With lost revenue and retail shrinkage continuing to be a major issue, the role of the Loss Prevention Manager, particularly in large retail chains or franchise environments, is becoming even more important. There are many sources of potential loss that retailers must contend with, including Point of Sale (POS) manipulation, vendor collusion and – the more innocent, yet potentially equally costly – training and process deficiencies.
For Loss Prevention Managers, a clear strategy and documented approach is critical in helping ensure they are staying ahead of the game. And the good news is that there are now new tools available to help you bring this strategy to life.
So if your loss prevention strategy is in need of an update, or if you don’t currently have a formal process, the following checklist may inspire some fresh thinking.
Pro-active loss prevention strategy – a checklist
Taking a pro-active stance on your loss prevention approach is the key to taking control. Here are some elements to consider that will help you do just that:
1. Continuous data monitoring.
Are you able to monitor every transaction or do you react to issues on an ad-hoc basis or from a ‘gut feeling’? Continuous monitoring doesn’t mean sorting through millions of lines of POS records for unusual voids, refunds or discounts. Today’s solutions enable you to automatically scan your data for these and other ‘red- flag’ scenarios such as cash draw skims, loyalty card misuse, multiple low value sales and many others.
2. Ongoing review of training needs.
How much revenue are you losing to possible training gaps? Employees generally want to do a good job but they need the right tools, processes and support to do so – and sometimes this means a little extra training. Identifying potential training gaps may be as simple as spotting the individual instances of staff consistently hitting the wrong discount button, not charging separately for a condiment or processing a refund incorrectly.
3. A check-in with company culture.
Are you confident that the internal culture is one of policy compliance? One way to assess this is to conduct an anonymous survey to allow team members to provide feedback on potential areas of concern and to gauge their awareness of policies and procedures. As well as showing that you are serious about compliance, this will help build better engagement with your team members. “Gamification” of compliance reporting can make for a fun and engaging approach to enacting cultural change. Set compliance goals, encourage progress towards these goals with regular feedback mechanisms and reward attainment.
4. Varied data sources for a complete picture.
Do you only analyse POS records or are you incorporating other sources of information? While POS data is important, it is often only the tip of the iceberg – valuable additional insights can be gained by incorporating other records such as Supplier purchases, HR, or Accounts Payable, among others – integrating sources to enable richer insights alongside the POS story. For example integrating and comparing Sales data, product Recipes / Bill of Materials, supplier purchase records and/or inventory suddenly enables the identification of stock theft, usage of unapproved suppliers, unnecessary wastage and un-transacted orders, among other things.
5. Ability to dive into the detail.
Data also needs to be sufficiently detailed to allow for meaningful analysis, e.g. analysing a sequence of actions in the order process rather than the finalised transaction alone. This would enable you to identify scenarios you may not have previously considered. For instance: in the presence of a customer, an employee keys in an order containing all of their purchased items, but then after the payment is made and before the order is finalised, selected line items are cleared or replaced with lower value items, so that the employee can steal the remaining cash from the customer payment. Would you know if this is happening in your stores? It’s just one of many scenarios that may be occurring across your network.
6. A bird’s eye view.
Often, Loss Prevention processes are focused bottom-up. Once a suspicious employee or store is identified through tip-offs or gut-feel, a review of their transactions and sales reports is performed. This approach is reactive, time consuming and may miss many fraudulent transactions. A top-down approach to loss prevention is much more effective. By beginning with an aggregated view of suspicious activity across ALL stores and then drilling into specific areas of concern, you can identify patterns of scenarios and transactions not visible when looking only at the detail. For example, employees committing fraud usually exploit a number or loopholes and techniques in an effort to go unnoticed. If a loss prevention manager simply analyses ad-hoc reports or transactions for a single scenario such as voids, discounts or refunds, activity in any one scenario may not be sufficient to raise concerns. Taking a holistic view – and using a loss prevention platform based on advanced analytics – makes it easy to take a top-down approach to loss prevention.
7. A process focus.
Managing and tracking open investigations is an involved task. It’s made easier by a clearly defined process and a set of tools that help to track progress and move towards recovery. What will determine your course of action once the culprits have been identified? Are the steps in your investigation, observation and recovery processes clearly defined? For example, where will you save the relevant data and correspondence captured during an investigation? How will you track a case through these various stages? Is it auditable to support potential legal proceedings? It helps a lot if these capabilities are built into your loss prevention platform.
Take the guesswork out of loss prevention
Retailers have been hearing about advanced data analytics for some time and many are engaging with the technology to get closer to their customers, A lesser-known – but equally as powerful – application is that around loss prevention.
The potential impact is significant. Retailers using Retail Defender – Bistech’s loss prevention analytics platform – have reported recovering around 7% of their annual revenue, with around 70% of issues identified warranting further action. These includes instance of fraudulent activity, non-adherence to corporate policies, operational inefficiencies and training gaps.
Manually sorting through thousands of lines of data is a thing of the past. Talk to us about how we can help take the guesswork out of loss prevention and help your retail network to recuperate lost revenue.
What could fraud, training deficiencies & operational inefficiency be costing my business?