Shrink Visibility: Integrating RFID and Loss Prevention 

Never in history has the brick and mortar retail industry been faced with such an array of challenges than it does today. 

The dawn of the Internet and web-enabled mobile devices has resulted in savvy shoppers who, lured by attractive prices, often favor online shopping over purchasing in-store. Combine this phenomenon with skyrocketing rental and labour costs, and you get a retailer which has to do everything within its power to stay afloat and remain profitable.

One major factor that can make or break retailers' bottom lines is “shrink”, which refers to shortfalls in physical inventory compared to information contained in the retailer's recording system. 

Shrink is expensive and is on the rise. According to the 2014 Global retail theft barometer, shrink in Asia Pacific had increased over the previous year to hit US$37.6 billion, accounting for 1.28% of the region's total sales. 

Curbing shrink would go a long way toward helping retailers maximise profitability. Many retailers have attempted to do so by solely deploying loss prevention technologies, but face a variety of obstacles. 

For starters, the definition of “shrink” itself is ambiguous. Financial losses are often tracked at the category level instead of individual events at the SKU level. Figures attributed to shrink tend to lump in losses incurred from shoplifting, internal theft and Organized Retail Crime, with receiving miscounts and vendor errors lying outside the realm of the loss prevention department's responsibility. As such, retailers are often left with an inaccurate picture around the underlying causes of shrink. 

Technologies can, however, be harnessed to overcome such challenges. With the right combination of technologies deployed, retailers can achieve what is known as “shrink visibility”, which provides real-time analysis of what, when and how specific products go missing. Shrink Visibility improves Loss Prevention effectiveness, and simultaneously corrects errors and gaps in Inventory Visibility. 

One technology that plays an integral role toward achieving “shrink visibility” is Radio Frequency Identification (RFID). The integration of item-level RFID information and loss prevention data from Electronic Article Surveillance (EAS) and video surveillance will present a complete picture of loss events at the SKU level and in full context – at the moment they occur. Armed with such valuable information, retailers can take swift, actionable steps to cut losses and improve store operations, which will ultimately increase profitability. 

In this issue, learn how Macy's employed Tyco's RFID-based Display Execution solution to drive inventory visibility and sales. Also read about how progressive retailers are deploying RFID technology as a foundation to enhance item level visibility and loss prevention effectiveness. 

We hope the information contained will help you find the best solution in your bid toward increasing profitability.

Store Intelligence. Retail Excellence.