By Steve Rowen, Managing Partner
9/1/2009
With the economy as it is, retail theft is on the rise. One out of every ten Americans is expected to be out of work this fall, rendering a bump in retail shrink – due to organized and individual shoplifting as well as employee theft - less than shocking. In fact, In RSR’s 2008-2009 annual Loss Prevention Report, Loss Prevention and Beyond: Survival of the Fittest, retailers observed that even with a higher quality labor pool, hiring constraints make it harder to take advantage of that labor pool. We therefore recommended retailers use technology to make their existing employees smarter.
According to a recent article in RetailWeek, several British retailers have been forced to do just that. The crime rate in London has climbed 11% from July 2008 to July 2009, and is actually double that (22%) in rural areas to the country’s Northeast, as reported by the annual British Crime Survey. As a result, one tactic retailers are employing involves implementing EAS tags in places that were previously unlikely. For example, Tesco is now tagging its steaks and chesses, as “hard-up shoppers increasingly lean towards theft.” Marks & Spencer has installed an EAS system to protect food and clothing in 50 of its stores so far - a technology that the retailer has never used before. And department store John Lewis, which was already planning on bringing in an EAS solution prior to the economic downturn, has accelerated its implementation plans accordingly. Says the retailer’s development manager for business protection, Paul Newbury, “Our losses had been rising steadily over the past three years and reached a level where we felt we could make a meaningful difference if we protected products with an appropriate technology… If we can prove that these (first 10 rollout) stores are delivering that crucial difference to shrinkage figures by the end of the year, then we can justify possibly extending EAS into the remaining 19 stores.”
From our report last year, EAS tags were at the center of our key findings: Probably the most shocking finding of all is laggards’ lack of use of Returns and Void Management, EAS/Security Tags or On-hand Adjustment Audits. Even as these retailers are convinced their employees are stealing from them, they allow those employees to make adjustments to quantities on hand without even verifying what happened to the merchandise, and even as they remain convinced customers are stealing merchandise from them, less than 20% use any kind of security tag on saleable merchandise.
But what are some other technologies retailers can – and should – be looking at to combat shrink as we head into an inarguably bleak holiday season? From the 2009 report, the chart below shows existing usage vs. planned purchases of new technologies:
The important colors in this chart are the bright orange (budgeted projects), and the pale yellow (planned projects that are not yet budgeted). In looking at those by performance, Workforce Management, which was recognized by both Winners and average performers as critical to improving shrink, was – one year ago - still being eschewed by laggards. For all other technologies, patterns were consistent across both perceived importance and buying intentions. In comparison to older technologies, we saw a strong rise in interest in Fraud Detection and Analytics. Plans for new implementations of automated returns processing and real-time alerts on POS overrides were acknowledged by 29% and 25% of respondents, respectively.
Today, we recognize that IT budgets have been cut in 2009, and for most retailers – drastically. However, we want to know more about how retailers are creatively battling the growing theft problem they face, both from their employees AND their increasingly desperate customers. We are currently building the survey for our 2010 Loss Prevention study – what are some questions you think we should be asking?
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