Grocery Headquarters: Why is it important for supermarkets to invest in loss prevention now?
John French: The answer to this question begins with the recognition that grocery and other retailers are not going to be able to attract new customer traffic in this economic environment and they’re not going to be able to count on more spending per customer visit. That leaves the remaining option of getting more out of current customer volume and it seems to me that loss prevention is the only lever that’s immediately available to improve the bottom line. An investment in loss prevention may be seen as a response to crisis, but it’s also an investment in the store’s future. What retailers do now, during this downturn, will likely determine the next leaders coming out of this economic cycle.
Is there any low-hanging fruit that operators can target to reduce shoplifting?
The most effective approach is to address current known losses and there are a number of technologies and suppliers offering to help do that. We know that store employees are involved, to some degree, in sweethearting via the register and on the bottom of the basket. So deploying a video, or software approach, or even employee training can quickly have some impact on this category of shrink.
Another area where there can be an almost immediate impact is with active RF technology that inhibits shoplifting and basically sends individual shoplifters and organized retail crime rings to competing stores.
What is push-out theft and how does it impact the typical supermarket?
Push-out theft is where a criminal or ordinary customer loads a shopping cart with a quantity of goods and then rolls right out the front door without paying. Retailers who’ve addressed this problem have seen recoveries in the range of $500 to $1,000 per week and from 50 up to 100 basis points in shrink reduction from stopping this kind of theft. That equates to 33% to 60% of total shoplifting in a typical supermarket.
What return on investment can a supermarket operator expect from the latest loss prevention technology?
An investment in technology that addresses bottom of the basket losses might be recouped in as little as six months. Push-out theft prevention systems can have a payback of even less than six months.
What’s the next generation of loss prevention technology?
The next generation is what I characterize as automated and self-managed. For example, push-out prevention is designed to stop shoplifters at the front door, automatically, in real time and without intervention by store personnel. This kind of solution is enabled by new network, wireless and software applications, coupled with the Internet. The systems are silent and invisible for good customers, but they intervene directly in shoplifting activities. And because they drive the perpetrators away, they contribute to long-term improvement in profitability and a safer store environment. As I see it, these new technologies are allowing us to move beyond the era where we’re given pictures or video of “bad events” that we then have to track down. In my mind, our goal is to contribute to shrink reduction and profitability without adding to the burdens of store operations and loss prevention personnel.