The Importance of Visual Situational Cues and Difficulty of Removal in Creating Deterrence: The Limitations of Electronic Article Surveillance Source Tagging in the Retail Environment

Abstract

Shrinkage continues to be a considerable cost to the retail industry, with a recent estimate suggesting that globally it could be as much as $278 billion a year. In addition, it is a problem that has proved difficult to resolve, despite billions of dollars of investment every year in new technologies by loss-prevention practitioners. A relatively common approach to try to reduce the extent of the problem has been the application of electronic article surveillance tags to retail products, either in the form of a soft tag (increasingly applied at the point of manufacture) or a hard tag (usually applied in the store) to deter and detect shop thieves. This study looked at the experience of one retail company that decided to switch one of its divisions from using hard tags to source-applied soft tags on clothing sold in its stores. The results were dramatic, with a 250% increase in shrinkage after 12 months in the stores with the new source tag compared with existing stores using hard tags. The study raises important questions about the importance of creating visibility and the relative difficulty of removing the tag when using security devices if deterrence is to be achieved in retail stores and the overall cost effectiveness of using source tagging as a means to reduce shrinkage.

A systematic review of tagging as a method to reduce theft in retail environments

“…The 1990s produced tags which could be sewn into or heat-sealed onto items of clothing at the point of manufacture (DiLonardo 2015). This process of source-tagging has become increasingly popular over the past decade, particularly among retailers since it ensures better consistency in tag application and it removes the requirement of retailers to train and resource staff to tag items in store (Beck and Palmer 2010). More recently, retailers have experimented with the use of RFID EAS tags albeit primarily as a way of monitoring stock levels as opposed to controlling theft (see Jones et al 2005).…”

“…This ranged from making comparisons between (1) similar but untagged products in the same store (Retailer B 2015), (2) different stores in which the specific tags under evaluation were not installed (Farrington et al 1993;Bamfield 1994;Hayes and Blackwood 2006;Beck and Palmer 2010;Downs et al 2011), and (3) the store chain average more generally (DiLonardo and Clarke 1996). The trial reported in Retailer A (2015) did use a comparison group but only in relation to changes in sales and availability.…”

“…Likewise, Bamfield (1994) examined a comparatively small sample of four action sites against one control site. The largest study was by Beck and Palmer (2010) which used data from a multibillion dollar US clothing retailer to examine the effects of switching from hard tags to source-tagged soft tags. Retailer B (2015) adopted a different approach to the other studies, whereby shrinkage levels for select lines of tagged meat products were compared to that of similar non-tagged items in the same store.…”

“…Likewise in these studies, Bamfield (1994, p. 162) measured shrinkage as "the difference between actual sales + net stock compared with the previous period, and the book level of sales + stock". DiLonardo and Clarke (1996) and Beck and Palmer (2010) both used store inventory statistics. Finally, Retailer A (2015) and Retailer B (2015) did not provide a clear definition of how shrinkage was measured, possibly for reasons of commercial sensitivity or simply because it was well-known internally.…”

“…Tags are widely used in retail settings (DiLonardo 2015;Hayes 2007;Beck and Palmer 2010;Global Retail Theft Barometer survey 2015). They are often favoured over other loss prevention methods because tagged products remain on display and are accessible to staff and prospective buyers.…”