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Engaged employees help retailers save millions of Euros

September 9, 2014

Study finds engaged employees could deliver the European grocery sector a €380 million improvement in net profits

London, September 9 2014: European Grocery retailers could save up to €380 million per year by improving employee engagement in the bottom quartile of their stores, according to a new report published by the Efficient Consumer Response (ECR) Shrink & On-Shelf Availability Group a research group supported by global merchandise availability solutions supplier, Checkpoint Systems.

Making the Link: The Role of Employee Engagement in Controlling Retail Losses, is the first study of its kind to explore the relationship between employee engagement – measured across 18 factors – and four indicators of retail loss: shrinkage, waste, cash loss and lost sales driven by out-of-stocks.

The findings have identified a strong correlation between higher levels of employee engagement and lower levels of retail loss among the 200,000 members of staff surveyed. According to the study, out of stocks were twice as high in the bottom quartile of stores relative to the average of the stores in the remaining three quartiles. Waste was also twice the average in these bottom quartile of stores with shrink three times as great and cash loss seven times higher.

To understand the actual degree of causation, the study used statistical tools and analysis to identify the actual power of employee engagement in explaining the variation between the levels of loss in the bottom quartile and the average of the three other quartiles. The remarkable finding was that 42% of the higher level of out of stocks could be explained by the lower levels of employee engagement.

Using this analysis, the study indicates that if retailers could improve employee engagement in these bottom quartile of stores, they could achieve a 19.6% reduction in the lost profits from shelf out-of-stocks; a 12.5% decrease in shrinkage; a 9.8% reduction in waste and a 9.5% saving in cash loss. Taken together, these savings would deliver an incremental €380 million in additional profits to the European Grocery Sector.

The report highlights that effective communication, making staff feel valued and promoting teamwork are all important factors, while ensuring manageable workloads, providing development opportunities and taking ideas seriously are also vital to building a well-motivated team.

The store manager’s role is also key to driving this motivation. Professor Adrian Beck, Academic Advisor to the ECR Europe Shrinkage & On-Shelf Availability Group, who led the study, explains: “Employees play a critical role in ensuring retail losses are kept at a manageable level. The store manager is the lightning rod through which a company’s organisational culture is communicated to staff and therefore essential to improving – and maintaining – staff engagement.”

Luc Cooman, Director of Risk management for Carrefour adds “This breakthrough research confirms our experience with the impact of employee engagement on product availability in-store and shrinkage. Employee engagement has been the cornerstone of our shrinkage and availability improvement plan and the results have clearly shown that happy employees positively impact on sales and the reduction of losses.”

Neil Matthews, Vice President, Global Product Management, Checkpoint Systems, explains: “Staff who feel valued in their role and by their managers are more likely to adhere to the processes and procedures designed to minimise out-of-stocks. Technology also plays an important role and will deliver outstanding results if operated correctly. Motivated employees are more likely to reduce out-of-stock if they use in-store technology effectively – particularly Electronic Article Surveillance (EAS) and Radio Frequency Identification (RFID) systems – to ensure merchandise is protected, available and on-shelf ready for purchase.”

To launch the survey, the ECR Europe Shrink and On-shelf Availability group are planning a one day workshop on November in London.

John Fonteijn, Vice President of Asset Protection, Ahold and Chairman of the ECR group shared: “we’re really excited about the workshop, it’s a unique and one-off opportunity for professionals from loss prevention, human resources and store operations to hear directly from the study authors and to debate how these findings can be acted on in their organisations to deliver improvements”

For further information, please download this document. For a copy of the full release, please e-mail Colin Peacock, colinmpeacock@hotmail.co.uk

Ends

About the ECR Shrink & On-Shelf Availability Group:
The ECR Europe Shrink & On-Shelf Availability Group has been active since 1999, producing numerous Blue Books, White Papers and tools, organising specialist seminars and regular team meetings. ECR Europe (Efficient Consumer Response Europe) is a joint organisation of National ECR Initiatives and companies from trade and manufacturing in Europe. Its purpose is to promote collaborative processes as fundamental business principle in the consumer goods value chain in Europe to fulfill consumer wishes better, faster and at less cost in a more sustainable way. ECR Europe builds on more than 20 National ECR Initiatives that gather over 1,800 leading companies and have issued more than 250 Best Practices Blue Books covering the different areas of ECR strategy (in particular supply chain and demand management) and optimizing other interface topics between manufacturers and retailers. The Group is also supported by Oliver Wyman.
Twitter: @ECRShrinkGroup

About Checkpoint Systems, Inc. (www.checkpointsystems.com)
Checkpoint Systems is a global leader in merchandise availability solutions for the retail industry, encompassing loss prevention and merchandise visibility. Checkpoint provides end-to-end solutions enabling retailers to achieve accurate real-time inventory, accelerate the replenishment cycle, prevent out-of-stocks and reduce theft, thus improving merchandise availability and the shopper’s experience. Checkpoint’s solutions are built upon 45 years of radio frequency technology expertise, innovative high-theft and loss-prevention solutions, market-leading RFID hardware, software, and comprehensive labeling capabilities to brand, secure and track merchandise from source to shelf. Checkpoint’s customers benefit from increased sales and profits by implementing merchandise availability solutions to ensure the right merchandise is available at the right place and time when consumers are ready to buy. Listed on the NYSE (NYSE: CKP), Checkpoint operates in every major geographic market and employs 4,700 people worldwide.
Twitter: @CheckpointSys