MishiPay secure mobile self-checkout

Is shrink-by-mPOS a major concern?

Mobile Shrink: The Newest LP Challenge

By Hilbert Dijkstra

November 9 2017

Just when Loss Prevention (LP) professionals thought they’ve identified every point-of-loss to battle, technology has introduced mobile point-of-sale (mPOS) to the world of retail. This has caused some LP professionals to scramble a bit to create stopgaps until they can wrap their arms around this relatively new method of retail operation.

Those who have had the fortune of building a career within retail are accustomed to the ebb and flow of the industry. Many years will pass in which retail processes become stagnant, then suddenly the daily business-as-usual exercises are instantly replaced with the newest, edgiest movement designed to increase sales while remaining competitive.

However, rarely does a new flavor-of-retail directly impact Loss Prevention initiatives.

Studying the Study

In a study published by the University of Leicester’s Department of Criminology, and funded by the Economic and Social Research Council (ESRC), Professor Adrian Beck and Dr Matt Hopkins set out to explore how the advancement of mobile scanning technologies within retail might impact shrink.

According to the study, “the primary focus was to identify current developments in mobile scanning technologies in the retail space; to understand how allowing customers to use their own personal mobile phones to scan and pay for items could impact upon shrinkage and also identify how crime prevention might be integrated into these systems.

Is shrink-by-mPOS a major concern? The fact that academia chose to take on the topic for a sanctioned study affirmatively answers that question.

As an LP professional, it is extremely difficult to imagine a world in which shoppers enter one of their stores, begins to scan merchandise with a personal smartphone, and then just walks out the door bypassing all traditional checkout registers.

A shrink concern? Absolutely.

And what did the university’s study find? Quite a bit, actually.

What’s the Buzz?

First, it is important to understand why retail executives are pushing forward on embracing mPOS within their respective companies. There are many benefits that lend themselves to customer loyalty and increased sales. According to the study, benefits include:

When considering just these few benefits, it is easy to see why retailers are adopting mPOS at a record-pace, and why LP professionals are feverishly working to help support their respective companies to obtain the greatest return on their investments.

mPOS Shrink

One key finding depicted in the University of Leicester’s study was the identification of four ways in which mPOS can cause shrinkage. Although slightly worded differently, these descriptions encapsulate the ideas discussed within the study:

  1. Theft through malicious non-scanning of goods
  2. Non-malicious loss through non-scan/scanning errors
  3. Negative effects on the customer experience generated via audit checks
  4. Transaction fraud or fraudulent use of app-hosted payment system.

The implications of each of these are self-explanatory, so more detail of each will not be provided in this blog.

However, Professor Beck and Dr Hopkins do highlight one solution that would help solve the dilemmas: “The challenge is developing an RFID solution that could be used in an intelligent way to deactivate when the consumer had purchased the products – in effect the tag communicates with the store inventory and when the payment is authorized the tags switch status from ‘not sold’ to ‘sold’ and consequently will not activate the exit alarms.

These researchers are correct.

Such a solution would impact most of the four shrink-causing dilemmas mentioned above. Although it is highly unlikely that an RFID solution would detect a fraudulent method of payment, many believe mPOS does not really increase the potential for loss in this area since these losses already exist within traditional shopping methods.

That aside, if such an RFID solution described by Beck and Hopkins did exist, it wouldn’t matter whether or not a customer intentionally failed to scan an item. This RFID solution would detect the non-scanned item, allowing an employee to immediately remedy the situation without the need for an intrusive audit (poor customer experience).

The Good News

There is good news for those LP professionals waiting for the RFID solution described in the study to be developed.

It’s already here.

When looking for the newest, most dependable RFID solutions, most start by researching what Nedap Retail has to offer. Nedap is widely recognized as the leader in RFID solutions within the retail space, especially when it comes to customer experience. That is why it is no surprise that Nedap’s Cloud-Based EAS solution does exactly what Professor Beck and Dr Hopkins described as a solution to mPOS-related shrink.

Nedap’s Cloud-Based EAS solution automatically deactivates soft EAS tags as items are scanned with a customer’s smartphone. As the study described, Nedap’s solution “communicates with the store inventory and when the payment is authorized, the tags switch status from ‘not sold’ to ‘sold’, and consequently will not activate the exit alarms.

Hilbert Dijkstra - Head of Product Management
Head of Product Management
Hilbert Dijkstra