What’s the Challenge for LP Departments in 2011

March 8, 2011

Steve Rowen

2011 is shaping up to be an interesting and challenging year for loss prevention professionals in retail. When the Great Recession began in late 2008, many retailers recognized that more desperate economic times would bring about more desperate criminal behaviors stores — on the part of employees, individual customers, and most notably, organized crime rings. LP (rightly or wrongly) became a higher priority than it had been in modern history, and many placed unreasonably high expectations on how new LP initiatives could stop the bleeding.

Our most recent LP report shows that as the economy somewhat normalizes, retailers today are less concerned with bad guys doing bad things in stores. Instead, they are honing in on the ability to manage more controllable issues — namely, reducing the amount of shrink occurring at the hands of their own staff. What does this mean for LP?

It means that while more organizations are having a slightly easier time finding budget, at the same time, LP professionals are becoming more challenged to prove those new investments’ return than they were just 12 months ago when LP was perceived as a panacea to all that ailed retail (66% vs. 2010’s 52%, Figure below).

Figure: Budgets Thaw, but Expectations Harden

Further, while perpetual inventory obstacles have become less of an issue, our aggregate response pool contains far more LP professionals than in years’ past (when more line-of-business executives have responded). These loss prevention insiders tell us that the LP plan is more often stymied from the get go — 23% say LP reports up to the wrong executive, vs. just 10% last year. More worrisome is that more of these respondents — the ones with boots on the ground — say that there is a lack of staff to review LP and audit data (54% in 2011). This tells us that the mass adoption of less mature LP technologies (and low-tech LP support) in recent years has created a deluge of data; without the proper business intelligence/analytics OR the manpower to review the volumes of information the average retailer’s LP hardware provides, much of the functionality is futile.

All of these factors add up to an LP plan is planned well, but executed sub-optimally.

The full report has much more data, as well as suggestions on how to get past all of these roadblocks.

 

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