Retailers have used data analytics for inventory and merchandising management for some time to help make smarter, better operational decisions. Loss prevention, however, has been slower to adopt data analytics to help improve their programs.
As the retail industry has shifted to an “always-on, always open,” shopping world, it’s imperative for loss prevention to keep up with the data-driven trends that influence decision making in inventory, traffic, operations and e-commerce. This is especially true as brick-and-mortar retailers try to compete with e-commerce opponents that don’t have the same issues around protecting merchandise from theft.
Additionally, as retailers work with leaner budgets, CFOs are paying closer attention to shrink and how any impact to it can effect larger company narratives shared with interested stakeholders on earnings calls.
Before analytics, data and valuable insights would go unused. Retailers had a challenging time making proactive decisions because the technology wasn’t available to help collect and analyze the data.
Today, analytics is one of the most vital tools to statistically identify the key factors which highly correlate with loss due to shrink. Collecting data from various sources gives retailers a more holistic perspective of their store activity, traffic patterns, along with a better understanding of the market, and insights into areas of potential loss. Combining these prescriptive insights enables retailers to make informed business decisions based on predictive and meaningful data versus reactive measures to help manage shrink.
For example, retailers can have a more complete view of their store traffic behavior, be able to proactively respond to potential organized retail crime (ORC) threats, and understand how operational decisions impact shrink, including root cause and ways to prevent loss.
Innovative technology is now available enabling loss prevention professionals to seamlessly integrate existing programs by connecting EAS devices to gain real-time insights into potential shrink. Having a comprehensive view through a single, user-friendly dashboard can help loss prevention professionals quickly take note of conditions and needed corrective action.
By compiling data in one place, retailers can understand how a weakness in operations leads to more opportunistic shoplifting across regions, or even identify patterns in organized retail crime (ORC). For example, an ORC map could provide insights into ORC activity in a specific geographic area, taking into account metal-foil and jammer detection alarms. Visibility into similar activity across stores further empowers retailers for proactive versus reactive decision making. With real-time data providing a clear sightline into the larger causes of shrink within operations, retailers can help improve on-floor availability and ultimately increase overall profitability.
Retailers can leverage actionable data, such as assigning financial value of loss events based on specific parameters, to help operations and merchandising realize the potential impact on shrink. Identifying key factors correlated with loss due to shrink helps retailers to analyze and classify locations that are likely to have a high incidence of shrink, which allows them to take better preventive actions in a more cost-effective manner. Via a dashboard, for example, they could see if the number of alarms are trending up or down, along with the total potential dollar loss value the alarms represent. This awareness builds a stronger case to be made to CFOs on how investing in the latest loss prevention solutions and services can impact shrink and bottom line results.
Shrink analytics provides the ability to positively transform the retail industry and loss prevention. By having the right data insights at their fingertips retailers can make the right decisions where and when it counts, including strategies around staffing and training gaps, to help prevent loss events and boost the customer experience. Ultimately, they can dedicate more time and resources to enhance customer service and store performance—their primary objectives—to help reduce shrink, improve sales and optimize staffing.
Learn more about cloud-based services that provide both device management and predictive analytics to manage shrink by viewing the Sensormatic video here.