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Loss Prevention: Fixing Operations

Bad economic times inevitably lead to increased theft by shoppers and employees, making loss prevention technology more of a necessity

Bad economic times inevitably lead to increased theft by shoppers and employees, making loss prevention technology more of a necessity.

Among the many loss prevention applications tried by retailers, two of the more effective ones have proved to be video surveillance systems and POS exception reporting. Moreover, the marriage of these two technologies — matching video and data records — has been particularly helpful in addressing cashier-related shrink, one of the largest sources of retail loss. What retailers are now discovering is that cashier shrink involves not just stealing from the till but operational snafus caused by inadequate training and oversight.

Raley's, West Sacramento, Calif., has made a major investment in a video-analysis system from Agilence, Camden, N.J. Following a successful six-store pilot, the chain completed a rollout of the system to all of its 132 stores at the end of August.

While targeting such sources of cashier fraud as sweethearting and theft, the Agilence system is particularly geared toward identifying non-fraudulent operational miscues, continuously but inadvertently perpetrated by cashiers.

“We're finding that 40% of all shrink at the POS is operational,” said Derek Rodner, vice president of marketing and product strategy for Agilence.

In its six-store pilot of the technology, Raley's relocated CCTV cameras for optimal coverage of the POS and “created a new store IT infrastructure,” said Debra Martin, vice president of asset protection at Raley's, in a presentation given in May at the Retail Industry Leaders Association's Loss Prevention, Auditing & Safety Conference. The chain also set up a centralized team of analysts to interpret the video and data.

The pilot identified a number of operational areas that were costing Raley's money, including excessive voids, lax self-checkout management, erroneous scanning methods, and improper processing of promotions and price look-up numbers (PLUs). In each case, the chain was able to take corrective action.

For example, by training cashiers on the proper implementation of void policies, Raley's was able to reduce the number of voids. At self-checkout lanes, the chain increased employee oversight to prevent customers from leaving the store without completing or paying for orders.

Multi-bottle cases of water turned out to be a major source of loss as cashiers were scanning the bar code on a single bottle rather than the bar code for the entire case.

“By identifying and correcting five operational issues found during the six-store pilot, we've recovered more than all Agilence-associated costs,” said Martin. “We expect to measure the total ROI in months not years upon rollout.”