Retailers and loss prevention teams are facing a dramatic uptick in shrink, often left wondering what happened to products that mysteriously went missing between the DC and the store.
Thankfully, RFID technology has the potential to revolutionize how retailers track shrink along the last mile of delivery and beyond. By leveraging data from RFID tags and working in concert with generative AI, retailers can gain more clarity around how and why products are missing.
Why does this matter? Nearly 65 percent of retailers in the U.S. and U.K. feel retail theft has hit a crisis point, according to a survey by Avery Dennison, and that includes organized retail crime (ORC) targeting loading docks, trucks, and online returns fraud. In the U.S. in 2022, total dollars from retail loss reached $112 billion, according to a major report from the National Retail Federation and Loss Prevention Retail Council. This is up from $94 billion the year before.
Historically, RFID tags have been widely used to track merchandise, control out-of-stocks, and manage inventory, but retailers are now testing tags to also monitor shrink.
Unique Codes Power Precision Tracking
The electronic product code (EPC) or identifier inside RFID technology marks individual products, pallets, or containers with a unique scannable code. The code cannot be duplicated, like putting a fingerprint on a product, enabling it to be monitored throughout the supply chain.
With this precision tracking, retailers have several benefits at their disposal, including:
- Associates can scan individual product codes to manage inventory counts in real time.
- Retailers can post RFID readers at store entryways and exits to alert when a tagged product is being shoplifted.
- Supply chain teams can sometimes even put readers on trucks, helping to track if items have been tampered with, or track if items have gone missing or been misplaced.
However, if a shopper exits the store with a tagged product, RFID can’t necessarily get the product back. Similarly, if a container goes missing, the RFID tags can’t say why. This is where a retail analytics solution works with the RFID tag data to unshroud some mystery.
AI and RFID Together Innovate Loss Prevention
AI-powered retail analytics solutions, especially ones with generative AI capabilities, can quickly read through mountains of data, including RFID data, to link pivotal information around cases of shrink. The data can also be used to assist loss prevention teams in finding if products have been misplaced by store associates or if an ORC ring broke into a container.
Consider these situations:
- Tracking missing products with RFID and cameras: If a retail associate does an inventory scan of TVs on the store shelf using RFID technology and notices that a product has gone missing, a loss prevention specialist can analyze RFID data and quickly identify when and where the item was last scanned. From there, teams can review camera footage to determine if the item was stolen or simply misplaced by an associate in the warehouse.
- Tracing a return for risk of fraud: There are many risk indicators to tell if a return is fraudulent including customer history, time between purchase and return, collusion markers, product value, and more. Now, with RFID, it is far easier to determine if an item being returned matches the item identified on the receipt. Essentially, RFID traces the path a product took to get to the return counter. If the product has not left the store and there is no record in the POS system, it is surely fraud. In a non-receipted return, the data doesn’t identify a specific transaction, but analytics can determine if the product ever showed up in a transaction or if it ever left the store.
- Build stronger, faster ORC cases: AI case matching helps identify cases that match ORC investigations automatically. When one or more items are scanned at the exit without a record of a sale from the POS, an incident report can be auto generated, sent to the appropriate investigator, and added to any matching ORC investigations. This means that an ORC group that ravages a store is tracked in real time, so that when law enforcement catches them, there is a complete picture of all the theft that’s been committed.
Fighting Retail Shrink in New Ways
RFID is valuable data, but it’s just data if not linked to the right tools and made actionable. RFID data alongside POS, CCTV, and ORC case data will surely help companies stay ahead of the bad actors.
The Avery Dennison survey of retailer executives learned that 76% percent of the respondents already use RFID in some capacity. What’s more, nearly 40 percent of the respondents expect to set up AI-enabled cameras and facial recognition technology to help reduce shrink.
RFID technology, combined with AI capabilities and more, give loss prevention teams more insights into how and why inventory has gone missing. Tech is joining forces to take down shrink and protect retail profits.