The loss that retailers include in shrink includes shoplifting, associate theft and administrative errors along with vendor fraud. Grocers are even more detailed as they also face losses from products that go stale or spoil and need to be written off.

For retailers, operational issues can impact on more than 60% of their losses, theft and misdeed accounts for the balance. In retail where margins are thin at the best of times this is an issue that deserve a lot of attention. Fortunately, there are a lot of new technologies that are helping to address these concerns.

Let’s look at associate theft for a moment. One of the most common schemes is called “sweethearting”. It happens when a cashier has an accomplice come through the checkout and does not charge then the full amount, if at all for some of the items in their purchase. Video surveillance is part of the equation, today’s technology is sophisticated enough to identify when something is not scanned but still bagged. Analytic tools can also identify patterns of anomaly. (i.e. specific loyalty members consistently seek out the same cashier and the average transaction value falls out of normal limits).

Outside of collusion, there are a great many thieves who work without the help of staff.  RFID (radio frequency identification) technology is something that generates a signal which can be tracked inside the store. In recent years this has become very inexpensive. One store that has made great use of this is The Real Real. Every item in their store is imbedded with a thread-sized microelectronic tag. These washable electronic tags can be woven directly into a garment by the manufacturer, which makes them almost impossible to remove. They can also provide information about the entire lifecycle of the garment, such as the date of manufacture and where it originated, (more on that in a future article about Blockchain and retail). These tags allow the staff to find and follow merchandise through the store or set off an alarm when it leaves without being deactivated.

While it may seem like a scene from Minority Report, the use of video analytics is coming into its own. This isn’t just a case of recognizing known offenders, the tools associated with technology are sophisticated enough to analyze a person’s facial expression to identify a propensity for theft.

It’s becoming a wild place where the respect for consumer privacy must be balanced by the need to secure the store and its merchandise. But as new store formats (like autonomous checkout) become more common, security measures like this will be something we see as the price of admission.

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The first time I saw them dance, it was in New York.They looked so cool, turning and spinning as they flew across the floor of the show. They moved quickly, with a choreography that defied reason, yet every move was precise. But this wasn’t an avant-garde ballet in a trendy art house. These were warehouse robots from Kiva Systems on the floor of the National Retail Federation “Big Show” which draws an audience of more than 30,000 industry insiders each January. Amazon was impressed… they bought Kiva in 2014 and now you’ll find them in Retail warehouses around the world.

Managing the logistics function of a warehouse and distribution network may seem almost industrial at times. Schedules, load optimization and cross-dock handling seem far removed from the luxury showrooms of Saks and Nordstrom, but they are critical functions for any retailer. There was a time when these operations were managed with manual processes and calculations. Today, the volume and complexity of this function requires a more sophisticated approach. Predictive analytics and machine learning are just as valuable as variations in fuel costs. To meet these challenges, companies like Rubikloud have developed analytic tools that leverage machine learning to juggle all of this information to help manage forecasting accuracy, reduce stock out situations and save man hours.

Another area that’s having an impact on logistic solutions is the Internet of Things (IoT). Being able to connect devices attached to everything from ships, trucks and pallets has provided incredible access to information throughout the supply chain. It’s now possible to track and measure everything from temperature and humidity of produce to the real-time location of your truck fleet. These things allow a retailer to optimize their operational costs and be more efficient in the way they bring their goods to market.

I spoke with Gary Newbury, a subject matter expert in Last Mile Fulfillment and Retail Logistics about this evolution. He commented that “the biggest two challenges for any retailer is having full visibility of exactly where each item is within the supply network extending back into each supplier, and dealing with a mix of both pallet handling for stores and single item picking, supporting individual customer orders, cost effectively”.

All this technology requires a new way to manage the information. While there are some notable exceptions, most retailers are very reluctant to build a massive data centre where the information is processed and stored. The capital expense is just too great. The other aspect to consider is that the computing power and speed required to handle the analytics, forecasting and reporting, exceeds the capabilities of a traditional data centre. Companies are now looking to Cloud solutions that can be scaled up to match their seasonal peaks. That evolution has sparked a whole new issue for retailers. AWS (Amazon Web Service) is a Cloud offering that is readily available for retailers. The issue that the retailer face is that they look at Amazon as the competition, so they find it difficult to partner with them by using their Cloud service.

Logistics may not be one of the most glamorous parts of the retail industry but it’s changing as much as any other part of the business, as a result of the digital transformation that the industry is experiencing. With a future that promises driverless transport trucks and drone deliveries the face of distribution and logistics has become a lot more interesting.

Learn more about transforming your business by leveraging your data

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