Think You Know Biometrics?

A Tale of Two Retailers

The ROI of POS

Although many high-profile use cases for biometrics are law enforcement-centric, we’ve already shown how versatile biometrics can be (even though it is really great at catching bad guys). And with fingerprint, iris and face scanners in many mobile phones and computers, the average consumer is getting a taste of how biometrics can make security quicker and simpler. What was once cutting-edge technology is now everywhere, and society is reaping the benefits.

Retail and foodservice establishments have a lot to lose when they fail to adapt. In industries where profit margins are razor thin, corporate leadership and private owners are constantly looking for ways to cut costs and eliminate preventable losses. Brick-and-mortar store chains are increasingly beset by bleak predictions from Wall Street pundits as brand after brand declares bankruptcy, but outdated approaches to doing business may be hastening that decline.

The 2017 NRF Retail Security Survey shows that inventory shrink is increasing, and employee theft accounts for 30% of it. Besides shrink, retailers have to deal with other costly and unethical employee practices, including time theft. Using fingerprint biometrics at the point of sale can address both of these issues and help keep retail competitive.

To illustrate the benefits of making retail a little more high-tech with biometrically-enabled POS technology, here’s a story of two retailers who take steps to address inventory shrinkage with very different results.

Both Susie and Jimmy own independent apparel stores in suburban malls, and have been looking for ways to make business more profitable in light of increasingly anemic margins and stiffer online competition. Susie and Jimmy accept retail shrinkage as a part of life, but Susie wonders if her employees are contributing to it. Jimmy thinks that increased losses are solely due to shoplifting—especially from younger store visitors—after catching a few would-be thieves.

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Susie

Susie is a search-engine whiz, so she does some research on how to reduce retail shrinkage. She learns about the staggering rate of employee theft and how biometrics may help. What’s unique about biometrics, she realizes, is for all intents and purposes no one can steal another person’s information. It’s also more private and less “big brother-y” than she thought it would be, since the full fingerprint image isn’t stored like it is in a law enforcement database. It’s just a coded file of key points on each finger. She can’t afford to buy new POS terminals, but her vendor has already integrated the capability and she sees a plug-in USB option for a single finger reader that’s very affordable and compatible with her system. She’s ready to give it a try.

As Susie begins to use the biometric devices, she’s impressed by how effective they are. When her employees clock in with a swipe, she knows they are who they say they are. Her employees can’t clock in and out for one another anymore, so people are arriving at the beginning of their shifts more consistently. There’s always someone on the sales floor, which keeps her customers more honest, too. She’s definitely getting more bang for her buck on payroll. Plus, when managers make a price override or void a transaction, the biometric readers generate an audit trail that’s hard to dispute. Within two weeks, shrinkage is down. She hasn’t caught any of her employees stealing or trying to make fraudulent overrides, but she suspects that the culprits know it’s hard to fool a fingerprint-based system and haven’t even tried.

Meanwhile, Susie is thrilled. She didn’t expect that adding a measure against employee theft would be so good for customer service, but logins with the fingerprint reader makes transactions quick and easy. She previously had a six-digit password for each terminal that would change weekly, and employees would often forget it and need to call a manager over to get the number. Lines at the cash register go quicker without the need to punch in codes.

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Jimmy

Jimmy is resistant to change and has had trouble with shoplifters in the past, so he assumes that the most significant source of shrinkage is his customers. He implements new security methods that claim to be a stronger deterrent to shoplifting. After paying a hefty sum to install additional cameras, put sensors in all of the clothes, and place new sensor towers at the front of the store, he really hopes the investment pays off. They say the new system is sensitive and that the camera configuration covers every part of the store. The feed is even analyzed to generate a report that isolates areas that are more conducive to theft so he can instruct staff to watch those areas more closely. Cool stuff, right?

Jimmy’s new security system isn’t the boon to his business that he’d hoped. As advertised, the sensors are sensitive—too sensitive. Customers can’t even walk near the towers while holding merchandise without ear-splitting beeping. Combined with more prominent cameras, his store is starting to feel less customer-friendly and more customer-accusatory. He has found a few areas of the store where shoplifting occurs more frequently and has moved associates around to address these hotspots, but he only has three employees working at any given time. When customers need to check out, associates can’t stay put. His balance sheet isn’t showing a reduction in shrinkage.

Jimmy is discouraged. Unbeknownst to him, his employees are still huge contributors to time and inventory shrinkage. They still share their smart cards to clock in and out, so time theft is chipping away at his bottom line. Sometimes the manager is so busy that he gives his card to associates for overrides, and one unscrupulous employee has been using voided transactions to steal. Everyone hates the new sensors, too. They’re hard to take off, and when customers set off the sensor detectors at the front after checking out, his associates have to dig through the entire bag to double check the clothes. Sometimes it’s a false alarm. Jimmy thinks, “retail just isn’t working anymore” and blames online competition for edging him out.

Business is good for Susie. Her store’s selection is great, and the new biometric POS devices have made a real difference in employee honesty and customer service. Plus, the attention she’s paid to customer experience and customer relationships in her community keep her competitive with online stores. With the near-elimination of employee theft, Susie is better able to benefit from the inherent advantages of a good brick-and-mortar store.

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