Retail crime: From static to dynamic

Wouter Ubbels, Vice President, Sales, Marketing and Operations, Nedap Retail looks at how we can get a grip on retail crime with RFID technology.

With organised retail crime (ORC) making headlines as a major issue, retailers are finding themselves having to keep both their staff and their stores secure while managing the economic issues that are affecting profitability and demand.

This is where finding the right solutions to stem the current tide of ORC comes in, allowing retailers to protect staff who feel vulnerable and often powerless in the face of criminals and keep inventory for the customers actually purchasing those items.

Technology is supporting brands in their mission to minimise crimes, with RFID technology working as a valuable solution in helping retailers get a better grip on retail crime, particularly when it comes to managing their inventories, keeping them a step ahead of the criminals.

The current retail crime wave

In the US, Target has warned that ORC could reduce profits by over $500m, with the UK’s Co-Op also reporting a rise in retail crime and violent theft.

It’s clear that there’s a problem with retail crime on both sides of the Atlantic – but what are the factors which could be causing this rise?

There’s no single element causing the current rise, but with inflation leading to more struggles in affording items, criminals are targeting the sector to compensate for changing circumstances.

This could either be to keep the items for themselves or to sell on.

Another huge factor is little prevention from law enforcement for these activities, with ORC gangs feeling like there are no repercussions, leading to a rise of more extreme cases.

It’s easy to think of organised crime gangs as being responsible, but not all retail crimes are committed by those in larger entities or using sophisticated methods.

Some stores have seen a reduction in staff numbers and, as a result, there are fewer people on the shop floor, making it easier for shoplifters to carry out their activities unnoticed as well as knowing they will not be confronted.

How retail crime impacts businesses

Retail crime has financial and economic impacts, but the ramifications don’t end there.

There has also been a rise in violence towards retail staff in both the UK and the US, a continuing trend since the pandemic.

As a result, staff can end up with long term mental health issues as well as feeling like they are working in an unsafe environment, which has already caused retailers to close stores.

With staff retention being a problem in so many businesses, this makes reducing retail crime an even more pressing issue, in addition to employers having a duty of care towards their employees.

Furthermore, retailers don’t want their employees to get into dangerous situations nor have an issue with potential lawsuits.

Hence, many of the retailers have policies in place that forbid employees to actively engage when there are shoplifters active.

Customers are also impacted by retail crime, with retailers needing to offset losses by increasing the prices faced by already financially stretched consumers.

Stores are not only made more hostile by retail crime, but the customer experience can be worsened by the introduction of visible security systems.

Facial recognition technology is viewed as a possible solution but there are privacy concerns over the use of the technology.

Current problems, old solutions

Retailers are turning to traditional solutions to solve customer problems, whether that be steel cables, physical monitoring by staff or plastic screens.

The reality is that these solutions are unfit for solving the problem and create friction for customers and staff.

Retail staff are now expected to deter shoplifters through the wearing of body cams and new training. Some stores are even offering the police discounted food and beverages, to encourage their presence.

The onus should be on management teams to find a solution – and in an age of data and technology, retailers must now look beyond the traditional security parapet to digital solutions that are fit for today’s society and the problems facing modern retail environments.

When retailers discuss theft or organised retail crime, they usually use the term “shrink”. The term shrink doesn’t just refer to theft but the overall issue of lost inventory.

Other drivers of shrink include damage, fraud and internal theft.

There’s a larger issue at play as losses are often the result of guesswork and estimates rather than hard numbers.

Retailers can lack an overall understanding of their inventories and this has a knock-on effect when it comes to the issue of shrinkage.

Combating shrinkage

There are still some retailers who have a limited knowledge of where items are and this is before the issue of shrink comes into play.

RFID technology can significantly increase inventory accuracy from 74% to 98.4%, helping retailers gain a better view of what they have and where those items are located.

Changes to the in-store experience have also increased the importance of using RFID as self-service checkouts are experiencing double the shrinkage levels that traditional checkout stores have.

When it comes to combating retail theft, retailers should look to combine labels, deactivation, electronic article surveillance and data analytics.

Together, these elements can reduce shrinkage and increase product availability.

Connecting hardware to an underlying data analytics platform can then help retailers make much better decisions.

Retail data analytics platforms are able to delve deeper into alarms and deactivations, combining those insights with metrics such as visitor numbers.

RFID can also reveal the items that are being stolen most frequently so that theft patterns can be revealed.

For example, with major metropolitan areas in the US being hit with flash mobs and in the absence of effective local law enforcement budgets, RFID data can alert stores in the area to thefts quickly, giving staff time to monitor shop floors and the customers coming in.

The question remains whether the shoppers and retailers are ready to take responsibility for these additional precautions.

However, these changes can better leverage data and optimise loss prevention strategies on an almost real time basis instead of twice a year after an inventory count, moving from static loss prevention to a dynamic loss prevention world.

Not all items will need to be protected in a retail environment and prioritising the most stolen and valuable items can have a significant impact on shrinkage.

Approaches to retail theft need to be holistic, considering the journey of an item through the retail environment.

The balance has to be struck between security and a seamless shopping experience.

Technology can be discreet and protect retailers from theft without hindering customers.

As stores move towards being checkout-free, retail criminals (or ORC gangs) will be presented with lucrative opportunities to steal, so retailers need to be one step ahead by introducing unobtrusive and effective technology solutions.

Case building can also be improved with item-level data.

The value of the stolen items is easier to determine using RFID data than with CCTV alone, providing more detail into the exact items that have been removed from the store and when.

This is helpful when it comes to tracking repeat offenders.

The modern retail environment continues to evolve and criminals are never far behind.

RFID technology can help to reduce shrinkage by improving inventory invisibility as well as harnessing the power of data to get one step ahead, by better predicting retail crime and formulating prevention strategies to change the outcome with better suited solutions.