Three of the retail industry’s most pressing challenges are eliminating friction, mitigating theft and curbing rising operating costs. These three objectives can feel at odds with one another, as making progress in one area can seemingly roll back performance in the others. The past few years have seen losses due to theft and organized retail crime (ORC) rise, as Coresight Research identified in their ‘Retail Shrink & ORC’ June 2024 report, motivating retailers to harden targets and deploy locks, alarms, cases, labels and tags in increasing volumes. In fact, according to VDC Research, 90% of retailers surveyed globally expect the percentage of store items using EAS hard tags and/or labels to increase over the next two years. However, for some retailers, this also can raise questions on how additional security measures may impact their shoppers.

To start, modern shoppers are motivated by convenience above most other factors (except price and quality) and will go out of their way to visit stores that deliver satisfying experiences. In the era of self-checkout (SCO), using hard tags may render certain items ineligible for do-it-yourself sales. Cases and locks can have a similar effect, leading some shoppers to wait in aisles for assistance or abandon their purchases altogether. Furthermore, some believe removing hard tags takes additional time at the register, which can seemingly extend wait times and potentially contribute to the next concern for retailers: rising costs.

Visual deterrents, like hard tags, are a low cost line item that enables your EAS investments to provide payback in already-tight budgets. However, the bigger concern for many retailers is the labor demand associated with hard tagging. VDC Research found that 84% of retailer respondents said more than 50% of their tagging happens in-store, and that means that, in addition to associates spending more time at checkouts, they may also spend additional hours attaching (and detaching) the devices by hand. It’s an undertaking that can be especially challenging in today’s tight labor market.

So, with the capabilities of modern artificial intelligence and RFID inventory tracking only getting more compelling and impressive, there’s a (mis)perception among some retailers that hard tags may be a thing of the past. In fact, 66% of corporate decision-makers surveyed in a recent Sensormatic Solutions-Loss Prevention Magazine survey shared that they had considered removing hard tags to reduce friction (18%), to cut operating costs (30%) or because they don’t believe EAS tags to be effective (23%).

Experiments with removal show a very different reality, though. Sensormatic Solutions retail partners that tried this approach saw an adverse impact on their loss prevention (LP) progress, and fast. Nearly all of those who removed physical hardware saw shrink increase in turn. Of our clients who have tried this approach:

• One saw shrink more than double in test locations within a year.
• Another saw shrink grow by 40-70% in some test departments in just seven weeks.
• One retailer saw shrink rise by 40% only in the product categories from which tags were removed.

Furthermore, these experiments showed that any labor benefits gained from doing away with hard-tagging were mitigated by an accompanying drop in worker experiences, and feelings of security when merchandise is tagged. LP leaders from these retailers noted that associate requests to bring the tags back were primary motivators in the decision to redeploy.

The pull between experience, cost and crime creates a vicious cycle that can only be broken by rethinking your approach to tagging from top to bottom. New operational models and hardware can help retailers balance these seemingly competing objectives to ensure that efforts to improve any one area don’t adversely impact the others:

• RFID-based item-level monitoring: Retailers can use the insights from their RFID-based inventory intelligence programs to identify high-risk areas within the store and high-risk shrink items on shelves. From there, retailers can opt to deploy low consumer friction hard tags—like our InFuzion tags, which offer a secure, easy-to-remove, one-piece system designed to streamline self-checkouts— beginning with the most high-risk items. This helps ensure that the merchandise that needs to be hard tagged is protected, reduces unnecessary friction for shoppers and cuts the costs associated with widespread tagging. After all, each technology (RFID and EAS) in the LP toolbox has a part to play in the effort and that a customized strategy is the key to success.
• Dual-technology tags: Retailers who are in the planning phases of deploying RFID and/or EAS systems may want to explore dual-technology tags, like Sensormatic Solutions new SuperTag4, available as part of the InFuzion line. This option combines RFID and EAS technologies into a single unit and can help retailers begin to build their RFID databases while continuing EAS hard tag programs—and can seamlessly be part of existing source tagging programs.. They can also reduce friction at both traditional and self-checkouts as they are easier for associates and customers to remove than other options.
• Source tagging: Source-tagging programs help retailers balance security with labor allocation. These programs allow retailers to receive already-tagged merchandise (either RFID, EAS, or a combined option) from point of manufacturer so products are floor-ready when they arrive. Thanks to the recent opening of our latest RFID bureau in Matamoros, Mexico, this option is more accessible to retail clients than ever before as Sensormatic Solutions has service bureaus in every region around the globe. Retailers who participate in these programs may see increased revenue, decreased shrink and lower labor costs—the best of all worlds. They also often see improved customer experiences, as it frees up store associates to assist customers.
• Recirculation: Source-tagging programs may also be paired with recirculation initiatives, which can further decrease costs by enabling retailers to re-use tags multiple times while still getting the benefits of source-tagging. Recirculation can also help retailers move the needle on sustainability performance as it reduces plastic waste significantly. Since its inception, our recirculation program has not only helped retailers save time, cut labor costs and reduce shrink; it’s also saved over 214M lbs. of plastic waste from landfills and reduced energy consumption by more than 2.6M megawatt-hours.

Every retailer is different, and requires a different approach and strategy. It’s important to select a solution provider with the experience and expertise to navigate forward successfully. If you want to learn more about how Sensormatic Solutions is working with retailers to address shrink and loss prevention, please read through our loss prevention portfolio or contact us today.