Fraud and Theft Protection in Retail

Transcription

1 Retail Technology Trend Report Fraud and Theft Protection in Retail Making stores more secure Joachim Pinhammer Senior Retail Technology Analyst

2 Planet Retail is the leading provider of global retailing information, from news and analysis to market research and digital media. Covering more than 9,000 retail and foodservice operations across 211 markets around the world, many of the world s leading companies turn to Planet Retail as a definitive source of business intelligence. For more information please visit All images Planet Retail Ltd unless otherwise stated. Researched and published by Planet Retail Limited Company No: (England & Wales) Registered Office: 66 Wigmore Street, London W1U 2SB Terms of use and copyright conditions This document is copyrighted. All rights reserved and no part of this publication may be reproduced, stored in a retrieval system or transmitted in any form without the prior permission of the publishers. We have taken every precaution to ensure that details provided in this document are accurate. The publishers are not liable for any omissions, errors or incorrect insertions, nor for any interpretations made from the document. United Kingdom: Greater London House Hampstead Road London NW1 7EJ United Kingdom Germany: Dreieichstrasse 59, D Frankfurt am Main Germany USA: 1450 American Lane Suite 1400 Schaumburg IL USA China: Tongxing Road Qingdao China Japan: c/o INSIGHT INC. Atami Plaza 1401 Kasuga-cho 16-45, Atami-shi Shizuoka Japan T: +44 (0) F: +44 (0) T: +49 (0) F: +49 (0) Tel: + (1) Fax: + (1) T: +86 (0) F: +86 (0) T: +81 (0) F: +81 (0)

3 Contents Executive Summary 1 1. Electronic Article Surveillance (EAS) 4 2. Video Surveillance Analytics Outlook Top solution providers to watch Planet Retail 2012

4 Planet Retail

5 Executive Summary PlanetRetail G lobally, retailers suffer more than USD100 billion in losses through shrinkage every year, the lion s share of which is presumably caused by theft or fraud at the hands of both customers and staff. According to the Global Retail Theft Barometer, the largest study on the cost of losses to the retail industry as a whole, shrinkage rates have reduced slightly over the last 10 years but reached a peak in the inception of the global financial crisis. There are a number of reasons for the shrinkage which fall into three categories: Errors and process faults; Theft by burglars, customers, own staff or third parties; and Fraud by suppliers, own staff or customers. Losses can occur at any stage along the supply chain, starting before products even arrive at the warehouse, at the distribution centre while on route to the store and last but not least at the point of sale. Without full transparency along the supply chain, it is difficult, if not impossible, to detect the precise point in the chain the loss occurred. In many cases it is also out of the question to analyse the exact source of the shrinkage, which could have been a booking error or the result of internal or external fraud. Therefore, published figures - including those from the Global Retail Theft Barometer - are only assumptions and should be treated with caution. However, implementing suitable measures to deal with all types of losses is extremely beneficial for retailers since shrinkage directly impacts their bottom lines. It is eating away at the already thin net profits in the retail industry which - with the exception of some high-margin speciality retailers - are typically singledigit figures with those in grocery ranging in the lower half. Combat losses with technology This report provides an overview of the technologies available to combat losses due to theft and fraud in retail. It delivers insights from best practice implementation projects and gives an outlook on trends and next generation technologies. Nevertheless, due to the complexity of the topic we focus on solutions applicable to retailers store operations. Both online fraud and losses occurring early in the supply chain have to be seen as equally valid threats but exceed the scope of this research. We will look at implementation projects from around the globe. While the general problem is similar worldwide, every country and area has regional differences that affect shrinkage. Levels of criminality vary not only from nation to nation but also in different locations, even in the same city while quality, investments and effectiveness of loss prevention contrast. According to the Global Retail Theft Barometer, there is not a simple correlation between spending for retail loss prevention and shrinkage rates but data shows that changes in investment tend to have an effect. Retailers who increased their expenditure have achieved reduced shrinkage rates not only in the previous year but already in the current trading year. Retailers have traditionally tried to prevent theft and fraud in their stores through a mixture of visible and undercover measures. Staff are encouraged to look out for suspicious activities while security guards, mystery shoppers and store detectives are often employed. These solutions are time and resourceintensive and, over the years, have seen the number of employees on the shop floor cut significantly. - Planet Retail