Packaging design is key to driving profit in the cosmetics sector. The design is an integral part of the marketing for brands in this sector and helps differentiate a cheap tube of foundation bought at the local drugstore from the latest Chanel launch.
But alongside the necessity to create attractive packaging is the need to develop a secure ‘source to shopper’ Loss Prevention (‘LP’) strategy. Cosmetics are targeted by thieves because they are quite portable and easy to resell (particularly on the ‘grey’ market) – this creates a headache for leading brands trying to control distribution and the perception that their goods are high value items.
Retailers need to balance the ability to allow customers to touch and handle these lovingly packaged products with security measures to ensure minimum levels of theft and associated out-of-stocks.
Follow these tips to create and implement a secure ‘source to shopper’ cosmetics protection plan:
- Define who should be involved in the overall cosmetics LP strategy. Identify your specific challenges with cosmetics and define an integrated LP cosmetics strategy involving operations, category managers and marketing.
- Identify the SKUs that suffer from a high shrink rate. Begin an EAS tagging program for the 10% of items that generate the majority of profits and are highly targeted by thieves in the bulk of the stores where the merchandise is sold. Define clear KPIs to measure the effectiveness of your tagging program and overall cosmetics LP strategy so you can show how it has generated an uplift in sales. Reinvest the ‘sales dividend’ into extending the protection to other SKUs.
- Meet with the product design team to discuss the challenges. Cosmetic packaging presents unique challenges because of its innovative and attractive design and the variety of packaging materials used, from metal to glass. Obscuring branding with a poorly placed EAS label is a sure way to lose sales and working with the design team is a much better way of helping identify clear ‘hot spots’ on the packaging where the label can be applied. However, if you need to marshal arguments for why working co-operatively will be a win for everyone focus on the revenue loss numbers attributable to high shrink.
- Decide whether to adopt a hidden or visible label strategy. EAS labels can be hidden on the item within packaging or placed on the packaging. The current trend in retailing is for visible protection to act as a deterrent to thieves via clear RF labels or warning labels. However, a hidden label could be a more acceptable option to the design team.
- Consider the value of labelling at source. Labelling at the point of manufacture can be a much more efficient process and allows retailers to relieve store staff from EAS tagging duties while ensuring better label placement compliance. To work effectively there must be strict guidelines for label placement arranged with the manufacturers.
- Engage store employees in the LP strategy. Employees will need to be trained in where and how to stick labels if applying in-store and how to deactivate EAS-tagged items. If they are fully briefed and feel they have a stake in the helping the process to run smoothly they are more likely to adhere to the guidelines and avoid embarrassing shoppers with false theft alarms at the point of exit.
- Create a regular process for new product launches. The cosmetics sector is driven by the excitement of New Product Development and ‘hot’ items backed with aggressive marketing attract the attention of thieves. Having a regular process in place with your design team and manufacturers to figure out the appropriate protection strategy for new launches will save you time, reduce your shrink and increase your sales