Newborn Unicorn Radar Helps Retailers Fight Losses Beyond Shoplifting

A retail store’s stockroom may as well be a black hole based on how long associates disappear there when asked to find a specific item missing from the floor. A startup backed by American Eagle’s CEO wants to solve that problem with tech designed to reduce inventory loss called “shrink,” caused by messy backrooms, supply chain mishaps and theft. 

Radar just closed a $170 million funding round, boosting its valuation to over $1 billion. The startup’s ceiling-mounted hardware scans RFID (radio-frequency identification) tags to pinpoint where all of a store’s inventory is, helping associates determine whether a shipment was accurate without sorting through every box and where a certain top is without searching through an Excel sheet full of SKUs.  

American Eagle was the first store to install Radar’s technology, but now Gap-owned Old Navy and more than 1,400 other stores rely on the anti-shrink system. 

The Plexiglass Paradox

Retailers panicked during the pandemic about shrink, a catchall term for any loss in inventory including theft. CVS, Walgreens and others put products behind plexiglass en masse, making customers rely on sales associates to come fish out their bottle of Gas-X like it’s a treasure in an Indiana Jones movie.  

And while state authorities have cracked down on organized theft rings, recovering hundreds of millions of dollars in stolen goods, blaming the problem on stealing oversimplifies it:

• Some of the hubbub about theft during the early 2020s was based on a National Retail Federation survey that claimed organized retail crime accounted for half of all shrink, or about $45 billion in annual losses. But a Retail Dive investigation found that the stat was overblown, prompting the NRF to retract it. 
• Experts now say shrinkage comes from a variety of causes, including administrative errors and false refunds. Walgreens said last year that the plexiglass hurt its sales, and that it was looking into other ways to safeguard against product loss. 

Shrink is Shrinking: Executives from retailers ranging from Kroger to Dollar General have said shrink has been trending down, and Target and TJX said shrink has returned to pre-pandemic levels. It’s hard to suss out how much of that comes from a pullback in theft versus improved inventory management. For instance, major retailers have scaled back self-checkout, where customers have said in surveys they’re more likely to steal, by accident and on purpose. At the same time, the founder of Radar said one of its clients saw a 60% decline in shrink using its tech.