Raley's Reduces Shrink By Over $18M In One Year

Agilence makes significant contribution to shrink reduction program

Raley's, a 134-store grocery chain located throughout California and Nevada, recently initiated a companywide effort to establish a comprehensive asset protection program that focuses on centralized and objective auditing as well as operational improvements. As a result, Raley's further cut shrink in just one year. Much of this shrink reduction is attributed to identifying operational and systemic issues and fraud with Agilence.

As part of their progressive program, Raley's employed Agilence's patented item-level synchronization software, Hawkeye. Hawkeye is a point-of-sale (POS) video auditing solution that enables retailers to efficiently identify losses at the POS. The solution pulls data directly from the POS systems and marries the data with video in real-time. Each individual item scan and key punch within a transaction is perfectly linked to its associated video image.

Agilence enabled Raley's to instantly view both the data and cashier activity for each suspect line-item in a single screen, allowing analysts to view up to 50 times more transactions a day than any other tool on the market. These capabilities have helped Raley's uncover the hidden shrink, including operational and systemic issues, that has traditionally gone undetected and that costs retailers billions of dollars each year.

"We did not realize the extent of losses occurring that were not related to fraud and that were causing substantial shrink," remarked Michael Teel, CEO of Raley's. "Agilence helped us detect several operational issues that were occurring frequently in many stores. By immediately identifying these costly activities, Agilence has already yielded a significant ROI."

In one instance, Raley's found that a packaging issue was causing numerous scanning errors across several stores. Bottled water cases have barcodes on each individual bottle as well as on the bottom of the case. Because the case's clear plastic overwrap is transparent, the scanner routinely picked up the UPC on the individual bottle rather than the correct UPC on the bottom of the case. As a result, customers purchased water bottle cases for $0.69, a $4.80 loss that could have cost the chain over $80,000 annually.

Furthermore, Raley's identified the causes of high shrink rates at its self check-out registers. In many self check-out transactions, the podium clerk was not present, causing frustrated customers who needed help from the absent clerk to either leave the orders behind or simply leave with the orders.

"Operational shrink is much more costly than fraud and theft," noted Derek Rodner, VP of Marketing and Product Strategy at Agilence. "Whereas fraud is isolated to a single person or a group of people, operational shrink includes mistakes that many cashiers are repeatedly making chain-wide. Raley's identified these widespread errors with unprecedented speed, allowing them to address the issues early and before they caused substantial shrink."

In addition to operational and systemic issues, Agilence helped Raley's identify employee fraud and theft, including two veteran employees who had been stealing cash for years. Because these were experienced employees, they knew the maximum that they could steal before traditional exception reporting tools detected them. Agilence does not have to rely on trends and exceptions to find the shrink, preventing employees from being able to dodge detection.

"By investing in the right technology and bringing in a team of professional managers who focus on results and precise execution, we created and implemented a comprehensive asset program that has improved our bottom line while in a down economy," said Teel. "With Agilence's item-level synchronization capabilities, we have been able to quickly and accurately detect losses – hidden operational shrink and theft – that significantly impact our profitability."

About Agilence
Agilence develops Hawkeye, an industry leading POS video auditing solution that enables retailers to quickly identify losses caused by operational errors, promotion execution, systemic errors, and associate fraud. Hawkeye efficiently identifies store-wide losses at the point-of-sale before they can erode profit margins and provides retailers with a 6-to-1 ROI in less than 12 months.

Founded in 2006, Agilence, Inc. is headquartered in Camden, N.J. For more information, visit http://www.agilenceinc.com.

SOURCE: Agilence