Retailers are relying on loss-prevention tech to curb shoplifting

Everyone’s had the experience of walking into a local pharmacy or convenience store and having to ask for a product behind a locked case. Now, with retail thefts on the rise, that locked case may be getting a lot more sophisticated.

In 2021, retailers slowly started seeing the return of customers through their doors after the pandemic pushed them largely online. One unintended consequence of this was a major uptick in shoplifting, which some retailers are now responding to with new technological solutions.

• Retailers, on average, saw a 26.5% increase in organized retail crime incidents nationally in 2021 from the prior year, according to an NRF survey.
• NRF also found that the average shrink rate in 2021 was 1.4%. As a percentage of total retail sales in 2021, that shrink represented $94.5 billion in losses, up from $90.8 billion in 2020.
• As Retail Brew previously reported, Target CEO Brian Cornell said in a November earnings call that in 2022, the company had $400 million of inventory shrink, which also encompasses items breaking and administrative errors. However, he blamed this number on “a significant increase in theft and organized retail crime across our business.”

While some companies like Target and Walmart have closed stores because of shoplifting, others are meeting the problem head-on by integrating technology-based preventative measures. But while tech across the board—from license-plate recognition systems and perimeter surveillance to facial recognition and multi-sensor parking lot surveillance towers/units—slowly becomes more commonplace in stores, in some instances, it’s also raising concerns regarding consumer privacy.

“I would assume that at the top of every retailer’s mind is a positive customer experience…that is safe, that is secure, and that is as unobtrusive as possible and easy for the consumer,” David Johnston, vice president of asset protection and retail operations at NRF, told us. “But if there are no preventative methods being used, it allows the thieves to walk right in and take what they want.”

New hardware: Lowe’s is one company at the forefront of integrating loss-prevention technology. At the end of last year, the company introduced Project Unlock, which uses RFID chips and IoT sensors to activate power tools after they’re purchased.

• Project Unlock has built a blockchain record that verifies and tracks all legitimate purchases to protect buyers from acquiring stolen products.

The Home Depot has been locking up more of its products over the past year, as it searches for more consumer-friendly solutions to preventing theft, the company told the Wall Street Journal.

“It’s a triage-type scenario. It’s to stop the bleeding and give yourself some time,” Scott Glenn, vice president of asset protection at The Home Depot, told the Wall Street Journal.

Face off: But one form of anti-shoplifting tech is coming under explicit scrutiny: facial recognition. Its use is permitted by New York state law, but retailers must inform customers that it’s being used and their information is being collected. Amazon customer Alfredo Perez filed a class-action lawsuit last week alleging the company did not notify shoppers that the company was using facial recognition technology in its Amazon Go stores.

New York-based grocery chain Fairway Market uses facial recognition tech that collects, retains, converts, and stores customers’ biometric information. Some customers are calling the tech “creepy” and comparing it to George Orwell’s “Big Brother.”

However, the company says the tech is paying dividends. “This technology is helping our stores reduce retail crime, an industry-wide challenge that has increased dramatically over the last few years,” Karen O’Shea, a spokesperson for Fairway’s parent company Wakefern, told ILTUWS. “Only trained asset protection associates use the system, which helps us focus attention on repeat shoplifters. We follow all applicable laws, including posting signage in the stores to make shoppers aware of the use of biometric software.”

The big picture: Johnston said retailers must weigh loss-prevention measures against customer experience as they experiment with new technologies. Retailers need to make sure products are readily available to purchase, but stores also don’t want to continue losing dollars to theft.

• “You do have to look at what are the basic components that can provide you with a level of prevention and mitigation. You also have to be very [aware] of what other organizations are doing in their efforts, particularly those that might be adjacent to you or have your similar segment,” Johnston said. “It’s a delicate balance. I think it’s one that retailers struggle with on a daily basis: ‘How do we keep the product there, so that the consumer can purchase it?’”