Retail theft is an epidemic that is wreaking havoc on the CE industry. Each year, millions of dollars are walking, and in some cases running, out the doors of retailers. Retail “shrink” (loss) averaged 1.41 percent of sales across categories in 2011, and while that may not sound like much, it equates to more than $35 billion in the U.S. according to the 2011 National Retail Security Survey by Dr. Richard Hollinger. This loss directly impacts the bottom line for both brands and retailers.
 
The National Retail Federation has identified the top two sources of loss as employee theft (44 percent) and consumer shoplifting (36 percent) according to the survey. The amount of loss from Organized Retail Crime (ORC) is also growing at an alarming rate. CE products are a major target for thieves because of their small size and high resale value.
Retailers and brand owners have gone to great lengths to prevent theft, but in the world of retail loss, clever criminals and unethical employees are proving to be a challenge. The packaging industry created one of the early standards for retail security—the plastic clamshell package. Disliked and even mocked for its difficulty to open at home, the clamshell thwarts casual thieves for the same reason. More advanced and costly security measures like EAS tags, alarms and cameras have long been used to combat external theft, but they are no match for the tactics of modern day thieves. Storing products behind counters and in glass encasements seem like great alternatives, but prevent customers from interacting with the product and decrease the likelihood of purchases. Where’s the fun in deciding between an iPhone 5 or a Galaxy S3 if you can’t play with them in the store first?
 
So if current security measures are frustrating, antiquated and ineffective, and alternative security methods decrease sales, what is left to protect the MP3 players, camcorders and digital cameras that continue to “walk”?
 
To help retailers, the packaging industry is developing solutions that protect products without interfering with the consumer experience. Clamshells have been replaced with paperboard or cardboard alternatives that provide security, eliminate sharp edges and are recyclable. This security packaging focus can help boost sales by allowing products to be open merchandised and highlighting brands, instead of hiding them.
 
Innovative packaging can be a first and strong line of defense to discourage theft and make shelves safer for retailers products and more accessible for customers.
 

An Innovative Solution

 
MeadWestvaco Corp. (MWV), in partnership with ProTeqt Technologies, is launching a security packaging system that uses digital technology to prevent theft. The system comprises a small lock placed on products inside the package, which disables product functionality until it’s deactivated by a retail associate during check out. If the product is stolen and does not pass through the point-of-sale to disable the lock, thieves end up with devices that are worthless. The technology uses RFID, which can also help retailers track inventory and brand owners pinpoint where theft is occurring in the supply chain. This new solution can potentially save CE retailers and brand owners millions of dollars each year.