When shrink escalates – it’s Panoptyc to the rescue

In Automatic Merchandiser’s State of the Vending and Micro Market Industry Report, operators reported a relatively stable micro market shrink rate in 2022, with most reporting a 3% to 5% loss rate. When 2023 arrived, something changed, as many operators reported a sudden surge in micro market theft, beginning in January. Just as quickly as the surge occurred, operators who utilize Panoptyc’s AI-based video monitoring were reminded of how valuable the program can be at stopping theft.

High shrink rate in 2023

“I've been really surprised with the average shrink rate this year,” said Bridger Keally, sales director at Panoptyc. “Unfortunately, the shrink rate has gone up significantly this year. We have seen situations where the loss level has been at 25, 30 or even 50%. At that point, the operator is about ready to just pull the market.”

“Many operators come to us because they have cameras in their markets, but they just don't have the time or resources to review the footage, and when they do, it takes days, and then maybe they catch one or two suspicious events to present to a client,” Keally said. “Mostly, the operators tell us that although they have cameras, they are doing nothing for them. Sometimes they admit that they don't even know what their shrink is because there are just so many other things that take precedent when running their business.”

AI identifies red flags

Panoptyc provides a video security system for micro market operators that uses AI to identify anomalies in customer behavior – red flags that are indicative of possible product theft. Company founder Mac Bolak offered some examples of red flags that are picked up by the Panoptyc system.

• When someone walks through the micro market without buying anything.
• When someone walks into the market, picks up a product and does not make a purchase.
• A wide variety of “funny business” that happens near the kiosk.

Most importantly, once the anomalies are identified, Panoptyc provides analysis of the video and a report for the operator to understand exactly what is happening at the location, including actual evidence of theft. Panoptyc provides different tiers of support depending on the operator’s needs, and according to Keally, an increasing number of operators are asking for the highest level of support, especially now with theft rates on the rise. Not surprisingly, Panoptyc is growing fast, as the company continues to double in size from year to year.

Having conversations upfront

While technology is the cornerstone of what Panoptyc offers, Keally said the company is focusing on working with operators to help them navigate customer relationships regarding theft, especially with newer operators who are trying to develop a strategy to deal with micro market shortages. “With our operators, we stress the importance of having conversations with their customers upfront about how shortages will be dealt with,” Keally said. “It is important to manage the relationship by getting ahead of the problem – having a discussion about the fact that theft is inherent in a micro market and having a plan of action in place that everyone is comfortable with.”

Understanding that monitoring is legitimate

Keally noted that the plan of action does not necessarily have to be about terminating the person, but having a talk with them, letting them know they were flagged and retraining them. “It is important that the employees understand they are being monitored and that the level of monitoring is legitimate. Just getting that knowledge out there to the employees can resolve a theft problem quickly. They need to know that they will be caught and there are potential consequences,” he added.

A real methodology

If that fundamental approach does not solve the problem, or if the client would prefer to not actively participate in taking steps to mitigate the theft rate, Keally said the upfront conversation with the client needs to include a contract clause that defines an “acceptable shrink rate.” Anything above that shrink rate becomes a cost incurred by the client. “As long as it is defined upfront, the client has the option on how to deal with theft. With this approach, there is a real methodology in place, and it offers solutions that are clearly defined. The customer can decide to address the theft issue case-by-case or choose to not address it at all and can simply cover the losses,” Keally said.

Identifying repeat offenders

“Operators tell us that some of their clients will only talk to an employee about theft if there is more than one bit of evidence pertaining to a particular employee,” Keally explained. “We combine proven strategies and advanced technology to easily identify repeat offenders. These are people who can have quite an impact on the shrink numbers at a location.”

As Keally points out, what makes Panoptyc such a powerful solution is its ability to identify and provide conclusive evidence of theft in a detailed report. “Our reports are a real eye-opener for both operators and their clients. It also opens the door for operators to remind their customers what they have been telling them for years – ‘If they are stealing from us in the micro market, there is a good chance they are stealing from you.’” 

To learn more about Panoptyc, email [email protected] or call 313-425-5765.

ABOUT THE AUTHOR

Bob Tullio is a content specialist, speaker, sales trainer, consultant and contributing editor of Automatic Merchandiser/VendingMarketWatch.com. He advises entrepreneurs on how to build a successful business from the ground up and specializes in helping suppliers connect with operators in the convenience services industry – coffee service, vending, micro markets and pantry service specifically. 

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