Store-bought items are more likely to contribute to shrinkage, contrary to popular belief about criminal activity
More than 80% of retail business decision-makers are losing at least 5% of their operating margin to in-store inefficiencies, according to a recent study. Mistakes related to promotions, pricing, and out-of-stocks have been identified as the biggest challenges for retailers.
To address these issues, retailers are adopting a combination of technology and staffing improvements.
Technology Solutions
Modern security technologies, such as advanced surveillance cameras, alarm systems, and electronic article surveillance (EAS) tagging, are being deployed to deter and detect theft. Retailers are also using RFID (Radio Frequency Identification) systems to enhance inventory tracking accuracy, prevent loss due to handling errors, and improve stock visibility.
Robust inventory management software is being implemented to minimize discrepancies from untracked deliveries, incorrect counts, or unrecorded sales. Data analytics and forecasting tools are being adopted to better predict demand, reducing overstock and obsolete inventory.
Staffing and Policy Improvements
Employees are being trained on loss prevention protocols, proper cash handling, and inventory management practices to reduce inadvertent shrinkage. Store policies around inventory checks, return procedures, and access controls are being strengthened to close loopholes exploitable by thieves or fraudsters.
Loss prevention teams' capabilities are being enhanced to identify and respond to both external (shoplifting, organized crime) and internal (employee theft) threats. Warehouse handling practices are being improved with well-trained staff and appropriate equipment to minimize damage-related shrinkage.
U.S. retailers' plans for investment in store intelligence technologies for the next year have increased over 150%, according to Coresight. More than a third of retailers plan to invest at least $500,000 in these technologies.
Tech is helping break down the divisions between the loss prevention and operating teams. Loss prevention experts advocate for viewing loss prevention teams as protectors of profits and margins, rather than just crime fighters.
Overcoming these inefficiencies could save U.S. retailers up to $162.7 billion, according to a recent study from Coresight Research. With the increasing investment in technology and staffing improvements, retailers that solve for visibility are seeing a step-change in performance across supply chain, e-commerce fulfillment, and store operations.
During the COVID-19 pandemic, retail shrink ballooned due to the elimination of non-essential employees. However, with the focus on technology and staffing improvements, retailers are better equipped to tackle these challenges and maintain their operating margins.
References:
- The Retail Shrinkage Study 2020
- Brad Bogolea, CEO and co-founder at Simbe Robotics
- Johnny Custer, senior director of retail risk solutions at ThinkLP
- Everseen's 2021 Retail Shrinkage Report
- The Impact of Technology on Retail Loss Prevention
- Technological advancements, such as AI, robotic systems, and sophisticated surveillance equipment, are being implemented in the retail industry to combat crime.
- The adoption of AI in retail has extended to inventory management, where it is used for predicting demand, preventing shrinkage, and optimizing stock visibility.
- Advanced innovations in robotics are streamlining warehouse handling practices, thereby reducing damage-related losses.
- In an attempt to address in-store inefficiencies, many retail businesses are embracing the integration of AI and labor policies.
- Data analytics and AI are assisting retailers in improving their business finance by reducing overstock and obsolete inventory.
- To address the challenges posed by promotions, pricing, and out-of-stocks, retailers are leveraging technology and labor strategies to ensure stock accuracy and improve overall retail performance.
- The investment in store intelligence technologies, like AI and advanced surveillance systems, is surging, with more than a third of retailers planning to invest over half a million dollars in such technologies.
- Retailers that prioritize visibility in their supply chain, e-commerce fulfillment, and store operations are seeing notable improvements in performance, thanks to increased investment in technology and labor policy enhancements.
