By Matt Pillar, editor in chief
The highlights are by now well documented — a 6.6% global increase in shrink year over year, and a 5.6% increase in spending to combat it. Of the $23.8 billion spent on global retail loss prevention in the 12 months leading up to the October report, nearly $8 billion went to security equipment and close to $10 billion was spent on contract personnel.
The report suggests that to curb the growth in shrink, retailers have to ensure that loss prevention spending keeps pace with the rate of loss due to shrink. It's not. But one seemingly smart strategy suggested by the report is the "localization" of LP efforts — the idea that a one-size-fits-all approach to LP makes as little sense as a cookie cutter approach to merchandising. That's logical at face value, but it's a slippery slope. Integrated Solutions For Retailers was once subtly accused of promoting racial profiling for a story I wrote on a certain tier-one national retailer's efforts to localize its LP technology footprint to thwart exceptionally large losses in its stores along the Mexican border. Of course the claim was preposterous. The retailer clearly demonstrated that its extra efforts to secure those stores were based on hard facts revealed by well-documented audits — plain store-to-store comparisons that focused on numbers, not race. But in an environment of hypersensitive political correctness, retailers that transparently bolster LP efforts — technological or otherwise — in stores that fit specific demographic profiles risk creating a perception of insensitivity toward significant and growing markets. Perception becomes reality when retailers are smacked with bad press and litigation associated with racial profiling, as we saw in recent years when big retail brands, perhaps most notably Dillard's and Cracker Barrel, were saddled with high-profile claims of improper treatment of minorities. While these cases most often involved person-to-person interaction that suggested (or proved) impropriety, is there a clear line of differentiation between profiling at the personal level and that executed via technology (surveillance, security tagging, etc.) at specific stores?
While deployment of localized LP efforts seems imperative, care must be taken at the execution level. Probably less sticky is an approach that reaches beyond geographic localization and drills down to the item level. A blanket of protection laid on the most-often stolen products across geographies protects merchandise without creating any demographic or racial implications, real or perceived. The GRTB reports on merchandise that's particularly problematic by segment, such as:
Unlike the expensive analysis, customization, and hands-on work required to beef up store-level LP solutions in high-risk stores, item-level protection of specific merchandise is well suited to a cookie cutter approach. Source tagging items such as those mentioned above, for instance, creates economies of scale via efficiency and standardization of processes from the outset. Secure packaging and display cases are also most efficiently standardized across retail enterprises, regardless of store-level demographics.
It's a sensitive subject but one that begs the question — how to protect high-risk stores without creating an offensive atmosphere? I'd like to hear thoughts on the subject from the retail LP community. E-mail me at matt.pillar@jamesonpublishing.com.
