Retail shrinkage is the destruction of profit margins through the loss of stock. Theft accounts for over £5.5 billion per year. This is hard for national chains to endure, but even harder for small convenience stores to cope with. Many of you will be familiar with the likes of a Nisa Local, Tesco Express or a Spar and will understand the differentiators and how they operate with a more condensed store format. The average weekly profit of a convenience store is around £1,200 for a business that’s open approximately 100 hours per week.
This doesn’t leave much room for shrinkage. Over 950,000 incidents of shoplifting were reported in convenience stores in 2018.
David vs Goliath
Smaller chain stores have unique disadvantages that supermarkets don’t encounter, these make managing loss difficult. Firstly, the largest and most extreme variance would be the chasm of difference between the operating budgets. Supermarkets have dedicated millions of pounds to tackle theft, with much of it being spent on hardware to spot shoplifters and security to counter the actions. Although they are often part of the chain, these smaller convenience stores don’t receive the same level budget dedicated to security, whilst many have cameras implemented, they are more often than not being watched.
Along with the reduced budget, they also have to compete with the larger stores on price and stock range. Their reduced stock list has to be carefully selected and often comes at a premium. This means when stock is taken without purchase, the smaller store suffers a greater loss than the supermarket as they have less stock availability.
Supermarkets naturally have a huge team who work together to reduce shrinkage. Large chains can support such a vast labour structures, whereas a smaller store cannot. This leaves them particularly vulnerable to professional gangs who have been known to enter shops and work together to distract staff while committing theft. An unavoidable loss for a shop with, often, one person at the helm.
‘Sweethearting’ is term that describes a different type of stock shrinkage. It identifies loss events when cashiers attempt to do a nice act, be this allowing the use of invalid coupons or intentional non-scanning of items. This seemingly harmless action is a form of staff theft and contributes towards lost profits all the same as shoplifting. It’s true that smaller shops are less susceptible to this, it is still found in every retail environment and can lead to damaging effects on the businesses bottom line. As retailers have found they must sell 50 of the same product to make up for the 1 that’s not scanned.
The Hark Loss Prevention solution is key to shrinkage reduction. It gives shopkeepers the chance to level the playing field. With this advanced technology, they can spot exactly where loss is taking place and identify trends that allow them to reduce the problem. Examples of others taking advantage of our tool include, retailers spotting certain items of stock being taken more than others, they have then moved these closer to the counter or even put them behind the shopkeeper. These little changes make a huge impact on the P&L sheets of smaller chain stores.
Our solution bypasses the need for huge teams that spot thieves and prevent them stealing stock. It makes use of IP-enabled cameras in self checkouts to track action inside the retail environment including theft, this information is then sent to the secure cloud server where over time AI algorithms learn patterns to the point where it can identify clear trends. Giving retailers the information in real time where theft is about to take place. The advanced solution can track stock from procurement, to the shelf and provides complete visibility to the leak of profits through retail shrinkage.