Magazine Article | September 19, 2006

Take Shrink Reduction To The Next Level

Source: Innovative Retail Technologies

A supermarket chain achieves a four-month payback on its asset protection exception reporting solution.

Integrated Solutions For Retailers, October 2006

Reducing shrink in one retail franchise is difficult, but as you grow, it becomes increasingly complicated. Penn Traffic understands these challenges. The company operates 112 supermarkets in the northeast United States under the BI-LO, P&C, and Quality trade names. It also provides wholesale food distribution to 78 franchises, 51 independent operators, and Penny Curtiss.     Penn Traffic used a homegrown exception reporting tool to investigate dishonest shrink-related activities, but its Asset Protection department sought to gather supplementary data to assist with its AP (asset prevention) efforts and link that data to the video gathered at stores. Penn Traffic wanted a solution that analyzed the activities that caused the exception, not one that simply identified patterns and required assumptions to be made (as with the homegrown solution). Additionally, it wanted to maintain historical data and retrieve current data rapidly following a questionable incident. Therefore, Catherine Penizotto, director of asset protection, attended the NRF (National Retail Federation) show a few years ago in search of a new exception reporting solution.

A team from many Penn Traffic departments compared solutions and selected Retail Expert’s NaviStor and Store Manager’s Report for Exception Reporting and Cashier Counseling, along with i3DVR from Navco, as its integrated digital video solution. “NaviStor has the flexibility to meet our needs, and it contains add-on components [e.g. Pharmacy and Direct Store Delivery] that we can grow into,” says Penizotto. “i3DVR enables remote viewing from the corporate locations to all stores, motion recording [i.e. only recording if motion is detected], and specific in-store site recordings, such as monitoring only activities near the razor blades.” It also allows AP field technicians to review video and exception reporting data via laptops with wireless connections. “The i3DVR functionality was compared with other DVR products and was found to better fit our needs,” says Tim Sullivan, asset protection systems administrator.

Penn Traffic encountered a few challenges, however. It currently uses two different POS systems and different DVRs at its stores, so the data from different formats had to be merged through NaviStor. Additionally, the project budget didn’t include replacement DVRs at all stores. Therefore, new stores are outfitted with i3DVR equipment, and select stores were upgraded.  

Access Historical Data, Spread KPIs Throughout Operations

Penizotto and Sullivan branded the solution’s historical data OPTIC (optimizing profitability through information collaboration) and customized the NaviStor solution to fit their business needs. “Previously, we could review only a 13-week history of item movements and research only 30 days of POS transactions, which required a trip to each retail site,” says Penizotto. “Now we can look back one-and-one-half years. We still keep at least 30 days of video, but we have more valuable footage and use motion detectors to record only when movement exists.” Penn Traffic develops asset protection cases in minutes, compared to months in the past. The system has been helpful in assisting law enforcement with criminal activity not related to Penn Traffic’s business. The system was recently used to track transactions on a stolen benefits card and provide officers with a snapshot of the offender within minutes of receiving the request.

Penn Traffic’s use of OPTIC has spread well beyond its AP functions. “The tool came with approximately 30 KPIs [key performance indicators], but we’ve significantly expanded those – we have more than 1,000 today,” says Sullivan. “Some KPIs target dishonest activity, but many are for operational improvements and training. Each store uses five or six KPIs at a time in an effort to increase productivity or identify training deficiencies. KPIs are customized to fit each store’s needs and are changed periodically.”

Penn Traffic received a payback four months after implementation, based on measured AP metrics only. This includes cash overs/shorts, coupon activity, refunds, and voids. Next, Penizotto wants to pursue the Pharmacy and Direct Store Delivery modules of NaviStor.