Addressing Loss Prevention Across the Retail Ecosystem
Every year, billions of dollars and countless hours are spent by retailers, brand owners, and packaging professionals ensuring that customers have a positive experience with their brand. What happens to the customer experience when they can’t find the product they want due to theft? Nothing good. Theft is far more than a retailer issue — it can be felt by everyone. Theft can result in loss of sales, inaccurate inventory numbers, and customers who view difficult-to-buy products as a nuisance. Direct-to-consumer sales via e-commerce are also not immune to theft. E-commerce industries are scrambling to find solutions, with some brands resorting to packages being placed inside a home, while having technology monitor a home’s entry way. According to a study by a leading provider of smart locks, “69 percent of package theft victims would rather let a delivery service enter their home, via an app from wherever they are, vs. leaving the package outside.”
What's the answer to this issue? First, let’s focus on the in-store challenge. When exploring the world of loss prevention, understanding organized theft is paramount. We're not talking about random, one-off, impulsive theft. These are professional criminals focusing on entire categories, based on their ability to easily steal and resell product for a profit. Once we understand the level of thought and planning that goes into product loss and how it impacts all brands involved, we can start to develop a strategy to solve the problem.
Retailer, CPG and Consumer Relationships
As a packaging partner, we have the ability to hear from both retailers and CPGs alike about their personal challenges with loss prevention. No retailer wants their customer experience to suffer or lose revenue due to theft and out-of-stock issues. It's really a one-two punch. The conversation then turns to the question, “what strategy should be deployed?”
It's crucial that when picking a loss prevention strategy, you keep in mind the dollars. What's the return on investment? Whose budget will the loss prevention measures be taken from? When the ROI is more straightforward, the issue becomes clearer. For example, moving product to high-visibility areas in the front of a store near checkout. When retailers make it difficult for customers to put a product in their basket by locking it up, brands suffer and different purchase choices will be made by consumers. It becomes quickly evident that this isn't a one-size-fits-all problem.
Some Gain is Better Than Chasing a Perfect Solution
A curated set of solutions that change with the product category, and specific to theft, is critical for brands and consumers. Within packaging, new technology and innovations are moving quickly to address these needs. One solution consists of two technologies on the package: an overt electronic article surveillance (EAS) tag combined with a micro-perforation in the packaging conversion process. Preparing this solution in the packaging conversion process minimizes the cost of hand-applying EAS tags in-store and in retail distribution centers. Placing the EAS tag overtly on the front of a pack makes it less likely that theft will even occur. According to industry estimates, EAS systems can reduce theft up to 60 percent. When the EAS tag is combined with a micro-perforation of the packaging material, it makes resale of product almost impossible. When organized criminals attempt to remove the tag, the packaging is torn and defaced. This is just one example of how combining smart thinking, understanding of the issue, and new and proven technology can have a major impact in decreasing loss.
Moving Forward
When talking to retailers, it's evident that they're frustrated by the lack of progress on retail loss prevention. It becomes everyone’s problem when costs rise and consumer brand perception turns negative. The answer may lie in a few different areas:
- Work together cross functionally with retailers, brand owners and packaging partners.
- Think in new innovative ways about ROI and budgets to create win/win scenarios.
- Apply new and proven technology wisely and to the correct problem.
Understanding the importance of picking the appropriate solution that fits each loss prevention issue specifically is key. When we can bring everyone to the table with a spirit of collaboration, real progress can be made.
Paul Nowak is the senior director of sales strategy and business development at QuadPackaging, a provider of collaborative end-to-end packaging solutions.
