Managing Retail Risk in a Global Pandemic
Managing Retail Risk in a Global Pandemic

November 20, 2020
By Professor Adrian Beck

In May 2020 I published a short article reflecting upon retail loss prevention in a time of COVID-19. In that article I hypothesised that that we were likely to see four phases affecting the retail sector: the Pandemic Panic-buying Period (Grocery in particular being adversely impacted by panic buying); Pandemic Paralysis Period (most non-grocery closed); Pandemic Distancing Period (all retail open but operating within a defined social distancing operating framework); and the Post Pandemic Period (retail back to pre-Pandemic operating practices). While the first three phases have come to pass, sadly, the fourth phase seems a long way distant and indeed, the model now requires a ‘loop’ component as many countries around the world begin to reimpose national lockdowns, sending their retail communities back into periods of panic-buying and paralysis. For an industry deeply scarred by the initial lockdown period in the spring, this new period of government-enforced economic hibernation is likely to be even more devastating given it begins to overlap with what for many retailers is their ‘golden’ period of profitability.

As retailers’ cycle through these various periods of the COVID-19 Pandemic, they are likely to face an ever-changing landscape of retail risks. Whilst it is not possible to highlight all the areas of concern loss prevention teams are having to deal with, outlined below are just four key issues that, to varying degrees, are likely to be having a significant impact upon retailers.

Securing physical stores temporarily closed as part of national lockdowns. Many retailers will have begun the process of preparing their store inventories for the (hoped for) busy festive period, with stores receiving a considerable amount of additional stock. It will be important, therefore, to ensure that physical locations are securely protected against the threat of burglaries. As outlined in a recent ECR Retail Loss Group report, many retailers are increasingly beginning to make use of their in-store video systems to not only verify whether building alarms are valid or not, but also actively try and deter would-be burglars. Managing incidents of violence and verbal abuse. As increasingly COVID-weary shoppers navigate the rules of social distancing and mask wearing, and the prospect of panic buying in Grocery stores remerges, the likelihood of friction between staff and customers and between customers themselves will increase. Loss prevention teams will need to have clear guidance and support in place to ensure their retail teams are not put at undue risk. Controlling Self-scan Checkout Losses. As part of an ongoing trend to reduce shopper friction points, and more recently to encourage social distancing in Grocery stores, the use of various types of Mobile/Scan and Go self-checkout technologies has grown considerably. As with many retail business choices, the introduction of these systems is not without a number of associated risks that need to be both measured and carefully managed. Certainly, the ECR Retail Loss Group’s report on the scale and extent of losses associated with various types of self-scan systems highlighted the challenges presented by Mobile/Scan and Go technologies, including the need to think about how their control can be influenced by the utilisation of people, technologies, processes, and design. Getting to Grips with E-commerce Losses. The COVID-19 Pandemic has seen a remarkable surge in the use of online retailing, with the likes of Amazon recording a dramatic increase in the volume and value of sales. Up until recently, there has been relatively little attention paid to not only identifying the various ways in which E-commerce platforms might generate retail losses, but also what their value could be. While the most recent iteration of the Total Retail Loss Typology mapped out 10 types of loss relating to E-commerce, to date there have been few published accounts offering insights into which of these are the most prevalent and how they might best be controlled. But as the percentage of sales through E-commerce grows further, loss prevention teams will need to begin to get to grips with this area of their businesses to ensure that it does not generate unacceptably high levels of loss. These are just some of the risks that businesses will need to address as the COVID-19 Pandemic continues to cut a destructive path through the retail landscape. Of course, they are not necessarily new risks, but what is new is the environment within which they are having to be managed and their overall impact upon companies already struggling to survive and make any form of profit. In this respect, the role of loss prevention in minimising the impact of losses on bottom line profitability has become even more important than it ever has – while ‘selling more and losing less’ has always been the desired approach, optimising the latter has become even more mission critical in these difficult times.

Securing physical stores temporarily closed as part of national lockdowns. Many retailers will have begun the process of preparing their store inventories for the (hoped for) busy festive period, with stores receiving a considerable amount of additional stock. It will be important, therefore, to ensure that physical locations are securely protected against the threat of burglaries. As outlined in a recent ECR Retail Loss Group report, many retailers are increasingly beginning to make use of their in-store video systems to not only verify whether building alarms are valid or not, but also actively try and deter would-be burglars.

Managing incidents of violence and verbal abuse. As increasingly COVID-weary shoppers navigate the rules of social distancing and mask wearing, and the prospect of panic buying in Grocery stores remerges, the likelihood of friction between staff and customers and between customers themselves will increase. Loss prevention teams will need to have clear guidance and support in place to ensure their retail teams are not put at undue risk.

Controlling Self-scan Checkout Losses. As part of an ongoing trend to reduce shopper friction points, and more recently to encourage social distancing in Grocery stores, the use of various types of Mobile/Scan and Go self-checkout technologies has grown considerably. As with many retail business choices, the introduction of these systems is not without a number of associated risks that need to be both measured and carefully managed. Certainly, the ECR Retail Loss Group’s report on the scale and extent of losses associated with various types of self-scan systems highlighted the challenges presented by Mobile/Scan and Go technologies, including the need to think about how their control can be influenced by the utilisation of people, technologies, processes, and design.

Getting to Grips with E-commerce Losses. The COVID-19 Pandemic has seen a remarkable surge in the use of online retailing, with the likes of Amazon recording a dramatic increase in the volume and value of sales. Up until recently, there has been relatively little attention paid to not only identifying the various ways in which E-commerce platforms might generate retail losses, but also what their value could be. While the most recent iteration of the Total Retail Loss Typology mapped out 10 types of loss relating to E-commerce, to date there have been few published accounts offering insights into which of these are the most prevalent and how they might best be controlled. But as the percentage of sales through E-commerce grows further, loss prevention teams will need to begin to get to grips with this area of their businesses to ensure that it does not generate unacceptably high levels of loss.

These are just some of the risks that businesses will need to address as the COVID-19 Pandemic continues to cut a destructive path through the retail landscape. Of course, they are not necessarily new risks, but what is new is the environment within which they are having to be managed and their overall impact upon companies already struggling to survive and make any form of profit. In this respect, the role of loss prevention in minimising the impact of losses on bottom line profitability has become even more important than it ever has – while ‘selling more and losing less’ has always been the desired approach, optimising the latter has become even more mission critical in these difficult times.

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