Today’s retail environment is arguably one of the most turbulent and competitive in recent history. Business survival is dependent on the leadership’s ability to rapidly gain knowledge and make immediate strategic decisions for the organization. Intuitive leadership is being replaced by analytical software that allows the organization to see their issues, develop initiatives, change behavior and make progress scalable.
Retail leadership is focused on empowering the organization to identify and capture missed opportunities. Software, and the data it disseminates, is being designed to produce key performance indicators (KPI’s) and dashboards that allow the employee population to gain knowledge and make better decisions instantaneously. Many retail organizations today have their field management teams operating within retail systems that provide immediate feedback on a hierarchy of sales driven data allowing daily and weekly adjustments to work-force management and inventory allocation.
Where does the loss prevention organization fit into this time sensitive analytical focus? Too often the strategic effectiveness of the LP team is measured by the inventory cycle or intuitively inferred on a transaction by transaction basis – ‘did we resolve the last investigation?’ So, while the organization’s sales effort is operating in a ‘real time’ analytical result oriented environment, the results of the LP effort; coaching, training, creating awareness, auditing and investigating – is un-realized until the inventory is taken to determine if the efforts have been successful.
Most leaders agree that the behaviors contributing to improved sales performance are one in the same as the behaviors contributing to good shrink results. Failure in the ‘hiring, training, and retaining’ process will reflect in the compiled data of employee theft investigations and operational audit scores, just as it will reflect in missed sales goals. It follows that as an organization’s leaders review sales data to look for sales improvement opportunities – they would also benefit by reviewing loss prevention KPI’s developed from operational audits and investigative results from the same or similar time frame. For example, a region with audit results indicating lower than average cash controls and high instances of assistant manager theft terminations will likely have more difficulty implementing the next promotional focus and meeting sales expectations.
LP teams are generating data. Every day reports fly across the retail industries digital frontier carrying critical information on investigations, theft, loss, and other structural breakdowns that proliferate in these scenarios. Some of this data is eventually captured in national level university security surveys. But the immediate opportunity for the retailer is to collect and formulate specific and timely performance indicators to coincide with business goals and objectives. The next inventory is too far away; looking beyond sales data and using loss prevention key indicators will create a more holistic evaluation and approach to managing a retail business. Organizations that have not implemented strong loss prevention KPI’s and subsequently wait for their next inventory to determine the effectiveness of the loss prevention program may have missed both a ‘top-line’ and ‘bottom-line’ improvement opportunity.
What approaches do you take to bring your loss prevention analysis more “real-time”?
What tools do you find most successful to provide immediate analysis?
What are some interesting Key Point Indicators (KPI’s) you have found to help analyze your program effectiveness?
Written by John Fice, Chief Operating Officer