take a look at the LP challenges that retailers face and how to address them.
Emerging Trends And Increased Risks
Retailers offering services such as buy online, pickup in-store (BOPIS); buy online, pickup at curbside (BOPAC); or buy online, return in-store (BORIS) are looking for ways to contribute to the frictionless shopping experience. However, with these processes comes increased LP risks for retailers.
These services may increase the number of products and types of merchandise in any given store. Ensuring that each piece of merchandise is kept in its original condition to resell or restock and tracking the item’s location in the store can help prevent unintentional loss.
When a product is transferred through a store, there’s always a chance of damage, theft or being misplaced. In order to protect retailers from any type of loss, the right strategies need to be in place. Using information-based LP technology can help retailers monitor the BOPIS, BOPAC and BORIS processes, and when needed, put a stop to any fraudulent activity.
Increasing Insights Into The Causes Behind Shrink
Advances in RFID, video analytics and big data have become the tools of choice for LP professionals looking to increase their insights into the causes behind shrink. The amount and quality of data available from these sources can create a real-time understanding of what, when and how specific items go missing. The data can help improve operational efficiencies for retailers, such as staff optimization and spotting organized retail crime (ORC) events.
Imagine an employee of a major retailer walks through an underground store that has stolen merchandise for sale with LP and RFID tags attached. Equipped with an RFID reader, the employee discovers 60% of the goods are stolen from the store they are employed at. Because of the information gathered from the device, the retailer is able to identify the stock and recover the stolen merchandise.
Investing In The Right Solutions
With the right LP solutions in place, retailers can make more timely, strategic and data-driven decisions to correct issues and reduce shrink. A variety of technologies are available to help (e.g., video surveillance, RFID-based inventory visibility, EAS and POS analytics). Each solution is valuable on its own, but when combined it can deliver a new level of data-driven business intelligence.
With information-based LP, which includes smart anti-theft exits with RFID-enabled sensor technology, retailers can gain better visibility into the stock that’s been stolen. They can set off real-time alarms, replace merchandise faster to prevent out of stocks and better understand trends in merchandise loss. In addition, it can help retailers track specific patterns of criminal activity and enable a strategy and response at the store exit, in receiving and on the sales floor.
Considerations For Loss Prevention Technology
As with the implementation of any new technology, there may be challenges when it comes to investment, operational resources and getting the most out of the solution. However, early planning and discussion can help ensure a smooth integration in the short and long-term future.
For retailers considering loss prevention solutions, they’ll need to make sure to plan for staff training where they may be learning curves. They’ll also need to ensure the technology selected can be easily integrated into other retail operations to utilize its full potential.
Additionally, a common challenge for retailers is identifying where technology can have the most impact. Therefore, it’s important to remember that there are few instances where every item sold at a retail store needs to be (or even can be) RFID-tagged. Grocery retailers, for example, would not tag every fresh head of broccoli, given both the way it is sold and its price point, but could consider it for expensive meats and seafood, which are more likely to be stolen. It’s important to look for places where the technology will have the most impact to ensure return on investment.
The Path To Unlocking Data-Driven Insights
By combining effective technologies and investing in data-driven strategies, companies can transform the way they do business. The insights gained can help businesses make better decisions, improve operations for the business and store associates and ultimately enhance the customer experience. For the retail industry specifically, retailers can gain valuable insights and visibility into shrink and ORC.
Furthermore, when LP is combined with inventory intelligence and traffic data, retailers can significantly improve efficiencies that drive savings and increase sales and most importantly create a more memorable shopping experience. Now more than ever, retailers need to remain responsive and competitive to deliver on their brand promise.
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