Cash-intensive retail stores are a hotbed for shrink. Which cash management system are you using to secure your bottom line?
A recent National Retail Security Survey lists the two primary causes of cash shrinkage as internal theft (52%) and processing errors (27%). Retailers of all shapes and sizes invest time, effort, and money into procuring best-of-breed cash management technologies to ensure their stores don't add to the statistic. Cash-intensive retailers are no different, as risk and liability are at a premium due to the large sums of money collected, handled, and stored on location each day. Therefore, cash-intensive retailers shouldn't be asking if they should invest in a cash management system, but rather, which one. Christopher Maitland, director of safety and security at Cricket Communications, Inc., had to find an answer to this very question.
Cricket Communications is a wireless service provider with retail stores that cater to credit- and income-challenged customers. Headquartered in San Diego, Cricket Communications is parented by Leap Wireless International. Leap and its joint ventures, which include Cricket Communications, now operate in 23 states, hold licenses in 35 of the top 50 U.S. markets, and employ 2,500 people.
Most of Cricket Communications' customers pay for their services with cash. Housing a high volume of currency at each retail location creates a plethora of cash management and liability risks, including internal theft, robbery, and processing error. Therefore, Maitland needed a cash management solution that would secure large volumes of cash.
Increased Liability Challenges Growth
Cricket Communications has continued to grow and expand with new markets spreading throughout the country. While growth and expansion are the cornerstones of retail survival, for this retailer, they produced an armored transport dilemma. At the time, Cricket Communications contracted an armored carrier to transport money from its retail stores to a local bank. Because the armored carriers could only service an area one day per week, six days worth of accumulated cash remained in each store at any given time. With locations all over the United States, transporting currency safely and efficiently was quickly becoming an issue. "Because Cricket Communications is a cash-intensive business, I couldn't have that kind of exposure in any location. For that same reason, I couldn't have employees taking money to the bank," says Maitland. "I needed a better method."
Maitland began to research several cash management solutions. He consulted several departments within Cricket Communications to ensure company-wide acceptance of the proposed solution. He presented both the problem and the solution options to the sales-operations group, sales-audit group, and treasury, as the solution would inevitably impact their day-to-day jobs. In the end, the retailer chose Loomis, an integrated cash distribution network, to provide a cash management solution that guarantees safety and security against shrink. Loomis incorporates its SafePoint integrated solution with FireKing Security Group's safes and software. SafePoint is an integrated safe solution, which includes a safe for on-site storage of cash, armored transportation to one of its cash processing facilities, and verification and delivery of a retailer's deposit to its bank.
"The SafePoint safe has separate top and bottom sections," Maitland explains. The store's operating cash is stored in the top section and is accessible only by the Cricket Communications' staff. The bottom section contains daily profits and is accessible only by a Loomis armored transport guard. Even though Cricket Communications staff cannot access the safe's bottom section, they must deposit money into it. Each time a cashier deposits money into this section, a drop receipt is generated. This receipt indicates the total amount of money deposited, broken down by denomination. At the end of a shift, each cashier runs a shift report, which details a complete list of the day's deposits, allowing cashiers to reconcile their books and to insure the money against theft. "Once the money is entered into the safe, it is insured by Loomis, protecting Cricket Communications against theft, fire, and so on," says Maitland. The Loomis guard visits the retailer's locations on a regular basis to collect currency from the safe. When the guard removes cash from the safe, a deposit report is automatically generated. The deposit report provides a detailed total of the cash removed from the safe, creating an audit trail for the retailer's staff. Once the report has been generated, the guard returns to a local Loomis branch. Here the money is consolidated and deposited to the retailer's bank.
Guard Currency With 24/7 Surveillance
The retailer experienced a minor glitch during installation. A third-party carrier delivered the first safe on a pallet to one of its locations. Cricket Communications' operations staff was unable to maneuver and install the safe on their own. To remedy this, Loomis sent a crew to deliver, handle, and install the safe. "The entire installation process took about an hour to an hour and a half," says Maitland. Loomis worked with the retailer's local IT administrator to integrate the safe with the store's network. The integrated network allows both Maitland's team and Loomis to view the contents of the safe at any time. "This integration allows our sales-audit team to log in, register the IP [internet protocol] address for the safe in a particular store, and view its activity. The team can determine who deposits money and how much, and end-of-day balance so they can audit all receipts," explains Maitland. "The sales-audit team also can balance the top portion of the safe with our POS system to check for cash shortage." Loomis conducted two forms of employee training to ensure proper use of the safe. The first form of training was conducted on-site during the installation process. At this time, only the store manager was trained on the safe's operations. The store manager trained the staff at a later date. The sales-audit group participated in the second form of training. The vendor trained the sales-audit group on the safe's software.
Since late 2007, Cricket Communications has installed five SafePoint safes in different locations. The retailer intends to do an ROI analysis to determine if this solution was beneficial from an operational standpoint. In the future, Maitland and his team will determine if the SafePoint solution will benefit the stores located in the new markets.