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SINCE being founded more than 90 years ago, the United Supermarkets chain has blossomed. With three distinct brands of stores, almost 1 million guests shop at 48 stores in 26 cities throughout North and West Texas each week.
While competing in the age of big-box grocery stores, the chain and its more than 8,000 employees continue to operate under the philosophy of founders H.D. and Jack Snell—quality, value, guest service and community involvement.
And while hoping to improve the bottom line, company officials noticed an issue that continues to plague retailers of all shapes and sizes—shrinkage.
More than $32 billion was lost in 2001 due to employee theft, and the numbers continue to rise steadily each year. Some retailers have no choice but to pass on the increased price of employee theft to customers in the form of higher prices.
With ever-increasing competition in the grocery sector, the Lubbock, Texas-based company created a loss prevention department in 2005. And the focus in the department is more than simply rooting out problem employees.
Calling a Coach
To help focus on prevention and coaching, the company turned to March Networks’ LP Data Mining software. Originally scheduled for a 17-week pilot program, the system was successful enough for the grocery chain to accelerate deployment across the company.
“Protecting the company’s assets and identifying dishonest employees are part of the job, but the real focus is on prevention,” said Todd Reynolds, United loss prevention director. “That’s why LP Data Mining, with its emphasis on coaching, works so well for us.”
The LP Data Mining solution applies transaction profiles to pinpoint sometimes undetectable shrink losses. Transaction-level drill-down in the system provides point-and-click analysis for targeted action by a retailer.
Smart transaction profiling employs hundreds of built-in business rules to quickly spot patterns of theft and fraud. To help improve information accuracy, the system uses statistical weighing of the unique characteristics and selling mix of each store.
And the Web-based software can be accessed with a user-definable dashboard that displays the most relevant and important information.
“[The software] was a better fit with our culture,” Reynolds said. “We looked at standard exception reporting and data mining systems, but the systems were primarily focused on catching dishonest employees. Our priority is preventing losses in the first place. By raising awareness and changing undesirable behavior, goals are reached much sooner than simply identifying fraud and catching dishonest team members.”
The system produces a weekly report, highlighting transactions that violate internal policies or rules defined by the company. Store managers then meet with specific cashiers in question to reiterate company policy and provide necessary coaching.
“Once you sit down with the cashier, they know that their work is being monitored, so it raises awareness and acts as a deterrent for anyone who may be in a position one day to make a poor decision,” Reynolds said.
The system also produces reports that rank cashiers in relation to various performance metrics. The posted report, displaying only top achievers in the categories, is just one way the company rewards employees.
“The ranking report is more than a piece of paper stuck up on the wall,” Reynolds said. “It includes comments and highlights congratulating the individual cashiers, so we try to make it a fun thing. This company is different in that we reward employees all the time, not just in relation to the LP Data Mining metrics. If employees are observed giving excellent service, our store managers will frequently reward them by buying lunch or showing appreciation in some other way.”
Seeing Results
And the system has already proven itself to the company. After installing the software, there was a 43-percent reduction in refunds and voids, a 7-percent increase in value per item and a 5-percent increase in sales per customer.
Along with overall trends, LP Data Mining helps resolve several significant incidents of point-of-sale-related shrinkage, including one case of $14,000 discovered one day after the system was installed.
United also has seen several other benefits with the system, including the ability to identify pricing input errors at the store and corporate level, and allowing accounting and audit clerks to research issues more efficiently than with traditional research methods.
With the company’s focus on training, the software even allows the training department to develop more effective instruction methods.
Even though refunds and voids happen often, Reynolds said the software helps improve cashier performance, creating a better shopping experience for customers.
“Refunds and voids are part of doing business and are an everyday occurrence because cashiers make mistakes and use the void key to correct them,” Reynolds said. “Refunds also occur quite legitimately for any number of reasons. They may or may not be related to shrinkage, but if you have excessive amounts of voids and refunds, your service levels are probably suffering and it’s something you want to address.”
After being thoroughly tested and used throughout the stores, the company plans to integrate the LP Data Mining solution with already installed CCTV systems in the next 12 months—helping to cut down on investigation time and improving prevention efforts.
About the Author
Brent Dirks is senior e-news/Web editor for Security Products and Network-Centric Security magazines.