Measuring the value of shrinkage prevention technologies (2008)

This report presents findings from a study undertaken on behalf of the ECR Europe Shrinkage Group. Its aims and objectives were to better understand how retail loss prevention practitioners calculate the value of investments in CCTV, EAS and Data Mining technologies, develop better practice in this area and provide practical steps for the loss prevention community in measuring the impact of various types of technologies. The report offers the retail loss prevention practitioner:
• A step by step guide on how to develop a coherent and persuasive business case for investing in shrinkage solutions in the future, including a detailed worked example.
• Detailed understanding of how to measure the ‘value’ of such investments, including a comprehensive explanation of the four key measures commonly used: Return on Investment, Net Present Value, Discounted Pay Back Period, and Internal Rate of Return.
• Clear guidance on how these measures should be used when communicating with the rest of the organisation to ensure credibility.
• Specific information on how to measure the ‘value’ of investments where strict financial returns are not easy to identify such as with CCTV, including a comprehensive list of possible variables that can be used for CCTV, EAS and Data Mining technologies.
• Detailed information on what other retailers are using, how they rate CCTV, EAS and Data Mining technologies and how they go about measuring their performance.
• A comprehensive list of Data Mining exception reporting variables to enable loss prevention practitioners to make the most of the technology.
• A checklist of requirements to ensure that CCTV, EAS and Data mining technologies are implemented effectively.
The report found that:
• The loss prevention community in Europe needs to radically improve the way in which it measures the value of investments in shrinkage control technologies. As business competitiveness increases and demands for returns on internal investment come under greater scrutiny, the need to ‘prove’ value for money is becoming more necessary.
• There is a lack of understanding of how to measure the value of investments and too often loss prevention practitioners use the generic term ‘Return on Investment’ as a catch all phrase to suggest overall effectiveness rather than as a precise measure of value as it was originally created to convey.

Download Report / Press release