By Alan Rabinowitz, CEO at RABDOC Consultants
End User Perspective
The National Retail Security Survey for 2021 and well into 2022 finds shrinkage at an all-time high, with almost twice as many businesses reporting shrink rates of 4% or higher compared to previous years.
Inventory lost through shrinkage cannot be recovered because there is nothing to sell or return, and thus the direct impact on the bottom line. The contributing factors to shrinkage include shoplifting, employee theft, consumer and vendor fraud, administrative errors, product damage, and more; the higher the shrinkage, the lower retailer profits.
Retailers depend upon their Loss Prevention and Security teams to thwart, mitigate and prevent shrinkage. Standard SOP is to monitor physical security or risk management. That includes the proper functioning of physical security systems such as CCTV, alarms, sensor and tag systems and locks. They maintain the safety and security of the store from shoplifters and suspicious employee activities, implement and monitor processes to reduce property or financial losses, maintain documentation on security related incidents, take action against perpetrators in accordance with guidelines and ensure a safe shopping and work environment.
With an unprecedented rise in organized retail crime (ORC) and a failed system of offender prosecution, loss prevention and store associates are told, no accusation, confrontation, or apprehension if not in the company guidelines; this in essence has created an “open season” for thieves and a totally unacceptable rise in shrink. Many retailers are closing stores in high crime areas as a result.
Under “normal” circumstances, product alarms, sensors and tags have helped reduce shrink with CCTV being the most effective tool. Old technology needs to be re-evaluated and its overall effectiveness challenged. The retail landscape has changed and new methods and systems must be deployed to meet both the needs of the omnichannel consumer and to reduce shrink. Enhanced consumer experience is high on the list along with analytics and metrics, required by the retailer and brands on product acceptance and sales. Self checkouts are another challenge because you can’t control what you can’t measure so depending upon shopper honesty to scan all items is a problem.
Thus, the end user is questioning the ROI of their current systems and placing an increased burden on Loss Prevention and Security teams to address these new challenges. Retro-technology or the upgrading of existing systems can accomplish both added security while saving significant sums of money. Innovative approaches such as making existing mechanical keys and locks smart without changing either of them is an example. Technology providers with integrable solutions make such things possible.
Retailers want to attract as many shoppers as possible to counter the on-line competition for sales. While there will always be a place for brick and mortar, stores must design for the future to provide the unique experiences demanded by shoppers-both the environment itself as well as for the products they sell.
The major disconnect that impacts Loss Prevention is the lack of communication between store and fixture design and the vendor. Beautiful fixtures that address the merchandising requirements of the brand and facilitate consumer shoppability may not consider shrink. Design departments and loss prevention rarely consult with one another during the fixture engineering process, and after the fact, when all is installed and shrink issues arise- it becomes an L.P. problem.
Vendors are fabricators or distributors of finished goods. The former builds from retailers’ prints, the latter re-sells an existing product. A fabricator can build in the security measures necessary to deal with shrink if they are part of the communication triage so sorely lacking. The store fixture industry can play an important role in loss prevention via closer involvement with both the retailers’ design and L.P. departments. Their fixtures can contain merchandising systems that provide security and are smart. This means they offer analytics and metrics to the retailer, loss prevention and the brand regarding consumer usage and attempts at theft such as product sweep, smash and run, and much more.
Suppliers have also have been approached by the brands to develop merchandising systems to eliminate planogram violations. This often happens when store associates are restocking and place more product on a shelf or display than the merchandising plan calls for. Such violations affect the neighboring brands or SKUs and depending upon the asset value, can cause L.P. issues as well. New Cloud based smart systems provide alerts to corporate and local stores on alarms, facings violations, inventory and other desired data. All data is available on mobile devices and in loss prevention offices. Facings violations often suggest a “set up” for employee theft.
Fabricators need not have the internal resources to address the technology aspects of the fixtures or those related to loss prevention; these are the responsibilities of the retailer. They do however need to understand the overall form, fit and function of the system as their expertise in manufacturing can result in cost savings to the retailer.
With these new challenges facing retailers, loss prevention, the brands and suppliers, cooperation among all is mandated. Solutions can be found without adding staff or new hires by working with companies that supplement and complement one’s current staff, have the expertise to develop new products and systems, bring an unbiased view of the issues to be addressed, and the understanding of the target market.
Loss Prevention Solutions
Technology is a wonderful thing if applied correctly. Its value lies in the application above all else. With all that is currently available in the marketplace, selecting the appropriate technology can often be difficult. The checklist below can be helpful in that regard.
- Make a “pain points” list
Self Checkout station- all items not scanned, customer theft
Open Shelf Merchandising- product sweep, unit theft
Wire Hook Merchandising- product sweep, unit theft
Fine Jewelry- smash and run, product swap, employee theft
Fragrance and Cosmetics –package violations, product sweep, unit theft
Apparel- product sweep, unit theft
Electronics- unit theft
Metrics and Analytics Monitoring- facings, alarms, inventory
Remote operability via Mobile App and/or Cloud
- Make a solutions “wish list”
Physical but shoppable barriers
Sensors, alerts, CCTV activation
Retro-technology making existing products smart
Enhanced consumer and user experiences
Data collection and archiving
- Choose the correct technologies (may require more than one)
- Chose a solution tailored to your specific needs, scalable and customizable
Hardware and Software
Meets ALL your criteria for functionality and operability
Fully integrable with any existing systems you own including access control
Does not need to live on your proprietary network
After reading the above, you probably need help. New retail landscapes require creative thinking, innovative approaches, alternate action plans and additional communication pathways. Take advantage of your industry contacts, their knowledge and experience, and utilize technology to achieve your goals. Seek the experts and don’t settle for just anyone. Do your due diligence and verify credentials. The proper selection for assistance can be your differentiator in the marketplace.
Alan Rabinowitz is currently CEO, RABDOC Consultants LLC, a consortium of technology experts in IoT, M2M, RFID, Wireless, AI, Cloud Communication and more. Services include new product development, prototypes, manufacturing, firmware and software, installation and grant writing. Multi-venue clients include retail (smart products), healthcare, hospitality, energy, DOOH, kiosks and cannabis dispensaries. Former educator, administrator and founder of a public company. Over 50 years of experience, an electrical engineer with two masters beyond the baccalaureate.
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