A deep dive into shrink

Upcoming special issue of Retail Insider the magazine examines the range of challenges facing today’s retail Asset Protection/Loss Prevention teams, and the tools and tactics that can help further protect and safeguard their organizations // By Stephen O’Keefe President, Bottom Line Matters

Over the past few years, Retail Insider the magazine has provided insight into areas of the retail world not commonly known to the public or retail sector at large. Industry leaders will often cite the need for confidentiality to avoid missing out on taking the first step in a retail program or deploying the most advanced technology to serve their customers’ wants and needs.

Occasionally however, all retailers share a common issue requiring collaboration within the guidelines of the regulations set forth in competition law. In light of this, Retail Insider the magazine recently took a deep dive into one of those areas of concern, and the findings are staggering. It is the world known by most as that of Asset Protection or Loss Prevention. And while many may know it as Security, it is much more than that.

The problem with shrink

Shrink is the terminology used to measure the performance of a company’s loss prevention pro-

gram and has been the topic of great debate, even making its way into the U.S. Congress. And so, we wanted to understand at a much deeper level what the background problem is when it comes to shrinkage. What became clear in our research is the fact that the calculation for expressing unknown losses is flawed, to say the least, and may not be a true reflection of the effects criminals have on a store’s financial performance. What we also discovered was that, in some cases, it was over-stated, but in others it was grossly understated.

Whatever way you measure it, the consensus is that crime is costing well over $100 billion a year in North America. And, Retail Insider the magazine has the back story on the formula used to determine shrink, the concerns with validity, and the alternative formulas being used to quantify losses.

The bottom line is - no matter how you calculate it, criminals are active. Some of them are violent. Losses are occurring. Police are not always

responding. Courts are neglecting their duty. Lawmakers are lagging. And, as a result of this culmination of a lack of proper action, retail profits are suffering.

Technology solutions ecosystem

To help fight the scourge of retail loss resulting from criminal activity, our research also revealed an entire culture of technology and solutions partners collaborating to address the issue with smart systems and artificial intelligence. Consumers are speaking out against the proliferation of brazen thievery, and they are expressing their concern that theft contributes to higher prices at the checkout. In addition, retail employees are nervous about what may occur during their shift when the doors are open to all walks of society, and safety is a real and present concern. To this end, retail Asset Protection and Loss Prevention professionals are “taking back their stores” as one industry leader passionately expressed at a recent conference in front of their peers.

Cause and effect phenomenon

What’s more, Retail Insider the magazine’s deep dive into the world of loss prevention discovered an entire cause and effect phenomenon that has put losses at the highest global level since the inception of recording systems. While it is quite complex and somewhat complicated, we have devoted an entire issue to the topic. For example, the “why” behind the reluctance for law enforcement to prosecute a shoplifter is not simply because they don’t want to. Rather, it stems from a whole series of events, and a generation of band-aid solutions that have all failed to address the root cause of loss. The result, unfortunately, is that shoplifters, or thieves as the industry prefers to label then for fear of diminishing the act of theft, have taken advantage of retailers to source product for personal use or to re-sell and fund other nefarious acts.

But there is some good news. While this is a problem at its pivotal point that requires and demands action immediately, technology and leadership are addressing the issue. They know the laws to change and are lobbying. They know the deterrent value of impressions of control and are installing them. They know the value of a connected loss prevention ecosystem and are working with suppliers and vendors to ensure that their systems speak to one another. And CEOs know that doing things the same way will get you the same results, and they are making changes and embracing alternatives.

The future of retail protection and prevention

AI is not a recent phenomenon. Retail Insider the magazine has traced the development of machine learning to the heart of loss prevention programs well into the 1980’s with exception-based reporting systems. Today, thefts can trigger silent alarms, notifying management via radio, as well as a CCTV system that will track and record the culprit. Without engaging with the criminal, their entire journey throughout the store is recorded. The front door alarms were activated, and another camera system was used to capture the licence plate information on the get away vehicle. In fact, one retailer is exploring the use of drone technology to follow a suspect vehicle, while another is using tracking within the packaging of high theft goods to “follow the money” and identify the location of merchandise stolen for the purpose of resale. It may seem like a Hollywood production of espionage or cops and robbers. But this type of technological capability and deployment is real. And Retail Insider the magazine will take you behind the scenes to share some of the technological advances that we discovered during our deep dive into the world of retail crime.

Special issue coming soon

Watch for all of this content, and more, in a special Asset Protection/Loss Prevention issue of Retail Insider the magazine this Fall. For industry leaders and retail solutions partners that want to get involved, or for more information about this special issue, check out the media kit here