Day: July 15, 2021

Anil Puri CMD, APS group A thought leader and an action catalyzer rolled into one – Anil Puri is a rare combination of a visionary, and one who has mastered the art of strategic and tactical thinking to the core. He has been using this combination to seed new ideas and to lead them to their implementation on-ground. This has been a consistent feature of his career. He has rich experience of approximately 35 years in corporate in diverse domains & from functional managerial level to apex as chairman of a corporate group. To him, the subject of loss prevention has always occupied central place when planning the security protocols for the shopping malls, warehouses, large shopping complexes, standalone retail stores and manufacturing plants. He has been keenly watching the developments in the loss prevention techniques emerging in this domain. Old adage loss prevention techniques have stood the test of times but have been breached – losses inflicted and profitability hit. However, Emerging innovative technologies have revolutionized the entire perspective of loss prevention. He contributes extensively in framework of security protocols of loss prevention with his ops team before deployment of security personnel at high end shopping malls. Here he shares his thoughts on new landscape which has gradually been shaping in favor of the retailers. Let us see what future holds for loss prevention…   INTRODUCTION Loss prevention has proven to be a dynamic discipline, one that has risen in importance in retailers throughout the world. The function got integrated into senior management levels initially then moved on to the audit committee level and now is the talk of the board rooms. Loss prevention continues to be a major concern for retailers since loss mounts to whooping amounts. Retail shrinkage, or shrink, is a term used in retail loss prevention. It refers to any type of loss identified as missing money or inventory that should be present but isn’t actually on hand or saleable. It can come in myriad forms such as customer theft, damage, bookkeeping errors, internal theft, or vendor fraud. Shrinkage can affect any company, although it is most prevalent in the retail industry. Retail’s evolution from conventional sales in brick-and-mortar stores to multichannel transactions with both online and in-store customers has proven it to be a double-edged proposition. Multichannel retail allows businesses more opportunities to sell. However, it also opens them up to more forms of theft and fraud. The continued renaissance of the global retail industry will require increased innovation to protect employees, customers and products. Traditional security solutions that typically increase friction to deter theft are counter to the new digitally empowered consumer that progressively wants to just scan and go. WHAT CAUSES LOSS? The causes are well identified. However same cannot be attributed to one singular factor. The best way to combat shrinkage is to know where loss is coming from. Some common causes include: Shoplifting: Shoplifting is more than straightforward theft. Price tag swapping also falls into this category, where a shoplifter pays less than what an item is worth because a different item’s SKU is recorded in the sale. This not only includes customers hiding merchandise in their bags and walking out of the store without paying but also altering or swapping price tags and other methods of theft Shoplifting is one of the key contributors to shrinkage. Employee theft: Employee theft is a significant contributor to shrinkage. Theft, fraudulent returns and neglecting to scan items for friends and family lead to mismatches in the inventory levels and can add up to big losses for the business. It can include pocketing cash, discount abuse, under-ringing, sweet-hearting, refund abuse, or the theft of merchandise. Human entry error: Poor inventory management isn’t just frustrating. It can lead to shrinkage as well. Pricing errors due to markups or markdowns, bookkeeping mistakes, and counting, sorting and storing errors during cash handling can cost retailers a lot of money. On its own, shrinkage due to administrative errors doesn’t necessarily mean lost cost – but it does mean lost profit, as you were likely forecasting more revenue than the actual inventory numbers can bring in. Vendor error and theft: Vendors can be subject to the same administrative errors as retailers, which can contribute to shrinkage. Some dishonest vendors can steal from you by not delivering a full order, though this is, by far, not the way the majority act. Vendor theft is not a very large contributor to shrinkage, and many retailers will not fall prey to it. It most often occurs during the delivery and return of merchandise. Finally, 6.6% of losses have an unknown cause. Damage: Accidents happen! Sometimes goods are broken without any theft or administrative error. LOSS PREVENTION APPROACHES Companies tend to rely on time tested strategic, cultural and operational practices in developing an effective approach to loss prevention. Some of which are: Strategic practices Establish senior management commitment to making shrinkage a priority, overseeing an action plan, allocating resources, and monitoring results. (Figures on inventory loss are a closely guarded secret at most companies, but one of the five in our study gives shrinkage data to outside financial analysts so that they can better assess the company’s performance). Ensure organizational commitment from managers throughout the company; otherwise, any attempted solution will be short-lived. The loss prevention department’s role is primarily to lead a cross-functional effort to manage the problem continuously. Embed loss prevention at all levels. Employees throughout the company must take responsibility for reducing shrinkage. The company should see loss prevention as equal to sales in importance. Cultural practices Provide strong leadership and develop a team. Heads of loss prevention must command authority and be passionate and energetic, and they must create and lead multifunctional loss prevention teams. Use evidence-based management. Decisions must derive from detailed and timely data, not intuition. (Most of the five companies’ store managers received item-level shrinkage data every week). Innovate and experiment. Team members must listen and have open minds so that they can stay…