Retail loss can amount to a significant sum of money if left unchecked, as estimates put shrinkage at around 2% of annual revenue lost. Measuring and scoping retail loss is the first step in reducing this.
The most common items that make up loss are small, expensive items such as IT equipment, apparel, beauty products and meat and cheese. This means measuring the loss of such items can be difficult as thieves are well practised and often know the system.
The Self-Checkout Dilemma
Self-checkouts pose a significant dilemma to retail stores, they increase the loss rate by 43%, when compared with stores that have no self-service features. However, they contribute greatly to increasing the seamless, frictionless experience that retailers strive to achieve.
To operate this technology retailers must rely fully on the good nature of shoppers, as until recently there was no way to effectively track loss through self-service machines.
Harks Loss Prevention solution integrates with fixed cameras on self-service machines to track when inventory is not scanned and placed straight into the bagging area, or trolley. It can recognise individual products and even lock checkouts when the correct procedure is not followed when it predicts loss is about to occur.
Loss Prevention Solutions
To correctly measure retail loss, establishments must first identify the methods by which loss happens. To do this, they must conduct internal audits on staff to ensure there are no nefarious intentions, as studies have shown that internal theft accounts for up to 28% of loss. They also have to learn what the exact quantity of inventory is at any possible moment, to understand what is missing and where loss is taking place. The common method of achieving this is stock takes, often an inaccurate procedure which takes hours.
Harks Loss Prevention solution is the step forward for retailers. It can catalogue each individual item a store possesses and use high definition video surveillance equipment to track items from pick up, to sale or loss. It then corresponds with the inventory management software to notify buyers and managers of their loss.
Although the solution doesn’t solely rely on video recognition from self-service machines, they can also be integrated into existing store cameras. When active, the solution connects via an internet connection to a monitoring platform that uses AI and Machine Learning to identify theft, over time it can precisely determine when loss happens. Allowing retailers to put preventative measures in place and action meaningful changes.
Other solutions include Radio Frequency ID (RFID), which constitutes an electronic tag that sets off alarms to prevent loss. These require security to act on signals sent by the device, driving the cost of these solutions up. They are traditionally used for alcohol but have been integrated to be used in meats, garments and electronics. With advancements in the technology allowing them to fit seamlessly into products.
Why Measure Retail Shrinkage?
Retail shrinkage is a problem that retailers have been constantly blighted within recent years, measuring loss can help ease the financial deficit of £11bn that the UK faces each year.
When measuring loss, retailers gain the ability to track changes to their inventory. The use of AI serves to do this in real-time and at a much higher degree of accuracy.
For example, a store notices they are down 10 sirloin steaks, and are up 10 bunches of bananas, it would be fair to assume that customers were putting through the expensive luxury item as a bunch of bananas on self-checkouts, due to the similarity in weight. The retailer can therefore use Loss Prevention tools to spot when steaks are passing through unregistered. This can then help them make informed decisions about how best to protect expensive items that are contributing to loss.
Get in touch with our team to find out how our Loss Prevention solution can help reduce the financial loss to your business.