Loss prevention: the latest tagging projects

Retailers battling recent spikes in shop theft have resorted to tagging more of their product, convinced that spending on security technology is justified in the present climate. Tesco is using electronic article surveillance (EAS) to protect food items such as Cathedral City cheddar cheese and steak as hard-up shoppers increasingly lean towards theft.

The British Crime Survey, published in July, revealed shoplifting was up 10% overall in the past year. London saw an 11% hike while in the Northeast shop theft had soared 22%.

For the first time ever, Marks & Spencer is installing EAS in stores, with electronic security tags protecting expensive food and clothing. M&S has installed its chosen system into about 50 stores in the South and is believed to be looking at more, although M&S declined to comment on its roll-out programme or results achieved so far.

At John Lewis, an EAS tagging programme was being trialled ahead of the economic downturn. So although the department store chain wasn’t reacting specifically to recession-based theft, its installation this year of tags and door readers into key stores has been a happy coincidence and is having the desired effect on shopfloor stock loss.

“Our losses had been rising steadily over the past three years and reached a level where we felt we could make a meaningful difference if we protected products with an appropriate technology,” says John Lewis development manager for business protection Paul Newbury. “A lot of other retailers have the protection of electronic tagging now and that would leave us at an obvious disadvantage if we didn’t have the same level of deterrence. We could no longer say no to it and we are now acting on fairly compelling evidence that shrinkage is significantly down in our two trial stores.”

Trials began in the Bluewater and Glasgow stores in August last year,
and on the back of successes there, a further six stores have just been given the green light for EAS systems installation. These are Oxford Street and Peter Jones in London, Cribbs Causeway in Bristol, Cheadle in Manchester, Watford and Reading.

Newbury confirms that all new John Lewis stores coming on stream – for instance Cardiff in September and Poole in October – will have this technology installed. “If we can prove that these 10 stores are delivering that crucial difference to shrinkage figures by the end of the year, then we can justify possibly extending EAS into the remaining 19 stores,” says Newbury.

Retailers’ technology budgets have been slashed by about 20% over the past year, according to BT Expedite, so it follows that return on investment of any capital expenditure is even more closely vetted than usual.

Newbury and his team have worked hard to calculate the optimum return on investment when planning John Lewis’ tagging programme. Rather than simply install the security system in the stores with the highest shrinkage, the expense in certain stores compared with others has been scrutinised as well. If stores have too many or very wide entrances the cost of the required number of pedestal units could outweigh the benefits they deliver, for example.

Newbury is now researching the best tagging strategy – ie, tagging at source or in-store – with discussions taking place with other retailers, manufacturers and John Lewis buyers to find the best method to ensure cost effectiveness and compliance. The areas being protected initially are fashion, handbags and purses, audio and TV and beauty and perfumery, with some discretion at local level.

He feels John Lewis being a late EAS adopter has its rewards. Technological advances over the years have meant that tagging systems have improved apace and there’s an argument that systems are more affordable today. “For us the improvements to the range covered by door pedestals have been an important factor because aesthetics are important to us,” says Newbury. The ADT acousto-magnetic system John Lewis has deployed has a particularly wide range, meaning if you have a 15-metre-wide entrance you might only need seven pedestals. “Eight, nine, 10 pedestals would obviously look less inviting.”

John Lewis is getting maximum value from its investment because it has opted for smart EAS, says ADT account director for retail Jonathan Flood. “This means the technology feeds back data on frequency of alarms and speed of response by business protection staff for example. This highlights areas of poor compliance and where staff training could be improved,” he says.

For instance, if alarms go off too frequently in a store it could be that staff are putting labels where it’s difficult to see and remove them at the till. There are also detection devices in the pedestals or above them, providing a footfall counting function, on top of product protection.

Security costs

Luxury clothing retailer Crombie has been working with Checkpoint to tackle high shrinkage levels on certain products and is using the opportunity to lay the foundations for a longer-term security and stock control project, thereby justifying spend.

By tagging stock in its eight UK stores and across concessions in department stores, Crombie has radically improved stock loss figures, with one store achieving a 50% reduction in shrink. The investment is paving the way for a combined RFID and source-tagging programme, so every pound spent now will help Crombie perform better.

“We needed to address our shrinkage problem as it was eating away at our bottom line,” says Crombie IT manager Adrian Roe. The Crombie project has also included Checkpoint creating bespoke labels bearing the Crombie logo, for both men’s and women’s ranges, demonstrating how tags are now more adaptable and need not detract from the product and brand as they perhaps once did.

Echoing this optimistic spirit, Centre for Retail Research director Professor Joshua Bamfield believes the bad news of economic meltdown coupled with worrying retail crime trends should be viewed as an opportunity. “It’s a great time for retailers to re-examine their policies, analyse how best to use shrink management technology and develop a more comprehensive, integrated and forward-thinking approach to loss prevention,” he says.

In fact, he believes best practices are already emerging and even where only localised problems are being tackled investment in loss prevention technology can pay off. “Smaller loss prevention projects dealing with issues such as in the worst high-shrink retail stores, new processes to reduce losses of high shrinkage lines and investigating employee theft can produce rapid payback,” he says.

Naturally business cases for loss prevention projects must be rock solid today. “The return on investment has to be totally compelling or there’s no interest,” says Khuram Kirmani, chief executive of IDM software, a data mining specialist. “So suppliers are working ever more closely with retailers to better understand their businesses and tailor solutions that provide the very best return.”

Like Bamfield, Kirmani believes retailers taking a holistic view of loss prevention have the most to gain.
“If you invest in a solution like data mining, you can benefit from the analytical tools it provides you with – getting insights from stock movement and PoS – but it can also help you sweat other existing assets such as EAS and CCTV,” he says.

Kirmani has learnt from his data mining work with retail clients that where morale is low – perhaps where stores are threatened with closure – staff theft and fraud goes up. As ever in the world of loss prevention, protecting product from customer theft should not be at the expense of keeping a check on staff misdemeanours.

It pays to tackle shrinkage from every angle, but this needn’t be a losing battle. As Bamfield says: “Even in the worst of times, retailers who manage loss prevention well can buck the trend of increasing shrinkage.”