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Survey: The products—and brands—most likely to be stolen from stores are…

BY Marianne Wilson

Shrink costs U.S. retailers a staggering $42.49 billion during 2017-2018.

That’s according to the 2018 “Sensormatic Global Shrink Index” from Tyco Retail Solutions, which found that the most likely to be stolen from U.S. stores included clothing, cosmetics, jewelry and confectionery, as well as consumer electronics. The brands targeted the most included Guess, Gap, Revlon, Apple (and Beats), Samsung and Sony.

U.S. fashion and accessories stores had the highest rate of shrink by retail vertical, the survey found. Office equipment stores had the lowest.

Tyco commissioned global retail market intelligence provider PlanetRetail RNG to conduct the report, which included over 1,100 retailers across 14 countries representing the world’s leading economies and 13 vertical markets. They operate over 229,000 stores. On a global scale, shrink cost retailers nearly $100 billion globally last year.

Shrinkage was highest in the U.S. at 1.85%, of sales during 2017-2018, while Europe (1.83%) ranked second.

Key U.S. findings include:

• External theft/shoplifting (including organized retail crime) make up the most significant percentage of losses, at 35.55% of lost sales, slightly above the global average. Internal shrinkage (24.54%), including employee theft, was the second largest source of losses, followed by vendor and supplier losses (21.47%).

• The average value of each ORC incident in the USA during 2017-2018 was $1,401.68 (or $131.72 more than the global average). Other external incidents, including shoplifting, amounted to $89.80 (or $16.86 more that the global average) compared to all other countries surveyed. Internal sources, including employee theft, were worth $12.75 more in the USA, at $71.75, compared to the rest of the world.

• After electronic article surveillance (EAS), alarm monitoring is the next most popular loss prevention investment, followed by access control systems, exception-based reporting and closed-circuit television (CCTV).

• The country ranked fifth for overall shrink, but has the highest shrink dollars based on being the world’s largest economy.

• Fashion and accessories have the highest rate of shrink by retail vertical, with shrinkage as a percentage of revenue coming in at 2.43%. Convenience stores and home, garden and auto stores had a rate of 2.05%, followed by drug stores, at 2.03%.

• The sector with the lowest amount of shrink (as a percentage of revenue) was office equipment, at 1.26%.

“Best in class retailers are optimizing their physical stores by ensuring that operational controls are in place for growing problems such as retail shrink,” said Catherine Walsh, VP and general manager, Tyco Retail Solutions. “The Sensormatic Global Shrink Index benchmarks retailer performance globally and sheds light on other factors affecting loss prevention.

To view the full report’s findings click here.

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Bloomingdale’s uses machine learning to evaluate employee knowledge

BY Deena M. Amato-McCoy

Bloomingdale’s can now pinpoint which of its employee learning programs are generating results — and by how much in real dollars.

The Macy’s division has deployed Axonify Impact, (from Axonify), a learning attribution engine that uses machine learning to evaluate the data collected through training programs. Results reveal the direct impact that employee training programs are having on real business metrics, such as increases in revenue or decreases in expenditures.

As employees interact with the platform, the technology’s machine learning capabilities reveal which programs are generating the greatest impact, and how employee knowledge and participation influence business results. It also uncovers gaps, and makes real-time recommendations to frontline managers when a business target is at risk.

At Bloomingdale’s, the platform has played a large role in helping reduce safety incidents. The platform automatically ties the retailer’s training efforts to how well it is reducing its overall safety claims. Bloomingdale’s has attributed about one third of this safety claim reduction to training efforts on the platform, which translated to a savings of $3 million in one year.

“At Bloomingdale’s, we’re always digging deeper into the effectiveness of our training programs and content to understand exactly how they impact business results,” said Chad McIntosh,VP of asset protection and risk management of Bloomingdale’s. “For most companies, making these connections is incredibly difficult and time-consuming.”

Bloomingdale’s can now easily identify where “learning has benefited our company, because we can tie training efforts directly back to business results,” he added. “But what’s most powerful to me is that Impact shows us exactly what we need to do to drive a greater effect on our business. This just hasn’t been possible before.”

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A.T. Kearney: Retailers in for big hit if U.S. exits NAFTA

BY Marianne Wilson

New tariffs, reduced retail spending, and lost jobs are among the outcomes if the United States exits the 24-year-old North American Free Trade Agreement.

The near-term cost to retailers of leaving NAFTA is estimated at $15.8 billion in added tariffs and reduced margins, according to a study from global strategy and management consulting firm A.T. Kearney. The retail industry imports $182 billion of goods from NAFTA partners.

“Retailers in different sectors would be affected in different ways—even from product to product,” said Johan Gott, A.T. Kearney principal and co-author of the study. “But bottom line, the impact will extend to millions of products imported into the U.S.”

The study, How NAFTA Affects US Retail, quantifies direct and indirect margin impact across all sectors of retail. It also quantifies the impact on retail employment, projecting losses of over one hundred thousand jobs within the next three years.

“NAFTA has dramatically influenced the US economy, the retail sector, and Americans’ standard of living,” said Gott. “From the time it came into force, retailers have gradually become de facto importers, because their customers demand the products that NAFTA allows them to purchase easily, affordably, and with great variety. Retailers, then, are agents without the protections that other importers enjoy.”

Should NAFTA be terminated, the report suggests that retailers:

• Take steps to quantify the impact on their cost of goods sold;

• Outline a response in terms of several different scenarios that factor in potential impact;

• Become an active voice with policymakers, industry groups and peers to share the real, direct impact that the end of NAFTA would have; and

• Be prepared to share confidential data with government officials to demonstrate this impact.

“If the United States terminates NAFTA, many importers would likely be covered by other protective sanctions against foreign competition,” added Gott. “US retailers do not face the same kind of foreign competition, but they would be left to face higher costs for the goods they sell — a prospect whose ramifications would reverberate throughout the US economy.”

The A.T. Kearney study was done in partnership with the National Retail Federation (NRF), Retail Industry Leaders Association (RILA), and Food Marketing Institute (FMI). To view the full How NAFTA Affects US Retail study, visit atkearney.com/retail/how-nafta-affects-us-retail.

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