Shrink Busters: How IT Is Helping Retailers Fight Theft
Losses from shrink (lost, stolen or damaged merchandise) and transaction fraud continue to haunt U.S. retailers dealing with sluggish sales. Can new tools and real-time business intelligence help IT help an industry in trouble?
The Aberdeen research also showed that 30 percent of retailers responding to the survey reported between 2 percent to 6 percent of all its transactions were invalid, meaning they were unauthorized and fraudulent customer transactions. "This indicates," writes Sahir Anand, a senior retail analyst, "that retailers may be faced with high transaction-fraud incidence due to organized retail crime, data loss and dishonest employees."
How IT Can Help
Retailers know they have a shrinkage problem even though it's sometimes so hard to see it: 93 percent of respondents to the RSR survey say that during the past two years shrink has become more important or is equally important as any other retail priority. Retailers have also started using technology tools, such as returns and void management programs, video surveillance and sales audit systems, to combat the loss problem, states the RSR report.
"But for a variety of reasons," writes Rosenblum, "these tools have netted out to marginal long-term improvements."
Given the complexity and scale of the shrink problem, what technology tools can offer meaningful help in decreasing shrink?
Because shrink is at its core a "people problem," retail security experts say that IT-based educational training systems can complement existing loss-prevention awareness programs. "Training is the first step towards alleviating risks associated with internal and external threats both from a merchandise and transaction standpoint," writes Anand in the Aberdeen report.
Retailers should develop a comprehensive Internet-based module for training so that progress can be monitored and tracked, and new loss-prevention techniques can be added as threats arise, Aberdeen advises. That way, executives will be able to verify that every store and headquarters employee is 100 percent trained on loss prevention, Anand notes.
Computer-based training, such as videos that show the "tricks of the trade" of merchandise thieves, or that alert employees to the downside of doing such things as keeping keys to locked cabinets on the shelf above them, has also proven successful, RSR's Rosenblum says.
