Increasing profitability in an ever-changing retail environment
- By Wayne Jared
- Dec 01, 2012
It is estimated that 30 to 40 percent of retail merchandise shrinkage
can be attributed to shoplifting and theft, costing retailers as much
as $15 billion annually. In a challenging, ever-changing retail environment,
it’s more important than ever for retailers to find innovative
solutions to tackle enormous margin-eaters, like theft, in order to
create operational efficiencies and protect their bottom line.
Take a Proactive Approach to Loss Prevention
Loss prevention professionals play a vital role in the profitability and
success of their retail organizations by protecting company assets,
minimizing and preventing merchandise shrinkage, reducing fraud
and preventing theft. Loss prevention teams have access to powerful
tools that enable them to proactively prevent loss before it happens
and have an even greater impact on company success and profits.
Retailers and loss prevention teams who take a holistic view of
business operations can quickly detect facility vulnerabilities, prevent
product spoilage and waste and identify fraudulent transactions and
errors. They can aggressively identify vulnerable merchandise displays
and entrances and exits that may be enticing to thieves and then recommend
changes to immediately reduce risk of theft. Leveraging the
power of video and data integration makes all of the above opportunities
not only possible but affordable and relatively simple to implement.
Identifying Theft in Real Time
Return on investment for loss prevention solutions relies on the ability
to detect potential fraudulent transactions as they happen and
stop theft before it happens, or to successfully investigate the crime
after the fact.
Mid-sized retail businesses, including grocery and convenience
stores and sports bars with multiple transaction points, have to manage
inventory, shift changes and personnel, which also may mean
more shrinkage risk. Oftentimes, retail managers don’t reconcile their
transactions until the end of day, only to discover an increase by 10 to
15 percent in exception-based transactions such as returns, refunds,
no sales or voids. At that point, how can these businesses ensure that
there were no fraudulent transactions? A better way for retail managers
to monitor transactions and suspicious activity is to generate
real-time notifications of events directly to their PC or mobile device.
What if they had the ability to be notified when a fraudulent exception
transaction happened in their store? Better yet, what if they had
all the information and the video in reference to the transaction to access
immediately, and had the power to effectively handle matters of
shrinkage and stop theft in the act before cash could get out the door
undetected? Video and data intelligence solutions that offer a powerful
notification engine empower retailers to prevent theft, in real time.
Harness Business Intelligence
to Increase Profitability
The convergence of disparate technologies provides retailers and
loss prevention teams with some of the most powerful business intelligence
tools in the company. Combining raw video, data from
back-office systems and video analytics to gain a visually integrated
dashboard of their business can provide an accurate forensic view of
business performance. Managers already have the equipment in place
to observe shoppers and employees, and because LP teams monitor
what happens at the checkout, the same data can be leveraged to bolster
operations, improve customer loyalty, deter theft, protect the bottom
line and increase top-line revenue.
Retail managers and loss prevention teams can use the power of
video and data combined to confidently tell the complete story of
what happened in their stores. Until recently, the surveillance cameras
used for loss prevention were simple recording devices and were
unable to provide an intelligent analysis of events in a retail setting.
Combining data and video intelligence provides retailers with the
ability to detect whether a certain event is ordinary or significant, verify
the event with video for validation and prevent undesired activity.
A great example is the integration of transactional data from a
point-of-sale device and video with analytics enabled. A fully integrated
video and data management system equipped with video-enhanced
intelligence software offers powerful data mining and filter
query capabilities that allow retailers to identify potential fraudulent
exception transactions in real time. With a single click, the captured
video can be accessed with the exact time of the event in question for
verification and validation. But this is just the tip of the iceberg.
Integrated video and POS data allow retail managers to gain
counts of store traffic, service metrics for registers, queue lines or
service point efficiencies, and the ability to accurately monitor store
conversion rates. Business intelligence platforms capture and crunch
data, providing the ability to analyze transactions, run reports and
build optimization models. This empowers retailers with the necessary
tools to identify events and trends as they happen, improving
loss prevention and asset protection and negating the need to spend
time on recapturing the assets. Real-time visualization dashboards
that communicate key performance data allow retailers and business
managers to identify poor customer experiences, fraudulent transactions,
transactional errors and inefficient operations.
Create Efficiencies to Protect the Bottom Line
In addition to tackling merchandise shrinkage and theft and using
business intelligence to increase profitability, creating efficiencies in
operations can further impact a retailer’s profits and bottom line. For example, smaller retailers, like a boutique
or specialty store, often wear many
hats in the operation and management of
day-to-day business. By reducing time spent
in back-office operations like shipping and
receiving and allowing for more time with
customers and front-end operations, managers
can create operational efficiencies that
bring value to their businesses.
For example, retail managers can receive
an alert or email notification to their smartphone
when a shipment arrives at the back
door. They can access the data regarding
that event and check to see if it truly is UPS,
FedEx or another regular delivery company.
Then, from their mobile phone, they can tap
into the video to ensure that there are no issues
with the delivery, without ever having to
leave the front of the store. This type of efficiency
ultimately increases the bottom line.
Employee behavior affects customer experience
and also has a dramatic effect on
the bottom line. In many cases, as much as 80
percent of loss is attributable to internal theft
or employee error. Providing retailers with
the ability to better identify problem employees,
as well as improve the performance of
honest employees, can have a dramatic effect
on the profitability of the organization.
By analyzing employee behavior and using
video and store data, organizations can
create staffing and additional operational efficiencies
to improve employee performance
and prevent loss.
Interestingly, the leading indicator of
satisfied customers is satisfied employees. A
number of retail organizations have begun
using video and data mining information to
give employees the tools they need to succeed,
such as real-time coaching and performance
feedback. By empowering employees
to be more successful in their work, retailers
are reducing loss, improving employee
morale and operations, and improving the
customer experience—all of which improve
profitability and company success.
Retail managers and loss prevention teams
have the power to take control. The above scenarios
are not of a future, ideal world; they are
possible right now and are even in use today.
By using real-time video and enhanced business
intelligence, POS and data integration,
proactively tackling loss prevention and creating
efficiencies, retailers can effectively reduce
theft and increase profits, regardless of the
size of their businesses.
This article originally appeared in the December 2012 issue of Security Today.