New York, NY (May, 2023) When it comes to shrinkage, there are no winners.
Shrinkage refers to the disparity between the inventory recorded on paper and the actual inventory sold. Somewhere along the way, items disappear, causing the retailer to lose out on needed profits and customers to miss out on the overall value proposition.
Unfortunately, the problem of shrinkage has been exacerbated by the pandemic and reduced law enforcement in major markets, leading to a consistent year-over-year increase in the shrink rate, according to industry sources.
Shrinkage is a multi-faceted problem that encompasses more than meets the eye. While shoplifting remains a significant contributor, other factors such as administrative errors, supplier fraud, and internal theft quietly chip away at retailers’ profits.
When combined with inflationary pressures faced by both small and large retailers, shrinkage can often be the proverbial straw breaking the camel’s back. With razor thin margins and intense competition from online retailers, reducing shrinkage is necessary for most retailers especially beloved regional chains that has existed for generations.
According to the 2022 National Retail Security Survey released today by the National Retail Federation (NRF), retail shrinkage accounted for $94.5 billion in losses last year, up from $90.8 billion in 2020, when measured as a percentage of total retail sales in 2021.
This alarming increase underscores the urgent need for effective solutions to combat shrinkage and protect retailers’ bottom lines. In fact, recent earnings reports from industry giants Walmart (NYSE: WMT), Target (NYSE: TGT) , and Kroger (NYSE: KR) show even they are suffering from shrinkage losses.
Historically, retailers have employed very conventional strategies like surveillance systems, license plate scanners, increased security personnel, and staff training to combat shrinkage. However, as the retail landscape evolves and criminals become more sophisticated, these traditional methods are proving insufficient. Retailers find themselves locked in an eternal cat-and-mouse game with those determined to exploit vulnerabilities for personal gain.
Retailers continue to search for new solutions to the shrinkage problem, but they have had to wait for technology to catch up with the problem. In the meantime, they have heavily invested in those ineffective solutions, hoping for technology to mature. Surprisingly, the answer to reducing shrinkage may have been right in front of most retailers all along—the shopping cart.
At first glance, shopping carts may appear to be nothing more than tools for carrying a large number of products from the shelves to the checkout. If you view the shopping cart merely as a means of transporting groceries and other goods to the front of the store, this perception would be accurate. However, the shopping cart has the potential to be so much more than a simple means of transportation.
An ideal solution would be a shopping cart that streamlines the retail shopping experience by scanning purchased products and enabling in-cart payment, allowing customers to simply “pick & go” and bypass long cashier checkout lines.
This would result in a more efficient shopping experience for customers, reduce unused shelf-space and manpower requirements, and provide advanced command and control capabilities for store managers.
One emerging company, A2Z Smart Technologies Corp (NASDAQ:AZ)(TSXV:AZ), based in Israel, has come close to developing a complete solution.
The company offers a smart cart for retailers called Cust2Mate, which leverages advanced, user-friendly technologies to streamline shopping for consumers while boosting store management efficiency.
Data suggests that Cust2Mate reduces shrinkage, keeps track of store stocks, and boosts sales through on-cart promotions that encourage shoppers to take advantage of special offers and sale items.
By integrating cutting-edge technologies into the shopping cart, A2Z Smart Technologies Corp has created a solution that addresses the underlying causes of shrinkage and provides tangible benefits to retailers and consumers alike.
Sometimes the best answer is the simplest, and in this case, the shopping cart armed with modern technology may be the difference between profitability for large retailers and survival for small retailers.
As the retail industry continues to evolve and face new challenges, innovative solutions like Cust2Mate offer a glimpse into a future where shrinkage is effectively managed, and profits are protected.