Loss Prevention Research Council Weekly Series - Episode 141 - 2023 IT Tech Investments & Retail Crime Epidemic
With Dr. Read Hayes, Tony D'Onofrio, and Tom Meehan
Just how bad is the retail crime epidemic? Find out this week along with hottest technologies in 2023 for operations and IT points of view, the potential indictment of former president Donald Trump, new Chat GPT 4 and its capabilities, and more.
RIS News Store Experience Study 2023 – Remodeling Retail
https://risnews.com/store-experience-study-2023
Let me start this week with a summary from one of my favorite annual reports from RIS news. This study focuses on technology going into stores from an IT and Operations point of view. As I said on stage at the Retail Council of Canada this week, understanding what Ops and IT is focusing on is important as the same technologies have applications in loss prevention.
The 2023 edition of the Store Experience Study is titled Remodeling Retail. Here are a few of the highlights.
The 2023 retail forecast is for 6.9% sales growth. Store IT spend is expected to increase by 4.0% over 2022 levels. Retailers expect to continue to expand their store counts by 3.5% overall in 2023 and they expect to conduct 3.7% more store remodels than they did in 2022.
Top priorities for retailers for 2023 look much like those in years gone by, with CRM/Loyalty upgrades, personalizing the in-store experience, inventory visibility, and empowering store associates at the top. When it comes to the non-traditional fulfillment channels (think BOPIS, click & collect, ship-from-store, and dark stores), retailers that don’t already have them are planning to adopt, and those that already have them are looking to optimize those journeys to recover lost margin.
Confirming the importance of physical retail stores, the study summarizes that total revenue by customer journey is taking place 70% of the time in stores, 13% of the time buy online / deliver from warehouse, 4% buy online pick up in store, 5% local store delivery, 4% ship from store, and 4% from other.
Retailers continue to close the gap between the consumer’s online experience versus that found in the store. Topping the list of IT priorities is Personalizing the Customer Experience (it has finished first in five of the last six years) with 54% of retailers citing it.
Inventory Visibility was a close second at 52% of respondents (and has averaged 49% the past six years). The additional customer journeys and the current supply chain issues make Inventory Visibility all the more important. GMS retailers (whose inventory was inaccessible during COVID) clocked in above the norm at 60%, while Leaders were at 61%.
Empowering Store Associates moved into third place at 47%, due in part to its relationship to the customer experience. Perennial top-three finisher Upgrading CRM/Loyalty Programs dropped to fourth place this year at 43% and completing the top five was Refreshing the POS (42%), up slightly from last year.
The top 3 emerging technologies from an IT point of view are SD WAN which means making the pipe bigger to move data out of stores is number one, followed by RFID, Voice / Walkie Talkie in store / Parking lots coming in third.
Specifically to RFID, the authors state, RFID gives retailers keen insight into inventory visibility, enabling store-based fulfillment. Fifty-four percent of those that have RFID deployed are GMS retailers. Those that have deployed RFID place a higher priority on inventory visibility (7.8% higher) and optimizing the digital journey for store fulfillment (16.7% higher).
Again this is an important study, especially for loss prevention as there are multiple cross over technologies.
America’s biggest companies say retail crime is an epidemic, but just big of a problem is it?
https://www.cnbc.com/2023/03/18/organized-retail-crime-debate.html
Switching topic, let me close this week with an article from CNBC a retail crime titled, “America’s biggest companies say retail crime is an epidemic, but just big of a problem is it?”
As the article states, America’s biggest retailers say organized retail crime has grown into a multibillion-dollar problem, but the effectiveness of their strategies to solve it and the validity of the data overall have come into question.
Over the last several years, companies such as Home Depot, Lowe’s, Walmart, Best Buy, Walgreens and CVS have been sounding the alarm about organized bands of thieves who ransack their stores and resell the goods on online marketplaces.
They’ve poured money into theft prevention strategies, such as plastic cases, metal detectors, motion-sensing monitors and AI-powered cameras, and have warned if the problem doesn’t improve, consumers could end up paying the price.
“Theft is an issue. It’s higher than what it’s historically been,” Walmart CEO Doug McMillon told CNBC in December. “If that’s not corrected over time, prices will be higher, and/or stores will close.”
However, the problem isn’t as clear-cut as retailers and trade groups have made it seem.
Studies from the National Retail Federation show retail shrink cost retailers $94.5 billion in 2021, up from $90.8 billion in 2020, but the data is largely qualitative and cannot be fact-checked because it’s gathered from an anonymized set of retailers.
Plus, the $94.5 billion in losses refers to shrink overall, meaning the difference between the inventory a company records on its balance sheet and what it can actually sell. That difference accounts for items that were shoplifted but also includes inventory that was damaged, lost or stolen by employees.
External retail crime accounts for only 37% of those losses, or about $35 billion, the NRF data shows.
At least one major retailer recently conceded that it may have overblown the problem.
“Maybe we cried too much last year,” Walgreens Chief Financial Officer said on an investor call in January when asked about shrink. “We’re stabilized,” he added, saying the company is “quite happy with where we are.”
Still, law enforcement agencies and retailers insist organized retail crime remains an issue and said they stand behind their data.
“I can tell you that in our world, we know that crime is increasing. We see it every day in our stores,” Scott Glenn, Home Depot’s vice president of asset protection, told CNBC. “Our internal information shows us that that’s on a year-over-year basis, growing at double-digit rates.”
