15 minute read
SOLUTIONS SHOWCASE
Loss prevention departments have, for some time, successfully examined risk flags within point-of-sale (POS) transactions to identify exceptions that may indicate theft or loss. These risk flags, many of which decrease potential revenue, are increasingly categorized as SRAs or sales reducing activities. Today, monitoring SRAs to drive shrink reduction is attractive for several reasons: ■ They are identifiable with analytics. ■ They can be indicators for both fraud and unintentional loss. ■ They are controllable through policy, procedure, and systemic changes. ■ Remediation delivers ongoing profit protection.
In this article, Appriss Retail will review some common retail POS SRA events and their connection to shrink.
Common POS SRA Categories
Many activities that generate SRAs exist to improve customer service and to correct errors that occur occasionally in the normal course of conducting a sales transaction. The goal of analyzing high-level SRAs is not to eliminate all instances of the activity but rather to determine the natural frequency at which these events occur within the organization and to identify behavioral outliers from the baseline. Some SRA categories commonly seen across retail verticals are: ■ Line voids and error corrects ■ Post voids ■ Suspends ■ Coupons ■ Price modifies ■ Refunds ■ Tender swaps ■ Tax override ■ Manual entries
Your retail business process may not encounter all categories, but your point-of-sale captures any SRA events and records them in the t-log. From there, exception-based reporting (EBR) solutions, like Appriss Retail’s Secure™ Analytics, can be used to analyze SRAs in detail and combine them with additional risk variables at any level within the store operational organization. Individuals with store-level responsibilities can find hotspots and resolve root causes in individual locations or request retraining for specific associates. Regional and corporate-level personnel can find and address the broader issues and causes using similar analyses for the whole organization.
An uptick in SRA frequency can indicate fraudulent activity, but when employee fraud is not found, the analyst should look for systemic or execution problems, as store employees may have developed a work-around for a problem that is not readily visible to the corporate office.
Shrink, Loss, and SRAs
Fraud—The Short-Term Concern
Even before there was a specific term, loss prevention pros monitored what we now call SRAs to find fraudulent activity. This works well when the EBR system is in the hands of a skilled user. In the course of a year, a retailer can save hundreds of thousands—even millions—of dollars and achieve excellent results by focusing on the largest cases.
Independent research by graduate students at the University of Texas at Austin showed a strong relationship between SRAs and fraud. The researchers ranked a national convenience retailer’s stores against each other for SRAs and calculated a risk factor. The 20 percent of stores with the highest risk factors were considered likely to have experienced fraudulent activity.
Systems and Processes—The Long View
A report from LP Magazine stated that in one retail chain, 77 percent of the employees who were terminated for stealing from their employers took advantage of an opportunity the employer created.
As the cost for criminal prosecution continues to rise, retailers are increasingly likely to overlook petty theft and focus only on the big cases. While a justifiable use of resources, this approach should not exclude the methodical analysis of these SRAs, which offer a better opportunity for success. By tracking SRAs and remediating the weaknesses they reveal, retailers enjoy immediate savings as well as ongoing profit protection.
Consider these scenarios: ■ A retailer attempts to install a software modification to block expired coupons from being redeemed, but a software bug prevents the modification from taking place, and the coupons continue to be accepted. ■ Confusion over a new employee discount policy leads to the sale of merchandise below cost. ■ Professional discounts are extended to shoppers based on their appearance instead of through identification.
Those examples make it easy to understand how using SRAs to find and fix systemic problems can deliver lasting margin-protection results. As an added benefit, resolving these issues clears the clutter from transaction analysis, which makes it easier to identify employees who intended to defraud.
Seasonal Impact
SRAs and shrink trend together, and they peak during the holiday season. Research from 2016 stated that 37 percent of shrink in the US and 38 percent of shrink in the UK occurred during the fourth quarter. The SRA distribution for both countries exceeded 40 percent at that time—roughly double that of other quarters. Margins dropped by about 9 percent during this period.
One SRA in particular, returns, peaks during the fourth quarter holiday season. According to the National Retail Federation, returns as a percent of sales were 2 percent higher than the annual rate in 2015. This tendency has been recorded for years in NRF’s annual reports.
Controlling Shrink
SRAs not only indicate where shrink may have taken place but also can be used as an early indicator of future shrink. By analyzing the transactions from Appriss Retail’s install base of tens of thousands of retail stores in a variety of retail verticals, the company calculated the correlation between current SRA volume and future shrink. The SRA to Shrink Trend table shows the relationship across the industry. (Results vary by individual retailer.) The more transactions containing SRAs, the higher the shrink percentage. Therefore, reducing SRAs will help reduce shrink.
The table clearly shows the correlation of SRAs and shrink. By monitoring SRAs throughout the year, retailers can detect problem stores and resolve root causes before it is too late.
SRA to Shrink Trend
k Shrin > 3%
2.501 to 3%
2.01 to 2.5%
1.501 to 2%
1.01 to 1.5%
< 1%
fewer
Transactions Containing SRAs
more
Monitoring SRAs for Improved Financial Performance
Both “good” and “bad” SRAs impact shrink. They should be monitored on a corporate level to identify emerging problems quickly, before annual shrink is calculated. In addition, people with store and regional responsibilities can use them to spot unusual activities at store level. An LP professional, for example, will make better use of the time spent on a store audit by running an SRA report in advance.
Analyzing the SRAs with Appriss Retail’s Secure Analytics is a quick and effective way to learn where to focus efforts to reduce shrink and ultimately improve profits. Visit apprissretail.com for more information.
Erosion of Net Sales
The errors or other situations that instigate legitimate POS SRAs diminish the customer experience for everyone waiting to check out—whether it is a pricing error that leads to a line void, the need to adjust tax for a professional contractor, suspending a sale while the consumer returns to the car for a wallet, or any number of other issues slow transaction times. The flow chart above right shows some of the common impacts.
Ensuring the Safety and Security of Your Most Important Assets
When was the last time you thought about the integrity and function of your fire alarm and security systems? Have you ever considered what would happen if your life-safety and security systems didn’t work properly in the event of an emergency? If a fire occurs, you expect all systems will function properly, alerting staff and customers to get to safety. You trust that your burglar alarm systems will function properly during a break in. However, if these systems fail to operate as intended, the consequences can be dire.
It’s easy to take the effectiveness of your fire alarm and security system for granted. Therefore, you need a fire alarm vendor and security partner with experience, reliability, and dedication to your system’s performance. For a busy retail or corporate manager, you can’t afford to make a mistake regarding your fire alarm vendor or security provider—a mistake that could mean the difference between all or nothing.
Founded in 1873, AFA has delivered best-in-class solutions for installing, monitoring, and servicing fire alarm and security systems. AFA’s story began almost 150 years ago, under the name of Automatic Signal Telegraph Co. of NYC, with authorization from the city mayor to automatically transfer fire alarm signals to the headquarters of the city’s fire department.
Over the next century and a half, AFA continued to innovate. AFA was one of the first companies to transfer alarm signals over telephone lines. AFA developed the first multiplex signal transmission system. AFA also pioneered computerized fire alarm and security monitoring. As a leader in fire alarm and security services for over a century, AFA has earned the trust of its customers by delivering exceptional levels of responsiveness, dependability, and thoroughness across the scope of its services, including: ■ Fire Alarm Services—installation, maintenance, and test and inspection. ■ Security Systems Integration—burglar alarms, video surveillance, and access control. ■ Central Station Monitoring Services—including UL-listed and FM-approved fire alarm monitoring and burglar alarm monitoring.
When it comes to the safety of your staff and your customers, the security of your assets, and the overall protection of your company, you can’t afford to take anything for granted. Choose a fire alarm and security partner with a rich history in life safety and loss prevention. Choose a partner with a reputation for excellence and leadership. Choose AFA Protective Systems, Inc. to protect your people, property, and assets. Visit afap.com for more information.
Is Your Back Door Protected?
Detex introduces a maximum security, multipoint lock so big and strong that it stands up to assault by the bad guys and reduces employee and customer theft.
Exclusive to Detex, the ECL-230X-TDB is a heavy-duty, easy-to-install, three-bolt, multipoint lock. Its construction takes panic hardware to a whole new level of toughness and eases your back-door security worries about the bad guys peeling the bottom of your back door to gain entry.
Built for maximum strength, it is designed with a larger deadbolt that goes deeper into the frame than other locks in the category. Connecting rods are solid steel rather than the less reliable, hollow rod or cable construction. Life-safety and code compliant, the new Detex ECL-230X-TDB serves as both panic hardware and a maximum-strength locking device.
The ECL-230X-TDB includes a photo-luminescent sign available in more than ten color and language combinations, a 100-decibel alarm, and three locking points per door. Together, the three bolts withstand 16,000 pounds of pull force. ■ Top deadbolt—approximately 1” wide by ½” thick, the top bolt provides additional stability to the top corner of the door. ■ Side deadbolt—2¼” tall by ½” thick deadbolt with a 1” throw allows for 3/4” penetration into strike. (Detex recommends flush installation for maximum security.) With more than 1½ square inches of bolt engagement, the side deadbolt provides superior defense against pulling and prying on the side of the door. ■ Bottom bolt—a 5/8” HEX bolt with 3/4” throw engaging the floor with 5/8” penetration provides better attack resistance and superior defense against the “peeling up” of the bottom of the door.
Add suffix DX3 (ECL-230X-TDB-DX3) for six locking points for even stronger security, providing an additional line of defense against break ins. Even if the exterior door hinges are compromised, the DX bolts keep the door locked and secure. These passive deadbolts are easy to install and offer another layer of attack resistance. Through-bolt mounting installation improves the door’s holding strength. You choose the right application and level of protection by choosing one, two, or three bolts for a total of four, five, or six locking points.
Other 230X models include: ■ ECL-230X (dead bolt only) ■ ECL-230X-W (weatherized dead bolt) ■ ECL-230X-TB (top and bottom bolt) ■ ECL-230X-W-TB (weatherized top and bottom bolt) ■ ECL-230X-TD (top and dead bolt) ■ ECL-230X-W-TD (weatherized top and dead bolt) ■ ECL-230X-W-TDB (weatherized top bolt, dead bolt, and bottom bolt)
Additional benefits include: ■ The lock body is made from a corrosion-resistant alloy. ■ It offers surface or flush reversible strike. ■ The durable photo-luminescent sign absorbs light, then “glows in the dark” when lights are dimmed. ■ It offers non-handed door handling. ■ Resetting the alarm can only be accomplished with a control key. ■ Locking and unlocking the dead bolt always arms and disarms the alarm. ■ It accepts five-pin through seven-pin standard and interchangeable core rim cylinders without using a cylinder collar. ■ An optional inside pull handle is available. Almost all hardware and accessories can be customized with different finishes, colors, sizes, and more. Ask us how this new generation of life-safety and security hardware can make a powerful difference at your back door.
For more than a century, Detex has earned the trust of architects and owners who rely on Detex products for the life safety and security of people and property. A USA company, Detex designs, manufactures, markets, and ships products from New Braunfels, Texas. Detex is known internationally for life-safety and security-door hardware, loss prevention and architectural hardware, integrated door-security systems, and guard tour verification.
Visit Detex’s website at detex.com or call (800) 729-3839.
When it comes to physical fitness, it’s important to build a strong core foundation. A strong core gives you that coveted beach body, but it’s also important to overall health. The core is the body’s powerhouse and is important for balance and stability. It facilitates movement and keeps your organs and central nervous system operating at peak performance. When a body’s core is weak, it can cause back pain, heart disease, and several other preventable ailments.
The same can be said for the core of a business. Without a strong core, inefficiencies run rampant, and profitability is less easily attained. Behind every successful business are strong partnerships. Strong partnerships strengthen the core of a business like nothing else. This is true of the partnership between lululemon athletica and InstaKey Security Systems.
Just over ten years ago, it came to the attention of lululemon’s facilities department that there had to be a better way to secure its stores rather than having to rely on a core-swap program that was no longer feasible due to inefficient turnaround and growing budgetary costs. That is when they identified InstaKey’s KeyControl® program as a strong solution for the store’s security. Greg Brumley, Vice President, Asset Protection and Facilities, lululemon
Streamlining for Cost Efficiency
InstaKey’s program approach streamlined the ordering and delivery processes and significantly reduced the costs associated with managing a mechanical lock program.
Before partnering with InstaKey, the cost of each core swap, due to employee transition, was around $140. (Today’s cost is closer to $240.) With InstaKey’s unique, turnkey, rekeying solution, each event now costs lululemon $70. That’s an immediate ROI upon the second rekey event.
When it came to streamlining the ordering and delivery processes, lululemon maximizes on best practices by retaining the Rekeying Kit on site (in a safe) for when a key is lost, stolen, or unaccounted for. This solution allows for an immediate rekey response to the loss of a key, instead of waiting on a locksmith or cores and keys from a supplier. Additionally, freight costs are dramatically reduced because shipping the next Rekeying Kit delivers standard ground instead of overnight.
In September 2014, lululemon’s facilities team wanted to further tighten their key control and began to work more closely with InstaKey and store operations, teaching stricter key-management practices. By teaching stores to get the keys back upon employee separation, they began to reduce the need for the rekey events themselves.
Later in 2015, Greg Brumley, vice president of asset protection and facilities, joined lululemon and reevaluated the KeyControl® program again. He believes that strong partnerships are critical for any company to achieve success. He added, “It’s kind of like your core strength; nothing works right without it.” Brumley went on to explain, “From a facilities standpoint, the InstaKey solution allows us to quickly respond to the needs of the store regarding initial basic security. We can rekey the store immediately at a fraction of the cost compared to locksmiths or managing a core-swap program. Also, having InstaKey manage the program for us is a huge benefit because it allows us to focus on other important facilities responsibilities. From an asset protection perspective, we can also be assured that keys aren’t copied, get managed at store level, and are changed quickly when lost, keeping our locations secure.”
George Woodruff, InstaKey’s client services manager, explained, “By establishing a close working relationship with asset protection and facilities, our team has a clearer picture of its goals in assisting the stores, has better visibility for what is coming, and has a core of trust that guides a seamless program.” He also added, “Through sharing of corporate culture, many personnel have now become lululemon brand loyalists and personally own their responsibilities for their partner’s overall satisfaction.”
For example, the graph below illustrates how a consistent evaluation and sharing of key-control data can result in dramatic cost reductions. In this case, lululemon’s rekey events have reduced
significantly due to the open communication, access to information, and shared goals with assisting the stores.
The strength of any partnership is always evident in the results. InstaKey strives to support all clients with prompt order turnaround, solutions at store level, a professionally managed program dedicated to implementing and maintaining best practices, and training designed to keep the program efficient and secure. Together with its clients, they build strong, core, key-control partnerships that provide simple and cost-effective security for any organization.
Visit instakey.com for more information.
120
100
80
Rekeys Over Time
280 stores 28% rekeying Program Evaluation
320 stores 24%rekeying
60
40
20
0 340 stores 31%rekeying
Today 340 stores 10%rekeying
2006 2008 2010 2012 2014 2016
