The Favorable Post COVID-19 Future of Retail Loss Prevention

A couple weeks ago, I had the opportunity to join other loss prevention professionals in a webinar titled “The power of Teamwork: How Retail LP can work with law enforcement to combat the double problem of ORC and Violent Gangs.”  In this Loss Prevention Foundation hosted event, my contribution was an ORC trends update, coupled with analysis on future loss prevention technology trends.

Retail crime trends have been changing for some time. Loss prevention / asset protection have not been immune from COVID19 innovation acceleration. As recent McKinsey retail research explained, in a matter of 90 days in 2020, we vaulted forward 10 years in consumer and business digital adoption.

Post my corporate career, I spent a significant amount of time researching growth opportunities and engaging with private equity portfolio technology companies and starts-ups in Silicon Valley, Europe, and India. Based on these market intelligence activities, I can confirm that the innovation funnel in all functions including loss prevention is being filled at a higher speed.

This article summarizes and expands on some of my high-level concepts shared in the LPF webinar. The future of loss prevention is bright, especially when you consider the general technology shifts taking place across harmonious retail channels.

Organized Retail Crime Increasing and Getting More Violent

As a December 2020 National Retail Federation (NRF) report pointed out, USA organized retail crime (ORC) cost retailers an average $719,548 per $1 billion in sales, up from $703,320 in 2019. This is the fifth year in a row the figure has topped $700,000 and is up significantly from $453,940 in 2015.

Seventy-five percent of retailers surveyed report a slight to significant increase in ORC. As a result, 61% are prioritizing this problem more than five years ago. Fifty-two percent are allocating additional technologies and 36% say they are increasing their annual loss prevention budget to address LP risks.

A disturbing trend is the increase in retail violence. Fifty-seven percent of retailers surveyed report that ORC gangs are exhibiting somewhat to much more violence that the previous year. A separate industry report confirmed these violent retail challenges. Even with all the pandemic store lockdowns, in 2020, retail fatalities were up 5% and incidents were up 14%.

Retail Violence2

Parking lots led with highest retail violence followed closely by stores / malls. Very ominous is that 49% of the 2020 fatalities were customers and 24% are store associates (up 41% on 2019).

The Evolution of Retail Loss Prevention

Loss prevention technologies have been at the core of transformational change in the retail industry. Electronic Article Surveillance (EAS) was one of the first successful item level technologies that is now evolving to being connected and smarter. Additional item level sensors such as RFID and GPS are also entering the frame to reduce item level shrink.

FutureLP

The first CCTV camera was installed in Germany in 1942. Seventy-nine years later, this year in 2021, one billion cameras will be installed around the world. As I have described in other articles, the CCTV camera is now a powerful visual data gathering sensor being applied in applications ranging from autonomous cars to in-store analytics including new powerful AI loss prevention solutions.

Retail Loss Prevention Disrupted

As some of you are aware, while continuing selected industry leadership activities, I am returning to the corporate world in 2021 to take a new challenge to transform the future of retail loss prevention. Timely as this new year promises to be a pandemic recovery year.

As I discussed in the webinar, traditional loss prevention technologies which are primarily designed to increase friction to deter shrink are on a collision course with evolving retail trends. The smartphone, as a third industry megatrend, has transferred the power of retail to the consumer. COVID-19 has accelerated contactless retail including new services which expand potential theft opportunities.

LPDisrupted

Firmly believe that retail loss prevention is at a positive crossroad where the function’s importance will eventually be elevated to the C-Suite (Cxx).

Crime patterns are changing and getting more violent. Consumers are taking charge of their shopping through increased time-saving services and digital tools. Welcome to a post pandemic brighter future for retail loss prevention.

 

 

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