Damian P. Comerford, CPP, PSP
Retail Security & Loss Prevention functions have traditionally built their programs focusing on shrinkage and crime reduction, rarely taking into consideration the key factors that make a retailer successful in a highly competitive global environment.
Based on the ‘Retail Pentagon & Triangle” framework of successful retailers, the ‘Retail Loss Prevention Pentagon & Triangle’ provides a framework for the retail security or loss prevention professional to develop a program that not only supports the effective reduction in the traditional measurements of shrinkage & crime reduction, it provides the tool in which they will be able to communicate to their business on how they are going to support them as retailers. Furthermore, it provides the Security or Loss Prevention professional a manner in which to measure the success (or failure) of their program in terms of accountability to deliverables and internal stakeholder engagement.
In April 2012, I had the pleasure of attending the RILA Loss Prevention Audit & Safety Conference held at the amazing Gaylord Texan Resort, Dallas, USA.
The level of presentations and round tables discussion held throughout the conference was world class in terms of content and execution. However, there was one consistent question that appears to ring loud in our industry, “As the senior people in our organisations on Loss Prevention, how are our function’s able to display added value and support to our organisation in achieving their objectives outside of the traditional metrics of reducing shrinkage and criminality?”
This is the exact challenge that I faced when I took up a new senior position with Officeworks, one of Australia’s most successful retailers. As the most senior Loss Prevention executive, I am charged with establishing the organisation’s five year Loss Prevention strategic plan.
I don’t believe the traditional metrics relating to Shrinkage will ever be totally removed but having a metric of success outside the traditional methods offers value in terms of wider business engagement, cross function collaboration and execution of strategic and tactical measures that have been put in place.
With an organisation investing heavily in the development of its people, I was afforded the opportunity to attend a four day Retailing Executive Program, facilitated by Professors John Strong and Larry Ring of the William & Mary Mason School of Business. During the program “The Eight Ways to Win in Retailing” and supporting “Retail Pentagon & Triangle” frameworks and strategies, used by many successful retailers, were covered in depth.
In summary, the Retail Pentagon & Triangle is a framework based upon the eight ways to win in retailing (The Pentagon) of Place, Product, Value, People & Communication that the customer witnesses and three key areas (The Triangle) of System, Supplier & System that the customer does not see. Each of the eight corners in total has sub components that, if ‘won’ by the retailer it goes to follow that the retailer will be successful in terms of, cost leadership and differentiation which, in turn will result in financial and longevity in operations.
It is from this globally applied framework of success for retail that I have developed and applied the Retail Loss Prevention Pentagon & Triangle which has provided me with two separate, yet interconnected methods of ensuring and measuring success of my organisation’s Loss Prevention strategic plan.
The first method being, the ability to effectively measure, monitor, gain feedback, and communicate back to the organisation on how the Loss Prevention function is supporting the organisation outside of the traditional metrics of shrinkage and criminal activity reduction.
The second being a framework for the eight key components of a successful retail loss prevention function and strategy.
Through the use of the Retail Loss Prevention Pentagon & Triangle the burning challenge is “how are our function’s able to display that we add value and support the organisation in achieving business objectives outside of reducing shrinkage and crime”.
THE PENTAGON
PLACE
Two of the key elements of ‘Place” relate specifically to ‘Layout’ and ‘Design’. These involve strategic and tactical aspects Loss Prevention strategy and proactively points to commercially viable solutions within stores that underpins the business’s store layout & design objectives.
PRODUCT
The Loss Prevention Team must be committed to seeking ways to support the business’s buying and merchandising initiatives and must exceed competitors in relation to the style, intensity and assortment of products within each retail category. All three elements can be achieved and maximum potential in profit can be realised through increased sales and minimised losses at store level.
VALUE
A critical success factor for a Retailer is for them to have the lowest prices by having the lowest costs. Another strategic and tactical aspect of our Loss Prevention strategy relates to consistently looking for ways to do more with less and provide the most cost effective LP solution for stores.
PEOPLE
Having Team Members that are dedicated to our organisation’s service culture as well as working in a climate of trust, empowerment and pride is a critical success factors for our organisation to win on this corner of the Pentagon.
COMMUNICATIONS
Communication is the hardest for any Loss Prevention function to directly impact upon. In the case of my organisation our key marketing message is EDLP (Every Day Low Prises). As such, the Loss Prevention function has committed to, through our day-to-day management of activity be low cost or cost reduction focused. Likewise, when considering new merchandise protection systems for use within store, a key consideration is: “Does the system fit with a Low Cost Operator environment?”
THE TRIANGLE
SYSTEMS
For an organization to ‘win’ on this corner it must have effective system in place for the flow of information to directing operations. As such, we ask ourselves (and internal partners) – “Does the Loss Prevention function’s internal systems and external processes effectively support both the analysis and flow of information and wider business decision making?”
LOGISTICS
Logistics relates to the supply chain and movement of goods from supplier to in-store sales. It can have significant impact in terms of financial and operational performance that relates to inventory ‘turn.’ As most retailers have come to realise, this is also an area with the retail environment that significant opportunity exists for a Loss Prevention function to proactively influence the business’s overall financial performance through identifying and removing the opportunities for loss that exist within the business’s supply chain.
SUPPLIERS
This relates to the relationship between the organisation and the suppliers of the product in which it sells in terms of deals, delivery quantities and trade terms. We have been proactively driving the engagement of suppliers in relation to establishing and implementing commercially viable solutions to minimise/effectively manage loss of their products. We do so in both upstream & downstream opportunities as well as in category and organisational strategy execution thus supporting the business in maximising sales and profit.
MEASURABLE / REPORTABLE SUCCESS (or FAILURE)
Firstly, an informal self-assessment as a team is undertaken on a monthly basis and secondly (and most importantly) a formal assessment process where feedback and rating is sought from our internal partners is completed at ‘half year’ and ‘end of year’ intervals.
The Informal Self (Function) Assessment is conducted on a monthly basis to discuss how the LP team is performing. I find this practice particularly important as it also re-enforces to my team that whilst they are LP experts, they are primarily “retailers” and as such are required to self-assess against ‘retail thinking’.
The Formal Assessment
To obtain measurable feedback on the Loss Prevention function we are supporting the organisation in its’ efforts to ‘win’ while adding quantifiable value and support to the organisation.
A half-yearly survey method involves internal partners from each function within the organisation rating on how they believe the Loss Prevention function and strategy execution is delivering on each of its’ commitments.
This is done in metrics of “Very Positive Impact” through to “Very Negative Impact” for the Pentagon and “Strongly Agree” through to “Strongly Disagree” with the Triangle on how they believe the Loss Prevention function and strategy execution is delivering on each of its’ commitments as detailed above.
Respondents to the survey remain anonymous at an individual level. However department level information is requested as this can provide insight into the areas of the business that may require greater engagement at senior level and by the team at an operational level.
The added value to this entire process is that, as a leader I am able to develop insight into how the Loss Prevention Strategy has been engaged by my team and the wider business and if required take corrective action.
Feedback based learning
The traditional metrics will never be totally removed but if new measures of performance in LP or security are not explored then as retail loss prevention and security professionals, we could face the real risk of being left behind.
To assess ones own performance against an established criterion can be easy. It is the seeking, obtaining and applying feedback from external parties that can, at times be difficult to do but the most effective and rewarding. For Loss Prevention leaders to be able to display and effectively communicate how we support our organisation outside of the traditional measurements of shrinkage and criminality we must have the courage to do so.
