Leveraging RFID for Loss Prevention

How To Create Seamless Shopping Experiences. Without Shrink.

April 28 2021

Shoppers won’t visit stores, unless retailers give them good reasons to.

That’s one of the noteworthy conclusions in this McKinsey article. Retailers need to aim for breathtaking in-store brand experiences, executed flawlessly and supported by fast, flexible and frictionless checkout options. However, with the introduction of new concepts like mobile and self-checkout, retailers run in to the risk of higher levels of (occasional) theft, which in turn, leads to higher shrinkage.

So how can retailers offer seamless shopping experiences, whilst keeping their shrinkage under control?

The Rise of Shrinkage in Retail

According to the NRF, retail shrink rose to an alltime high in 2020. Theft, fraud and losses totaled $61.7 billion, a 22% increase from the year before. To put that number in comparison: this is more than the GDP of the whole country of Croatia or more than the worldwide retail sales of Burger King and Starbucks combined.

The economic lookout remains uncertain, but it is unlikely this number will decrease anytime soon. What will decrease though, is the number of brick-and-mortar stores. Analysts predict that 2021 may see a 14% increase in closures of brick-and-mortar retailers.

This means that even in the case where the level of retail crime remains the same, shoplifters have fewer stores to pick from, which will lead to a higher shrinkage per store.

With shrinkage this high, loss prevention managers rely on ‘usual’ loss prevention tactics, such as guards, monitoring CCTV or visual deterrence to combat shrink. But these tactics might not deliver the results retailers are looking for. According to our annual State of Retail Loss Prevention Report, 45% of LP teams are operating with fewer staff and resources, which could be another reason why retailers are struggling to get their shrinkage under control. In addition to that, LP reported increased responsibilities not related to loss prevention, such as enforcing health and safety measures in the stores.  

Seamless Shopping and Seamless Checkouts

A more structural reason that these loss prevention tactics are less effective, is because of the high expectations consumers have when they visit a store. Nobody likes a lengthy checkout process (in fact, analysis by Adyen shows that long queues caused European retailers to lose €17.9 billion in potential sales to competitors). Whether it’s a crazy long lineup or an overly complicated process to finalize a purchase, customers will leave as quickly as they arrived if they feel they might have to wait a long time to buy. This is why retailers are introducing new checkout concepts that mirror the online world and enable a fast and smooth checkout.

This seamless way of shopping has a massive impact on store operations. Having accurate stock levels is just the beginning; it also means stores need to have faster checkout processes. This can be achieved by store employees carrying mobile POS devices, self-checkout options or having customers scan and pay for items using their own mobile phones. Though these new ways of checkout provide the seamless shopping experience that consumers expect nowadays, they also create new risks of theft.

Hard Times for the Hard Tag

Traditionally, one of the go-to solutions to deter theft in fashion retail has been the security hard tag. EAS tags come in different shapes and sizes, including pencil-shaped, square and circular and EAS hard tags are one of the most effective means of combatting shoplifting. Unfortunately, there are a couple of reasons why the EAS hard tag is a show-stopper when it comes to seamless shopping experiences.

The first and foremost reason why retailers need to review their tagging strategy is that an EAS hard tag obstructs a seamless shopping experience during the checkout process. Having to detach an EAS hard tag at the checkout or during a mobile checkout can ruin the experience and can create dangerous situations when customers have to detach a hard tag themselves. It’s estimated that checkout times can drop by thirty percent without the use of EAS hard tags.  

Secondly, the EAS hard tag can also ruin the experience of online orders that are fulfilled in-store. EAS hard tags need to be removed from items before shipment, because nothing is more frustrating than receiving a new pair of jeans with the EAS hard tag still on it.  

Lastly, the time it takes to attach and detach a hard tag, is time not spent on helping customers or fulfilling orders.

Doing More With More Data

To make matters even more complicated, Loss Prevention managers need to deal with all of these changes in a more efficiently and effective way than ever before. According to the State of Retail Loss Prevention Report, the current sentiment among LP/AP managers is that more work needs to be done with less resources. That’s why LP/AP managers are looking at how data can help them spend their valuable time and resources as best as possible.

As crime progresses, the call for more actionable insights becomes louder. Which items are getting stolen, in what store and during which times? How can we protect those items, when the hard tag is not as practical as it used to be? How can we fully optimize our staff planning, our floor plan, guard planning, CCTV planning and so forth?

A Way Forward for Retail Shrink Prevention

There are a lot of moving parts and questions to be answered here.

The levels of (organized) theft are rising; the hard tag is less and less of a useful option; there is a need for more actionable and real-time data for LP teams to work more effectively; and finally the modern consumer expects a seamless shopping experience, with easy checkouts and without any long queues.  

This all might feel overwhelming. Is there a way to address all these challenges?

Luckily, there is. And you might already be using it.

It’s called RFID.

How to Protect 100% of Your Items, Seamlessly

When retailers started using RFID, they mostly used it for inventory management. Nowadays, the use cases for RFID in retail have broadened to other areas, including loss prevention.

In a nutshell, RFID for loss prevention works like this. A shopper, carrying items with RFID labels on them, leaves your store. She passes through the RIFD sensors in your EAS setup, which can be your typical floor-mounted antenna or a more concealed antenna, hanging from the ceiling. When this happens, the EAS system captures the data associated with the item, such as which item it is, the location, day and time of the event and most importantly: if it was paid for or not.

Obviously, when a non-paid item leaves your store, the EAS alarms go off – one of the measures against shoplifting. But is doesn’t stop there. Besides knowing that there was an alarm, you’ll directly know which item it was that set off the alarm. And when this happens more often, you’ll have actionable data to find patterns and protect your merchandise appropriately.

Using RFID for loss prevention also serves the high-demanding consumer. With the data and insights generated by the labels passing through your EAS systems, you can start looking into your hard tagging strategy. Which are the high risk items that need a visual deterrence? And which items are better served without a visual deterrence, because it speeds up the checkout process and facilitates a seamless shopping experience?

These questions might sound scary at first to some loss prevention managers. But with the data at your fingertips, you can make responsible and informed decisions. And keep in mind: most retailers that use RFID, tag one hundred percent of their inventory. That also means that a hundred per cent of your items are now secured; a percentage that you won’t achieve when using hard tags.

Seamless Shopping Without Shrink

RFID not only enables retailers to offer seamless shopping experiences to their customers, it also makes sure that theft, fraud and therefore shrinkage stay at a minimum.

We call this Seamless Shopping Without Shrink: an omnichannel-ready loss prevention strategy, utilizing realtime, accurate data and empowering retailers with fast, flexible and frictionless checkouts.

Retailers that provide seamless shopping experiences, are the ones that give consumers a good reason to visit their stores. And who doesn’t want that?