Research in 2023 shows that the average inventory loss rate for North American retailers is 1.6%, of which internal and external damage account for 65%. Retailers were caught off guard and took drastic measures. A quarter of retailers reported closing stores and a third were making changes to reduce in-store inventory to prevent crime.
The impact of stolen goods on a brand far exceeds its own value
When inventory is stolen, it can also negatively impact customers and salespeople. Consumers want to be able to purchase products in stores quickly and intuitively. Merchandise theft puts products at all price points at risk, forcing stores to lock not just luxury products behind security systems, but lower-priced products as well. Customers would have to ask store staff to unlock these items while shopping, even low-value items. This will greatly reduce the shopping experience for consumers. Consumers may choose to shop elsewhere the next time they make a purchase.
This, combined with an increase in in-store violence, has exacerbated the shortage of frontline staff. In North America alone, the industry faces losses of more than $100 billion.
Looking for solutions
Retailers are implementing a variety of technologies to reduce damage, including deterrence and detection solutions. A standard in-store loss prevention strategy will include electronic article surveillance (EAS) systems and lockable display cases combined with alarms and CCTV. Some retailers are investing in new advanced technologies using artificial intelligence and machine learning to outwit thieves. But what if there’s a solution right under our noses, but it’s underutilized?
Loss prevention experts champion technology
Dr Read Hayes, an expert on the retail crime industry, is outspoken about the under-utilization of proven technologies in the loss prevention field. As founder and leader of the Loss Prevention Research Council (LPRC), he has been at the forefront of retail crime research and has received support from industry giants such as Walmart, Target and Home Depot. LPRC’s extensive research and advanced laboratories demonstrate the transformative potential of technology, particularly RFID-based systems, to address issues of cargo damage, fraud and violence.
Will RFID be a game changer?
Recently, Home Depot discovered and prosecuted an organized theft ring that reportedly stole $1.4 million worth of merchandise from the store. At the same time, their competitor Lowe’s announced that they would integrate Project Unlock into their future strategy using RFID-based technology. The reasons behind this are worthy of our investigation.
The capabilities of RFID are transformative. It enables retailers to pinpoint:
- Detailed information on each lost item
- How each item was lost
- The time each item was lost
- Who is stealing (and potential accomplices)
- Identify past damage patterns
Additionally, it provides real-time detection, alerting retailers when items are missing in-store. In a practical application, Macy’s is combining video surveillance with RFID to speed crime solving and improve the quality of evidence for law enforcement.
Why is RFID not limited to inventory management?
While many retailers in the fashion, homewares and personal care sectors are leveraging RFID technology for inventory management (and are successfully operating in omnichannel operations), its potential for loss prevention remains untapped. The fact that goods are already tagged with RFID provides a compelling reason to expand their use in preventing theft.
However, past misunderstandings persist. Is RFID also a feasible solution in general retail areas such as electronics, home improvement, food retail, etc.? Innovations in RFID tags and solutions now provide retailers across a variety of industries with inventory management and loss prevention tools for their entire product range. Retailers can also apply the technology more strategically to known high-risk items. The National Retail Federation has released an overview of products that ORC often targets. For example, in general retail this includes kitchen accessories and diapers, and in the food sector this includes alcoholic beverages, frozen seafood and fresh meat. Each type of product faces unique labeling challenges, such as substrate materials, extreme temperatures and food compliance, for which RFID-based solutions are needed.
Evaluate your RFID strategy
Loss prevention professionals deserve credit for the work they do under extremely challenging conditions, but now is the time for retail leaders to reevaluate their strategies. If your organization is already implementing RFID in your inventory, you need to explore its potential for loss prevention. As Dr. Hayes highlights, many people may be overlooking inherent abilities that are currently dormant.
Addressing loss through loss prevention is a complex challenge, and while RFID is a key component, it is only one part of a larger story. If you want to stay ahead of the curve on how to use RFID to create a safer, more profitable retail environment, click into the mini program below to learn about successful RFID application cases.
Item-level RFID tags provide inventory visibility
RFID plays a fantastic role in tracking all products throughout the retail supply chain. Businesses can deploy the technology to manage and track every item in their inventory, from source to final destination. By working with manufacturers, retailers can also use RFID sensors to record price, quality information, shipping details and intended destinations for specific items. RFID tags can provide enterprises with informed business decisions, demand analysis and prevent inventory shrinkage at every stage of the supply chain based on the data collected.
During inventory tracking, businesses can know where goods are currently located, how many items there are, and how long it will take to replace items lost in transit. All this is possible thanks to RFID monitoring of all information. Another benefit is that once employees know that every item is being tracked, employee theft is less likely to occur. Using RFID to prevent retail theft can increase employee accountability while helping to optimize upstream distribution processes.
Post time: Jan-16-2024