How to ‘buy’ Low Shrinkage for summer - Christmas 2009

The Three ‘A’s: Awareness; Attitude; Action
Technology a consideration…….?

With the expected rise in Australian unemployment expect a rise in Australian retail theft and attributable retail losses.

The RETAiL Alert Group has a proven track record in reducing Australian retailer’s Retail Theft, Profit Losses and Lost Sales Opportunities created by retail shrinkage within an Australian retailer’s business.

The trading period summer – Christmas 2009 will be challenged by an increase in Australian unemployment coupled with a rise in Australian retail theft, profit losses and lost retailer sales opportunities.

Re-focussing on the Three ‘A’s of;

Retail Theft and Loss Prevention AWARENESS

Your ATTITUDE to Retail Theft and Loss Prevention.

Your ACTION on Retail Theft and Loss Prevention.

will reduce the risk, mitigate the risk of retail losses for trading period summer – Christmas 2009 or actually improve the levels of retail losses experienced during trading period summer – Christmas 2008.

Many Australian retailers have periodic stock takes, some six months, some annual some quarterly which in our view are just token attempts to stem retail theft, retail losses and lost sales opportunities.

The result of these stock takes is a few weeks of ‘thrashing around’; the blame game is alive and well, managers and team members are fired but after time the business settles back to wait for the next round of stock take disasters.

Although there are sometimes ‘token gains’, the ‘occasional stock take’ approach to retail theft from the results of regular stock takes does not fundamentally address the issue of embedded retail theft and losses within a retailer’s business.

All retail theft and retail losses in real or loss of sale opportunity are lost profit opportunities which go directly to the bottom line.

Looking at stock take losses in isolation does not consider the substantial number of profitable sales lost as loss of sales opportunities.

Reducing retail theft and retail losses are a daily matter not an occasional ‘stock take fix in a panic matter’.

Retail theft and retail losses are reduced when reducing retail theft and retail losses is seen as an ‘all business issue’ not just a set of retail theft issues confined to the shop floor.

Retail theft as reported in a store stock take is split into two parts, real theft and error counts and mistakes in general back office or head office paper work.

Technology aids such as EAS (Electronic Article Surveillance) and the emerging ability to source mark vulnerable product with RFID bar-codes are available.

There are also ‘tools’ to interrogate POS (Point of Sale) transactions but nothing substitutes for an end to end all of business approach to reduce Retail Theft and Retail Losses.

Controlling retail shrinkage covers a multitude of ‘profit leak points’; a surface brush to retail shrinkage by just concentrating on stock take results without looking at underlying procedures and processes is why many Australian retailers have unacceptable retail shrinkage or costs.

Following is a Retail Theft and Retail Losses guidance table to assist defining where your Retail Theft and Retail Losses are for summer – Christmas 2009.

Shop Floor	Comment	Rank Risk 1-10	Proposed Action	Action Date
Manager Accountability and Understanding	Training of Store Team in minimising Shop Theft Risk
Sales Team Accountability and Understanding	Shop Theft observation and reporting of same
Casual Sales Team Accountability and Understanding	Shop Theft observation and reporting of same
Current Vulnerable Stock Spot Checks Against POS Stocks	Set timetable of cycle counts on vulnerable ranges
Placement and Visibility of Vulnerable Stock	Make sure vulnerable ranges are in clear sight
EAS or RFID Tagging of Vulnerable Stock	Are all Vulnerable Stock Items Tagged
Procedures to Check Accuracy of Received Stock	Is the soft copy ASN (Advance Shipping Notice) available to scan and check received stock against?
Are Claims Procedures for Stock Receive Errors in Place	Make sure you have simple procedures when making supplier or claims against a DC
Goods Received Log	Essential to track back on claims in dispute
Refunds / Credit Notes Procedures	Make Refunds and Credit note Auditing a weekly KPI of Audit procedure as a % of Sales
Lay-by Returns Procedures	Make sure that lay-by’s are returned to stock and refund procedures on lay-by deposit refunds are tight.
Customer Discount Procedures	Make Customer Discount Procedures Auditing a weekly KPI of Audit procedure as a % of Sales
Staff Discounts Procedures.	Make Staff Discount Procedures Auditing a weekly KPI of Audit procedure as a % of Sales
Faulty Stock Return or Disposal Procedures	Ensure that Faulty Stock Return or Disposal Procedures are checked weekly by AM’s; AM’s to sign off providing a weekly audit trail.
Interstore Transfer Matching	Receiving stores to have an auto match against soft copy send; Inter Store Transfers not matched within two weeks audit exception reported.
SOR (Sale or Return Procedures)	Regularly Audited to make sure that stock is returned on due date and stock matches SOR agreement. Consider RFID for SOR Stock.
Consignment Stock Procedures	Regularly Audited to make sure that stock is returned on due date and stock matches SOR agreement. Consider RFID for Consignment Stock.
Concession Stock Procedures	Regularly Audited to make sure that Concession stock matches agreement. Consider RFID for Concession Stock.
Banking Procedures	Daily time exception reported POS vs. Bank Statement.
Stock Cycle Counts	Timetable set ensuring Vulnerable Ranges counted regularly for Loss of Sale replacement.
RFID ‘bar-code’ Stock takes by location	Vulnerable Ranges counted regularly for Loss of Sale replacement.
Back dock, stock receiving and reserves	Goods Received Log Essential to track back on claims in dispute. Weekly Audited Reserve Random Stock Spot Check. Is the soft copy ASN (Advance Shipping Notice) available to scan and check received stock against?
Claims procedures	Ensure Claims Procedures are simply with an on-line Supplier Listing available to ensure correct location to return, correct carrier are defined for the team member.
Spot Stock Checks	AM’s to undertake random store and reserve stock checks as part of store visits; details posted on-line via POS
Spot Cash Checks	AM’s to undertake random store cash checks part of store visits; details posted on-line via POS.
External Reserves	Weekly Audited External Reserve Random Stock Spot Check
Pre-Season Shop Theft Training	Set dates
Main October Shop Theft Training	Set dates
November Christmas Casuals Shop Theft Training	Set dates

Supply Chain	Comment	Rank Risk 1-10	Proposed Action	Action Date
Scan packing at supplier	Mandatory
EDI Orders / ASN / PO Change Documents in Place	Mandatory
Bar-code QA in place	Mandatory
RFID ‘bar-code’ Source Marking	Starting with vulnerable retail theft ranges and basics.
Third Party Warehouse Stock take Accuracy	Spot checks weekly; full stock take monthly

Head Office Errors	Comment	Rank Risk 1-10	Proposed Action	Action Date
Incorrect Inter-Store Transfer Manual Posting	Change to auto matching
Incorrect Posting of Store Invoices	Move to EDI formats and standards for invoices / ASN’s even on non basic product.
Incorrect Posting Store Claims	Look at current time lag and posting procedures for Posting Store Claims
Incorrect Posting of Outstanding Invoices / Claims at Stock take	Check current procedures to ensure that stock held at store or DC has not been or has been ‘received’ into the store or DC system.

Existing technology including EAS (Electronic Article Surveillance) Tags provide Australian retailers with valuable support.

RFID ‘bar-codes’ with the ability to double as stock control by location and provide a degree of EAS capability should be considered for vulnerable fashion or high risk electronic stock items.

See RETAiL Alert article on RFID ‘bar-codes’ + EAS now Bluetooth.

‘Tools’ to track POS (Point of Sale) transactions are available on request.

For further guidance see The RETAiL Alert Group Loss Prevention 2009, Lower Costs; Less Shrinkage; More Accuracy article posted on The RETAiL Alert Group Website.

Re-focussing on the Three ‘A’s of;

Retail Theft and Loss Prevention AWARENESS

Your ATTITUDE to Retail Theft and Loss Prevention.

Your ACTION on Retail Theft and Loss Prevention.

will ‘buy’ low shrinkage for summer – Christmas 2009.

We are ready to assist you plan your Retail Theft, Profit Losses and Lost Sales Opportunities strategies for summer – Christmas 2009.

For guidance email Loss Prevention summer – Christmas 2009.

Tony Standley

Principal
The RETAiL Alert Group (Australia)

Mobile +61 (0)41 924 0497
e-mail info@adsass.com.au
Fax +61 (0)2 9987 0633
Website http://www.retailalert.com.au