Take 5 from the  ECR Retail Loss Group’s October 2020 Working Group Meeting

“Sell more, Lose Less” – two well used retail terms that many of the former generation of Loss Prevention Specialists would have never dreamed of using in the same sentence, being seen as the sales preventers, solely focused on the elimination of theft and crime in retail stores. However, in the Loss Prevention team of today, working in a more complex retail context where the risk appetite has grown, specialists have needed to evolve to help the business successfully support good, profitable sales in tough trading. The evolution has been from sales ‘blockers’ to that of sales ‘enablers’.

That is why it was great to be able to ‘engage, contribute, collaborate and learn’ with the ECR Retail Loss Group’s workshops held ‘virtually’ at the beginning of October. Just under 200 participants from retail, academia and suppliers came together to share their experiences and knowledge, leading to space to reflect on world-wide practice and maybe go away with a different approach to solve Sales and Shrink opportunities that you didn’t even know you had!

The seven sessions, over two days, were chaired by ECR Group Strategic Coordinator, Colin Peacock, with a well themed, progressive and holistic journey through Total Loss and Profitability. The range of topics at the workshop were:

·        An early look at a new ECR Retail Loss group’s commissioned ‘DC Pick Accuracy’ research paper by the University of Warwick, demonstrating the impact that DC Pick Accuracy has on store inventory accuracy and sales.

·        A look at how retailers are making inroads in dealing with losses incurred though error and incorrect master file data, removing the losses upstream before they hit the store. 

·        A discussion on the business case for ‘Counting more to Sell More’ delivered by UK supermarket Waitrose, who have started to use up to 6 stock-takes a year to drive better availability, increased sales and better analysis of loss.

·        A view from Dutch company Bol.com on how they are trying to combat the rising issue of e-commerce shrink – especially difficult when you range 11 million SKU’s and 30% of your sales come from post-delivery payment of goods by the customer.

·        An insight to the evolution and accountability of Shrink KPI’s in UK retailer Marks & Spencer.

·        A review from Sainsburys and the Co-op in the UK, alongside some views from vendor Procter and Gamble and their work in European Retailers, on how there are trying to protect vulnerable people and products with new solutions.

·        Some pearls of leadership wisdom from Mark Gabriel, Head of Loss Prevention at Sainsburys, in trying to answer the question of should the role of Head of Loss Prevention be a Loss Prevention specialist or can an Operations Manager be better placed to lead.

So, what did I take away from the event?  Here are my regular ‘Take 5’ from the event to get you thinking and talking…..

Improving Shrink Has to be Culture Driven at Board Level Downwards

Mark Gabriel’s thoughts about the shrink culture at Sainsburys, alongside his comparison to Professor Adrian Beck’s Loss Prevention Pyramid and how Shrink has to be constantly revisited at Board room level to be effective throughout the company, were a welcome reminder to everyone. Culture is everything with Shrink and if a company has a complementary shrink culture then it will surely be more profitable than a company who does not. Interesting that his whole session was brought together at the end by two pearls. Firstly, his team are ‘Sales first, Customer Second and then Shrink third’ and Secondly, he now sees the true value of an enabling Loss Prevention team rather than his view of ‘blockers’ as a previous Operations Field Manager.

E-Commerce Shrink is probably the Biggest Rising Problem for Loss Prevention Professionals…and Probably the Least Understood.

Hearing the ECR Retail Loss Group’s Chair John Fonteijn talk about Bol.com’s journey through E-commerce was one of those moments where you can probably see a hundred light bulbs switch on and people thinking ‘I’m not sure I’ve looked at the problem in this detail before now”? I know it was for me! With the pandemic still in full flow, E-commerce will continue to be the biggest growth area for retailers and thus, potentially, the biggest risk area of future losses. We need to ask are we prepared for that, or are we going to wait until we are in trouble before we ask the question of correct investment in time and resource? How can we take learnings from other retailers on what they are doing? The ECR Retail Loss Group are now looking at further sessions to deep dive E-commerce in the coming months… definitely one to watch out for.

Counting More Can Have It’s Positives –

I’ve always been a fan of promoting ‘less is more’ when it comes to inventory management. In effect, my philosophy has always been, the more you count a SKU, the more likely you are to get it wrong as well as expensive labour costs.  However, with the acceleration of different customer technologies being used in retail now, including self-checkouts and scan & pack, inventory drift and lost sales are challenging my ‘less is more’ blanket approach. Well, Waitrose have completed a project where stores are now being fully counted by external stocktakers up to 6 times a year and its driving an average of 1.5% LFL sales growth. For some retailers this may not be profitable, but for Waitrose it is - as well as bringing an additional suite of sales driving reports for stores and critical shrink analysis for the company.  The reflection on this has to be a self-question on how you effectively introduce new scanning technologies and keep accurate stock to drive availability & sales, whilst keeping costs down to make it profitable – especially in a time where labour is a key challenge for retailers.

Are Video Analytics going to overtake Physical Security in the future of Loss Prevention – I tend to think so!

I listened to the three presentations of Co-op, Procter and Gamble and Sainsburys with interest. Were there any new nuggets of physical security technologies that were available. Well, if I am honest, there was not as much as I hoped, although the presentations were engaging.  However, what did interest me were two aspects. Firstly, a question about continual requests for Capex to replace evolving technologies. For example, once the new technology’s bottle cap detacher becomes readily available to buy on the dark market, then what do you do next to replace the capital you’ve invested. But actually, the second aspect answered the first aspect for me where Sainsburys demonstrated their new Third Eye video analytics software that picks up on poor shopping behaviours, like potential shop lifting, creating video backed alerts for security to deal with. For me, the future of theft has to be about video analytical deterrent and rather than the physical deterrent – but I’m sure others would disagree.

If 65-80% of Inventory is Inaccurate and the DC Pick Accuracy is a Significant Contributing Factor, am I Just Chasing ‘Wooden Dollars’ by Doing Something About it?

Gosh, if I had a £1 for every time I have had a conversation about Pick Accuracy over the years in regards to Shrinkage, I genuinely would have retired a very rich man by now. Why bother spending lots of labour moving financial stock around the store and depot shrinkage pots when it adds nothing to the bottom line – it is a great debate to have with any Retail Senior Manager who blames the DC network for their shrink performance. But to hear an excellent presentation from Professor Godsell, leading the research at Warwick University, that showed the inaccuracy of book-stock can lead to an impact in sales of an average 4% is an interesting curve ball to get any Loss Prevention Manager thinking differently. Also hearing that pick accuracy was a low priority to DC networks surveyed was surprising and maybe suggests a lack of correlation between quantity, quality and the knowledge on the impact to the sales line. The solutions seem to suggest about corporately working with a coherent, shared strategy that looks at operations, technology and people. The final report to come before the end of the year is going to be very interesting read.