Study Takes A Look At Use Of Electronic Article Surveillance, Business Intelligence In Retail Environment

  • Jan 14, 2009

A new study "Loss Prevention and Beyond: Survival of the Fittest," sponsored by ADT's Sensormatic Retail Solutions, has uncovered some big differences between top retail performers -- those whose sales growth outpace the three percent industry average -- and retailers below that average.

One is that top performers use business intelligence tools like returns and void management technologies 46 percent more than underperformers. Another is that nearly three times the number of top performing retailers use Electronic Article Surveillance (EAS) technology as compared to underperformers.

"Greater usage of business intelligence tools has improved the efficiency of our other loss prevention technologies and delivered a strong return on investment," said David George, vice president of Asset Protection for Harris Teeter. "Business intelligence solutions such as Sensormatic Analytics tied to our CCTV systems have enabled our operators and loss prevention teams to quickly identify and address both operational and loss prevention issues in each of our stores and across the entire chain. The end result is two-fold: improved shrink reduction and better performing store operations."

The online survey was conducted by Retail Systems Research (RSR) during September and October, including respondents from retailers with stores around the world. Among its findings:

  • Employee theft of goods and cash are top retailer concerns, with respondents ranking internal theft as their number one source of shrinkage, shoplifting as second, and internal theft of cash as third.
  • While almost half of the top performers use EAS to control shrink, only 17 percent of underperformers use EAS -- despite all respondents ranking shoplifting as their second largest source of shrink.
  • Seventy-one percent of all respondents said they frequently use exception analysis reporting, a key business intelligence tool, as a critical technology in their loss prevention arsenal.
  • Fifty-three percent of all respondents cite better business intelligence as needed to make effective use of the vast amounts of loss prevention data that exists, especially from video surveillance systems.

According to the report, this discovery was consistent with many other findings that top performers don't merely do the same things better compared to underperformers, but they also tend to do different things: "(They) think differently, plan differently and respond differently."

In another example, the study found that while 39 percent of top performers audit employees' adjustments to the quantity of goods on hand, only nine percent of underperformers do the same. The report concluded: "Even as these retailers are convinced their employees are stealing from them, they allow those employees to make adjustments to quantities on hand without even verifying what happened to the merchandise."

"In tough economic times, shrink continues to rise," said Paula Rosenblum, RSR's managing director and widely recognized as one of the top analysts in the retail industry. "With the slowing economy many retailers have cut back on staff and now will be relying on technology to help control theft. Smart, winning retailers know the best way to maximize profitability and improve shrink is to leverage existing assets and improve store intelligence."

"This study offers important insights into the difficult challenges facing retailers today," said Gary Chan, vice president of retail Security for ADT Security, Asia Pacific. "In sponsoring the RSR study, we want to help educate retailers about how other retailers are using advanced, integrated technologies to best support their loss prevention efforts as they continue to thrive and weather the economic storm."

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