My initial experience at Next Plc in 2013 wasn’t massively different in terms of product loss, we had very large product ranges, but the most targeted items were relatively small in comparison – the top 20 loss lines accounted for 80% of total loss. We had a massive advantage though at Next, with the implementation of UID – Unique Identification.   

Created by retail & IT geniuses and launched in 2010, UID was an in-house built RFID “lite” solution. The cost of item level, disposable RFID tags at that time was prohibitive, so Next developed their own unique product identifier. For clothing products there was a sewn-in care label that carried a unique 15-digit code. 

By scanning this code, you could check the complete life cycle of that specific product, from manufacture, to store, to sale and return / refund. This initiative delivered over £1M reduction in refund fraud for over 5 consecutive years.

Full, complimentary RFID was implemented in Next in 2015 to further improve stock file accuracy, allow for fast, bulk product scanning and to support fast online order supply via stores. 

The range of products stolen by thieves at Next did extend across wider product groups, including bedding, curtains, lighting, cosmetics, and fragrance as we improved the security on perennial theft targets, but with good data we could take action to reduce these losses. 

The key point of these 2 detailed examples is that accurate data is critical. Many retailers have the skills, experience, judgement, and business support to reduce losses significantly IF you know about them. 

In my 3.5 years consulting, I’ve had the pleasure to work with some great solution providers, lots of market leading retailers and some talented loss prevention professionals. 

One common factor in all the retailers that are delivering below industry accepted shrinkage results, is the accuracy of their stock file data and stock-loss reporting. This can vary from full OMNI channel RFID, or basic, regular on-hands checks in small convenience stores.  

Clichés are that for a reason, they state the obvious, such as “you can’t sell it if it’s been stolen” Very true, but if you don’t know it’s been stolen, how can you take preventative action? 

Relying on stock-loss data from annual or bi-annual stock-takes is simply not going to be enough for retailers to implement measures to reverse the fast-growing rise in customer theft. 

There will be exceptions (large pharmacies for example, with lots of hard to protect, easily pocketable & easy to re-sell products) but for many retailers, if you can keep losses low across your highest selling product lines, it’s a great base for low shrink delivery. 

So, what would be the core elements of a product driven loss review, if I were advising a retail business? 

• Conduct a full-end-to-end product life-cycle risk review of 5 x high loss product groups. From in-bound checks to warehouse handling, processing & shipping, transport, store receipt, store pricing etc etc…. (Unidentified losses in the supply chain can cause significant inaccuracy in store results, often resulting in expensive store investments that aren’t necessary)
• Choose 5 of your highest loss product groups and implement robust daily checks of these products. Commence this at store level, accurately recording the stock levels in the stockroom & shop floor, including sales & returns at least 4 times per day.  

Basic, but you may be amazed at what you discover………… 

• Prevent bulk replenishment of these products without a check to confirm sales. 

Also, based on my experience as a Head of Loss Prevention & Consultant, what would I be doing to react to the increasing levels of customer theft.

• As a priority, build the business case for a thorough feasibility review of implementing RFID in your business. (There is lots of advice & case studies to assist)
• Ensure you are maximising any investment in store-based security or loss prevention resource. Ensure there is absolute clarity about their purpose, role and measurables. So often, 3^rd party resource is employed as a reaction to a single incident and then left in situ, without review of the benefits. (A blog specifically on this subject will be available soon) 
• Review your CCTV policy and consider exactly what you are getting for the investment. Are you only getting benefits from retrospective incident review, rather than maximising your investment. AI technology, utilising existing infrastructure is now delivering amazing results, replacing the human eye by automatically alerting on a range of genuine & suspicious customer behaviours. The most effective of these is accurate, real-time reporting of product concealment.
• Review your product protection strategy, ensuring that it is effective & proportional to the product risk – putting spider tags around cheese is not the action of a business enabler in my view.
• Maximise the opportunity for collaboration. There are effective business crime reduction partnerships in most towns & cities that can deliver great advice & practical support to retailers.
• If you know that self-scan theft is the largest contributor to stock-loss, talk to the leading solution providers in this area and ask for case studies of achievements in similar size stores. There are very effective SCO theft detection solutions, but they haven’t necessarily scaled down to be cost effective outside of multi-lane, big box retail yet. Working with an AI powered, small provider may deliver a more cost effective, bespoke solution….  
• Finally, don’t be discouraged from innovation by unjustified challenges around IT Security, Privacy or Data Protection. Take time to fully understand any obstacles so that you can knowledgeably challenge any blockers to innovation. Solution providers will also be able to assist in these areas and provide documentation and case studies of similar business deployments. 

Thanks for reading, if myself or my Associate Director, Corin Dennison can assist you in any way in reducing shrink & its impact on your staff & customers, please get in touch.