LP Pain Points discusses issues that keeps those in the loss prevention industry up at night. Each month we will examine topics and areas of concern that have been brought to our attention by retailers, industry professionals and publications. Within our common goal of reducing shrink, we can often lose sight of what is truly important. Consumer experience is the ultimate driver of overall profitability and sustainability for the retailer. While this is not new or profound insight, it often gets lost in the day-to-day discussions about what happened, what’s been lost, who’s to blame and what we are doing to combat it.
LP PAIN POINTS – Issue #1 – The Forgotten tag
A few days ago, while reading The Effective Executive by Peter Drucker, I came to the passage about executives working ‘within the organization’ and failing to realize the impact upon the individuals ‘outside the organization’ but who are actually of the great importance to the overall goals of the institution. In the book, Mr. Drucker gives the example of a hospital executive and their focus only on the data related to patients while they are ‘within’ the hospital, not the actual patients themselves and especially not after they exit the building. The passage hit home. In our case, the ‘patients’ are the individual consumers of our customers. Sometimes as solution providers, our vision gets clouded by providing the retailer with the best possible solution or the best one we currently have available. A primary goal is to secure the product with a solution that will reduce shrink, ensure product availability, and produce the highest level of numerical and data-driven ROI. We tend to forget that somewhere, a consumer is being significantly impacted by every choice we make and is making their own decisions based on outside factors not only related to product availability but also accessibility and even presentation. We must make a point to examine all factors that drive consumer experience, not solely those that are driven by numerical values and data.
I recently had the opportunity to sit down with a VP of LP and discuss one of his pain points. A pain point which is common and growing more prolific for retailers that employ EAS tags and also support omni-channel operations – garments fulfilled and shipped from back of store via courier with a security tag still attached. This is an ever-increasing problem in today’s changing retail landscape. With the expansion of online orders and in-store fulfillment, retailers have turned to utilizing existing store locations as distribution hubs. While this proves to be a strategic advantage, it also creates additional operational and loss prevention challenges. The tag issue is becoming both more commonplace and problematic, as it initiates a new area for potential customer dissatisfaction and increased costs. In a time when buyers are accustomed to receiving their products within days, sometimes even hours, of placing an order, the last thing they want is to drive to a retail location to have the forgotten tag removed. The replacement of the garment, associated labor cost and excess shipping fees associated with current practices erodes any margins the retailer may have realized on the initial sale. And in the end, they are still faced with a potentially unhappy customer. What this VP needed was a cost-effective solution to put an end to the problem before it even occurred. The current solution, while effective in detecting tags at the store exit, left employees unboxing numerous orders to find the tag after the EAS system alarmed and as the courier passed through with numerous packages during shipment pick-up. That was not acceptable. Again, we were talking labor dollars and now unhappy employees as well as delayed delivery drivers. While our first solutions solved the problem, it was not customer-centric in its applicability. So, we went back to the drawing board.
When Product Protection Solutions thinks about ROI, we like to examine it from both a financial and a customer-centric perspective. While ROI is usually a simple metric calculated on the reduction in costs and growth in sales or profits by preventing the loss of product, we agree that it should include more. It should also include the safety of the store, associates, employees and reduction of risk such as a potential lawsuit. It should include overall consumer satisfaction and enhance their experience which will increase their likelihood to continue being a loyal customer. We don’t want to just save a sale; we want to create future sales and help our customers focus on what is important to them.
Christy Cox is the CFO at Product Protection Solutions, Inc.