Total Cost Of Loss Control Ownership

October 2012 Integrated Solutions For Retailers

By King Rogers, managing principal, King Rogers Group, LLC.

Total cost of loss control ownership is a management tool designed to emphasize competitive best practices in loss prevention.

Although some do not, most retailers budget for loss prevention, payroll and nonpayroll. Those who do not budget for LP might consider losses as a cost of doing business. And, as long as those losses are not completely unacceptable, they annually budget for those losses based on performance history.

Those retailers who do have a loss prevention staff do so with the expectation that the LP staff will manage and control the losses. Unless we are in a recession-like economy, most retailers expect and, yes, even forecast, that their gross sales will grow year after year, but they will not grow their LP expense exponentially year after year. If they did, that one-third to one-half expense as a percent to sales from one year to the next would mean a bigger LP staff next year compared to this year’s. And we know that such increases aren’t going to happen. Thus LP needs to do more (more sales, more stores, more supply chain costs, more store employees, more customers, etc.) with what seems to be less each year. Success in this relentless belt-tightening environment requires that retail management and LP must operate smarter year after year.