Design to Reduce Shrinkage, Not Sales

Since great store design starts with customer experience, I’ll start there.

I went into a popular electronics store for an Apple Watch. There were only two to see. Both were tethered to a “wrist loop” so you could “try them on” by slipping your wrist through the plastic loop that held the watch. So, I naturally picked up the wrist piece and A VERY LOUD ALARM SOUNDED the minute I picked it up. Eventually, an associate walked over, stopped the alarm and we spoke:

Associate: “You can’t try on the watches anymore.”

Me: “I’d like to know how it feels on my wrist and what size is right.”

Associate: “You have to just look at these two. Those are the two sizes.”

Me: “The display shows seven colors. Can I at least look at the colors?”

Associate: “You have to pick from the poster.”

Me: “So you can’t see the colors?”

Associate: “You can if you go to the Apple Store.”

Me: “Ok, I think I’d like the smaller one in the gold-ish color.”

Associate: “I’ll go get it out of the back.”

… (comes back with box)

Me: “Can I see it?”

Associate: “We can’t open the box.”

Me: “So, I’m going to buy a watch I haven’t tried on or seen?”

Associate: “You can bring it back within 10 days if you don’t like it.”

This one encounter is a result of the escalation in many aspects of what's currently a very serious issue affecting most all of retail. Theft. The shopping experience has substantially diminished to account for necessary theft mitigation measures.

Shrink is Now a Bottom-Line Issue

Shrink, including shoplifting and organized retail crime, cost retailers $94.5 billion in 2021, up from $90.8 billion in 2020. According to a 2021 study conducted by the National Retail Federation that used data from 63 retailers, retail theft accounted for 37 percent of those losses, employee or internal theft for 28.5 percent, and process and control failures for 25.7 percent. Unknown loss and other sources accounted for the rest.

Although related, each of the three major types of theft noted above require a focused approach and tactics, given each account for a significant percentage of the aggregated loss. Reduction of modest percentages across each type rather than focusing on just one usually offers greater overall mitigation of losses.

It's also widely known now that store policy doesn't allow employees, and even hired security, to intervene during an active theft. Store security staff is in place largely as an optical deterrent.

Purposeful Design Solutions

One critical aspect of a formidable theft prevention program that can get overlooked in the flurry of security measures is the store design itself. Store flow/layout, positioning of key displays, and signage and inventory placement with loss prevention in mind can significantly contribute to anti-theft effectiveness.

Store layout can be redesigned to surround high-theft areas with barriers, controlling traffic flow and multiple access points. For example, guiding shoppers to a central “entry” to the electronics area or beauty section signals it’s a more curated area with greater store attention. Using barriers also allow for cameras and video monitoring to focus on a very specific area.

Many retailers also leverage a “greeter” or “shopper assistance” desk as well as a special entryway to these areas. While the perception to most consumers is that it’s to help them shop, it also sends a signal to shoplifters that more eyes are on that section of the store. Separate checkout for these areas also can deter theft by keeping inventory in the designated area unless actually purchased in that area.

Some of the simplest ideas around store layout that maximize visibility and minimize blind spots can have an impact on shrinkage if planned and executed correctly. Lowering fixtures in areas of greater risk allows surveillance cameras to cover more area. Wayfinding and signage placement can help guide traffic flow and parlay information, but also needs to be thoughtfully positioned to enhance sight lines vs. obstruct views to high-theft areas. Store layouts not collaborated on with security or store operations can mean new, updated signage or fixtures can inadvertently negate security system effectiveness.

Fixtures can play a major role in an anti-theft strategy. The latest in anti-theft fixtures comprised two whole exhibit halls at Euroshop, held in Germany earlier this year. One example was shelving that only showed one row of product at a time. Only when that row’s inventory was depleted would the next row open up. This deters organized “shelf clearing” theft from happening where entire sections of merchandise are taken at once. A different type of fixture allowed shoppers to inspect high-end merchandise like watches or shoes. When a shopper reached in to touch the item, a light would come on and music would play. Unknowing shoppers saw this as an enhanced shopping experience, but it also alerted employees nearby that the high-end merchandise was being handled and it sent a signal to security.

Checkout was another area where technology played a huge part in the evolution of theft prevention. Bag scanners take the place of receipt checkers as shoppers leave a store. A cart or shopping bag would pass through the scanner and ensure all merchandise was paid for by cross-referencing with the receipt or scanning for theft tags not deactivated.

Items can also be individually tagged using electronic article surveillance (EAS), which sets off an alarm if a tagged item isn't deactivated at checkout. While this item-tagging technology has been around a while, it’s more elegant and smaller in size as well as more sophisticated in how well it works. 

An Ongoing and Evolving Challenge

Finally, associate training is critical for all potential scenarios. This includes customers who are belligerent because of inconvenience and customers who are frustrated by a perception of incorrect suspicions. Expediting a path to de-escalation, in fact, might win the goodwill of involved parties as well as onlookers.

A single strategy can rarely eliminate shrinkage completely. As mitigation evolves, unfortunately, so does the methods used by thieves. It can be reduced significantly, though, by implementing a combination of methods tailored to the specific challenges of your retail store.

When doing a refresh or even a new signage package, ensure placement, size and other factors don't interfere with security efforts. Regularly review and update loss prevention efforts to stay ahead of emerging risks and adapt to changing theft behavior.

Tina Chadwick is senior vice president, strategy/creative/digital at Miller Zell, a branded environments and physical design agency with end-to-end services under one roof.