The Perfect Retail Storm
Updated: Apr 30
Experts predict there is a 65% likelihood that La Niña will persist through April 2021, with a 70% chance the tropical Pacific will return to ENSO-neutral conditions by the April-June 2021 season, according to WMO's El Niño-La Niña Update. So, how does the large-scale cooling of the earth’s oceans affect you? It probably does not, unless you lead the World Meteorological Organization (WMO) that is charged with saving lives and mobilizing preparations for climate sensitive regions. However, if you are reading this, you probably run an organization charged with predicting a different type of weather, such as increased shoplifter violence, social unrest, or a general increase in shrink.
Asset Protection and Loss Prevention leaders must protect their organizations from storms that impact the safety, security, and profitability of their respective retail organizations. Knowing when and where these retail storms will make landfall can be difficult to predict but knowing how to best support the business is critical.
Retail theft in the U.S. continues to increase year over year. However, since the onset of the Covid-19 pandemic, retailers are reporting thefts at an alarming rate. A study by Business.org shows that 40% of small-business owners say shoplifting has increased since the beginning of the pandemic. The National Retail Federation (NRF) survey found 75% of loss prevention executives at a cross-section of large and mid-sized retail companies said ORC activity had increased in the past year, up from 68% last year. “Retailers are seeing more cases and higher losses as organized crime continues to target stores.” NRF VP for Research Development and Industry Analysis Mark Mathews said.
Most retail executives agree the pandemic is to blame for the accelerating theft trend. But, what if there is more to come? What if there are weather patterns within the retail atmosphere that suggest the storm could be strengthening?
The unemployment rate in April 2020 increased by 10.3 percentage points to 14.7 percent. This is the highest rate and the largest over-the-month increase in the history of the data (available back to January 1948). The number of unemployed persons rose by 15.9 million to 23.1 million in April. (Bureau of Labor Statistics). The sharp increases in joblessness reflect the effects of the COVID-19 pandemic and efforts to contain it, such as mandatory lockdowns, quarantines, travel restrictions, and the closures of non-essential businesses. The immediate threat of severe retail weather is imminent. The long-term impact remains to be seen, as customer behavior changes to contactless experiences and employers move to lower-staffing models. The end-result is fewer jobs. With sustained unemployment, a growing number of Americans have resorted to shoplifting, just to make ends meet (Washington Post). An estimated 54 million Americans will struggle with hunger this year, up 45 percent from last year, according to the USDA. The Census Bureau reports that nearly 26 million adults reported not having enough food to eat, reaching record highs for the 22 years the government agency has been tracking this data.
Retail weather conditions continue to rapidly deteriorate. The clouds are darkening, and winds are picking up speed. Retail LP/AP executives notice the storm is beginning to take shape as shoplifting offenders realize their crimes will go unpunished.
Law enforcement officers must comply with social distancing and over-crowding jails. Officers struggle to effectively police when directed to not respond to non-violent crimes. Felony thresholds are raised in several jurisdictions, further reducing the ability to hold offenders accountable for their actions.
Recent policy changes in the news
The change in Columbus Division of Police policy, says officers are not to arrest or issue
a summons for most nonviolent misdemeanor offenses, including theft. The Columbus
New policy limits jailing of low-level, some felony offenders in attempt to eliminate
COVID-19 outbreak NBC - Maine
Official says shoplifters ‘acting with impunity,’ blames limits on felony charges WGN -
Retailers are left with little recourse as store-level employees are instructed to avoid potentially violent encounters with shoplifters while law enforcement fails to respond to theft-related offences.
A Perfect Storm
A global pandemic, widespread unemployment and decriminalization of non-violent crimes is a scary prospect for retailers. The perfect storm was formed when the spread of Covid-19 threatened those affiliated with the justice system, putting everyone connected to it at risk. Justice officials are continuing to reduce jail and prison populations to help stop the spread. But, at what cost?
According to the Action Institute, many prisoners released over the last year have reoffended. Coupled with ongoing decriminalization throughout the country, they will continue to offend. As the eye of the storm tracks over the retail industry, evacuation is not an option. This applies mounting pressure to retail LP executives to find solutions that do not involve law enforcement and limit employee intervention while keeping costs low. For example, Gatekeeper Systems’ Purchek™ system prevents pushout theft by locking one or more wheels on any shopping cart that attempts to exit a store without passing through a working checkout. By doing so, the need for employees to confront dangerous shoplifters is vastly decreased.
Pushout theft is real, and this form of shoplifting is far more frequent than most retailers realize. Gatekeeper Systems conducted a real-world, ten-week experiment in a major US supermarket to prove the point. The results are alarming, see for yourself. https://gatekeepersystems.wpcomstaging.com/2021/01/26/purchek-case-study/
Gatekeeper Systems’ expanded product suite of intelligent cart solutions offers solutions for EVERY retailer’s needs to minimize merchandise loss and reduce asset and labor expenditures.
Gatekeeper’s loss prevention, retail analytics, and cart containment solutions utilize patented locking wheel technology to put an end to cart-based shoplifting, shopping cart loss, and uninformed decision-making. Cart management solutions increase safety and reduce labor costs by maximizing productivity while simultaneously resulting in a positive store image.
Intelligent pushout theft prevention solutions stop thieves and their cart full of unpaid merchandise from leaving the store. Customizable wheel technology allows retailers to defend their entire store or just a high loss department based on the store’s unique layout.
NEW Retail Analytics solutions provide increased visibility for informed decision making. Increase efficiency, optimize fleet size, and perfect the entire customer shopping experience with store and enterprise-level analytics.
Find out why the top 20 retailers that use shopping carts rely on Gatekeeper solutions.
To learn more or to schedule a free consultation, click here.