Author: Nick Reese
Date published: October 30, 2024
Increased inventory shrinkage has emerged as an important issue for many brick-and-mortar retailers, driving the ability to use technology as part of retailers' retail loss prevention strategy as a key technology use case.
The National Retail Federation (NRF) reported in 2023 that the average shrink rate was at 1.6% in 2022, representing $112.1 billion in losses, up from $93.9 billion the previous year.1 The majority of this shrink (65%) was driven by theft—both internal and external—and ranged from solo shoplifters to sophisticated organized retail crime gangs.
Theft doesn't only impact the bottom line, but theft also can affect employee and customer safety. The NRF also found that retailers are concerned about the rising threat of violence associated with theft, with 88% saying that shoplifters overall are more or much more aggressive compared to the past year. As a result of this increased violence and theft, retailers are taking more drastic actions, including reducing specific store hours (45.3%), altering in-store product selection (29.7%) and closing specific locations (28.1%). For some stores, loss prevention in retail stores is no longer an issue of profitability, but business sustainability.
Retail loss prevention technology could be a key to stemming the rising tide of theft. While retailers today use 5G connectivity to create engaging customer experiences and make their operations more efficient, this same connectivity also powers innovative retail loss prevention technology solutions that could help companies reduce their risk, prosecute thieves and provide a safer experience for employees and customers.
Using 5G, retailers can leverage high-speed data transmission and near real-time analytics to enable retail loss prevention technology, reducing shrinkage and stopping thieves before they have a chance to steal. Here are four key technologies retailers are using today to secure their store aisles.
With RFID technology, retailers can embed small tags into their products that allow for precision tracking of tagged items. While this technology is often used for inventory tracking, RFID can also power retail loss prevention strategies by helping retail security teams track which items were stolen and when. Unlike the large, plastic electronic article surveillance (EAS) tags you may have seen affixed to items, these RFID tags are embedded in the product, making them more difficult to detect or remove.
With near real-time insights into their shrinkage, retailers could secure the specific items most likely to be stolen and identify patterns that may indicate that a frequent customer or employee is actually the source of theft.
Retailers have relied on video surveillance for decades in order to catch culprits in the act. While recordings are helpful for providing evidence after the fact, traditional systems require a security guard to monitor multiple cameras at once if a retailer hopes to use video surveillance to stop a theft in progress.
With smart surveillance systems, AI can help to safeguard shelves by monitoring customers throughout your store. Should it detect a potential theft event, such as a shopper sticking an item in their backpack or a group of people huddled around a shelf, it can trigger an alert to a security guard on the store floor who can then take action. It can also help security personnel use facial recognition software to quickly scrub through hundreds of hours of footage to find repeat offenders or detect when a known thief has entered the store.
More and more, retailers are securing their items behind locked shelves or doors. A physical key can be easily lost or stolen, in addition to making it impossible to know who accessed a shelf and when.
With smart keys, retailers can provide employees with a device that acts as a virtual key. Not only can the device be disabled should the employee lose possession, but it also allows security staff to track precisely which employee opened a shelf door. Combined with RFID and video surveillance, this could help identify any incidents of employee theft.
Retailers have never had more data at their disposal—individual customer behaviors, seasonal data, in-store traffic patterns, real-time inventory levels and line-item data from other stores. By leveraging this data, businesses can use signals gathered from across the internet to improve loss prevention in retail stores.
For example, in a presentation at NRF Protect, a specialty beauty retailer shared how it used data collected from its e-commerce site to identify a gang of cybercriminals analyzing the inventory of high-end hair dryers in physical stores. This information helped the security team send an all-points bulletin to stores nationwide to secure those dryers behind locked counters before it was too late.
The point of all this technology is twofold: not only does it make it harder for a thief to get away with a crime, but it also discourages thieves from attempting the theft in the first place. In this way, retail loss prevention technology will help reduce incidents of retail theft-related violence, allowing you to protect both your employees and your profits.
Verizon provides the advanced 5G network and solutions required to power retail loss prevention technologies, improve the customer experience and optimize operations. Learn more about retail technology solutions from Verizon.
The author of this content is a paid contributor for Verizon.
1 National Retail Federation, 2023 Retail Security Survey, 2023, page 4.