INSIGHTS
Shop ‘til you drop. For retailers, that phrase has become an ominous one. As the recession tightened consumer spending, retail business witnessed a similar drop. While a global crime wave of rampant shoplifting did not emerge, retail sales suffered. The reduction in consumer spending meant loss prevention departments had smaller budgets to work with. However, some retailers managed to beat the market. Discount items became a hot commodity, with US chains such as Family Dollar and Dollar General investing in hosted monitoring for hundreds of locations. Hosted solutions helped reduce upfront costs, generating better ROI for retailers and security providers. On the other end of the spectrum, luxury retail is booming. While retailers targeting average-income buyers survive on razor-thin margins, high-end retailers are selling out of their most expensive items. Overall security spending increased 10 percent in 2010, reducing shrink by 5.6 percent, according to the Global Retail Theft Barometer. With shoplifting being a US$45-billion problem, anything that cuts shrink is a welcome investment.
The general mindset toward security remains grudging. Security is seen as an upfront cost, not an investment. Loss prevention officers must explain why they want a solution with a price tag over budget, or that takes up network bandwidth, when it does nothing to reduce shrink. Operational efficiencies that boost sales are worthwhile, which is changing the security dialogue. Instead of identifying shoplifters, security technologies in video or asset tracking are being deployed to increase productivity. As retail operates on slim margins, demonstrating benefits is the way to go. a&s examines the market for retail security, as well as how security is evolving. We look at how solutions are deployed, what the hallmarks of strong performance are and where the future is headed.
Security Rings Up Sales for Retailers
Date: 2011/10/17
Source: a&s International
Investing in Security
With all the flak security gets, why bother with it? Retailers become more amicable when security proves to be an investment, rather than a high one-time cost. Reducing operational costs is one clear way security can provide benefits. “In the longer term, ROI can be demonstrated through cost reduction of manpower, such as security guards and more,” said Iida Atsushi, Manager of Security Solutions, Professional Solutions Asia Pacific, Sony Electronics.
Management efficiencies can also be delivered through security aiding business systems. “We see a lot of interest in PoS technology because often times there's more loss at the register than internal and external theft combined,” Shepherd said. “It's not always intentional; it could be as simple as mis-scans on bar codes, ringing up a single item when it should be multiple. If you don't identify that, the retailer could sell a case of water for 99 cents. If the system improperly registers that, it's a loss.”
Other instances may result in unintentional losses that are avoidable with security solutions. Sensors can detect if refrigerator rooms are left open or if there is water damage from open skylights, Lienland said.
Identification solutions using RFID tags can benefit multiple stakeholders within a retail organization. “The strong trend nowadays is for the inventory, loss prevention and merchandising teams to look at solutions holistically,” Coyle said. Selling security is not just moving product but addressing user needs. Security can be a team player, paired with good processes and effective training. In the following article, we examine how security is implemented in different retail settings.