If you’re a retailer, no one has to remind you that shrink is an expensive challenge, impacting the entire supply chain. Not only does it cost retailers billions of dollars each year, it disrupts stock and inventory processes and creates unhappy cu
stomers when items that were supposed to be on the shelf go missing. Did they fall off the truck? Were they stolen off the rack by a customer or out of the stockroom by an employee? Or was there an error in the documentation? You may never know the answer, but one thing is clear: However shrink happens, it
hurts.
According to the Global Theft Barometer, theft cost U.S. retailers $40 billion in 2010, and added an extra $427.68 to the annual shopping costs for American families. It’s time to think beyond security-enabled exit gates and enter the “new age” of loss intelligence: RFID.
The intrinsic technology capabilities of Item-level RFID for tracking and data capture automatically deliver intelligence about loss never before possible. This includes the WHAT, WHEN and WHERE data of a lost, stolen or misplaced item; information that can lead a retailer to the WHO and the WHY of a loss. This is powerful intelligence for eliminating shrink in areas of shipping and receiving and for helping to identify and indict shoplifters and dishonest employees. Real time loss intelligence is the first step in removing shrinkage from your business model.
Perhaps you have Electronic Article Surveillance (EAS) in place and think this is doing the job. Let’s look at the technology. With an EAS solution, items must first be “tagged” with a compatible electronic hard tag, creating extra work for your staff. When the customer pays for the item, the hard electronic tags must be removed. More work. If a customer exits the store with unpaid merchandise, the electronic tag sets off an alarm.
What happens when the alarm sounds? Most of the time, very little. (more on this in a subsequent blog posting). The shoplifter isn’t apprehended or indicted, and the store cannot easily identify what was taken. The only “data” received from the EAS solution is that merchandise has exited the store, unpaid, through the customer exit portal.
What happens when merchandise is lifted from the stockroom? According to the National Retail Theft Survey, dishonest employees are responsible for 43.7 percent of retail shrink; shoplifters account for 35 percent. EAS has limited capability for monitoring internal theft. Moreover, existing EAS solutions ‘lock’ you into buying proprietary hardware and tags specific to their closed systems.
How does RFID differ from EAS for loss prevention (LP), or more appropriately, for loss intelligence (LI)? First, with RFID, the price tag is the RFID tag. There’s no extra work or time costs involved for tagging.
RFID solutions work with any RFID tag, giving you much more flexibility from a pricing perspective. If
security gates, or a security pedestal exits, RFID technology can function like EAS, setting off an alarm when an item passes through the exit portal, leaving the store unpaid for. But there’s much more.
In addition to alerting the store to an unauthorized exit, RFID is simultaneously capturing important data about what was stolen, including the article name, color, size and price. With this information, the store can act quickly to replenish the floor, keeping shelves fully stocked and customers happy, and allowing you to adjust the ‘on-hand’ inventory to maintain 99+ percent accuracy.
By capturing and recording information about each theft, RFID accumulates data that can be used as evidence to help indict and convict habitual shoplifters.
RFID works at the item-level to monitor and track the movement of every item of merchandise, from its manufacturing source to the final customer sale, in real time. Any deviations (merchandise falls off the truck), errors (the loaders failed to put the merchandise on the truck), or employee dishonesty (stockroom theft or fraud) are captured and recorded as they happen, giving retailers near perfect visibility into exactly what is occurring with merchandise at any given moment. It is like wrapping a surveillance net around the entire supply chain so that nothing enters or exists unseen, or undocumented.
Shrink is going to happen. While it is possible to remove or correct some of the causes, and to reduce shrink, it is very difficult to prevent shrink completely. Of all the loss prevention/protection solutions available today, item-level RFID technology is unmatched in the scope of benefits delivered. Only RFID gives retailers the real-time data needed to make sure all systems continue to operate at maximum efficiency whenever, wherever and however an item disappears.
Today, many retailers are deploying item-level RFID for its inventory/replenishment benefits without fully understanding the unsurpassed advantages of RFID technology for loss intelligence. In the future, I expect to see more retailers implementing RFID for its loss intelligence prowess, looking at the inventory/replenishment related advantages as an added bonus.
Shrink management is a vital component of Truecount’s item-level RFID software, providing exceptional real-time loss intelligence with no integraton. We will be at the RILA Loss Protection Conference in Orlando April 11-14, partnering with Jamison RFID, a division of Jamison Doors, to give retailers a close-up, first-hand look at the capabilities of our advanced RFID software for loss intelligence. Visit us at Booth #509, say hello and see for yourself what RFID can do. As a special “thanks”, Truecount is offering complimentary private RFID consultations for businesses visiting Booth #509 during the RILA show.
For an overview of how RFID and EAS compare, Truecount has placed a comparative chart on our web pages, at http://www.truecount.com/solutions/loss-intelligence.