Retail shrink results in billions of dollars in losses every year. In North America and Europe, the average shrink rate for the 2018 fiscal year was 1.38%. For a store with sales of $5,000,000 annually, the average loss was $70,200, but, for many, it went well over $200,000. To get a sense of the cost, the National Retail Federation (NRF) estimates that retailers lost more than $50.6 billion that year.
What causes retail shrink?
Most commonly, retail shrink is the result of shoplifting, internal theft, paperwork errors, or vendor fraud. To combat this, retailers are collecting more data with their physical security systems than ever before. While more data can lead to greater Loss Prevention (LP), the reality for many is that it can be too much to sort through.
On top of that, retailers of every size are also adding more single-purpose tools to their systems with the goal of identifying theft-related trends. This has led to LP investigators jumping between multiple applications to identify potential problems and doing a lot more manual searching as part of their process. Without the right tools, investigators can be overwhelmed with information.
An inability to prioritize can lead to greater losses
The truth is, retail investigators cannot catch every suspect. They need to find effective ways to prioritize suspicious transactions and identify which ones generate the greatest losses in order to protect the most profit.
In the past, the labor-intensive process of detecting suspicious activity involved exporting a list of transactions from a POS system and then manually finding the associated video. This meant that investigators had to find the right cameras and key in time codes to determine whether certain transactions should be flagged for investigation. All too often, there were simply too many transactions to review to know where to prioritize efforts.
Is there a better way to reduce shrinkage?
Security Center Transaction Finder is an embedded point of sale (POS) and exception-based reporting (EBR) video tool that helps retail teams speed up investigations by easily detecting suspicious transactions. To do this, it unifies POS data, video cameras, and analytics into one intuitive interface.
This means that, instead of working with a variety of tools, investigators can now search for suspicious behavior and immediately review the corresponding video for more context to determine if further investigation is needed, all in one interface.
The tool allows investigators to filter down to transactions of interest based on search criteria. It enables them to search according to any relevant criteria, including date, time, employee name, SKU, as well as non-transactional information, such as whether motion is detected on the customer side of the register. Then, it scans for transactions that match the selected criteria and locates video alongside the itemized receipts associated with those transactions.
This helps investigators quickly identify suspicious trends or transactions and flag them for further investigation. Finally, Transaction Finder also allows users to share reports with other stakeholders for easier collaboration.
Shifting to frictionless shopping creates new concerns
The retail landscape is changing. To stay competitive, many retailers are moving toward a frictionless shopping experience. But, implementing self-checkout (SCO) comes with a set of new and unique challenges, including the ability to ensure that customers are actually scanning their items.
While an SCO system can improve the customer experience, it often comes at a cost to retailers. Research conducted at the University of Leicester in the UK found that retailers saw an immediate and significant 30% increase in shrink after rolling out their SCO systems.
To mitigate risks and keep shrink down, retailers need greater visibility around their SCO systems. Because Transaction Finder allows investigators to search by a variety of criteria, it helps identify suspicious activity at SCOs.
For example, by comparing the length of a transaction against the number of items being checked out, it can alert personnel to a possible incident where a customer is working too quickly to be scanning all their items. Then, by associating video, this tool gives investigators a complete picture of each suspicious transaction and helps them prioritize their investigations.
The effort required to support loss prevention and reduce shrink is growing. Retailers everywhere need tools that work with them in clear and effective ways. Security Center Transaction Finder is a single application that unifies data streams to help investigators identify suspicious transactions faster and close cases sooner.