Embracing New Tools to Tackle Organized Retail Crime

High Shrink and Organized Retail Crime (ORC) have become pressing challenges for retailers across the industry. No one is immune.?Notably, even retail “High flyers” like Walmart, Target, and Ulta Beauty are feeling the impact. Target's projected loss of $1.2 billion in profits due to organized retail crime and Ulta Beauty's CFO acknowledging the financial drag caused by ORC theft are alarming indicators of the gravity of the situation. As we delve into this issue, it becomes clear that immediate action and innovative solutions are required to safeguard profitability and protect our businesses.

Understanding the Magnitude:

According to the National Retail Federation (NRF), the annual merchandise shortage (shrink) amounts to a staggering $94.5 billion, with almost half of this attributed to ORC. This year alone, retailers experienced a significant 26.5% increase in ORC compared to the previous year. The numbers are a wake-up call, necessitating a deeper examination of how we, as an industry, can address this growing problem.

Shoplifting vs. Organized Retail Crime:

While shoplifting and ORC may be confused at times, it is crucial to recognize their fundamental differences. Shoplifting primarily involves individual acts for personal use, whereas ORC entails coordinated criminal activities aimed at profiting from stolen goods through illegal resale. Understanding this distinction enables us to explore effective measures to address the escalating trend.

The Need for Innovative Solutions

The traditional tools and loss prevention solutions that retail has leveraged in the past simply are not working. Couple this with legislative changes that make theft in retail stores “not easily, if at all, prosecutable”, then it is no wonder that shrink and ORC are on the rise. While retailers continue to leverage traditional techniques of “hiding merchandise from customers and “would be thieves” by placing products behind locked cabinets or using EAS hard tags, it is essential to consider viable technology solutions that strike a balance between security and customer access. Vision systems and RFID emerge as powerful tools to transform the landscape of loss prevention and detection.

Harnessing the Power of Vision Systems and RFID: New Tools in the Tool Belt

By leveraging vision systems and RFID technology, retailers can revolutionize their approach to combating ORC. Real-time visibility systems, including "Just walk out" solutions and RFID overhead systems (similar to Amazon Go or Radar), offer immense potential in reducing ORC incidents. These advanced solutions provide Loss Prevention Professionals with improved tools to detect thefts in progress, understand staging methods, and gain valuable insights into the entire path to theft.

Additionally, chain wide trend and analytics data will allow Loss Prevention professionals to be much more proactive in their approach to combating OCR rather than relying on the traditional “reactive” techniques which are dependant on manual physical counts in stores.

Traditional “intercept’ and alarming solutions are not necessary.?Leveraging RFID solutions for analytical purposes as well as to combat sweet hearting, returns fraud, and even internal fraud are possible without the "cheap beep".

Breaking Through Challenges:

While technology solutions have faced hurdles in gaining traction within the traditional retail paradigm, the magnitude of losses faced by retailers demands a paradigm shift. Investing in RFID infrastructure and embracing innovative approaches are critical steps towards fortifying loss prevention efforts and protecting profitability.?Afterall, $1.2B of lost profit can buy a lot of RFID infrastructure. ??

Conclusion:

As the threat of organized retail crime continues to loom over retailers, it is imperative to act swiftly and decisively. By leveraging the power of technology, such as vision systems and RFID, we can transform our approach to loss prevention, enhance customer experiences, and safeguard profitability.

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Ted McCaffrey - Omnichannel Champion Omni Talk Retail Jonathan Aitken Brandon Rael Brand L. Elverston Michael Graen Steve Schenk Marshall Kay ?? Ricardo Belmar CASEY GOLDEN Pam Sweeney