The new approach retailers are taking to curb organized retail crime
Tony D’Onofrio, president, Sensormatic Solutions
Losses due to theft and fraud have skyrocketed in recent years, hitting a record $112 billion in 2022, and the frequency of organized retail crime (ORC) events is rising rapidly. As a result, many leaders have added physical and visual deterrents, like locked cases and alarm tags, to sales floors to strengthen their loss prevention (LP) programs. Others have invested in new tech solutions that promise to stop shrink in its tracks, with over half (58%) of retailers saying they plan to increase investments in IT in the coming year.
Despite these efforts, ORC continues to cut into retailers’ bottom lines. Not only are criminals getting more sophisticated and less concerned about the repercussions of retail theft, but the very deterrents designed to stop them can prevent well-intentioned shoppers from making purchases. No matter how retailers look at it, they need new strategies to counter ORC’s effects.
While rising crime is the challenge that retailers must overcome, when designing LP strategies, the focus is on the drivers of shrinkage at work in their stores — whether they’re related to security gaps, lack of insight or lack of consequences. That means retailers need a multi-pronged approach that addresses the three key pillars of successful LP: next-gen tech, partnerships and legal frameworks.
Adopting next-gen tech and data helps retailers identify patterns and insights
Though half of retailers now report using descriptive insights from analytics systems to gain an understanding of losses, few are going beyond that. Only 12% of retailers say they leverage predictive analytics for LP, and just 7% take advantage of prescriptive insights.
Advanced algorithms can turn radio-frequency identification (RFID) data, AI-enabled camera feeds, smart exits and other systems into solutions that address the problem from the source. These systems use information about how merchandise moves and areas that might benefit from more stringent security measures to produce predictive and prescriptive insights unique to each retailer, region and store location. This guides more precise, effective decision-making led by desired outcomes and operational understanding.
Getting the right outcomes may involve a combination of hardware deployments, alarms, labor adjustments, changes to floor layouts or investments in next-generation systems that help associates stay two steps ahead of criminals. AI and machine learning tools, for example, can monitor video feeds and exit data to identify patterns, suspicious activity and areas that might need attention.
They can also help teams keep up with changing trends to support continual improvement and illustrate what has worked in the past and what hasn’t. And because no aspect of a retail enterprise exists in a vacuum, retailers may also want to use other data sets to fine-tune their results.
For example, shopper behavior and sentiment data, labor information and point-of-sale logs may all correlate with LP-centered metrics, highlighting opportunities retailers might not have otherwise seen. However, third-party data also has a part to play. Developing strategic partnerships with government groups, industry organizations and solution providers can help refine store strategies and change the broader landscape.
How retailers work with law enforcement to understand the scope of ORC
Partnerships with law enforcement and legislators can help retailers cement the final building block: legal frameworks. Nearly all retailers included in the National Retail Federation’s 2023 Retail Security survey (93%) support federal ORC legislation to increase penalties, address interstate crimes and standardize penalties. Working alongside law enforcement may help the industry get closer to legislation of this nature by helping governing bodies get a better sense of the breadth of the problem.
Developing legal frameworks and processes for working alongside law enforcement may also help deter criminals, as the perceived lack of consequences for shoplifters and organized groups has no doubt encouraged criminals. Using evidence packages gathered by AI-enabled systems can help law enforcement track down perpetrators and recover lost goods, while RFID tagging can help officers return items to their origins.
Tech, partnerships and the legal frameworks a business pursues are up to its leaders and should be guided by their operational and performance data. As with any part of a business, what works for one will only sometimes work for another. However, adopting next-generation tech that can allow retailers to access predictive and prescriptive insights, partnering with organizations to gain additional data for more accurate results and working with law enforcement to push legislation forward for the industry will not only firm up individual businesses’ protections but may move the needle on the issue at large.
Sponsored by Sensormatic Solutions