Despite advances in retail loss prevention, shrink continues to plague brick-and-mortar retailers—to the tune of $100B in 2017, according to RetailDive. With a global shrinkage rate of 1.82%, the problem is even more significant in the US, which has a national shrinkage rate of 1.85%. Fashion and accessories retailers are the hardest hit, with a shrinkage rate of 2.43%, nearly double that of the industry at large.
The root causes of shrink in brick-and-mortar vary. However, external theft/shoplifting is the most prevalent issue, followed by employee theft. So retailers are turning to visibility platforms—technology that better connects the dots between people and things. Visibility platforms boost retail loss prevention, improve customer experience, and drive profitability. 80% of retail organizations have budgeted for visibility, and IT departments are leading the charge.
CB4 helps operations executives responsible for at least 30 stores combat shrink at each location in their chain. While we’re not a retail loss prevention solution per se, we drive accountability and empower employees to uncover in-store operational problems that affect the flow of merchandise. In doing so, we naturally contribute to retail loss prevention and connect the dots between your merchandise and your store teams and customers.
Employee Engagement & Accountability
Employee engagement is critical in retail loss prevention, according to recent research by the ECR Europe Shrinkage and On-Shelf Availability Group. ECR surveyed 200,000 associates working for three large European retailers to explore the link between levels of employee engagement, measured across 18 factors, and four indicators of retail loss (shrinkage, waste, cash loss, and lost sales as a result of out-of-stocks).
ECR’s study also found that it’s particularly valuable for retailers to target employees in “the bottom quartile of stores in their business.” And, although many retailers use employee engagement techniques to sell more, retail teams can also be equally effective in efforts to lose less.
One of the survey’s most interesting findings is that store managers are key to delivering many of the most important engagement factors that reduce store loss. Store managers can help curb loss by communicating effectively, making staff feel valued, promoting teamwork, and ensuring associate’s tasks are manageable. This deepens team members’ connections with corporate and increases trust within the organization.
How CB4 Helps:
CB4 gives store managers an easy-to-use interface with clear, simple tasks to complete. They can complete CB4’s recommendations themselves or, in larger stores, easily pass tasks on to associates. We recently visited a store in a specialty retail chain in which nearly all 600+ stores were using CB4. The store was big—about 30,000 sq. feet—and the store manager had a lot on his plate. So, when CB4’s recommendations arrived, he handed out tasks out to sales associates in the relevant departments. They, in turn, partnered with other associates to promptly complete CB4’s recommendation.
We make CB4 fun to use, using gamification techniques to reward store teams for successfully uncovering issues in their stores. Store staff feel valued for their contributions to the team. Their tasks are extremely manageable, with no ambiguity about what they should be doing or how it will contribute to the business. That’s why 80% of store managers love CB4, according to one in-app survey. And, we boast a 95% compliance rate across the board. That means that for every 100 recommendations we send to stores, 95 are executed.
Closer Connection Between People & Products
Supply chain visibility is a well-established priority for retailers. Most modern retailers can track what happens to merchandise between the warehouse and your storefronts. But supply chain optimization leaves the final stretch of your merchandise’s journey, your stores, totally untouched. Why invest in a backend solution and then drop the ball in the final leg of the journey?
How CB4 Helps:
CB4 helps ensure that your retail loss prevention doesn’t leave any products to fall through the cracks. We don’t just rely on traditional analytics to predict what “should” be selling in your stores based on limited factors (i.e. comparisons to like stores, last year’s sales, etc.). CB4’s patented algorithms use your POS data to detect selling patterns you wouldn’t otherwise see.
Once CB4 detects patterns, we translate our findings to actionable recommendations that we send directly to store managers. We prioritize the most urgent issues in terms of what’s costing you the most in revenue, so your team doesn’t get held up fixing every problem in your aisles that doesn’t have a clear impact on your bottom line.
For instance, we recently visited a supermarket that was using CB4 technology to uncover physical issues in store that were hindering sales. The store manager received a notification to check on organic 1% milk, which was typically in high demand for her store, despite not being a chainwide best-seller. It was underselling significantly, leading to spoilage and loss.
When the store manager looked at the cooler, nothing appeared wrong. It was fully stocked according to her planogram. But, upon a closer look, she discovered that the milk in question was incorrectly packaged with a blue cap (typically for skim milk), rather than the green cap denoting 1%. She found properly packaged backstock to replace the incorrectly packaged milk and reported the problem to the manufacturer for a credit.
In this case, the store manager was able to both put a cap (so to speak) on the lost sales and mitigate spoilage-incurred loss by realizing a manufacturer’s defect. A quick look at the cooler alone would not have done the job. Moving forward, she got into the habit of checking this brand of milk to prevent a similar mishap. With only traditional analytics in place, she would have missed this problem entirely.
Reduction in Mark Down-Related Shrinkage
Who hasn’t seen discount store bays full of red and green tinsel heavily marked down on January 1st? Who hasn’t surveyed racks full of mint green tank tops at 50% off in October? The struggle to sell-through time-sensitive products in the critical window is real across almost all retail verticals.
RetailDive writes that markdowns cost non-grocery retailers a shocking $300 billion in revenues. That’s 12% of total sales. While the problem is intrinsically linked to inventory misjudgments, retailers will also want to make sure that time-sensitive, seasonal merchandise is optimized once it arrives in store.
How CB4 Helps:
CB4 helps you maximize sales for products that are only in high demand for a limited period of time, but failing to sell to demand due to issues in a store. Perhaps the mint green tanks were left too long in the stock room. Perhaps silver and gold tinsel were double exposed to maximize visibility on your floor, while red and green tinsel could only be found in zone on the floor. Whatever the cause, CB4’s patented algorithms will detect when high-demand products are underselling before it’s too late and your sales momentum is lost. And, likewise, our system will stop sending recommendations once the key selling window has passed so your team can move on to the next hot, full price item of the week.
Bottom Line on Retail Loss Prevention with CB4
Disclaimer: CB4 is not a full-scale retail loss prevention solution. Yet, without installing in-store hardware or cumbersome equipment, it offers you critical insight into the movement of high demand merchandise throughout your selling floor.
Our patented AI algorithms aren’t your average BI tool or excel spreadsheet. We offer a totally fresh way of looking at consumer demand patterns that helps you sell better in every store in your chain. More than that, it’s a tool that inspires and engages your workforce, training them to meet their customers needs in new and exciting ways.
We started out in convenience and grocery retail, but our technology has been put to the test by department stores, apparel sellers, and specialty chains. We passed with flying colors and rave reviews from store managers.
Ready to explore how CB4’s machine learning tool will work for your business? Let’s connect.