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Shrink: An Opportunity for Walmart to Lead the Way

WRITTEN by: Bill Sterzenbach |
categories: Branding

Jun 2015

ALL INSIGHTS

Walmart attributes $300mm in revenue loss to theft. Walmart is about to re-energize their greeter program partly to reduce theft (shrink). While the greeter program itself is a core part of the Walmart experience, there is a small component that may send their brand impression in the wrong direction.

I recently read that Walmart greeters do "sporadic" receipt checking. Here in my area I've never been asked to show a receipt by a Walmart greeter, so I was surprised to learn of this policy. There is a bit of controversy surrounding the concept of receipt checking, and I'm not sure it's the right way to go given the advancements in technology that are available.

It's about the Frequency

We've all been asked to show a receipt at a retailer at some point, it's certainly not a new process for anyone. Most of us simply shrug it off as a necessary inconvenience to keep prices in-check. For many however, receipt checking can be insulting, inconvenient, and in come cases can create potential legal issues for the retailer (when receipt-checkers overstep their role).

When working to reduce theft in lower-ticket items, one could only assume that the frequency of reciept-checking would need to increase. This is where the slope tends to get slippery. Retailers work hard to create a positive brand impression, but so often diminish that hard work by essentially communicating "prove you are not a thief" as the last act of their engagement with their customer. 

Of course receipt checkers are not tasked with catching shoplifters, they aren't even individually tasked with deterring shoplifters. It's simply assumed that the repeated presence of receipt checkers may act as a deterrent to shoplifting.

According to Walmart, meat and produce are the most commonly stolen types of items. I can see how these types of items could also be the most challenging to track with chip technology. A few companies are solving this with chipless RFID technology that is embedded in the product packaging. These embedded technologies can cost as little as 1 cent per item. I'm assuming a company with Walmart's resources and motivation could bring about big advances in this area. Walmart is already into the RFID space in their clothing area, this would not be much of a leap.

A Great Case for Intermediation from Technology

This is a great place to use technology to intermediate. RFID can passively reduce theft while helping to keep the brand impression intact. Using this technology in the area of food has received less than overwhelming participation from retailers. Walmart has always been a leader in innovation with respect to operations, and here is a great opportunity to lead other retailers in the right direction. 

Interesting reading:

http://www.businessinsider.com/wal-mart-brings-back-greeters-to-reduce-theft-2015-6 (contains a math error)
http://consumerist.com/2011/03/07/calm-man-successfully-buys-tv-and-denies-walmart-receipt-checkers/
http://www.oregonlive.com/portland/index.ssf/2014/09/costco_receipt-checking_lawsui.html
http://www.thelegality.com/2008/03/12/stop-that-paying-customer-the-legality-of-compulsory-receipt-checking/

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