Innovative Retail Technologies

JUL-AUG 2017

Innovative Retail Technologies (formerly Integrated Solutions For Retailers) is the premier source for innovative yet pragmatic technology solutions in the retail industry.

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Exception Reporting — Operational Issues Beyond fraud, the software also helps identify operational issues. For instance, Smith says that when the software was first implemented, he could see that the miscellaneous SKU was being used too much. Of course, anytime an associate uses the miscellaneous SKU, it increases the likelihood of shrink and also creates inventory inaccuracies. After identifying this issue, Smith was able to roll out an education initiative to train employees away from using the miscellaneous SKU. "We were able to drop the amount of usage by more than 90 percent in the first year, saving the organization approximately $750,000," he says. "Keep in mind, that's not theft; it's just operational efficiency gains." The software also provides the ability to report on key metrics that have been found to have a correlation to shrink. In an environment in which inventory is taken only once a year, having the ability to report on indicators of shrink is critical. For example, stores that have an increase in return rates are more likely to have an increase in shrink. Stores that use the miscellaneous SKU more often are also more likely to have shrink. By reporting on return rates, miscellaneous SKU usage, and other KPIs that correlate to shrink, stores are able to keep shrink in the forefront of the minds of managers and, in turn, are better able to gauge if they are heading in the right direction. Jul -Aug 2017 10 None of this would be possible if not for the software being used. The previous manual process used by Five Below required a programmer to extract the data, and even then, Smith says the data wasn't complete. "I could see refunds by store, a dollar amount, and some high-level associate totals, but I couldn't see details of the transaction," he says. "The best I could do would be to take a store and look for any time there was one employee who accounted for more than 40 percent of the store's returns. Then I'd know something was wrong." With the new software, Smith can easily create dashboards that give him and other department leaders immediate access to countless highly detailed reports. For example, he can look at refunds in a variety of ways, such as cash versus credit, those greater than $50, and so on, even applying "weight" to certain categories that are more or less important. This gives Five Below the ability to rank associates in order of need for additional training or investigation into an integrity issue. "We can now dig into details we didn't have before," he adds. "Also, by using this tool, I no longer take up our IT department's time, so it can work on global initiatives related to marketing, promotions, e-commerce, and driving sales." Speaking of other global initiatives, once the software was implemented, Smith found ways to expand its use to other areas of business. "We gave the finance and sales audit teams access so responsible for getting to the employee, making them aware of the situation, and educating them on proper procedure." Indirectly, he says this creates a presence that makes it less likely for an associate to do something inappropriate at the POS. "The goal isn't to catch your way to low shrink," he says. "It's about identifying activity and putting processes in place to heighten awareness and reduce the likelihood of repeat activity." Regardless of the goal, the result is a savings to Five Below. In its first year of use, the software was able to identify fraud with a case value of $155,000. Additionally, it helped curb $79,000 in credit card fraud. "The goal isn't to catch your way to low shrink. It's about identifying activity and putting processes in place to heighten awareness and reduce the likelihood of repeat activity." Gregg Smith, senior director of asset protection, Five Below

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