Preventing Loss in 2010

Preventing Loss in 2010

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In this brutal economy, retailers of all stripes say loss prevention is one of their top priorities. Sixty percent of retailers with annual revenue greater than $5 billion rate organized retail crime as a top business challenge vs. 33 percent of the smallest and 36 percent of mid retailers.

Retailers, especially those in the lower tier-one space that are growing, are most concerned about becoming larger targets for thieves, according to RSR's new report, “Loss Prevention in 2010: Battling Shrink in Tough Times,” by Paula Rosenblum and Steve Rowen, RSR managing partners. Smaller retailers see employee-related theft as a top concern. But as revenues rise, so does trust in employees.

For all of the respondents (83 retailers from the consumer goods, general merchandise and apparel, and hardware/DIY), manpower expense has become a much larger concern in 2009. More retailers report that having the staff required to review loss prevention and audit data is a significant inhibitor to their ability to adopt new initiatives. For winners, though, the ability to execute is the enemy. Twenty-five percent of retail top performers say they have a good loss prevention plan but need to improve execution. The key to overcoming those challenges, they said, is through the implementation of better business tools.

Retailers are focused on wringing the value of their existing investments, without having to add people to review detail data. Video surveillance, pre-screening systems, sales audit, returns and void management, exception analysis reporting, and cash management systems could benefit most from improved automation, they said.

Respondents said that any technology refresh must eliminate the work of balancing, cross and low data analysis; the essential value of business intelligence layered on top of existing investments. It is also long overdue that retailers get their perpetual inventory systems under control; it's not possible to get a handle on shrink when the data is only available by department category, the report found.

In terms of organized retail crime, the smallest retailers are often the biggest targets. All retailers should work more with local law enforcement and stay up on the tools and techniques of the largest retailers. Because loss prevention is one of the rare components of retail not seen as competitive, there are many opportunities for retailers to learn from one another's experiences. While the keys to having a better perpetual inventory system may be closely guarded, the tools and techniques to keep employees in line and customers honest are openly discussed.

Keeping loss prevention up and theft under control requires a continuous commitment with constant improvements. With difficult economic conditions, high unemployment and technology advances, thieves aren't going anywhere; they are only more desperate and sophisticated.

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