And when it comes to the use of business intelligence as part of security systems, the winners use and the underperforming don’t.
A study “Loss Prevention and Beyond: Survival of the Fittest,” sponsored by ADT’s Sensormatic Retail Solutions, has uncovered some big differences between top retail performers – those whose sales growth outpace the three percent industry average – and retailers below that average. One is that top performers use business intelligence tools like returns and void management technologies 46 percent more than underperformers. Another is that nearly three times the number of top performing retailers use electronic article surveillance (EAS) technology as compared to underperformers.
Better Return on Investment
The online survey was conducted by Retail Systems Research (RSR) during September and October 2008, including respondents from retailers with stores around the world. Among its findings:
- Employee theft of goods and cash are top retailer concerns, with respondents ranking internal theft as their number one source of shrinkage, shoplifting as second, and internal theft of cash as third.
- While almost half of the top performers use EAS to control shrink, only 17 percent of underperformers use EAS – despite all respondents ranking shoplifting as their second largest source of shrink.
- Seventy-one percent of all respondents said they frequently use exception analysis reporting, a key business intelligence tool, as a critical technology in their loss prevention arsenal.
- Fifty-three percent of all respondents cite better business intelligence as needed to make effective use of the vast amounts of loss prevention data that exists, especially from video surveillance systems.
“In tough economic times, shrink continues to rise,” said Paula Rosenblum, RSR’s managing director and widely recognized as one of the top analysts in the retail industry. “With the slowing economy many retailers have cut back on staff and now will be relying on technology to help control theft. Smart, winning retailers know the best way to maximize profitability and improve shrink is to leverage existing assets and improve store intelligence.”
A number of different studies have identified four ways that retail operations lose money. There is lost from sales associates and other employees. There is loss from shoplifting. And there are losses from vendors and just from bad bookkeeping.
Loss prevention executives and experts both agree that the recent economy may spur more losses from employees and shoplifters, While retail security has depended on a combination of technology and security officers, there is a shift to more intelligent security video systems and their integration with point-of-sales and other business systems.
One of the outcomes is the ability of loss prevention to partner with the business to provide the operation with people counting and traffic analysis within the store.
For Security Magazine and SDM Magazine readers, a free copy of the 22-page report can be obtained by visiting the link below.