As a retailer and a brand, it is important to protect your business from losses due to theft. This billion dollar problem isn’t going to go away on its own.
So, can retail loss prevention boost store revenue? The short answer is a resounding yes. Strategic loss prevention propels revenue growth and provides tangible and intangible benefits to the retail industry.
Loss prevention isn't just about damage control for retail stores. It's a strategic investment that goes beyond preventing external theft (such as shoplifting or organized retail crime). Effective loss prevention methods and strategies can significantly impact your bottom line. They boost store sales, streamline operations, and create a more secure environment for both employees and customers.
The Hidden Cost of Locked Displays: Time is Money
Retailers often rely on locked displays to deter theft. However, this approach creates a hidden cost in the form of lost time and sales. Imagine employees spending up to 1.5 hours daily unlocking cases for customers. This translates to nearly $10,000 annually in lost labor per store.
Beyond the financial impact, constantly locked merchandise creates friction for customers. They may abandon purchases due to frustration in wait times or operational errors, impacting store sales.
Boosting Sales and Protection with Smarter Solutions
Secure, self-service display solutions empower customers to take control of their shopping experience. Consumers get access to the desired product in real-time from a solution that prevents theft. These displays can dramatically reduce shrink, often exceeding 70% depending on the product category.
This translates to significant cost savings for retailers. Employees don’t have to constantly unlock display cases. They can dedicate more time to customer service and sales efforts. This leads to increased revenue and overall profit.
The friction in the shopper experience for many stores is a necessary evil to protect margins and ROI. But do these customer frustrating solutions really protect the bottom line if customers give up purchases?
That very issue is what drove the development of our solution, ShopperAccess. It gives customers the power to shop secure items without friction, no longer waiting for employees, no more frustration. Understanding the impact on revenue is crucial to choosing the right solution to this problem.
Calculating ROI: Beyond Theft Reduction
A comprehensive ROI analysis for loss prevention extends beyond just the direct savings from theft reduction. There are at least five key factors store owners and merchandisers need to consider in choosing an anti theft solution.
Key factors to consider:
- Cost of Stolen/Damaged Merchandise: Factor in the overall value of lost goods, not just the initial product cost. This includes any markdowns needed to sell damaged items.
- Labor Dedicated to Unlocking: Calculate the hourly wage of employees multiplied by the time spent unlocking displays.
- Projected Sales Increase: Evaluate historical data and trends from similar stores with upgraded displays to forecast potential sales growth.
- Reduction in Cost of Goods Sold (COGS): Theft isn't the only damage factor. Excessive handling of merchandise can lead to lower-quality products. Retailers may have to discount or write off damaged products, impacting COGS.
- Supply Chain Optimization: An integrated inventory management system that works seamlessly with loss prevention measures can streamline operations and prevent stock discrepancies. This ensures smoother ordering, reduces the risk of overstocking, and optimizes inventory levels throughout the supply chain.
Intangible Benefits with Real Impact
The financial gains are big. Effective loss prevention also has a significant impact on the customer experience, employee morale, and your brand reputation.
Intangible factors to consider:
- Customer Satisfaction: Easy access to products fosters positive interactions and builds customer loyalty. Customers feel empowered and in control during their shopping experience. They're more likely to return and recommend your store to others.
- Employee Empowerment: Reducing security burdens allows employees to focus on customer engagement, leading to higher morale and increased sales potential. Employees who feel valued and empowered deliver better service, further enhancing the overall customer experience.
- Brand Protection: A secure environment intended to prevent loss also builds trust and attracts safety-conscious customers. A retail store projects a professional image and creates a welcoming atmosphere for shoppers.
How a National Drugstore Chain Reduced Their Shrink
High-value electronics, such as electric shavers, are frequent targets for external theft, creating a headache for retailers. Phillips, a leader in personal care products, decided to tackle the problem head-on by partnering with ShopperAccess in a national drugstore chain. These results were obtained with a 10-store test.
Here's how the numbers played out:
- Before ShopperAccess: Phillips products experienced a disheartening 9.9% shrink rate. This translated to an annual cost of over $640 in stolen merchandise per store. Additionally, employees spent a significant portion of their time unlocking cases, costing approximately $2,700 annually in labor expenses per store.
- The ShopperAccess Impact: Implementing the ShopperAccess solution dramatically reduced the shrink rate to just 2.7%, saving $450 per store in theft losses. Employees were freed from the constant unlocking of cases, resulting in labor savings exceeding $2,100 per store. Remarkably, the improved customer experience led to a 30% sales increase, generating nearly $1,000 in additional revenue per store.
- The Bottom Line: The reduction in theft, labor savings, sales growth, and reduced COGS yielded a remarkable 9.85% return on investment for Phillips and the retail chain.
Imagine the potential impact across larger footprints:
- 100 Stores: Anticipated savings of $220,000 in labor costs and approximately $100,000 in increased sales annually.
- 1,000 Stores: Projected savings of $2.2 million in labor combined with an estimated $1 million increase in sales.
The ShopperAccess case solution proved an effective deterrent to theft while simultaneously streamlining operations and boosting the bottom line. This compelling example highlights the real-world impact of strategic retail loss prevention.
Loss Prevention Tips for Success
To maximize your store's security and profitability, consider these steps.
Key strategies for success:
- Choose the Right Solution: Don't settle for a one-size-fits-all approach. Evaluate your specific needs, considering security requirements, customer experience, operational efficiency, and scalability when selecting a loss prevention solution.
- Train Employees: Knowledge is power. Educate your staff on loss prevention tactics and how to identify potential theft risks. Empower them to be observant and report any suspicious activity.
- Optimize Store Layout: Design your retail space with clear sightlines in mind. This can deter potential theft and make it easier for employees to monitor the sales floor effectively. Consider strategic placement of high-value merchandise in areas with good visibility.
Looking for a Proven Solution?
ShopperAccess offers the FlexCube system, a customizable and scalable loss prevention solution that addresses these vital areas. Its seamless customer interactions and robust security features offer massive benefits to you.
Interested in achieving both shrink reduction and a truly customer-centric, sales-driven store experience? Contact a ShopperAccess expert for a personalized ROI consultation. Discover how the FlexCube system can work for your retail business.
