Increasing retail profitability through intelligent loss prevention strategies
With increased competition from omni-channel and online outlets leading to tightening retailer margins, I have seen a growing pressure on the high-street to combat theft, reduce shrinkage and grow in-store revenues. Shrinkage in retail now amounts to $123.4bn globally – 1.23 per cent of total sales; of which the leading cause is attributed to employee theft and shoplifting, with only 16 per cent attributed to non-crime losses. This is a huge problem that unfortunately cannot be solved by boosting the use of security technology or personnel alone. High-street stores need to take an in-depth, strategic look at their business processes to recognise key sales drivers and agree on the most effective loss prevention strategy possible.
Often I see that while retail departments have the same goal of increasing store profitability, they also have very different methods of achieving this – often working in silos. Merchandisers, for example, look to boost customer experience and increase sales, with loss prevention departments looking to secure products against theft. These different motivations can lead to non-optimal solutions such as bulky security measures or poor product placement. A holistic approach to loss prevention, taking into account both day-to-day security and the customer experience, can be a key driver for success. From assessing real-time inventory through RFID technology, to detailed shopper behaviour analytics, these once disparate functions have an opportunity to combine, maximising merchandising effectiveness whilst mitigating the effects of shrinkage.
Intelligent security; a collaborative approach to loss prevention
While loss prevention strategies are fairly simple at their core, they become increasingly complex when ensuring a positive customer experience, often requiring more creative solutions. To implement these processes and meet the challenges presented by a changing business landscape, retailers require a thorough understanding of their brand, their staff, and their operational model. Only once this has been achieved can informed decisions be made to reduce exposure to shrinkage in a way that compliments other business processes – particularly the sales function.
We now see a strong need for traditional security providers to educate retailers on both the solutions available, and how to maximise the advantages of using networked technology. Sales and loss prevention operatives must now be incentivised to strive towards the same goal – increasing revenues through collaborative business strategies. While there is an instinct to protect high-ticket items such as champagne and perfume, for example, retailers must find a balance between product security and the accessibility of items for sale. In my view, an integrated, store-wide loss prevention strategy, supplemented with industry leading technology, will not only help reduce losses within stores, but will assist in driving revenue, providing greater potential for the business to thrive.
I would like to invite you to our Lunch event at the IFSEC International show in London. The event will be all about the challenges retailers face and topics like organised retail crime, analytics and loss prevention will be covered. Read more and register.