Five Steps to Better Store Loss Prevention
Gone are the days when Loss Prevention (LP) teams focused only on shoplifters in their store. Today, technology has changed the game. Customers have many purchasing options such as buy-online pick-up in store, ship-from-store, and in some cases, they can pay for merchandise using a tablet as they walk out the door. These scenarios challenge LP teams. It’s why RFID, video analytics, and big data are becoming the top tools for LP to have insight into shrink. The amount and quality of data available to retailers from these tools are vital in today’s complex retail environment.
By gaining a deeper sightline into shrink, retailers can identify root causes while providing timely, corrective actions and recommendations to avoid repeat occurrences of specific LP issues. With real-time analytical dashboards and exception-based reporting, smart system management, monitoring and alerts, and Shrink Management as a Service offerings, retailers are armed to do just that while saving the company money and making better-informed decisions.
So, how can you really determine if your LP program is working for you? It all starts with knowing what’s going on in your store.
Step One: Constructing a Foundation – Gather the Data
Retailers start collecting shopper data from the very minute they open their doors for business. They consistently compile statistics on employees, vendors, and customers. Rarely, however, is this data compiled into actionable insights that can help drive strategic action in a timely fashion.
In many cases, this information is readily available. In others, the retailers might not even be aware that the data already exists. Although, a qualified and reputable LP solution provider usually knows exactly where and how to locate it. Sometimes, compiling the necessary data takes a bit more time and effort, which is why consistent collaboration and interaction with the in-house LP team and IT resource is so critical in building a foundation for success.
Step Two: Developing Key Performance Indicators – Decide How to Measure
Over the past few years, retailers have started developing, tracking and measuring key performance indicators (KPIs) in a systematic approach to help reduce shrink. After analyzing the collected data during Stage One, both the internal LP team and the LP solution provider have a better understanding of the company’s current state of shrinkage. From there, they can define future goals and objectives which take the form of measurable KPIs.
The most effective KPIs help organizations by reducing the time required to identify new challenges for LP in the future. While retailers may find that they have a very long list of potential KPIs, most LP analysis experts recommend focusing on only the top seven or eight most critical objectives in the beginning stages.
Step Three: Understanding Trends and Developing Insights – Determine What it Means
Retailers can utilize helpful business intelligent (BI) tools to better understand LP trends and evaluate insights. One of the more common initial uses of BI tools is leveraging them to generate massive volumes of compiled data, which then require an extensive manual evaluation by an in-house employee to determine what it all means. By optimizing the true potential of BI systems, companies save time and money in identifying root causes of shrink and creating actionable remediation strategies. Retailers can also predict future shrink events more accurately while proactively countering them more efficiently through tracking the success rates of these shrink-related solutions.
Rather than creating huge reports filled with various statistics, metrics, and activities, retailers can use these technologies to configure an easy-to-use, customized dashboard of relevant metrics and insights. The dashboard can then summarize meaningful information to identify trends across multiple retail locations, departments, and products to clearly tell the story about what’s happening in the store. This data and actionable insight can be used in real-time to help reduce and control shrink.
Step Four: Predicting Shrink – Be Proactive
Through the use of predictive analytics technologies, retailers can capture relationships between multiple retail factors while interconnecting the related findings to past shrink events. The prescriptive data analysis is then exploited to “predict” future outcomes faster and more accurately.
Since predictive analytics can be used to identify odd relationships and patterns, specific data regarding employee overrides, sales-to-return ratios, on-hand inventory quantities adjustments and the employee schedules of specific retail locations can trigger alerts to questionable behavior. Resulting patterns and relationships can be translated and factored into countless calculations and what-if scenarios to forecast future shrink events and outcomes at any point in time.
Step Five: Leveraging the Latest Technology – Simplify Solutions
Look to cloud platform offerings and options for “as a service” solution models to simplify retail environments and gain the predictive and preventative insights vital to proactively manage shrink. IT complexity and costs can be reduced with a simplified infrastructure available with a cloud-based solution, and “as a service” software enables anytime, anywhere access and collaboration. Instead of having to rely on the proverbial “shrink cycle” to identify and resolve shrink-related concerns (which can take up to six months or more in many cases and significant investment in both employee effort and time), retailers can now make more timely, strategic and data-driven decisions to correct issues. Today’s retail store does a lot of talking all day long and will share information on how to minimize loss and maximize growth. All retailers have to do is listen.