The 2016 National Retail Security Survey (NRSS), by the National Retail Federation, reports that retail inventory shrink accounted for 1.38% of sales, or $45.2 billion, in 2015. Another survey by Retail Knowledge calculated that US retailers are losing $60 billion a year to shrinkage for the same year.
Wherever the true figure lies, loss in retail is a big issue, and the main issue is theft. The NRSS showed that shoplifting accounted for 39% of the reported shrink in 2015, and perhaps more concerning is that employee/internal theft amounted to 35.8% of inventory shrink.
It’s not just in stores that this problem manifests. Throughout the supply chain, be it from warehouses or in transit, internal and external theft is occurring on a wide-scale. In fact, the FBI lists cargo theft as a multi-billion dollar criminal industry. The retail sector needs a solution to this epidemic and it has been right under their noses for some time.
Adoption of Radio Frequency Identification (RFID) systems for retail inventory management has been growing in recent years. In addition to helping retailers create efficiency in their stores and supply chains, RFID has emerged as the ideal loss prevention tool.
Items fitted with RFID tags at their source can be tracked as they travel through the supply chain. RFID tags alone don’t stop a box being carried away and sold elsewhere. But they create valuable intelligence both for law enforcement, to retrieve lost goods, and for supply chain managers, to pinpoint areas of greatest loss then do something about it.
Once at the store, stolen items fitted with RFID tags can be tracked leaving. When combined with instant alerts to security guards or retrospective store camera footage, RFID allows retailers to literally see their products being stolen, wherever the thief is hiding them.
Market leading systems such as Mojix wide-area RFID mean that retailers no longer need to accept this level of shrinkage as a “cost of doing business.” Widespread adoption of RFID systems will put billions of dollars back into the pockets of retailers through loss prevention, while also offering all the efficiency and visibility benefits normally associated with RFID in the retail sector.