RocketBoots rises to the challenge as retailers feel the pinch from rising theft

Rising retail theft impacts profits significantly
RocketBoots develops tech to combat shoplifting and optimise staffing
Growing international presence sets stage for strong revenue potential

Retailers around the world are dealing with a big problem called “inventory shrinkage,” which basically means items are disappearing due to theft, fraud, and other issues.

Major US players like Target, Walmart, and Home Depot have all talked about it during their earnings calls.

Target said that rising theft had hit its profits hard—around US$500 million in 2023 alone, with Walmart reporting similar figures.

The US National Retail Federation estimated the total problem at a massive $US100 billion a year.

In Australia, the ongoing cost-of-living crisis is also driving a rise in shoplifting.

A recent survey revealed that more than one in ten Australians admitted to stealing in the past year as they hit their financial limits.

“There is certainly a correlation between the cost-of-living crisis and increased theft in retail stores,” said Queensland University of Technology retail expert, Gary Mortimer.

“Be it supermarkets, consumer electronics or discount department stores.”

Coles, for instance, reported a 20% increase in what it terms “loss” in FY23. In FY24, the retailer said that preventing these thefts has contributed an additional $80 million to its H2 bottom line earnings.

How Rocketboots’ technology tackles this problem

Last week, Walmart said it was experimenting with invisible barcodes to make it harder for shoplifters to locate and remove them from products.

Meanwhile, other retailers are also getting creative with installing technology to tackle theft at self-checkout counters.

One Australian company that has developed an innovative technology designed to combat the growing problem is Rocketboots (ASX:ROC).

“As everybody is very well aware, there’s rising theft at self-checkout, at the registers, as well as staff fraud,” explained Rocketboot’s CEO, Joel Rappolt.

“This obviously contributes to losses that impact the profits of retailers, who traditionally have very thin margins to begin with.”

The situation is compounded by organised retail crime, Rappolt said, particularly involving repeat offenders.

Loss prevention system

RocketBoots’ solution is to use an adaptive loss prevention system that merges advanced computer vision techniques with machine learning and AI (artificial intelligence).

“The adaptive loss prevention product is a small device installed that’s connected to cameras looking at the self-checkout,” said Rappolt, explaining how the technology works.

Each time a customer scans a product, the system monitors this data in real-time.

If the visual information captured by the camera doesn’t match the scanned barcode—say, if the camera sees batteries while the system registers garlic—an alert is triggered.

“The system will then either tell a staff member on a mobile device, or put it in the self-checkout user interface where the customer can see and we say ‘Hey, sorry, there’s been a problem, can you correct this?’” said Rappolt.

This allows retailers to manage theft proactively, while still maintaining a smooth shopping experience for customers.

“Friction is bad customer experience,” Rappolt said, adding that minimising disruptions is crucial for fostering loyalty.

Beyond theft reduction, RocketBoots’ technology also focuses on workforce optimisation.

Rappolt points out that many retailers struggle to balance staffing between traditional registers and self-checkouts.

“How many staff should you have in order to reduce queue volatility?” he asks.

By analysing customer flow and queue times, RocketBoots helps retailers forecast the ideal number of staff needed, which not only reduces idle time but also enhances customer satisfaction.

This technology has already proven effective for a major Australian retailer, which has been utilising RocketBoots’ software for over five years across nearly 270 of its stores.

Retail banks are using it too

The use of RocketBoots’ technology extends beyond the retail sector and into banking.

Rappolt said that while many transactions have moved online, branches still experience significant customer foot traffic.

“We don’t have as many transactions, but we still have a lot of customers coming into the bank,” he said.

And without the necessary data to schedule staff effectively, banks can face long queues and declining customer satisfaction.

So by collecting data on customer arrivals and service times, RocketBoots enables banks to optimise their staffing models.

“We have worked with retail banks now for a number of years, and have proven that by collecting various data, we can provide schedules for staff that reduce latent capacity,” Rappolt said.

“This ensures that banks can minimise costs while enhancing service levels, addressing one of the key pain points in the industry.”

Breakeven, profitability in sight

Rappolt highlighted recent wins, including a significant retail deal in the UK a couple of weeks ago, and a partnership with a retail bank in New Zealand.

“We have two long-term contracted customers,” he explained, “and we’ve been with our beachhead clients for five years.”

Currently, the company also has 10 trials underway across Australia, the UK, the USA, and the EU, showcasing the appetite for RocketBoots’ technology across multiple regions.

“We haven’t lost any trial so far,” Rappolt said, adding that with a growing list of trialing customers, the potential for revenue is significant.

The business charges an annual fee based on the number of sites, which means that converting even a fraction of these trials could lead to substantial revenue.

“If we convert just 5% of the trials, that would get us pretty much close to break-even,” Rappolt said, underscoring the company’s path to profitability that is now firmly in sight.

“The market is massive,” he added, pointing to an addressable market of approximately $2.3 billion across the company’s target regions.

“With over 10,000 sites operated by customers in the trial phase and all contracts set to be reviewed by year-end, I believe RocketBoots now stands at a critical inflection point.”

The views, information, or opinions expressed in this article are solely those of the interviewee and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.