Hello, Welcome to a special three-part episode where we talk about the biggest problem in retail right now, which is theft. With US retailers like Target and Walmart Home Depot grappling the rising inventory shrinkage leading to significant profit losses, this issue has cost the industry over $100 billion, double that of 2015. Increased theft incidents, either violent ones, are prompting measures like surveillance plexiglass. However, balancing security with a seamless shopping experience
is an ongoing debate. In the United Kingdom, the Coop reported its highest ever levels of retail crime, with over 175,000 incidents in the first half of 2023. Over the next three episodes we'll take a look of the problem of shrink or theft, talk to experts in the field and look at real life solutions on what retailers can do to protect themselves from the etab offices in the UK. I'm joined by Leandro Blank. Who better to talk to about such an important problem in retail than the experts?
Leandro, welcome to the podcast. What I'd love to start by doing is getting your view on what is lost. First of all, thank you Annex for having us in the in the podcast. I would say that Nos. It's a very broad concept. That nowadays we are seeing lot of noise and lot of news around fast specifically, but it's actually a bigger challenge for retailers which includes from the loss that happens in during the process supply chain inventory, stock error in the process of accounting and
pricing. It also includes product waste and spoilage. So all the product that it goes out of stock because the expire date has reached. And then the third, Peter, is the the theft, which is now the most hot topic in the press and the news and everywhere but we see in theft, we can also split it into two different categories, organized crime and what we call opportunist theft. It's a client that goes to the store, sees an opportunity, doesn't scan, doesn't pay for something.
You see that he can he or she can get away with that. And then they repeat that I becomes a behavior. Yeah. So these two aspects are different. Within this theft pillar of loss, is there one that causes more of a headache for retailers? Is there one that's prioritized when you're talking to retailers? I guess all of them are in the agenda.
But what we are seeing is that specific specifically theft, it's in the rise, right because of the dynamics that we are seeing now in the in the current economic situation. So rising cost of living, the diminishing margins from the retailers are making this theft the one that it's now becoming the really hot topic because it's in the rise. The other tool, for example the process, the ones related to processes or the one related to product waste are more or less
being managed by the retailers. But the one that it's purely related to theft, that's the one that it needs to be put under control at the moment. So can it be put under control in reality? Can you really help retailers or is it just marketing? It can be put under control. There are some initiatives going on as everything in life. With everything that is an upside and then downside, sure. So every initiative, every solution we have a trade off.
So I think that the challenge remains how to mitigate the risk, yeah. Theft without stopping trading, yeah, because that's in stores are there to enable trade. So if you put lots of barriers and lots of products behind the cabinet counters when they closed in cabinets, then yeah, you're going to reduce loss where you're impacting sales at
the same time. So that's I think for me the main challenge how to put theft under control and mitigate the risk, Yeah, but at the same time I'm what I was going to say improve the customer experience, but at least don't make the customers don't have any work on it, right. I don't make it worse. It's.
Not make it worse. Yeah, because it's interesting because again, the NRF report that focuses in and and in the UK, the Federation of Small Businesses has also they launched a report in July about what are for small shopkeepers or small medium enterprises, how much of a problem it is for
them. And obviously they're asking for change in the UK law as they are in the US to make any type of shop crime more than petty theft, which is the way they look at it. But this whole thing about friction and having the right amount of friction to prevent theft or the right amount of friction to allow a great
customer service. What I found interesting when I was reading the report and some of the solutions had to mitigate was this whole concept of, you know, capturing live video and then using AI or this new world of AI and data to help store staff get themselves out of positions of danger. Exactly, because that's the other big problem is no retailer wants their associates to be in danger. I just wondered if you have any thoughts on that in terms of
best ways to help retailers. So we understand the problem, but what is the solution? That there is no one single solution for every retailer and there is no one single batch point that will solve all the problems. Yeah, So what we see that works. Is that, first of all, each retailer has a different dynamic, different operating model and so we need to approach every retailer as a new
development. So we will end up with a bespoke solutions for every retailer based on their need, on their specific dynamics and their specific customer experience that they want to deliver to the client. So just working from your experience, when you're talking to these people, what is that one thing that they come to you with? Like, I know everyone's different, but yeah, are they? Is it theft as a problem in general that's driving their conversation with you right now?
I think that now the main challenge that we're seeing is that, but it's not really a measure of loss, right? Where it's happening in which products when, So there is lack of information. Got you. So I think that. 1st, we need to start there. We need to understand where is loss happening and once we will understand that, then we can propose a solution. It's really hard to measure the absence of something, so losses
something that it's not there. So our approach is probably measuring the when we can convert a potential loss into a safe opportunity. Yeah. So that's something that it can be measured and can be then also put in the in a in a. Highlight within the organization because everyone understands the language of
sale. Yeah, in a retail environment because until now I think loss was more on the on the back end was a for the loss prevention officer somewhere in the back and very isolated from the rest of the of the organization. Yeah. But when you translate that into a sales discussion, how we can by preventing laws and loss, actually it transformed that into a sales opportunity. Then that is that something real?
I mean does that like? Just to give one example, yeah non scan and attempt and it says checkout. Yeah, if we can convert a non scan attempt into an that's a sales, right, but you're. Transforming, and in that case, is that that's an innocent mistake that someone may have made, but the retailer will lose anyway. Or or innocent. It only broke. Yeah. Interesting. Interesting. Why are they focusing on it now when it's been around for so long? Since there is written, there is loss.
So it's been always a problem until now is budgeted and it was in the P&L, somewhere in the P&L. But now there are two dynamics as I I I said it beginning that I'm putting this on the hotspot on one side notice increasing, yeah, on the other side profits are going down, margins are going down. Yeah, so now. Reducing loss has become a pocket loss margin, the pocket
of growth for the retailers. So nowadays actually investment in loss prevention initiatives is his number one investment. The other thing I hear and and I'm sure retailers are probably, you know, when you go to any trade fair, you see loss prevention through computers, loss prevention through AI, loss prevention through data, loss prevention through dates, Los prevention through pause. Where do you start? How do you how do you tackle this problem?
Every single problem might be tackled with a touch point with a single touch point. But the the real value to really address loss in a holistic way and with a multi dimensional approach because loss is a multi dimensional problem is by connecting all these dots together. So and not only the touch points that are related to loss specifically like a vision technology could be, foot fault could be, transactional data could be.
Time of day, weather. So all the data points that we have, we have around and written store. If we connect all those together, we can extract the patterns on the data that could give us insight and we copilot to the store manager to know when something could happen. I think that's where the value lies. That sounds like science fiction.
I mean like, I mean I love the idea of Copilot and and you know which business doesn't want to enable their store manager, their store associates to help them. I mean NRF for example. Again the the report said one of the pieces of advice that they give to the executives or the retailers, do not ask your colleagues to engage, record the incident, gather the data and in the US they're trying to share the data. But I mean how does that? Is there a way of bringing it all together?
There is. We're working on initiatives. But rather than me talking about it, yeah, don't you come to our office in the showroom in in Sweden and you can see it for yourselves. I sound fantastic.