What You Need to Know
- Growing Concern: In 2023, inventory shrinkage in the USA surged by 13.2% from the previous year, reaching a staggering $112.1 billion in losses.
- Sources of Shrinkage: Retail environments face numerous challenges, such as data entry errors, misplaced items, theft by employees, and organized retail crime.
- RFID Delivers Comprehensive Solutions: RFID item serialization improves inventory accuracy, enhances loss prevention, as well as employee accountability.
A solution to growing concerns
In 2023, inventory shrinkage amongst U.S. retailers became an even greater concern, surging by 13.2% from the previous year to total $112.1 billion in losses. [1]
These losses have steadily increased since 2018, largely due to administrative errors, employee and shopper theft, and increased retail fraud. The problem extends beyond the U.S., with European retailers experiencing similar rates of increase.
Retail environments are fraught with challenges that can lead to significant shrinkage. Data entry errors often result in inaccurate inventory counts, considerably affecting the perception of loss. Additionally, items not returned to their proper places further complicate tracking efforts.
More serious still are the losses from theft, including theft by employees, which cost American retailers nearly $33 billion in 2023. [2] Organized retail crime further complicates the situation, with reported average losses of around $700,000 for every $1 billion in sales.
As the financial stakes continue to climb, modern retailers are turning to RFID software to cut down on these mounting threats and break away from the loss cycle.
Cutting the Shrink
RFID technology is rapidly being adopted as the preferred solution for addressing and minimizing retail shrinkage, owing to its wide-ranging and effective features in preventing losses. This is highlighted by its efficiency and adaptability in stemming the issues that contribute to inventory losses, such as theft, fraud, misplacement or mismanagement, within retail environments.
According to Frequentiel data, retailers who have integrated RFID solutions with EAS systems, experience, on average, a 33% decrease in shrinkage, a figure expected to rise as the application of this technology expands.
The growing success of RFID applications is rapidly replacing traditional loss prevention methods with more precise and automated solutions.
- Real-Time Tracking: RFID software allows retailers to track inventory instantly, quickly spotting discrepancies and potential theft or loss.
- Improved Accuracy: RFID readers scan multiple tags simultaneously, boosting inventory accuracy and reducing human errors.
- Enhanced Security: RFID integrates with anti-theft readers to detect unauthorized item removal and unsold items, triggering alarms if necessary.
- Detailed Tracking: RFID shows item movements within the store, from the stockroom to the sales floor, helping spot and address any unusual activity indicating theft.
- Loss Prevention Analytics: RFID data helps spot theft patterns and high-risk areas, allowing retailers to boost security where needed.
- Employee Accountability: RFID tracks employee item handling, ensuring accountability and reducing internal theft.
[1] National Retail Federation / Shrink Accounted for Over $112 Billion in Industry Losses in 2022, According to NRF Report / 2023
[2] National Retail Federation / NRF National Retail Security Survey 2023
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