Traceability’s Vital Role in a Retail Crisis: Safeguarding Revenues and Brand Equity

There’s no denying that crises are unavoidable. For retailers or any businesses operating in a consumer-facing industry, swift action to address a crisis is not only expected but crucial to ensuring safety, maintaining brand integrity, and safeguarding revenue. For retailers and loss prevention professionals alike, traceability—or the ability to track products from concept to consumption—plays a vital role in retail resiliency. This is especially true for small- and medium-sized businesses (SMBs) that operate on slimmer margins and with fewer staff than big box retailers and are often looking to partner with big box retailers. 

According to the US Small Business Administration, small businesses account for 99.9 percent of US businesses as of 2023, and a recent survey of Shopify merchants revealed that 64 percent are managing operations and loss prevention with outdated business systems. For retailers small and large and their loss prevention professionals, implementing emergency preparedness systems and integrated technologies that allow for traceability can help reduce reaction time in crises, leading to better outcomes for the brand and the bottom line. 

Moreover, effective traceability can help ensure that inventory records are accurate, which is crucial for preventing loss. This accuracy enables better forecasting, ordering, and distribution processes, minimizing the risks of overstocking or stockouts that can lead to potential theft or loss scenarios.

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In the event of a product recall, traceability allows loss prevention professionals and businesses to quickly identify affected products and remove them from circulation. This swift response helps mitigate risks to consumer safety and the company’s reputation. Thus, end-to-end traceability is a critical feature of integrated software systems, such as inventory management platforms, that allow businesses to connect their back-end tech stacks with consumer-facing applications for easily accessible data across the supply chain to post-purchase. 

Leveling the Playing Field for SMBs

Big box retailers have many advantages—from economies of scale to brand recognition to accessibility—but SMBs and their loss prevention professionals who adopt new technologies may find themselves empowered to play in the major leagues. 

In addition to quick action in a crisis, a major benefit of employing technology that enables traceability is that it allows for greater transparency into a brand’s sourcing, production, and distribution processes. Today, many SMBs use transparency for consumer relations, highlighting their commitment to quality, ethically sourced, and sustainable materials that appeal to socially conscious consumers. This can be a key differentiator from their big box counterparts, who are often less willing to share supply chain information. 

SMBs and their loss prevention professionals who bring consumers into the fold with transparency can foster a positive brand image and inspire consumer confidence and trust. According to a recent report from NielsenIQ, 71 percent of consumers consider brand reputation when making a purchase, highlighting the importance of building brand equity to remain competitive. 

Preventing Loss and Protecting Revenues

Retailers of all sizes and their loss prevention teams need to be aware of the potential losses associated with crises that result from compromised products. From destroyed inventory to reductions in revenue, a crisis can be detrimental with ripple effects that long outlast the emergency itself. It’s crucial for loss prevention professionals to implement technologies that help them ensure supply chain integrity, identify compromised products, and execute a recall quickly and efficiently. In fact, the 2024 Sedgwick’s Recall Index found that the number of recalled products reached a five-year high in 2023, and the consumer products industry set a seven-year annual high with more than 135 million units impacted. With robust preparedness measures in place, retailers can help prevent major losses of inventory and protect revenue. 

Mitigating Risk and Brand Devaluation

Traceability is a critical component of ensuring integrity for retailers. It can be a safety net for the entire supply chain, ensuring that companies can quickly trace issues back to the root of the problem. It is an essential strategy to mitigate risk in retail operations and prevent brand devaluation. 

Some sectors of retail carry more risk than others. For example, food and beverage, medical products, consumer goods, and automotive are all highly regulated industries, and compromised products could have widespread negative effects. Inadequate traceability in these areas can lead to severe health risks and substantial fines, eroding consumer trust and potentially devastating brand reputation. For loss prevention professionals representing these types of brands, traceability is a critical practice to ensure regulatory compliance, and retailers must stay current on regulatory or industry changes that could impact their business. Staying up to date on regulatory rulings is especially important for businesses with a global presence. 

Transparency is paramount in the event of a crisis, but the benefits of having systems in place that allow for traceability and transparency go far beyond crisis management. Modern consumers make purchasing decisions based on brand values and commit loyalty to retailers that continue to uphold a relatable ethos. For SMBs and large enterprises and their loss prevention teams, integrated technologies with traceability allow them to be more transparent with their operations which showcases their dedication to high quality products and to their consumers. Traceability can allow them to build their brand and consumer loyalty, scale operations, and ensure longevity. For all loss prevention professionals, implementing systems that offer traceability is more than crisis management—it’s a strategic investment in long-term resiliency. 

Kristjan Vilosius

Before Katana, Kristjan was the CEO of one of the largest investment firms in Estonia and had been an angel investor for nearly a decade in technology and manufacturing. He was excited by the impact of these two worlds merging and could see the need for a more modern solution to the outdated business suites of the 90’s. With this inspiration, a 10-slide presentation became the beginning of Katana Cloud Inventory.

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