According to the recently published 2016 Retail Holiday Season Global Forecast, retailers will experience both the heaviest sales volumes and the weakest performances (specific to margin rate) during this holiday season. As such, the National Retail Federation (NRF) predicts retail sales in November and December (excluding autos, gas, and restaurants) will increase 3.6 percent over last year, which translates to a cloudy forecast specific to margins for this most crucial sales quarter of the year.
The forecast, which was underwritten by an independent grant from Checkpoint Systems, employs data from last year’s Global Retail Theft Barometer (GRTB) study and public financial data to assess applicable financial metrics performance based on reported earnings.
Why Profitability Strains?
Strains on profitability manifest during the holiday season largely because of increased shrink and theft from internal sources (primarily employee theft and other sales reducing activities, or SRAs) and external factors (shoplifting and organized retail crime).
These are exacerbated during the season when retailers typically build up inventory levels to accommodate holiday shoppers. In addition, increased store foot traffic correlates with more shoplifting of high-risk items.
Spotlight on Report Findings
Some 37 percent of the annual shrink loss for retailers is expected to occur in only three months, October through December. In fact, the US retail shrink rate for this holiday season is expected to be almost double that of the prior two quarters.
The cost-loss burden for the retailers surveyed is expected to be $132 per person, of which $50 (about twice as much as in other calendar quarters) is expected to be incurred in this holiday season. These increases in losses place an enormous burden on retailers and, ultimately, on honest consumers who pay for it in higher prices.
Apparel, children’s toys, electronics, and electronic accessories are expected to be the most stolen items this holiday season.
Apparel. The fashion industry is one of the fastest-moving consumer-driven businesses, and apparel retailer chains and department stores need to have flexible end-to-end solutions like Checkpoint EAS and RFID solutions to support high-impact branding, secure their merchandise, and provide real-time feedback on product availability throughout a complex supply chain.
Electronics. Electronics stores stock highly sought-after and costly merchandise. Checkpoint EAS and high-theft security solutions help protect expensive merchandise that is tempting to shoplifters while providing easy access to shoppers looking to compare models and features.
Drug Stores. Pharmacies and drug stores have a variety of high-risk merchandise, such as razor blades, medications, cosmetics, food, beverages, and electronics. Checkpoint helps these retailers by protecting merchandise while increasing on-shelf availability.
What Can Retailers Do?
Checkpoint Systems provides a full range of solutions to address these and other high-risk merchandise segments during the holiday season, including EAS systems comprised of hardware, consumables, and software; high-theft security solutions; and RFID solutions, including hardware, software, tags and labels, and services and installation support.
Checkpoint’s end-to-end EAS and RFID solutions are complemented by global field service expertise in worldwide implementations, maintenance, and monitoring of solutions.