Improve The Productivity Of Your LP Analysts

Theft from stores, including internal and external theft, costs retailers billions of dollars per year. Depending on the type of retail store, retail inventory loss ranges from 0.7% to 2.2% of gross sales. Whole retail store chains have gone out of business due to their inability to control retail theft losses. Therefore, loss prevention (LP) professionals manage in-store security programs that focus on reducing losses due to employee theft, shoplifting, fraud, vendor theft, and accounting errors. But, when LP professionals spend hours analyzing cumbersome reports generated from homegrown systems, case loss (i.e. the reduction of money lost per case) is jeopardized. Adam Parker, director of LP at Lamps Plus, needed to replace the retailer's archaic and inefficient LP system with one that reduced the retailer's average POS case loss.

Headquartered in Chatsworth, CA, Lamps Plus operates 45 brick-and-mortar stores and an e-commerce platform and employs 600 people. When Parker joined the organization, a homegrown LP tool, used to generate various reports on things such as frequency of credit card usage and employee purchases, was already in place. "The 'tool' was not a software application, but rather a report generation tool," says Parker. "At the end of each week, I received one massive report, which included every LP activity for every store in our portfolio. The LP team had to analyze this report, which took hours. Therefore, POS investigations [e.g. fraudulent returns, fraudulent voids] were more time-consuming than they should have been."

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Don't Waste Time Chasing Investigation Data
In addition to time-consuming POS investigations, Parker experienced delays with field investigations or investigations at various store locations. If the facts of the investigation changed while it was being conducted, Parker lacked the flexibility to adapt to those changes. "If you're constantly relying on reports for information, you're spending a tremendous amount of time reading," says Parker. "If a new piece of information unfolded, we did not have the flexibility to change our strategy." For example, while Parker was out in the field at a store location, he may have been tasked with investigating one individual. Parker sometimes found that the person he interviewed provided new or additional information, pointing the investigation in a new direction. Because Parker lacked the ability to quickly go back and research information due to the LP reports' excessive size, hours were wasted on the case.

Deter Fraudulent Activity With Exception-Based Reporting
Parker's LP concerns were alleviated when the retailer overhauled its POS software application. The retailer chose Epicor Retail Store, which offered other software packages to its POS system, such as sales audit and LP. Epicor Retail Loss Prevention is exception-based reporting software that analyzes a central database of store-level transactions, provided by Epicor Retail Audit and Operations Management. The software detects patterns of fraudulent activity and identifies procedural violations that may signal the need for additional employee training. Epicor Retail Loss Prevention was installed at the same time as the POS software application. The application is hosted at the corporate office, and the LP team is its only users. The LP team can use it in the field, so when the facts of an investigation change, reports can be generated on the spot.

Prior to installation, Parker developed rules (e.g. an employee cannot ring up his own purchase), incidents, and excessive violations based on the LP department's policies and general LP experience. "The LP software lets us create our own criteria and rules around what we deem as potentially damaging activity at the POS," says Parker. "We prescribe the criteria, and the application conducts the analysis for us. Now, when an infraction is detected at the POS, an email alert is sent to executives such as the district manager. The manual process that used to take hours is now automated and takes just minutes."

Parker views the information garnered from Epicor Retail Loss Prevention via a password-protected dashboard. The dashboard highlights the specific incidents and exceptions he customizes. It also allows Parker to view exceptions that are automatically collected and organized hierarchically according to three levels of severity. For instance, incident cases are portrayed in a pyramid. They are located at the base, followed by violations, then excessive violations. Incidents, for example, occur if a cashier performs a cash refund over a set certain dollar amount. A violation is flagged if the cashier performs a particular number of cash refunds within a week. An excessive violation occurs if the cashier performs a specified number of cash refunds over a set period. Lamps Plus employees are aware the LP program exists.

Parker deems the installation a success, as the retailer has reduced its average POS case loss by 1/3. For example, a $3,000 case has been reduced to a $2,000 case because the problems are identified sooner. "Because our data is automated, we no longer have to look for that proverbial 'needle in a haystack,'" says Parker. "The data comes to us and tells us exactly where to look and why. The data helps us determine when a case does not point to a dishonest employee, but rather a training issue. We've reduced the time it takes to identify these cases, both internally and externally."

For More Information On Epicor Go To www.epicor.com