I have been monitoring recent news stories on retailers which are closing doors on many of their stores. The most recent headliner is J.C. Penney announcing a closing of 138 stores. According to a report on CNBC.com, the CEO, Marvin Ellison stated, “We believe closing stores will allow us to adjust our business to effectively compete against the growing threat of online retailers.” In a Jan. 5, 2017 report on money.cnn.com, by Paul R. La Monica, the site reported the closing of 109 K Mart stores and 41 Sears Outlets. “Sears CEO Eddie Lampert said in a statement that the company was “taking strong, decisive actions…to stabilize the company and improve our financial flexibility in what remains a challenging retail environment.” Both stories referenced the challenge posed by online retailers, especially noting Amazon. Kohl’s and Macey’s are two other major stores that have recently announced the closing of significant numbers of stores. When I began researching information on the causes of retailers closing their doors I was surprised at the lack of finger pointing at merchandise shortage or mentioning the need to stop shoplifting or prevent employee theft. The closest I could find was in a CNBC article which cited as one of 11 common reasons small businesses fail is due to “disgruntled employees”. The article references a 2013 Gallup Poll, “70 percent of American workers are either not engaged at work, or are actively disengaged to the point of trying to subvert the work of colleagues.” http://www.cnbc.com/2014/07/30/11-all-too-common-reasons-small-businesses-fail.html?slide=12 I would like to suggest that what all the articles I reviewed fail to recognize is the impact that theft has on business closings. If retail theft prevention is not a part of a business plan, there is a good chance a store will not be able to remain profitable.
The impact of retail theft prevention cannot be underestimated. According to the 2015 Global Retail Theft Barometer Shrinkage among U.S retailers was 36.79 billion dollars (2015 GRTB pg. 50). Broken down, 45% of this shortage was due to dishonest employee theft and 36% due to shoplifting (2015 GRTB pg. 53). According to the same report, many retailers had decreased spending on Retail Loss Prevention and shortage increased. The use of a Checkpoint security system including the pedestals, labels and tags and deactivation tools can improve shortage results and profitability for stores. Unfortunately, many stores that already have systems sometimes choose to reduce the number of sku’s to protect or increase the price points of the items they will tag in an effort to reduce cost. The idea behind this is to purchase fewer labels or spend less on hard tags. The unexpected consequences are increased shortage.
I pointed out that most of the analysis I am reading on store closings seems to blame online retailers and also closing less profitable stores to focus on those that are succeeding. But I would like to point out an article specifically on JC Penney and electronic article surveillance from Dec 3, 2013, from scdigest.com, “RFID News: JC Penney’s Sudden Retreat from RFID Led to Rash of Store Thefts”. The SCDigest editorial staff writes, “…the struggling department store chain said last week that a botched transition to RFID over traditional Electronic Article Surveillance (EAS) technology allowed thieves to run relatively wild in Q3 and probably earlier.” They continue, “With sales of $2.78 billion in the quarter, the percentage drop in margin cost Penney about $28 million in lost profits…”. http://www.scdigest.com/ontarget/13-12-03-1.php?cid=7637&ctype=content I am not familiar with the EAS system JC Penney’s used and I would emphasize I am not suggesting a Checkpoint security system would save the stores that are on the chopping block. What I am willing to say is the article does seem to support my point that anti-shoplifting measures do stop shoplifting as well as internal theft and thereby saves businesses significant amounts of money.
Retail theft prevention using a Checkpoint security system can stop shoplifting and reduce internal crime in your store. Merchandise theft cannot be sustained for long without causing significant impact to the profit line of the store. Install a Checkpoint system and see how much you can improve your bottom line.
Get more information on a Checkpoint security system, contact us or call 1.770.426.0547 today.