The most recent annual shrink survey from the National Retail Federation indicated that we have a $100 billion shrink problem.
The retail industry is enduring a retail cyclone.
Immeasurable pressures from a litany of factors have placed brick-and-mortar retailing in the sightline of a cataclysmic attack. Everything from rising inflation, global uncertainty, post-pandemic tremors, manpower shortages, and a disrupted logistics pipeline are part of the cyclone’s strong whipping winds.
The other factor is the historical increase in shrink and outright crime assault on retail.
We are seeing an event never experienced to this magnitude in retail in our lifetime. It rivals the challenges which the Great Depression placed on the retail industry in that era. The retail industry is no stranger to challenges, but the skyrocketing retail shrink rate is an eye-opener.
The most recent annual shrink survey from the National Retail Federation indicated that we have a $100 billion shrink problem. Shrink, which encompasses losses due to theft, fraud, errors, and more, has been a persistent problem for retailers, but it has reached unprecedented levels in recent times.
In this article, we’ll explore the underlying factors contributing to this alarming trend and discuss how the integrators and installers can play a pivotal role in preventing and mitigating retail shrink through targeted solutions and key partnerships with retailers.
Before delving into solutions, it’s crucial to understand the factors driving the surge in retail shrink rates. Several key elements contribute to this retail cyclone:
Economic pressures: Economic downturns and uncertainties can lead to an increase in theft and fraud as people become more desperate to make ends meet. The COVID-19 pandemic exacerbated these pressures, with many individuals turning to theft and fraudulent activities to cope with financial hardships.
Many people left the retail labor pool post-pandemic, placing further pressures on the hiring and staffing of quality team members, a challenge integrators and installers must address.
Organized retail crime (ORC): ORC rings have become more sophisticated and widespread. These criminal organizations are not only stealing goods but are also reselling them through various channels, including online marketplaces.
The vast reach of ORC makes it a formidable adversary for retailers. Retailers are having to invest in a tremendous amount of manpower and technology tools to fight this scourge, and integrators play a vital role in providing these solutions.
Reduced prosecution on retail crime: Across the nation, we are seeing legislation that is reducing the felony levels for retail theft, and in some instances allowing shoplifters and ORC operatives to walk with a citation, as if they just jaywalked.
This lack of prosecution is a critical factor in the increased mass attack by criminals on retailers. The risk is worth the reward. Change must occur now to hold retail criminals accountable in the legal system, and integrators can offer tools and expertise to address this challenge.
Employee/internal theft: Unfortunately, employees can be significant contributors to retail shrink. Whether through collusion with external criminals or simple pilfering, insider threats cannot be ignored. Under-ringing or sweet-hearting is still a common challenge for those who do not monitor the front-end operations properly.
Refund fraud perpetrated by employees remains an impactful avenue of theft, and one which integrators can help prevent through advanced tools and deployments.
How Integrators Can Help Control Retail Shrink
Be a leader. Partner with companies that provide Data Analytics and Artificial Intelligence (AI): Integrators should continue to assist in the identification, offering and deployment of Data Analytics and AI solutions.
Harnessing the power of data analytics and AI can be a game-changer in the fight against retail shrink. Retailers can analyze historical data to identify patterns and anomalies, helping them predict and prevent theft and fraud.
Real-time AI-driven monitoring can also alert security personnel to suspicious behavior as it happens. Every defensibility a retailer deploys can be refined and strengthened with AI. It is imperative that integrators focus on making AI tools that meet the retailer’s needs.
Being an informed integrator partner and having the ability to deliver these tools is essential.
Enhanced surveillance systems. Modern surveillance systems equipped with high-resolution cameras and advanced analytics can provide invaluable insights. These systems can detect unusual behavior, track movement, and even identify individuals, helping security teams intervene proactively.
Speed to respond and react is key. Having a strong open platform video management system deployed is key to making sure early alerts are getting to the proper retail team members to respond and be proactive to crime and risk.
As an integrator, seek out partnerships with leading edge technological companies that provide needed hardware and software platforms.
More risk mitigation tools. Facial recognition has the potential to be a game-changer in retail, especially as it applies to ORC activity.
Other innovations such as locking shopping carts, smart display cases that require a cell phone number to open, anti-shelf sweeping technology, remote parking lot surveillance systems, license plate recognition, VMS platforms to integrate each analytic possible, are examples of solution tools that integrators and installer channel partners can leverage which are making headway in the fight on shrink.
More innovation equals more impact, and integrators are at the forefront of implementing these technologies.
Collaboration and information sharing: Retailers should work closely with integrators and installers, sharing information about tools and deployments which can impact criminals and criminal activities. Integrators are instrumental in partnering with retail and facilitating this exchange of information.
Tailored retail strategies. Rather than employing one-size-fits-all approaches, retailers and integrators need to work closely together to ensure that projects and future needs are considered in a holistic security resources matrix. The integrator community has a key role in helping retailers understand the wide spectrum of tools and deployable solutions at their disposal.
A close symbiotic relationship between integrators and retailers is key.
Kroger, for example, regularly brings in its top security solution providers as well as integrator/installer channel partners to an invitation only open forum to discuss needs and deployment-based strategies. This is a concept that all retailers need to embrace, with integrators helping lead the way in customized security deployments. When integrators are consultative partners, great things happen for both parties.
The skyrocketing retail shrink rate is a pressing issue that demands immediate attention. It is not going to just go away. It is here until we pull every stop and deploy every tool that makes sense. Integrators and installers must continue to step up and innovate.
The time is now. The retail cyclone needs to be stopped. Although integrators cannot impact all factors contributing to the retail cyclone, you can play your part by developing a strong toolbox, working closely with retailers, and deploying benefits that mitigate risk and crime. If we all work together, it is possible to stem this tide.
Retail needs you. It is essential that you and your team answer the call.
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