With Seconds to Spare, Retail Profits Walk out the Door Wearing Ill-gained Nike Tennis Shoes
It’s understatement to say that real-time Loss Prevention (LP) is vital to retailers when you look at stats that show shrinkage is responsible for a loss of 1.61 percent of sales last year, according to a recent National Retail Foundation survey, for a total loss of $41.6 billion. Writes RIS News (PDF):
“When the FBI and the National Retail Federation (NRF) get together to fight crime [with the LERPnet program], you know what they’re collaborating on must be important to retailers. […] According to a 2006 survey by the NRF, 81 percent of retailers admitted to being victims of organized retail crime (ORC), while 48 percent reported an increase in organized crime thefts. FBI numbers indicate that organized retail crime accounts for $30 billion a year.”
That’s a whole lot of stolen Nike tennis shoes walking out the front door, then reappearing at the return department.
When it comes to LP, we’ve written post after post on how retailers can reduce their vulnerability to deception, fraud, and theft with a good identity resolution solution that looks at who the bad guys are, who they know, and what they’re connected to. But did you know that identity resolution is good for more than just identifying bad guys?
Imagine that one of your clerks is processing a return for a customer who doesn’t have a receipt. In one store system the clerk can access all the data available on suspected or prosecuted fraudsters. In another system lies the data for preferred customers. But a sister store has a record of known thief who has a record on an apprehended thief with the same name as the customer now standing before your clerk. How the clerk reacts in the next few seconds is the difference between profit in the bank and loss walking (in Nike tennis shoes) out the front door. If the clerk takes the wrong action, your store can lose a valuable customer for life over a false positive.
Now imagine you’re a big retailer like Macy’s and this losing-your-best-customers-in-seconds scenario plays out thousands of times a day in the 850 stores you operate in 45 states. Those couple of seconds the clerk spends making a right decision or a wrong decision can mean millions of dollars.
With an identity resolution solution bolted on to their existing database, a retailer like Macy’s can determine when to roll out the red carpet for the good customers and put up a red flag for the bad ones.
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September 12th, 2007 at 9:30 pm
I’d be interested to know how many shoplifters are caught by the “may I see your receipt” policy that many of the “big box” stores seem to imply. Since the employee conducting this check often only glances at the receipt and normally does not verify the merchandise with the receipt, I’ll bet this process yields a very low number of apprehensions. With that assumption, I consider this harassing their customers so they’ll feel beter. I don’t condone retail fraud, but I don’t support a practice that is both disrespectful to the 98.39% of honest customers and ineffective at catching thieves. I say don’t shop at stores that practice receipt checking without a valid reason or reasonable probable cause.