May 19 2023

As Organized Crime Threats Increase, Retailers Rely on Smart Technologies

Retail is a hub for organized criminals, but enhanced video surveillance, smart shelves and access control systems are anticipating incidents before they hit.

Loss prevention is a critical challenge for the retail industry. According to a 2022 National Retail Federation (NRF) survey report, U.S. retailers lost almost $100 billion to inventory shrink in 2021, a number that is trending upward. That same year, retailers, on average, saw about a 27% increase in organized crime, shoplifting and lost inventory incidents.

While there are numerous factors that can cause inventory shrinkage, theft — by individual shoplifters, dishonest employees or organized criminals — is by far the most significant one. To minimize the impact on their business, retailers must adopt new solutions such as self-checkout monitoring, enhanced video surveillance, access control systems, radio-frequency identification (RFID), smart shelves and more.

Doing so will help them optimize their loss prevention efforts at a time where retail is changing, with increased online shopping and self-service options. “As we redesign things, there are always people that are thinking, ‘How can I take advantage of this?’” says Brendan Witcher, a principal analyst at Forrester. “Retailers have to be aware that almost any initiative should include an evaluation of potential threats to this new way of doing business.”

However, the NRF report notes that fewer than half of all retailers are using more advanced loss prevention technology strategies. These emerging technologies are helping stores to monitor their environments, detect suspicious activity, deter crime and respond effectively to incidents. Here is what all retailers should know about them.

Retail TOC


How Retailers Can Implement Self-Checkout Monitoring

The use of self-checkout monitoring surged during the pandemic, helping retailers navigate staffing shortages and enabling them to limit physical contact with customers. However, self-checkout systems can be vulnerable to fraud by customers, such as using counterfeit coupons or gift cards or ringing up an inexpensive item but taking something more expensive.

Self-checkout monitoring systems use machine learning algorithms to analyze transactions and detect fraudulent activity. The system can then block the transaction or alert staff to act.

Enhanced Video Surveillance Can Support Retail

Video surveillance has been a staple of retail security for decades. “The minute someone can be identified or they know they’re on camera, the rates of theft go way down, and that includes for employees too,” says Witcher.

Today’s enhanced iterations of video surveillance only augment that effect. New technology makes it easier to spot specific individuals and behavior in real time. High-resolution cameras and artificial intelligence-powered analytics and object detection are all available in today’s enhanced video surveillance systems. These technologies allow retailers to monitor their stores and detect unusual behavior, such as customers lingering near high-ticket items or moving in restricted areas.

Some systems are even specially configured to detect certain common retail theft tactics. For example, when a transaction is entered by a store associate without a customer being physically present, it’s often a sign the transaction is fraudulent, but that can be difficult to detect by humans in real time. An AI-powered enhanced video system is designed to take note of such transactions and alert the store’s loss prevention specialists.

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The Role of Access Control Systems in Retail

With the increase in curbside pickup and online ordering, the back rooms of retail locations are becoming fuller, more lucrative targets for those with ill intent, Witcher says: “We’re creating almost a warehouse in stores, where the warehouse is the back room and the store is the front of house, so you have new threats to security, and you need to find new solutions to prevent theft.”

Access control systems help retailers keep unauthorized people manage access to sensitive areas such as stockrooms. Retailers also can track employee behavior, such as when they enter or exit restricted areas, to keep a digital trail in case anything goes missing.

READ MORE: Three ways AI-powered video reduces retail theft.

RFID Tags, Smart Shelves and Loss Prevention Software

RFID tags, which are attached to items and use smart barcodes, can track product movement, such as from the warehouse to the retail floor. They can also be used to monitor product movement throughout the store and prevent theft of high-value items such as electronics and jewelry.

Similarly, smart shelves use sensors to monitor product weight and track inventory levels in real time, preventing theft through “anti-sweep” alerts that can let staff know if the amount of product removed from the shelf exceeds established parameters.

Finally, loss prevention software can analyze data from security systems to detect patterns and prevent future theft. The software can create more efficient inventory systems, allowing products to be tracked.

Adoption of enhanced retail loss prevention solutions can have an additional impact beyond theft prevention. They also can enhance the customer experience. For example, better surveillance security measures can create a safer shopping experience for employees and customers in-store.

Solutions such as smart shelves can prevent stock shortages and make items easier to find for customers and staff. The varied applications of these emerging technologies offer a compelling cost-benefit case for retailers. “We now have environments where technology can be utilized in multiple ways, which makes for a better argument to make that investment,” Witcher says.

wir0man, Hartmut Witte/Getty Images

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