[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.the-future-of-commerce.com\/2023\/03\/14\/retail-shrinkage-2023\/#BlogPosting","mainEntityOfPage":"https:\/\/www.the-future-of-commerce.com\/2023\/03\/14\/retail-shrinkage-2023\/","headline":"Retail shrinkage: Are locks the best way to stop shoplifting?","name":"Retail shrinkage: Are locks the best way to stop shoplifting?","description":"To curtail retail shrinkage, stores are placing products in locked cabinets, but alternative security measures that don't hurt CX exist.","datePublished":"2023-03-14","dateModified":"2024-03-12","author":{"@type":"Person","@id":"https:\/\/www.the-future-of-commerce.com\/contributor\/david-rand\/#Person","name":"David Rand","url":"https:\/\/www.the-future-of-commerce.com\/contributor\/david-rand\/","identifier":662,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/27af23cf29ea2b57936ae1099d10f2b43bf9e7528abe792c2ae825d887981c44?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/27af23cf29ea2b57936ae1099d10f2b43bf9e7528abe792c2ae825d887981c44?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"The Future of Commerce","logo":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2023\/01\/logo-foc-schema-app-1.png","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2023\/01\/logo-foc-schema-app-1.png","width":172,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2023\/03\/Retail-shrinkage-FTR.jpeg","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2023\/03\/Retail-shrinkage-FTR.jpeg","height":375,"width":1200},"url":"https:\/\/www.the-future-of-commerce.com\/2023\/03\/14\/retail-shrinkage-2023\/","about":["B2C Commerce",{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/commerce\/","name":"Commerce","sameAs":["https:\/\/en.wikipedia.org\/wiki\/Commerce","http:\/\/www.wikidata.org\/entity\/Q26643"]},"Consumer Products","CPG",{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/customer-experience\/customer-experience-general\/","name":"Customer Experience","sameAs":["https:\/\/en.wikipedia.org\/wiki\/Customer_experience","http:\/\/www.wikidata.org\/entity\/Q984142"]},"Future of Grocery Retail",{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/retail\/","name":"Retail","sameAs":["https:\/\/en.wikipedia.org\/wiki\/Retail","http:\/\/www.wikidata.org\/entity\/Q126793"]},"Retail Industry","Retail Trends, Data, News",{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/sustainability-in-business\/","name":"Sustainability in Business","sameAs":["https:\/\/en.wikipedia.org\/wiki\/Sustainable_business"]}],"wordCount":1142,"keywords":["Brick and Mortar","Future of Retail","Future of Shopping","Retail","Retail Trends","Shopping"],"articleBody":"Retail stores are beginning to look like plastic fortresses, and the trend isn\u2019t likely to wane anytime soon, thanks to retail shrinkage.Bruised by a shoplifting problem that cost the industry $94.5 billion in 2021, drugstores such as CVS and Walgreens as well as megastores like Walmart and Kroeger have been putting everything from batteries and booze to makeup, baby formula, razor blades, and cleansers in locked plastic cabinets.One retailer even went so far as to say it was considering \u201cputting everything behind showcases to ensure the products are there for customers who want to buy it.\u201dSuch measures \u2013 on top of potential store closures in more theft-plagued cities like Los Angeles, San Francisco\/Oakland, New York, Houston, and Miami \u2013 could curb what the industry calls retail shrinkage. But industry executives also know they need to strike a delicate balance between security and customer experience.So far, they aren\u2019t succeeding. Consumers, many of whom already feel in-store experiences are worse than they were before the pandemic, don’t enjoy hunting down clerks in staffing-challenged stores to retrieve items they’re interested in. Indeed, it can tarnish how people feel about the experience and cause them to consider other options, like buying from a competitor or online.\u201cIt\u2019s poisonous to our perception of the store,\u201d says Paco Underhill, founder of Envirosell, a behavioral research and consulting firm.      Self-checkout at the grocery store: Reality bites                Self-checkout machines are everywhere, but can be frustrating for shoppers and a shoplifting nightmare for retailers.      Battling shrinkage: Security vs. convenienceTo be sure, annoyance with the security practice could be reducing overall sales by 15% to 25%, Joe Budano, CEO of Indyme, a technology company selling retail security devices, recently told Axios.That\u2019s because customers know they don’t have to suffer such inconvenience. Most head to a physical store because they enjoy the experience of checking out and comparing physical products before purchasing them. If that’s disrupted or taken away, many will likely throw up their hands, walk out, and spend their money in less garrisoned outlets or online.For their part, retailers understand this risk and have been trying not to overreact. But they\u2019ve also been between a rock and a hard place.Retail shrinkage has always been an issue. But at the tail end of the pandemic, few stores were fully staffed, meaning there weren\u2019t enough eyes watching small and easy-to-grab items. Between petty theft and a 26.5% spike in organized retail crime (ORC) activity in 2021, retailers say shoplifting has been soaring.Indeed, the average retailer is losing 2% to 3% of sales to shoplifting now compared to 0.7% to 1% before the pandemic, Burt Flickinger, managing director of retail consultancy Strategic Resource Group, told CNN.      Pedal to the metal: Retail fulfillment trends driving fast delivery                Retail fulfillment is ramping up to boost CX with new warehouses, micro-distribution centers, and tapping rideshare platforms.      Walgreens has second thoughts on stepped-up securityNaturally, those big numbers \u2013 against the backdrop of a rise in organized crime \u2013 alarmed retailers like Walgreens, which saw a 52% jump in shrink in 2020 and 2021, causing it to lock up product, deploy security guards, and close stores.Now, though, the drugstore chain is feeling as if it might have gone too far and is considering simply partnering more with local law enforcement to address the problem.\u201cMaybe we cried too much last year,\u201d Walgreens CFO James Kehoe said during an earnings call in January. \u201cWe probably put in too much, and we might step back (on security).\u201dSome retailers are using less obvious methods of combatting theft. For example, Walmart reportedly equips employees at self-checkout with devices that allow them to see what customers are buying and pause the transaction if they spot anything suspicious. But from the customer’s perspective, it simply looks like a technical error with the self-checkout machine.      Data-driven decision-making: 3 ways to drive retail resilience                Retailers can improve CX and strengthen the bottom line by taking a fresh approach to data.      3 ways retailers can battle retail shrinkage, sans locksStepping back won\u2019t make shrinkage disappear, however, which means retailers still need to make several changes to deter shoplifting in ways that don\u2019t make customer feel under siege.Here are three steps retailers can take to combat retail shrinkage:\u00a0Deploy modern technologyRemap the storeSupport legislationTechnology such as security tags, sensors at gates, and cameras are par for the course. They should be placed as inconspicuously as possible to minimize making customers feel watched. Also keep an eye out for emerging technological solutions, such as embedding RFID chips in high-ticket items like power tools. The idea is that, if the store doesn\u2019t activate those items upon purchase, they won\u2019t work \u2013 so stealing them gets thieves nowhere. Lowe\u2019s hardware is reportedly testing such a system.Artificial intelligence (AI) and video analytics could also soon prove useful in scouring video feeds to look for patterns of suspicious behavior that could indicate a crime is about to occur (like Minority Report but without the creepiness).Remap the store: Envirosell’s Underhill, who has studied shrinkage for decades, suggests making a few modest changes to how stores operate.Since most retailers have data on which items thieves are targeting the most, retailers should relocate these from difficult-to-watch parts of stores to more heavily trafficked, visible locations, he says.Also, look for ways to subliminally tell shoplifters they\u2019re being watched. One way to do this is to make periodic PA announcements in a very friendly voice saying things like, \u201csecurity to section eight please, security to section eight.\u201d Another is to post signs saying the store has camera systems or shelving technology tracking product movement.\u201cThese are ways of addressing the problem that cost almost no money,\u201d Underhill says. \u201cWhatever you do, though, you want to make sure it helps you still be a very friendly store.”Legislation: Retailers can also get behind legislation as it comes along to make shoplifting less attractive to crime organizations. For example, the recently enacted Integrity, Notification, and Fairness in Online Retail Marketplaces (INFORM) Consumers Act\u00a0requires online marketplaces to verify the identities of large third-party sellers.In essence, the law seeks to make it harder for organized crime to move their loot online. More such legislation is likely to emerge as retail theft continues.      The WOW factor: How retailers can build customer relationships that last                Retailers can no longer rely on product pitches to win customers. Find out how to deliver personalized experiences that build loyalty and drive growth.      Don’t turn off shoppersWhatever steps retailers take to head off retail shrinkage, it\u2019s critical to avoid turning physical stores into fortresses.Consumers have alternatives, and they will take them if in-store experiences remain poor.  Shifting retail landscapes.Varying buying behavior.What makes people click “buy”?We’ve got the answers HERE.\u00a0"},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"2023","item":"https:\/\/www.the-future-of-commerce.com\/2023\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"03","item":"https:\/\/www.the-future-of-commerce.com\/2023\/\/03\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"14","item":"https:\/\/www.the-future-of-commerce.com\/2023\/\/03\/\/14\/#breadcrumbitem"},{"@type":"ListItem","position":4,"name":"Retail shrinkage: Are locks the best way to stop shoplifting?","item":"https:\/\/www.the-future-of-commerce.com\/2023\/03\/14\/retail-shrinkage-2023\/#breadcrumbitem"}]}]