Shrinkage is bad for retailers — here’s how to make it stop

Amelia Kirby

In the Sensormatic Global Shrink Index, Tyco Retail Solutions* presented data on shrinkage worldwide. It showed that shrink, which is loss of inventory by any means including employee admin errors, fraud, shoplifting or other errors, cost retailers nearly $100 billion last year. And it accounted for between 1.82% to 3% of sales globally. While some shrinkage is expected, grocery stores are particularly affected because it can significantly impact your bottom line.

The good news is that innovative computer vision could be the answer to shrinkage across retail. And Tiliter Retail is making it happen. Here’s how.

Automate your manual processes

The leading causes of shrinkage are fraud, shoplifting, employee theft and admin errors. Theft can be prevented to some degree, but focusing on operational issues within your control can have the most significant gains. By leveraging technology and assisting shoppers and cashiers with automated product recognition, you can mitigate these shrinkage risks in your store.

Tiliter's retail tech solutions identify grocery items and products without barcodes. This helps shoppers scan their products quickly and accurately without the need for frustrating lookup menus. It saves a lot of time at self-serve or traditional checkouts while minimising the chance of product selection errors. And our checkout retrofit solution helps cashiers by accurately identifying products at the point of sale.

Remove the chance of human error

According to the National Retail Federation, admin errors account for up to 21.3%** of shrinkage. This includes mistakes like mislabelling and price reduction errors. They’re accidental in intent but still come at a cost. Deploying computer vision in-store can help.

A portion of admin errors are paperwork related; others are due to issues with Point-of-sale (POS) monitoring and inventory management. Things like cashiers entering the wrong PLU or scanning an organic item as a non-organic item. Integrating or deploying automated product identification tech helps you reduce the chance of human error and manage your inventory more efficiently.

Remove the option for shoppers to make incorrect selections  

If your shoppers can’t tell the difference between an organic banana and its non-organic cousin, you could be chipping away at your profit significantly. Usually, this mistake happens by accident — organics and non-organics are often identical! But once artificial intelligence is involved, it’s easy to reduce the problem. Computer vision can identify produce accurately, which means you won’t need an alphabetical selection menu (we can show up to four options), so you can trust that the prediction is correct.

This is great for shoppers who get frustrated by paging through the menu onscreen and are looking to speed up the checkout process. It also means they don’t need to remember if they picked up a fuji apple or a red delicious — the scanner knows, so your shoppers don’t have to.

Retailers will often place store members in the checkout area to prevent fraud. They are tasked with watching out for self-checkout shoppers who choose a cheaper item than the one they’re purchasing. But this means they need to keep an eye on multiple checkouts and could easily miss something.

Smart tech can help manage this problem. The latest AI can be set up to send a notification to a staff member if a shopper overrides a prediction and adds the incorrect item to their shopping cart. That way, staff can follow up with the shopper or follow the process your store chooses to manage this situation.

Help cashiers to be more efficient

For cashiers scanning thousands of items a day, there is room for improved efficiency. Automatic product identification is a great time saver which can help keep customers happy.

And it also means that cashiers don’t need to remember all the PLU codes. These can easily be forgotten or input incorrectly, adding to the shrinkage problem. With computer vision, it’s easy to get it right!

The knock-on effect of improving the scanning accuracy is that you can track inventory more accurately and improve the data you use to order perishable products.

Future proof your business from shrinkage

According to FMI’s 2019 Food Industry Speaks study, grocers experience increased staff costs and lower customer satisfaction, on top of a loss of profit, due to shrinkage. Retailers who invest in long-term shrinkage reduction solutions and technology to help automate processes prone to human error will be positioned to fight this issue and protect their bottom line proactively.

* Sensormatic

** National Retail Federation


Amelia is Tiliter’s wordsmith. She has a background in tech writing, comms and content in a broad range of industries and is on a mission to banish jargon.

Amelia Kirby

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