Stock losses remain one of the most serious problems for retailers. New studies show that loss prevention systems on shelving are becoming ever more popular and effective. They provide effective protection from thieves and can be linked with technologies to detect out-of-stock.
Berlin, 9 October 2017: Last year, German retailers recorded over €4 billion in stock losses. Theft by employees and customers, fraud and organised crime have a debilitating effect on retailers’ profit margins. According to estimates by the EHI Retail Institute, the number of simple shoplifting offences has fallen almost continuously since 1997 but organised crime has dramatically increased over the past ten years. According to the German Federal Office of Investigation (BKA), 25% of all shoplifting is caused by organised retail crime (ORC). The associated willingness to use force has therefore never been so high.
The need for effective and future-oriented strategies and better loss prevention systems is rising. According to EHI, retail invested a total of €1.3 billion last year in various security measures. It states that electronic article surveillance, training store staff, camera monitoring and data analysis are gaining importance. In his current benchmark analysis, Adrian Beck, professor for criminology at the University of Leicester, investigates proven and new loss prevention technologies and provides an outlook for the future of retail security systems.
In the survey entitled “Emerging Technology in Loss Prevention Retailing” published in 2017, Beck surveyed the largest US retailers on how they grade various loss prevention systems. With participation from a total of 60 top retailers, his survey covers 48% of US retail. He separated the loss prevention systems into “emerging technologies” and “established technologies”. The latter have long been used to prevent shoplifting and are deployed across retailers worldwide. These include, for example, electronic article surveillance and classical video monitoring. “Emerging technologies” are the newest generation and therefore not yet so widely distributed. They include smart shelves and face recognition.
Smart shelf technology is an intelligent shelving system that recognises any customer activity. The removal of the product is registered and interpreted. Potential thefts can therefore initiate an alarm and be revealed quicker. By using face recognition technology, shoplifters can be detected again automatically when they enter a shop.
According to the survey, the US retailers see smart shelf technologies and automatic face recognition as the most effective when combating organised retail crime (OCR). Above all, the fight against ORC is characterised in smart shelf technology by effectively deterring shoplifters and immediately alerting the staff. Staff can respond immediately and proactively approach potential offenders. The patented IMCo Smart Shelf has proven itself in international retail chains and has significantly reduced the number of shoplifting offences there for nearly ten years.
The IMCo Smart Shelf registers each product removal and identifies atypical multiple removals. In this case, the shelf immediately triggers an alarm. This way suspects can be addressed by store staff in a service-oriented manner, thus minimising the escalation risk. The IMCo Smart Shelf can also be networked with remote alarm options, video monitoring or the public address system, so that the goods can be presented openly at all times.
With thousands of installations worldwide at major retailers such as dm drogerie markt, Rossmann Drogeriemarkt, Coop in Norway, Netto in Denmark as well as Safeways and Lowe’s in the USA, IMCo is now the global market leader in smart shelf technology. Therefore the IMCo Smart Shelf technology is well on the way to becoming “established technology”.
In his study, Adrian Beck refers to another benefit of smart shelf technologies: they not only protect retailers from shoplifting rather they can also be used for in-store analytics. The latest developments of IMCo software show the fill level of every hook and product pusher; they then transmit the stock in real-time to the cloud and therefore e.g. to a smartphone app. The retailer is therefore notified immediately of inventory gaps on the shelf and can drastically reduce out-of-stock situations. The first prototypes of these IMCo systems will be tested in retailers soon.
It is well-known that out-of-stock mean lower revenue and the loss of loyal customers who do not find the goods in the familiar place. The economic effects on revenues and profits caused by empty shelves amongst German retailers are therefore massive and, according to the GS 1 Germany study from 2011, represent lost revenue of more than €1 billion per year.
The study of the project platform AdOSA, Advanced Optimal Shelf Availability, from St. Gallen University and Friedrich-Schiller University Jena (2007), also clarifies the negative effects of missing items on customer purchase decision-making processes. 37% of consumers who cannot find the item due to a lack of availability buy the goods elsewhere. 21% of customers choose an item from another brand or, like 11% of all customers, buy nothing at all. In this tough competitive environment, as the falling sales can have serious consequences for manufacturers and retailers, the sales losses for products with high brand loyalty are even more drastic.
Various studies, however, including by Wal- Mart (2006) and Edeka (2015), show potential sales of 3-4% if it is possible to reduce out-of-stock. Therefore, targeted optimal shelf availability is an important task for retailers. Automatic out-of-stock detection supports store staff by immediately informing them of any gaps.
Able to record and analyse customer behaviour data, stationary retail also benefits from the system’s intelligence. By connecting the cashier system with the IMCo smart shelf, it is possible to determine more precise conversion rates.
In times of digital change, it is difficult for customers to differentiate between IT technologies that are being hyped up and those that could actually increase their market share. With transparency, user friendliness and commitment, the manufacturers of loss prevention systems can achieve this. It is about discovering what security needs have to be met to minimise empty shelves. The IMCo Smart Shelf technology can achieve this. With out-of-stock detection, theft prevention and tracking customer behaviour, it will increasingly gain in importance.
IMCo is manufacturer of innovative intelligent retail loss prevention solutions that help to sell more and lose less. With thousands of installations worldwide at major retailers such as dm drogerie markt, Müller Drogeriemarkt, Coop in Norway, Netto in Denmark and Safeways and Lowe’s in the USA, IMCo is now one of the leading producers of intelligent systems that stop theft while maintaining an open shopper friendly presentation. With the IMCo solutions that stop organized retail crime directly at the shelf, fast, measurable results are achieved. The company was founded 2000 in Germany and distributes its solutions through its worldwide partner network.