Every retailer with multiple locations has a group of stores that are higher in loss than others. Most often, specific programs are created (Target, Intensive Care, Focus, etc.) to conduct specific or additional actions to reduce their loss. These actions may include additional audits, general loss interviews or store meetings, all designed to prevent another bad inventory or excessive loss. The success of a Target store program is not often found in the program elements themselves, but rather specific elements that must be in place prior to the start of a target program.
As a National Client Service Manager, I have the privilege of working with multiple retailers, assisting and guiding them in the development and execution of their loss prevention program. When discussing target store programs and results, it struck me that regardless of the organization, there seemed to be three basic elements that, if not part of the program, showed a failure on reducing shrink either within a location or the program overall.
Element #1: The Right People
It is important to have the right people supporting the Target Store Program. No amount of program elements can be implemented if the wrong people are executing your program, or not involved in the execution of your program. For a store-based program, this includes District Management, Store Management and at least key holders (secondary/tertiary management). Senior leadership support and “buy-in” is also a critical element.
Work with appropriate stakeholders and decision makers that drive the business in the field when developing your target store program
Review and analyze the performance and ability of the people running your high shrink or problematic locations. Are they fit to run such a location?
Determine a strategy for those who may not be suitable for the challenge. Will it require more district management involvement? Additional follow-up? Removing them from that location?
Element #2: Incentive to Achieve
Those who have more successful programs have had a well structured store management incentive program directly connected to shrink performance. It is up to each organization to determine their store incentive programs, and not every incentive needs to be cash related. We have seen some who provide company trips for a select group, cash bonuses or even merchandise related gifts. The most important aspect is that store management understands that if they fail to meet the company’s shrink goal, or performance metrics goal, they will not receive their incentive and/or bonus, at all, or in part.
A word of caution, however, is that there is a delicate line between maintaining a “sales-driven” environment and a “loss prevention or operational control” environment. It is important to create an incentive program that keeps both environments in balance, as a sales goal is as equally important as achieving your shrink goal.
Element #3: Leadership Support
This element speaks for itself. Without leadership support, a target store program will not be successful. Leadership support begins with the Regional Managers/Directors and District Managers, but must also include the Director/VP of Operations and others within the organization supporting the stores.
We all know that there will always be pressing issues, a new focus, or a new business direction that presses everyone for time. However, remember the reason why the target store program has been implemented; Poor Performance. Although priorities may shift and focus can often change, it is critical that field leadership have some part, or has some responsibility with improving their Target store’s shrink.
Field Management must make certain they follow up with target stores on the expectations, goals and action plan to reduce loss.
When visiting locations, make it a point to review the target store program and ask questions and challenge store personnel on where they are with their goals.
Make shrink improvement part of the business plan, discuss it as part of the store operations, not as a separate part of the business.
Where I’ve seen really good programs fall apart is when the RM/DMs stop asking and challenging on the Target Store Program and press store management on other business issues. At the end of the day, most store managers are more concerned with what their DM/RM has to say, rather than their LP partner. That is why it is critical when you are preparing a Target program field leadership must be included and must continue to reinforce the program throughout its lifecycle.
There is unfortunately no easy or perfect program out there that will cure your high shrink issues. Target stores take time and effort to improve. You can put a lot, or a little into the program, I’ve seen success with doing both, however, if your program is not built on a strong foundation and does not possess the right people, an incentive program, and leadership support you will continue to struggle with your high shrink stores.
Written by Michael Hofstetter, National Client Services Manager