I’ve been discussing the changing loss prevention landscape for a while. If I were to draw a picture that landscape would look much like an overgrown, barren field. This is not to present a negative, hopeless picture of the profession’s future, but rather to suggest that we cannot ignore the changing environment and simply “hope” that the days of old will return. Too many factors suggest that retail has struggled to transform for the past several years and that those who survive will be a different organism.
Under-employment, consumer confidence, changes in minimum wage, on-line shopping, healthcare laws, and the decriminalization of shoplifting are all taking or will take their toll on the industry’s future. These conditions can cause a form of professional paralysis. Rather than seeking new approaches and new ideas, a sort of quiet panic sets in and professionals dig deeper into the old methods in fear that any mistake or misstep might put them on the “radar” or render them “expendable.” The problem is, however, that for most organizations “things” have changed and failure to change with them is a pathway to disaster.
In Loss Prevention, resources have continued to be the greatest challenge. There are fewer of them to go around. LP staff sizes are smaller, many experienced professionals have been displaced, and money for technological updates or advances have disappeared. Store personnel are experiencing the same resource challenges which means they have less time to focus on the issues most important to the LP goals. In such an environment, the control of loss means we need more early warning alerts and less reliance on alarms.
The value of the big alarms go without saying. All the standard practices of investigations, auditing and awareness are core functions in shrink reduction. Target store programs and increased training have proven to both reduce shrink and to maintain that better performance in subsequent years. The purpose of alerts is not to dismiss the value or benefits of these best practices, but rather to augment them and to provide information that allows us to put our limited resources in the most important places.
There are five specific “alert” features a “taxed” loss prevention effort can employ to improve performance:
Store Security Visits: Sometimes there just aren’t enough personnel to complete the recommended two full audits in each store. A Store Security Visit or SSV program is a method to reduce the time involved and extend the reach of review. An SSV doesn’t try to be a full audit and it’s not designed to take 2, 4 or 8 hours to complete. The SSV is a 45 minute visit that reviews the most critical information and the information most likely to flag potential dishonesty or disaster. The questions reviewed focus on the high-risk transactions and activity such as refunds, cash control, deposits and shipping and receiving. SSV can be very successful in rooting out the big issues and in uncovering information that leads to a bigger and a more thorough investigation.
Statistical Snapshot: In the law of averages, there are always outliers. Those who perform at the top and those who perform at the bottom. A statistical snapshot compares the store activity to the average to reveal which places are performing below the average. For example a review of refunds as a percent to sales or damage dollars to the chain average will demonstrate those stores operating outside the norm. Although this information might not be an indicator of anything but what is “normal” for a particular location, it does provide a starting point for further review. This type of alert helps us understand, very quickly, who is operating “outside the norm.”
Mystery Shops: Today’s mystery shop costs are low enough to make them an excellent low-cost method to expand reach and visibility. Long used to gauge customer service, mystery shops can, with a little “tweaking” provide excellent loss prevention information. The correctly worded questions can give us insight on floor coverage and employee to customer interaction (a possible shoplifting target), cash handling (potential for mistakes), and the state of ticketing or EAS tagging (potential for theft and error). Like the snapshot, a single score may not be conclusive, but when compared to the average of all locations, these scores can begin to alert us to a locations need for attention.
Short-Form Key Performance Indicators: I remain a fan of the Loss Prevention KPIs. Information is the most powerful tool in our arsenal and having the information in a format that is easy to digest and interpret is critical. In the short form method, we build our KPI’s much like the Statistical Snapshot but rather than relying on averages, we collect and compare specific information. The information provides a historical reference we can use to recognize negative trends or sudden leaps in activities. Average refund dollars, cash shortages, late deposits and late to open or close are some of my personal favorites.
Employee Relations: Building a relationship with Human Resources and the Operations team is essential to a strong loss prevention program. Being alerted to the fact that employee relations issues exist in a location provides the opportunity to monitor other activities in the location. There is a psychological element to ER issues. When they occur, employees can lose focus on the operational practices and certainly disgruntled employees can engage in behaviors that are not conducive to healthy practices. Using the ER information doesn’t mean the LP personnel needs to have all the details, which might make some HR folks uncomfortable, it is enough simply to know that there “are” issues so that extra monitoring can occur.
The five alerts described require some work, but not nearly as involved as collecting all the information through store visits. All of the information can fit into a nice neat computer file that can be built upon and sort to create an easy to use Alert Dashboard. Alerts also provide a pro-active method to deploy resources and to schedule visits. Tomorrow’s loss prevention belongs to those who have the best information in the quickest manner. Alerts are an effective way to begin that information gathering.
Authored by: Ray Esposito