New-age technology solutions give the control back in the hands of retailers helping them reduce shrinkage and curb losses
New Delhi: Retailers today find shrinkage or theft the biggest challenge followed by resourcing and an unsafe operating environment. A recent white paper by Sensormatic, a Switzerland-based leading global retail solution provider, says that the main reason for the challenges is that retailers are operating in a landscape that’s completely different from anything they’ve ever faced
It’s a landscape characterised by rising theft, escalating in-store violence and threats to shoppers and sales associates, along with greater activity by organised retail crime (ORC) groups.
“Retailers are facing the hardest operating environment they’ve ever seen,” said Matthew Meade, Account Executive at Sensormatic Solutions.
“Shrink, and in some regions, threats to safety have escalated to the point that retailers are desperate for ways to ‘harden’ the targets, with some going as far as putting every single item behind lock and key,” added Meade.
According to the data from the National Retail Federation, stolen retail merchandise costs retailers in the United States around $94 billion in 2021, up from $90 billion in 2020. The same report uncovered that retailers saw ORC increase by almost 27% in 2021.
In addition to this, the North American region and countries like Australia, and the UK have all reported losses.
Why does retail shrinkage happen?
Shrinkage in retail arises out of different reasons which include shoplifting, organised retail crime, violent events, inflation, job losses and economic impact. Between 2020 and 2021, the rise in shrinkage was attributed to the pandemic, however even after the pandemic waned and the economy rebounded, the rate of shrinkage did not recede.
However, it’s worth noting that in-store violence and ORC aren’t as much a factor in the Asia-Pacific (APAC) region. Experts from Sensormatic added that the ORC-style thefts common in North America are largely relegated to Australia and New Zealand, but they’re not a factor in the rest of APAC, due largely to heavy penalties associated with theft.
Another culprit is the self-checkout. In Latin America, self-checkout is the number one source of shrinkage. Many countries in the region have banned the use of plastic bags, so dishonest customers just walk out with products in their hands, and it’s very difficult to stop or deter them. In Europe, retailers are re-evaluating self-checkout or are planning to close self-checkouts completely.
How can retailers control shrinkage?
Shrinkage has led retailers to a point where all of them are finally coming together, being vocal and demanding legislation on the issues. In addition to this, retailers need to consider refocusing on what they can control in their stores by putting more obstacles and risks between merchandise and potential thieves.
Defensive solutions like tags, safers and wraps, smart sensors, and labels along with a fully connected electronic article surveillance (EAS) system can act as a more proactive approach to loss prevention. In addition, implementing a source tagging programme ensures consistent merchandise tagging that is cost and resource-efficient. Source tagging simply means that labels and tags are applied at the manufacturer so that merchandise arrives in stores shelf-ready.
Another best practice is to deploy public view monitors in vulnerable areas around the store including at the self-checkout area. It’s a way of letting potential thieves know they are being watched very closely.
Further, retailers are also leveraging data to understand the problem and its effects — but not all retailers have reached that level of sophistication. Retailers have the power to leverage loss-event data from store exits via EAS systems, point-of-sale systems, RFID sensors, video feeds, and more — but only if they invest in ensuring these solutions are connected. Many leading retailers are already using a suite of connected solutions to extract insights from data, like what’s stolen where and when, the value of those items, bulk merchandise theft events, and even which exits were used in the thefts.
A good majority of retailers have already made significant investments in video infrastructure. They are also working towards Computer Vision and AI technology.
Based on a recent white paper by Sensormatic. Click here to download the same.
