Loss prevention is a critical element in protecting a retailer's products, people and assets in-store. Shrink—inventory reduction due to theft, fraud or mistakes—reduces profitability and ultimately impacts a retailer's bottom line. And as consumers become increasingly connected, digital trends are making loss prevention an even more important function.
According to Tony D’Onofrio, chief customer officer at Tyco Retail Solutions, progressive loss prevention leaders see a link between in-store and online purchases. Therefore, they have diversified their skills to protect products both in the stores and online.
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FierceRetail sat down with D'Onofrio to learn more about how data is becoming a critical weapon for retailers in understanding theft patterns and deploying new connected Electronic Article Surveillance (EAS) and video solutions to help increase theft deterrence.
FierceRetail (FR): Are the shrink numbers better or worse than they were a few years ago?
Tony D'Onofrio (TD): According to the last Global Theft Barometer, retail global shrink was $123 billion—a huge hit to retailer profitability. Most years this number increases as new markets come online with modern retail formats. Retail shrink has been a problem since the first market opened in ancient times. The internet and other technologies where thieves can fence stolen goods is changing both the methods of combatting what will continue to be a growing problem.
FR: What is the best way for retailers to fight against loss?
TD: Traditional technologies such as EAS and video are still very effective in attacking the problem of shrink. Data analytics integrated into all potential loss areas of a store is becoming increasingly important in areas such as Point of Sale (POS) and return fraud. Video analytics to understand buyer and theft behavior is gaining traction in stores. RFID is leading to smarter loss prevention solutions where items are tracked on whether they were actually purchased. Increased number of sensors will appear in stores to provide data into cloud platforms to attack shrink.
FR: What analytics should retailers be collecting to help fight identity theft and loss?
TD: The focus today should be on connecting all devices in stores including EAS, video, intrusion and access control. The more data that a retailer is able to generate from in-store devices, the more analytics are possible to identify loss areas and deter the problem. Any data that is in the store such as POS, vendor deliveries, etc., should be consolidated over time into comprehensive data mining applications. These applications should be linked to video to match the data with the visuals of the problem. RFID holds lots of promise in extending this data visibility to the item level. The future of retail is about prescriptive analytics where sensors and data provide enhanced visibility and deterrence to retail theft.
FR: For retailers just getting started in theft prevention, where should they begin?
TD: From the onset, always focus on the basics such as EAS, video and data analytics. You can build from there into very powerful solutions.
FR: What else can you tell us about the future of theft in retail?
TD: Every dollar saved by reducing shrink is an additional dollar in profit. Loss prevention needs to have a seat at the executive table of every major retailer as new shopping approaches such as mobile will increase the problem of shrink. Understanding what the loss prevention department is doing from an executive point of view is very important. The base of new technologies such as video analytics started in loss prevention, with the camera first being pointed at preventing crime. Today, video is a data gathering device. Partnering with a strong loss prevention department leads to both improved profitability and increased sales. Assets deployed for loss prevention can concurrently be leveraged to drive operational improvements. The future is bright for loss prevention and retail when true partnerships are in place.