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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they can look at bulk sales data to identify frequency, what people are buying, and when they are buying," he says. "When we have special promotions, we can look at how often a coupon is used, the size of the basket, and more." Video Surveillance The third significant initiative Smith focused on concerned Five Below's video surveillance rollouts. Prior to his arrival, the strategies behind CCTV investments were not always consistent. Smith wasn't striving to ensure that every store had the same number of cameras. In fact, some stores don't get any cameras. In the past, Five Below would assume certain stores needed more or fewer cameras based mostly on gut feelings of someone who knew the area. While it's likely that stores in rural areas wouldn't need cameras while a store in the middle of a large city probably would, the decision shouldn't come down to a guess. He sought to gather data to be able to make objective, fact-based decisions concerning which stores needed cameras. "When you're expanding at the rate we are, you find yourself in cities and regions you're unfamiliar with," he explains. "We need to ensure we're investing in the stores that need camera security the most. Now we utilize CAP Index crime reports to make decisions and plan." Having data gives Five Below the ability to dictate the level of security the retailer installs at any given location. Smith adds that he's increased the annual budget for surveillance to affect two areas. First, he wants to ensure that all new stores are properly equipped. Second, he identified which existing stores were the highest-risk, highest-loss locations and invested in cameras appropriately. In both cases, store managers and district managers receive training on how to use the systems, which was not previously the case, and Smith set expectations on how often the systems should be used. The goal was to use the surveillance proactively to deter activity from taking place. Smith says the surveillance has the benefits of reducing internal and external loss and improving store conditions and operational execution. Five Below receives additional benefit from the system by integrating it with the previously mentioned exception reporting tool. Now, transactions being looked into within the exception tool can include corresponding video of the event. "We can more easily identify if it's operational error or a lack of awareness," he says. "It's not necessarily about catching people; it's about utilizing our tools to influence better operational controls and heightened awareness." In fact, Smith says that when cameras were rolled out to high-shrink locations, very seldom did the retailer catch dishonest employees with the cameras, yet shrink was reduced. It reinforces the notion that the cameras act as a deterrent if used correctly. In year one, Smith had to prove the ROI of the project. Within nine months, the investment paid for itself, leading to a 33 percent reduction in shrink in those locations. Today, he says Five Below's video surveillance spend is far greater than it had been in the past. At some point in the future, Smith plans to leverage the cameras for analytics that can be used by other Five Below departments. Lessons Learned Currently, Smith is in the midst of a supply chain project that will yield the ability to track shipments from the DC in and out of carrier terminals to the store. This initiative will help to improve inventory accuracy and lead to real-time inventory. That project should be completed sometime this fall. Looking back on the past few years and the various changes Smith has implemented at Five Below, he says they've given the organization the ability to be more effective and strategic, not to mention reducing overall shrink by 7 percent. While the gained efficiencies help the company as a whole, they haven't necessarily made Smith's life easier. He isn't kicking his feet up on his desk and letting automated reports do his job for him. "Reducing manual processes has given me the ability to get to projects I wouldn't have had time to get to," he says. "At the end of the day, we're able to deliver a better product and service to customers due to these initiatives." Smith's point is that when you get more data and gain some time, you simply identify more areas you can improve. In short, his to-do list isn't getting shorter. 11 Jul -Aug 2017

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