Alarming Rise in Shrinkage
Loss Prevention Needs Smart Technologies
With each passing year, the retail industry is witnessing a steady rise in shrinkage, which is financial losses occurring due to theft. According to the National Retail Security Survey 2023, 36 percent of retail shrinkage in the US can be attributed to external theft and 27 percent can be attributed to process control failures. For the US Retail industry, the aggregate losses from these two factors exceed USD 70 billion!
The situation is challenging in the UK as well. According to a recent survey by the British Retail Consortium, retail theft has resulted in shrinkage of GBP 2.1 billion. Such staggering losses bring into focus, the importance of the role of Loss Prevention Officers in retail companies.
Loss Prevention can be effective only if one can understand the threat vectors that need to be dealt with. A physical retail store faces a variety of theft scenarios, and it is vital for prevention officers to understand these challenges before they can identify effective means to tackle such situations.
| Theft Context | Description |
|---|---|
| Aisle | This is a common method followed by shoplifters, especially in stores with fewer staff to monitor the floor. They typically take items from the shopping aisles, conceal them in their clothing or bags, and pay only for the low-cost items placed in their shopping carts. |
| Self-Checkout | Self-checkout places a lot of trust in the consumer with the expectation that all items will be scanned and paid for. However, theft happens here often in the following forms:
|
| Checkout | This is an internal theft as the actor would typically be the store staff at the checkout counter. Sweethearting is the most common offense committed here, with the staff providing discounts to shoppers they know. |
| Cart Pushout | This is blatant theft with the person placing items into a cart and walking out without making any payment. |
Given such varying methods of theft being employed in multiple contexts, the task of monitoring the floor becomes a complex challenge. The standard response would be to put more people at it, but this comes with additional staffing costs. Moreover, with more staff keeping a watch on the aisles, genuine customers can be put off as they would feel that the store does not trust them with honest shopping.
Smart Technologies can be invaluable in meeting the monitoring requirements while ensuring a smooth and engaging consumer experience at the store. SAI Group provides Smart Technologies to 3 of UK top retailers, helping them identify theft across the aisle, self-checkout, and cart pushout contexts.
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