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ROI Case Study: $3M Shrink Reduction in 1st Year of Use

In this Profit Improvement Case Study, we will share how the ProfitTrax System achieved a 27% Shrink Reduction and an 8:1 ROI in the First Year of use by a group of Corporate Product Directors, Supervisors and Store Teams.

COMPANY BACKGROUND: REGIONAL, MIDWEST GROCER – 30+ STORES

The focus of this Case Study is a 30+ Store, Regional Midwest Supermarket Group (here forward referred to as “The Company”) that operates as a successful food and related staples retailer. The Company offers quality products in a variety of sizes, serving all demographics of consumers. As of December 2020, the Company operated 30+ grocery stores under two banners in the Midwest United States. In business for over 100 years, the Company is committed to full variety, superior fresh products, and excellence customer service.

THE CHALLENGE

While the Company is stable and very successful, they wanted to implement a comprehensive system / solution including new training programs and advanced BI / AI technology that could be used by Store Operations, Merchandising and Loss Prevention to unify efforts to improve operating results, workforce efficiency and store team effectiveness.

The Company sought to find and successfully implement a data-driven, easy to access and use solution that would reduce store operations shrink loss / profit erosion by a goal factor of $3,000,000, foster new, profitable sales and simultaneously improve on their culture of best practice execution.

The Company wanted a web and cloud-based data warehouse solution that would collect data from disparate sources, provide Enterprise-wide, easy access visibility into Store Performance and help to improve daily best practice execution by making their data easy to use, beyond traditional spreadsheet reports.

SOLUTION SELECTION & GOAL SETTING

In the 4th quarter of 2019 (before COVID), the Company selected ProfitTrax BI Solution with Augmented Intelligence with embedded Operational Best Practices Alerts for rollout to its 31 Stores. Selection of ProfitTrax BI centered on five key factors: (1) the minimal IT lift required to implement the software, (2) the ProfitTrax all-in-one Dashboard for Operations and Merchandising Teams, (3) its daily, plain English Alert system, (4) specialized Merchant Analytics, and (5) the ProfitTrax Guarantee of a minimum 5:1 ROI* from sales gains, 15% shrink reduction and 18% out of stocks reduction, improving cash flow and store teams best practice execution. The ProfitTrax System provided clear visibility into a variety of operational data points and provides store and department leaders and Supervisors with profit-making best practices training and daily plain English Action Directives to correct below goal performance. Once configured for implementation, the Company and the ProfitTrax Team worked together to set the following performance expectation goals:

The First Goal – Implementation Effectiveness – serves to set a baseline starting-point for everyday best practice execution consistency in Stores. Stores were trained to implement specific best practices proven to assure sales and profit improvement and to complete their unique, daily ProfitWalk in the ProfitTrax AI software. ProfitTrax tracks the successful completion of sales improvement and shrink reduction tasks and reports on the effectiveness of individual stores.

The Second Goal – How ROI would be measured – the Company and ProfitTrax defined criteria to measure the annualized ProfitTrax ROI Guarantee of 5:1 in 120 Days. (1) Known Shrink Loss reduction of up to 15%, Out of Stocks reduction of up to 18% Inventory Turns Improvement and measurable Sales gains.

IMPLEMENTATION

Prior to providing access to ProfitTrax BI, the ProfitTrax Team worked with the Company to build a profit improvement plan of action to attack in five specific opportunity areas:

—-1. Shrink Reduction & Control
…..2. Operational Best Practice Execution
…..3. Store Teams Training
…..4. Enhanced Store Performance Visibility
…..5. Guidelines for Store Manager and Store Supervisor Leadership

The ProfitTrax AI Solution and its Integrated Best Practices Alert Systems are designed to support storewide best practice execution to measurably improve store manager and store supervisor effectiveness. Managers and Supervisors were trained in the use of the ProfitTrax BI System and ProfitTrax Best Practices for Gross Margin improvement. After 120 Days of use, the Company reported KPI improvement and ROI results.

GOALS, RESULTS AND ROI

Goals were set for 15% Known Shrink Loss Reduction, 18% Fewer Out of Stocks, Improved Inventory Turns and Best Practices Execution improvement for a minimum 5:1 ROI. The subject company of this Case Study exceeded every expectation and achieved an annualized 8:1 ROI. Company Leadership, Supervisors, Managers and Store Teams all engaged actively and pre-COVID KPI Improvements prove it:

Shrink Reduction for Gross Margin Improvement: Store Shrink Loss, including Fresh and non-Fresh departments was reduced by 27%, or approximately $3,1000,000 from baseline starting points.

Inventory Turns: Inventory Productivity / Turns improved substantially further promoting shrink loss reduction, positive cash flow and improved store labor efficiency.

In-Store Best Practices Execution: Store Managers and Dept Leaders were trained in proven Best Practices for profit improvement resulting in 91% best practice execution improvement in all stores.

Gross Margin Improvement: Dept Gross Margins improved an average of 110 basis points with greatest impact in Fresh Depts.

Using the ProfitTrax System guarantees a minimum 5:1 ROI*, measured by annualizing KPI improvements achieved during the first 90-120 days of use. Accordingly, the Company achieved an 8:1 first year ROI.

The Company’s VP of Store Operations has said,

“The ProfitTrax Solution / System and its all-in-one Command Center Dashboard is an excellent system providing very easy to use access to all store data and performance metrics and the Daily ProfitWalk operational best practice Alerts.

Store recording of Known Loss and OOS is better than ever and execution of the ProfitTrax Best Practices is excellent. With this: our storewide Known Shrink Loss is down 27%, Top Selling Item sales are up, Sales gains from OOS reduction is up and 91% of our Store Associates understand our objectives and are actively participating.

I cannot say enough about the Profit Improvement Partnership “Partnership” Culture that the ProfitTrax team helps to create with their best in class, pro-active support. ProfitTrax is the most impactful software we have used in our company.”

Our Store Manager’s, 350+ Dept Managers and 25 Store Supervisors are all engaged using ProfitTrax. All are more focused than ever on improving Gross Margins and are measurably reducing operating shrink loss and improving gross margins.

The SRS / ProfitTrax Training, on-going Webinar Refresh Training, and Support programs are certainly among the best we have ever worked with. Support is top-notch and is clearly and pro-actively dedicated to our success.

Bottom Line: The 8:1 ROI is very real. Our Store Managers, District Managers and Corporate Directors all embraced and executed the ProfitTrax System. Cash flow impact has been excellent, grosses are very good and store teams are more focused and determined. Our Executive Team really enjoys the greater visibility into our store operations performance. The ProfitTrax approach has focused us on selling more with greatly improved proactive shrink prevention. It creates an operating culture that has helped us to better define our store operating standards in very sustainable ways. Store moral is at an all-time high thanks to the ProfitWalk Best Practice Compliance Module. I definitely recommend ProfitTrax for any company that wants to run better, more profitable stores.”


This company’s name is withheld at the company’s request. However, this Company’s leadership team is happy to speak with retailers interested in the ProfitTrax System. 

For more information about this Profit Improvement Case Study, ProfitTrax BI and Smart Retail Solutions please feel free to contact our team.

ABOUT SMART RETAIL SOLUTIONS
ProfitTrax is the flagship Profit Improvement BI and Best Practices Training “Action Alert” Solution developed by Smart Retail Solutions. ProfitTrax is a cloud-based, SaaS, Enterprise-wide Business Intelligence solution that guarantees sales improvement, shrink reduction, customer experience improvement and sustainable store profit improvement. The ProfitTrax advanced analytics interprets store-wide data, performs multi-dimensional analysis, and produces Plain English Action Alerts using proprietary Narrative Science. For more information, please visit: https://smartretailsolutions.com.

MEDIA CONTACT:
Steven Miller, Director of Marketing
Smart Retail Solutions, LLC – Email: info@smartretailsolutions.com
Or Call Larry Miller Directly at: (602) 448-8500

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