Here's the technology Lowe's wants to use to tackle power tool theft

By James Rogers

Lowe's Cos. Inc. says it is harnessing RFID technology to combat the theft of power tools at the home-improvement retailer's stores.

"We're developing Radio Frequency Identification, or RFID technology, embedded in power tools to prevent theft," Joe McFarland, Lowe's executive vice president of stores, said during a conference call to discuss the company's second-quarter results. "This solution will be largely invisible to customers but it makes the tool inoperable until it is scanned and purchased."

Related: Lowe's earnings top expectations, though company sees lower DIY discretionary demand

Shrink is a big responsibility for any retailer, especially in this environment, McFarland said. "As expected, shrink was in line with last year's results, despite industry-wide challenges, driven by our proactive customer service, tech-driven solutions, industry-leading asset protection program and our penetration of rural stores."

Lowe's stock rose 4.1% Tuesday, outpacing the S&P 500 index's SPX gain of 0.1%.

Related:Walmart's 'shrink' challenges differ from those of other retail giants, CEO says

"Shrink" continues to be a key theme of retail earnings. While there are a number of potential reasons behind inventory shrink -- such as damaged items -- theft and organized retail crime are increasingly important drivers, according to major retailers such as Target Corp (TGT) and Home Depot Inc. (HD).

Last week Home Depot described the retail industry's battle with shrink this week and highlighted a new U.S. law designed to aid efforts to tackle a problem that costs the sector billions of dollars a year.

Related:Dick's Sporting Goods' stock slammed after earnings miss by a wide margin. The reason may be shoplifting

The Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act, which went into effect June 27, is designed to add more transparency to online transactions and deter criminals from acquiring stolen, counterfeit or unsafe items and selling them through online marketplaces. The INFORM Consumers Act requires e-commerce sites to verify and disclose information about their high-volume third-party sellers.

Last year, the National Retail Federation reported that retail-industry shrink amounted to $94.5 billion in 2021, up from $90.8 billion in 2020, and was primarily driven by external theft, including organized retail crime. The NRF's National Retail Security Survey, which was conducted with the Loss Prevention Research Council, found that retailers, on average, saw a 26.5% increase in organized retail crime incidents in 2021. Eight in 10 retailers surveyed also reported that violence and aggression associated with organized retail crime incidents had increased.

-James Rogers

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08-22-23 1201ET