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Profits: Lost in the Surge

Posted on 1/13/15 12:49 PM


bigstock-Overhead-photo-of-an-American--24720266There is an old saying, “It’s not over til it’s over.” The holiday sales surge is a good time to keep that tenet in mind. 

If you are a sports fan, you may recall a celebratory disaster that involved Leon Lett a Dallas Cowboy’s defensive lineman. Mr Lett had the good fortune and skill to recover a fumble by the Buffalo Bills during the fourth quarter of Super Bowl XXVII. Ball in hand he took off for the end zone, another touchdown for the Dallas Cowboys almost guaranteed.

At about the ten yard line, however, Mr. Lett began his premature celebration, the football held out in one hand as he prepared his theatrical victory dance in the end zone. To his shock, dismay, and embarrassment, Buffalo Bill’s player, Don Beebe had chased him down and Beebe stripped the ball from Lett’s outstretched hand before he crossed the goal line. Celebration Canceled.

The holiday season can be a lot like that ill-fated assumption of victory. Although the sales may be in “the bag,” so to speak, there are still a number of items worth balancing before we begin our celebration. Early January is the best time to focus on the biggest culprits of lost holiday profits. 

During the holidays things are moving fast, audits are on hold, and details can be overlooked. Most of “problems” that have occurred will ultimately come to light, but experienced loss prevention professionals understand that the sooner we discover the holiday issues, the more likely we can provide resolution. And while there are many areas to consider, there are three in particular that can net the greatest peace of mind.

Deposits: There are probably a few missing. Retailers were busy, the associates were busy and the banks were busy. There is no greater disappointment than learning sometime in February that many of our great sales days…never made it to the bank. The issue is compounded with turnover, as often, the potentially responsible party or critical witnesses have left our employment. The early part of January, when any issues are still relatively fresh, is the best time to ensure deposit and petty cash reconciliations. 

Damages: Many businesses perform inventory shortly following the end of the holiday season. The high customer traffic and increase in returns can create a mountain of items that require processing. Damages represent a number of opportunities for things to go wrong. There may be products that are fine for sale but have inadvertently been placed in the damage’s area. As inventory approaches and pressure mounts to prepare the store, damages may be discarded or improperly accounted for, and some of those items may find their way into the possession of dishonest associates. Ensuring damages and “return to vendor” products are secured, that there is an effective and traceable process in place, and that the process is completed in a timely manner are all key to preventing shrink and profit erosion.

Returns: With an increase in sales comes a subsequent increase in returns and exchanges. The more transactions processed, the more opportunities for mistakes in re-tagging, improper application of SKU Numbers to returned items, and of course the ability for dishonest associates to hide “fake” returns within the increase of legitimate refunds. While we need to adjust our average refund thresholds to reflect the general increase, we should still pay extra attention to the return process. After the holidays, is the best time to review refunds for red flags such as multiple same item returns, high cash refunds, missing signatures and customer information, and for patterns in associate transactions. 

In the surge of holiday business it may not be possible to catch every mistake and certainly discovering dishonest transactions is more of a challenge, but placing an increased diligence and effort in these three key areas can make a large difference in reducing holiday losses and improving resolution. 

Authored by: Ray Esposito      

Ray EspositoRay Esposito Linkedin 



Topics: loss prevention, policies and procedures, educate, Holiday Tips, customer service, Gift Card Fraud, Refund Fraud

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