Several major retailers, such as Walmart, Target, and CVS, have been locking up entire aisles of products in an effort to combat shoplifting. However, this approach may be causing more harm than good, as shoppers feel alienated and the root cause of the problem is neglected. According to a recent report by UBS, shrink, or inventory loss due to theft and other causes, remains a $95 billion problem for retailers.
The report revealed that staffing levels and supply chain issues are often overlooked in efforts to tackle shrink. The lack of sufficient staffing in stores remains a major contributor to shrink, with monitoring technologies only being effective if risk is flagged and followed up with human intervention. Staffing levels have declined due to a growth in organized retail crime, which has become more violent in recent years.
Supply chain losses are also an issue, which can occur during transportation from vendors to distribution centers to stores. The report stated that technologies like RFID tags could help with tracking items. Retailers, therefore, need to understand the evolving nature of organized retail crime and invest in new technologies such as AI to fight it.
The report highlighted the need for retailers to make substantial investments rather than spending minimally on solutions such as padlocks and off-duty officers that have already been in place for decades. Retailers must work with third-party providers that are at the forefront of leveraging AI and existing surveillance infrastructure to deploy innovative technologies that mitigate pain points and flag shrink risks.
The UBS report emphasized that retailers need to address the root causes of shrink, rather than simply locking up entire aisles of products. By investing in staffing levels and supply chain solutions while leveraging technologies like AI, retailers can work towards combating organized retail crime and ultimately reduce inventory losses due to theft and other causes.
