Tackling Theft

Increasing profitability in an ever-changing retail environment

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.

Take Control

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.

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