Ask Tom is a weekly column featured in D&D Daily, sponsored by Checkpoint.
Tom is a grizzled veteran of retail store operations and inventory management, and he’s heard it all – and seen most of it. He’s been part of loss prevention and RFID technology roll out teams in more places than he cares to remember.
Tom has graciously agreed to share some of the wisdom he’s picked up along the way. So ask Tom a retail question and enjoy your own 15 minutes of fame by emailing him at AskTom@verizon.net. Anonymity respected upon request.
Question: I own a small chain of convenience stores and noticed recently that we are receiving mixed lots of serial numbers on popular pharmaceutical products from our wholesaler. Should we be alarmed at this practice or is this normal for wholesalers to split inventory this way?
Answer: If you’re receiving mixed lot products — especially on high-risk products — you may need to evaluate your distribution chain to make sure the goods being sold to you are not stolen. It is common practice that Organized Retail Crime gangs steal popular products, which in turn are mixed in with legitimate goods, repacked and sold to Diverters, who move items back into commerce. To ensure your supplier is not a Diverter: Obtain a list of who they purchase from, conduct inspections of their warehouses, find out how they choose their wholesalers, and check to see if they are prescreening inventory.
Question: I work for a large chain and would like to give my LP management teams real-time visibility into EAS and ORC activity store-wide. What options do we have for remote access and reporting of our theft protection devices throughout our chain?
Answer: There are some real-time management systems that will provide your LP teams with remote store visibility through smartphones or tablet devices. These mobile apps support EAS and ORC theft prevention devices with real-time store monitoring and remote service support while optimizing system uptime. They enable LP management teams to drive chain-wide loss prevention and sales compliance simultaneously with up-to-date EAS system performance and store analytics. The benefit of these systems is in the reporting tools that enable management to build numerous reports that bring event visibility store-wide to see where improvements can be made.
Question: I’ve seen an increasing number of magnets available online to help thieves defeat EAS systems. To make matters worse, there are YouTube videos showing thieves how to use them! How can I ensure that I am not vulnerable to these techniques?
Answer: This has been an ongoing problem. Fortunately, not all forms of loss prevention are susceptible to magnetic deactivation. For those that are, some stores are using deactivators that are coded to specific stores, so general magnets have no impact on them. In addition, other loss prevention methods don’t require magnets to deactivate at all. For example, RFID tags can’t be deactivated by magnets. Beyond EAS and RFID tags, another approach for specific merchandise might include products like Keepers or Lanyards, which offer physical protection and can set off alarms if they are tampered with.
Question: In the past year, we’ve been hit multiple times by organized retail crime operators. We believe they are then selling our goods over the Internet. What strategies have you found to be most effective against them?
Answer: The best way to combat ORC gangs is to reduce their incentives to steal: They don’t want goods traced back to them, and they aren’t much interested in damaged goods no longer in pristine condition. Both of these can be addressed by tags that cannot be easily removed without damaging the merchandise and include precise store information on them. Tamper-proof labeling and packaging combinations discourage thieves from taking goods. Some tags are placed over a package opening while others use special adhesives or combinations of both. And if they are stolen, store information on the tag can be used to repatriate goods that are recovered.
Question: My retail chain has grown through several acquisitions, and we now have disparate LP systems in different retail locations. What is the best way to manage these systems chain-wide?
Answer: Your situation is very common. Even if you had the same systems in all your stores, my advice would be similar, since few retailers have monolithic approaches storewide. Most importantly, LP must be part of a storewide program that includes spot checks, inspections, audits and/or enterprise monitoring systems. Regarding the latter, several retailers I’ve worked with have deployed enterprise monitoring systems to ensure all systems are powered up and operational during store hours. I’ve seen some good results with them as store managers tend to be more diligent and problems can be identified early on.
Question: I’ve read studies that say employee theft is becoming as big a threat to retailers as shoplifting. Based upon what I’ve seen, I believe it. How can we reduce employee theft?
Answer: Stores that have successfully reduced employee theft understand the importance of putting in place a culture of consistency and compliance. The more lax your controls, the more employees may be tempted to steal from you. As such, employees need to know that there is a solid LP program in place. One strategy is to get them more involved in the LP program and educate them about the benefits to everyone when shrink remains low. Then, consider how modern your LP infrastructure appears to customers and employees. These perceptions are very important. Finally, some retailers install RFID in backrooms and employee entrances to track inventory movements and potential sources of shrink beyond the sales floor.
Question: Our drugstore chain has a growing number of SKUs prone to shoplifting. We have EAS, but are having difficulty in consistently applying a wide range of tags in store. How can I ensure that all of our stores are consistently applying them?
Answer: In addition to source tagging, which we’ve discussed in earlier columns, here are other ideas: Some stores reinforce hands-on training by placing compliance posters in the back room to show associates the proper placement and application of specific EAS tags designed for different items. In addition, to ensure that only tag-protected high-risk products are restocked, many are using color-coded or other visual cues on the shelves themselves to alert employees that only protected products should be stocked. Finally, focusing your efforts on the most high-risk SKUs provides the most benefit, since for many retailers, 10% of products comprise 90% of shrink risk.
Question: I’m an LP manager at a large grocery chain and am frustrated that I have no control over a significant portion of my shrink numbers that pertain to meat spoilage and other food perishables. Any suggestions?
Answer: That’s a tough one because it’s time consuming and costly to take expired food out of inventory, and consumers hate picking up food that may not be safe. A number of grocers are working on this problem with technology that tracks meat as it arrives at the supermarket and is cut and packaged in the butcher shop. The technology sends alerts when it is getting close to the sell or expiration date. This lets butchers know what they have in inventory, when to put specific meat on special, when to remove it, etc. Early trials have shown that spoilage is reduced, sales increased and customers are happier.
Question: We regularly patrol our store floor looking for out of stocks, but even with our best efforts, still come across empty shelves, particularly with our high-velocity items. Any suggestions?
Answer: Having accurate inventory management information directly impacts sales and the shopper experience. Some retailers attack this problem first by identifying problem categories that shouldn’t ever be out of inventory. Then they automate surveillance through technology sometimes called smart shelves or ShelfNet. This technology measures how much inventory you have on shelves and sends alerts when inventory is low or you have out of stocks. Some technology also measures the time merchandise is out of stock as well as providing store metrics that can be aggregated for headquarters. The other benefit is to combat ORC. Now, when gangs sweep a shelf, the retailers knows immediately and has a fighting chance of stopping it.
Question: We are interested in exploring RFID solutions for shop floor merchandise such as cosmetics, skincare, liquor, tobacco, food, jewelry, toys, electronics and garments. We have a team of seven who manually count each category, and it’s very time consuming. We want to reduce this extensive exercise daily. Can RFID address this challenge?
Answer: You’ve described high-velocity, high-risk merchandise in your question, which can benefit from more than once-per-day inventory attention. What takes an associate two hours to perform cycle counting manually may often be accomplished in a few minutes with RFID readers. So RFID may be ideal for your situation. Beyond speed, you will also obtain more accurate inventory counts, so your merchandise availability should increase tremendously. That should positively impact on-shelf availability and sales, while freeing store associates to focus on customer-facing tasks.
Question: Our corporate design team is remodeling many of our stores and wants the EAS system to match the new aesthetics, or have no pedestals at all. How do I protect new stores while keeping our designers and merchandisers happy?
Answer: There’s always a push and pull between designers and those charged with loss prevention. Fortunately, a couple of approaches should satisfy both parties. First, many pedestals are now available in a variety of colors and low profile styles, and some even accommodate advertisement panels that provide a low-cost means of promoting in-store campaigns when customers enter and leave the store. For instances in which designers want to avoid pedestals altogether, retailers can upgrade to RFID and use small overhead systems that are hidden in the ceiling, providing accurate, “invisible” inventory protection.
Question: I’m an LP pro responsible for protecting our regional grocery stores. We keep getting hit on specific merchandise, like Tide detergent. We’d prefer not to lock this type of merchandise away where shoppers have to ask for assistance. Your thoughts?
Answer: Tide and other high-risk merchandise with handles have been favorite targets of organized retail crime for many years now, primarily because they are easily fenced and turned into cash quickly. Short of putting this inventory in locked cabinets, which will negatively impact sales, you can look at solutions, such as cable locks. In essence, they include a hard tag with very strong cables that attach to the merchandise’s handle. Some even come with multiple alarms, so that if a thief tries to cut the cable or walk out of the store, they’re greeted with a blasting sound of 95 decibels for 5 minutes! Usually, they just drop the merchandise and run away.
Question: We have an ongoing debate internally: Which is more effective – EAS labels inside or outside the box? What’s your take?
Answer: I’ve seen compelling research that clearly points to the superiority of visible tagging, or better said, applying the EAS label outside the box. It adds a deterrent factor. It’s been said that if the bad guys don’t see it, they don’t fear it. With visible tagging, they’re more likely to say, “Not here, not now.” More surprising to me was that the same study showed that shoppers like to see the EAS tag, because it creates the impression that the merchandise is of good quality and the store is taking steps to protect it. Do the test in your stores and see for yourself.
Question: We have a pretty good EAS program in our grocery chain store, but we get pushback from store operations because our associates seem to spend an inordinate amount of time tagging goods instead of helping customers on the floor and at checkout counters. How have other retailers addressed this issue?
Answer: Balancing employee tasks can be a challenge especially at peak times. In general, best practice is to move tagging labor costs up the supply chain, where the process can be automated. Source tagging is a perfect example. It doesn’t just reduce the costs of applying labels, but also frees up store associates to focus on customer-facing activities. In addition, because tags are attached to merchandise in a consistent location, ingredient information and branding aren’t obscured. Customers also benefit from faster checkout times because cashiers know where to find the labels.
Question: We employ EAS in our stores, but it seems to slow down throughput at our POS. Much of the problem stems from the fact that tags and labels don’t always deactivate, which sets off false alarms that annoy honest shoppers. How can we address this?
Answer: There are probably two things going on here. First, what we call the “Lazarus” effect: when tags remain active even after being “properly” deactivated. In an earlier column I wrote about the disadvantages of cheap, uncertified tags. Add this to the list! In other cases, the EAS tag needs to be deactivated within four inches or so from the POS table. Any swipes above that causes operator error (and our friend Lazarus again). Check out what you use in-store for EAS deactivation solutions. Some of the better solutions can deactivate merchandise from a distance of up to 12 inches. Getting better tags and upgrading your POS deactivator may reduce your false alarms tremendously.
Question: We’ve had increasing problems with organized retail crime gangs showing up with foil lined bags and stealing merchandise without our EAS system alarming. What’s a retailer to do?
Answer: Look into metal detector products from reputable retail suppliers that detect foil-lined clothing or “booster bags” at store entry points. The technology has improved significantly over the years and the software can now filter out false alarms from baby carriages, shopping carts, wheel chairs, etc. When the bag guys enter your store with a foil-lined bag and bad intentions, the detector will beep and/or send a silent alert to store personnel. Combined with aggressive customer service and other tools such as EAS, it will give you a fighting chance.
Question: We get hit by organized retail crime constantly. Can you share a few best practices on the best ways to defeat ORC techniques?
Answer: I’m a big believer in the good, better, best layered approach to security. Protecting at-risk merchandise with EAS or even RFID is a good starting point. Then focus additional layers, such as CCTV to identify, detect and record suspicious behavior. Your goal should be to make the bad guys think “not here, not now”. Finally, you may already have your best shrink weapon operating in-store. Studies have shown that nothing works better to deter ORC gangs than aggressive customer service. Turns out that thieves aren’t terribly social and don’t like to be personally welcomed as they enter and walk through stores.
Question: There’s an internal debate here about EAS labels. Some say that they are interchangeable and we should choose based upon price. Does it really matter which we display?
Answer: While different tags may look the same, check with your EAS label supplier to ensure that they have been certified by organizations such as TUV. I have seen reports where similar looking tags come out of the box as much as 15 percent dead. Antenna detection rates also vary significantly between the “premium” and “value” labels. Label technology is also improving in size, detection rates and deactivation. Some solutions even combine RFID in the same label. In essence, not all labels are created equal and you get what you pay for. Take it from me, an active EAS label is far more protective than what turns out to be no more than an expensive sticker.
Question: I’m an LP pro at a major drug store chain, and like many others, struggle to protect our small, valuable items, such as razor blades. Any suggestions?
Answer: Indeed, razor blades are often the #1 shrink challenge I hear about. A good starting point would be deploying EAS tags specifically designed for high-risk merchandise on peg hooks, such as razor blades. If that alone doesn’t stop would-be-thieves, consider products variously called Keepers or Safers that include EAS protection and additional alarms that sound when someone tampers with the case, attempts to hide it in a shielded bag or leaves the store without the case being properly removed at POS. It’s amazing how 100-decibels alters a thief’s behavior.