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Adding Value through Emerging Loss Prevention Technology and Data Analytics
By Mike Limauro
Loss prevention technology, especially analytics, has evolved exponentially over the past few decades. And as this technology has evolved, the most recent solution—prescriptive analytics—combines all these ideas to identify opportunities for improvement and takes the next step, making suggestions designed to remedy these opportunities and capitalize on them. Ensuring corrective action is taken to address the identified problem is what makes prescriptive analytics more effective than a traditional data reporting solution. By automatically turning data into understandable insights and placing them directly into the hands of those who can impact your business, this solution will dramatically help optimize results.
Opening the Doors
Up until recently, exception-based reporting was in the hands of a limited number of people, making the investment one of the best-kept secrets in the company, thus missing the true potential to maximize the return on investment. The data mining solution was used in a very limited capacity to identify dishonest behavior. The problem with this strategy is that it virtually eliminates the chance for loss prevention technology solutions to add value in other departments.
To combat this, we need to think differently about how we use these technology investments, searching for new ways to use old ideas. At a time when the face of retail is changing so rapidly and many companies are cutting expenses in order to either stay competitive or simply survive, it has become critical for every asset protection team to add value throughout the entire organization. In today’s environment, it is critical to offer services the company simply cannot live without, and the best way to achieve this is to embed your culture, knowledge, services, and technology throughout the entire enterprise. It’s no longer enough to simply protect profits; it’s time to start thinking about how you can expand them.
Increasing Value
In my previous role, I utilized a prescriptive analytics solution, partnering with a company that had a very progressive view on how data could be used to expand a company’s profitability. We trained employees across all departments on how to use the solution to enhance daily functions. Each user was looking at something completely different than the next. But by sharing our loss prevention technology and our expertise, the solution’s value increased exponentially. In addition, the company looked at the department in a different way because we were able to assist in creating a broad range of successes by targeting individual requirements and unique challenges.
Don’t limit yourself. The more data you push through your analytic software, the more uses you will discover. Imagine how the senior executives will perceive your department when you can say your team helped increase sales and that you have processes in place to monitor for any missed opportunities that occur in the future.
Building a Strong Plan
Before you begin, you will need to educate yourself on which technologies are right for you and your organization. What current technology do you have, and how can it be used in a different way? What new technology will your company benefit from? Selecting your solution provider is a critical step in this process as they can make or break a program implementation.
Finally, embedding your technology into other departments is not as easy as it may sound. Take the time to share your information in a manner that promotes partnership and teamwork. As loss prevention technology becomes increasingly useful across all departments within an organization, the opportunity to elevate your department grows. By capitalizing on basic data that is readily available and using it for purposes outside of the traditional asset protection wheelhouse, you will drive improved results and increase efficiencies in other departments, thus earning respect and adding value across the entire enterprise.
Botched Crisis Management at Wells Fargo?
By Bill Turner, LPC
Recently, the news seems to be reporting one crisis after another. The effectiveness of a company’s crisis management plan and execution can be a virtual make-or-break situation. Let’s take a closer look at Wells Fargo regarding unethical sales practices and the creation of phony accounts to boost sales numbers. All indicators are that Wells Fargo’s management scored poorly in their crisis management response. In fact, the Dow Jones business news called their efforts “a textbook case of botched crisis management.”
Senators from both major parties have chastised Wells Fargo’s then-CEO John Stumpf over the company’s sales practices. Senator Elizabeth Warren of Massachusetts called it “gutless leadership and fraud.” The Wells Fargo team seemed unprepared and did not answer many questions from legislators about faulty sales practices. This ineffective response led to a $185 million fine.
In the opinions of several former Wells Fargo executives, the root of the debacle stemmed from an insular culture that left it ill-prepared to effectively deal with a major crisis. Wells Fargo did respond by firing some 5,300 employees, but those layoffs only represented about 1 percent of its employee base. The bank would neither confirm or deny any wrongdoing, and Stumpf showed zero empathy, never saying he was sorry. At one point, an Oregon senator accused Stumpf of “scapegoating people at the bottom.”
Wells Fargo’s crisis management missteps continued as it was reported that Stumpf became aware of the faulty sales practices as early as the fall of 2013. When he appeared before the Senate Banking Committee, he had few concrete answers.
New CEO Tim Sloan got off to a rocky start when he announced a drop in profits while analysts were demanding more information on the crisis that had prompted his appointment. On the call, Sloan continually deflected questions and referred to the board’s continuing investigation.
Wells Fargo’s crisis management efforts, at best, have been ineffective and, at worst, inexcusable for a company of its size. While crisis management and communication can be complicated, there are basic dos and don’ts that Wells Fargo seemed to be ignorant of or just disregarded.
It is important that, in any major crisis, the top officer in the company is visible and is effectively communicating their response and direction. No executive should be expected to go it alone. Done right, effective crisis management takes a whole team that represents all critical functions of a company and prepares for a wide variety of issues that might arise in the future.
While it is unclear if Wells Fargo has such a team or if they drilled to develop effective crisis management processes, it is clear that their actions have served to make the crisis worse, not better. Rarely is a company in a position to “tell all” during a major crisis. But they need to make every effort to show some transparency, empathy, and cooperation. “No comment,” especially from the top, doesn’t do any of that.
Wages, Employee Performance, and Retail Industry Trends: Looking at Walmart’s New Approach
By Jac Brittain, LPC
Following an important topic that has been widely discussed throughout 2016, recent retail industry trends have explored the relationship between wage increases and the impact on employee performance. And as many employees and other interest groups across the country have expressed their opinions about wage increases and their impact on all involved, a recent New York Times article explored the subject and the potential impact that wage increases can have on employee performance by taking a closer look at the world’s largest retailer.
A few years ago, Walmart, which once built its entire branding around a big yellow smiley face, was creating more than its share of frowns. Shoppers were fed up. They complained of dirty bathrooms, empty shelves, endless checkout lines, and impossible-to-find employees. Only 16 percent of stores were meeting the company’s customer service goals. The dissatisfaction showed up where it counts. Sales at stores open at least a year fell for five straight quarters; the company’s revenue fell for the first time in Walmart’s forty-five-year run as a public company.
To fix it, executives came up with what, for Walmart, was a revolutionary idea. In early 2015, Walmart announced it would actually pay its workers more. That set in motion the biggest test imaginable of a basic argument: what if paying workers more, training them better, and offering better opportunities for advancement can actually make a company more profitable, rather than less?
The results are promising. By early 2016, the proportion of stores hitting their targeted customer-service ratings had rebounded to 75 percent. Sales are rising again. At the store level, managers describe a big shift in the kind of workers they can bring in by offering higher pay rates. “We’re attracting a different type of associate,” said Tina Budnaitis, a Walmart manager. “We get more people coming in who want a career instead of a job.”
From a loss prevention perspective, results from the annual National Retail Security Survey (NRSS) and other research conducted by Richard Hollinger, PhD, often considers the relationship between employee satisfaction, employee wages, and the impact of these critical retail industry trends on employee theft. How exactly would higher retail wages impact shrink in retail stores? Would higher wages influence overall store performance?
Similarly, the research and content supported by Read Hayes, PhD, and the Loss Prevention Research Council also looks at retail industry trends and the many influences that support the motives behind employee theft, including employee wages and job satisfaction.
In a volatile corporate world, an unexpected recession or management change, or rise of a new competitor, could upend any plans. But in the short term, the Walmart experiment shows pretty clearly that paying people better improves both the work force and the shoppers’ experience.
As retailers look for answers to the ongoing threat of theft, fraud, and the many factors that impact retail shrink, let’s hope that these recent retail industry trends can have a similar impact on the loss prevention industry and our ongoing battle with retail industry shrink.
Amazon Continues to Reshape the Retail Industry
By Bill Turner, LPC
The idea of shopping online for groceries is not new. Retail technology companies have tried over and over to fix what people hate most about grocery shopping—long lines, slow moving cashiers, and now the long wait for chipped credit cards to process. As history has seen, however, the retail industry is slow to change on one issue that is critically important when it comes to groceries—touching and feeling the product. There have been many technological advances to improve the grocery shopping experience. Some have worked; some have not.
Self-Checkout. It has worked reasonably well for some retailers. But grocery checkout is often more complicated. Weighing produce, having to wait for clearance when purchasing alcohol, and malfunctioning scanners are all major frustrations for consumers. Many grocery chains are removing or scaling back on self-checkout.
Delivery. Once upon a time, most grocers delivered. But the rise of supermarkets and the automobile virtually ended the practice. In the late 1990s, Webvan had some success in web-based grocery delivery. But they lost millions of dollars and went bankrupt in 2001. There have been others. Even some large supermarket chains began experimenting with online order and delivery. Arranging delivery windows and guaranteed availability of items ordered online have been major problem areas. Plus the consumer can’t squeeze the melons.
Self-Scanning. Europe has seen some modest success around having customers self-scan grocery items with their smartphones and using apps for mobile payment, thus avoiding checkout lines altogether. Meanwhile, the US retail industry remains skeptical.
Dash Away. Amazon took a swing at the online grocery market in 2015 by launching its Dash button. The WiFi-enabled devices are branded with specific products, and the customer simply clicks the button to reorder from their Amazon account when needed. But adoption of the concept has been far from overwhelming.
Smart Appliances. The idea of your refrigerator keeping track of food inside and having a food purchase app is novel. Samsung has been pushing hard in this area. However, to date, technical glitches and the continual need to update software have been major hurdles.
Mobile Payments. Mobile payments are catching on rapidly but still only represent 19 percent of all purchase payments. Again, technical glitches have prevented widespread adoption. The requirement to have a relatively new and sophisticated cell phone and concerns over privacy and data security are also major issues.
Delivery Drones. Again, the retail industry remains skeptical. Amazon is hard at work trying to iron out logistical and regulatory issues to bring it to reality, but progress is very slow.
The widespread adoption of online shopping for groceries isn’t here yet. But as we know, Amazon never gives up thinking about how to make shopping more convenient for the consumer. The Amazon Go grocery store is now in the testing stage. It is still some ways away as the concept is grounded in a brick-and-mortar store. The idea is to allow shoppers to walk into the store, select items, and walk out, totally skipping the checkout process. Everything selected gets automatically charged to the customer’s credit card. The system relies on a series of cameras and microphones. A customer’s smartphone is “tagged” when entering the store using the Amazon Go app. The system tracks the customer’s movements throughout the store. The customer’s selection of an item or returning it to the shelf is closely tracked by cameras. Payment is automatically calculated for all items selected and charged to the customer’s account. The customer simply leaves the stores with their purchases.
The concept uses the latest technology to make grocery shopping more seamless for the customer. Will it happen? Maybe. But as we have seen, the US retail industry customer is skeptical. Loss of control, privacy issues, and other concerns still need to be overcome in order to make technology-assisted grocery shopping a reality. And how do you squeeze the melons? Time will tell.
For more original news content, see the following articles:
- How the Right Retail Cash Management Solution Can Minimize the Costs of Cash
- Will the Retail Industry Become Cashless?
- The Holidays Are Here. Are Your LP Plans in Place?
- Unreported Cargo Theft Incidents Make it Difficult to Grasp Scope
- 2016 Data Breach Statistics by the Numbers
- Black Friday, Other Retail Industry Holiday Shopping Trends Shifting
- RFID Technology and Asset Protection
- Credit Card Fraud Goes Online for the Holiday Season
- Awareness of E-commerce Security Issues Is the First Step
- 75 Years Ago: Pearl Harbor Anniversary
- LP Magazine 2016—Wow! What a Year!
- E-commerce Has Not Killed Brick and Mortar
Professional Development
- LP101 Investigations and Retail Fraud
- Keeping Your Loss Prevention Job Search Confidential
- LP101 Safety in the Workplace: Program Elements
- LP101 Safety in the Workplace: Safety Compliance Initiatives
- LP101 Safety in the Workplace: Identifying Hazards
- How to Snag a Loss Prevention Job
- LP101 Safety in the Workplace: Safety Performance Measurements
LPM Voice
- Your Safe Can Do What? LP with Cloud-Based Management
- Can a Smart IP Video Solution Help You Solve Problems?
- Pre- and Post-incident Actions to Rebuff Negligent Security Lawsuits
- Holiday Crooks Are Here; Get Ready Inside and Out
- Should You Pay for Security Technology the Same Way You Pay for Theft?
- Has the Time Arrived for RFID?
