3 Key Elements + 10-Point Checklist Essential to Your Success

This month and next we will examine the store manager’s daily Store Walk. That absolutely necessary time spent each day
walking and looking at the vital elements necessary for running a proper and profitable store.

We will examine these elements not in complete form, but more in their urgent form. We will look at 10 areas and 4-6 key control points necessary to assure store conditions and presentation, customer service readiness, and of course, we will focus on loss prevention and control.

So, are your loss prevention results on pace to help you accomplish your profit growth goals this year? If your answer is an unambiguous yes, then good for you. But if your shrink loss control results are falling short, here are three key elements to examine:

  • Your Operational Systems. Typically, these include ordering, in-store accounting, merchandising, and POS operations. All of these related systems are in place for one reason: to help you grow and operate you business in an efficient and consistent manner.
  • Your Daily Practices and Store-Walk. This is the most fundamental of store management activities. In fact, it’s fundamentally urgent. And yet, few companies take time to teach and train managers exactly what to do, what to look for and how to conduct an expert store walk. That’s why we constantly ask ourselves, “what can Jim and Bob run a tight store with low shrink and controlled payroll but the others can’t”? The reason: because Jim and Bob naturally see things and address them properly. They see things that others don’t. Their interpretation
    of their stores conditions get translated into actions. Then they implement and execute. I know, it sounds simple, but in fact it’s very complex.
  • Your People. At the end of the day, all the policies, programs and technology won’t mean much if your people aren’t taught and motivated to be actively engaged in prevention thinking. Your people are, in fact, the key to growing your business, controlling shrink and achieving your profit goals. They are the executors of your loss control strategies and tactics and they are the embodiment of your Loss Prevention Brand.

How long has it been since you had a shrink control pep-rally, backdoor receiver training, cashier shrink awareness training, or even a department manager review of ways to control perishable shrink? It’s a great way to communicate shrink control and customer service values, re-state core policies and publicly solicit their involvement.

10-point Daily Store Walk Check-list.

1. Backroom Grocery – I like to start my store walk in the backroom. Backroom conditions always seem to set the tone for the real, underlying shrink controls that take place on the sales floor. There seems to be a clear attitude of control that begins and is visible in the backroom and is carried forward into all other areas. Are your backrooms clean, organized and at the proper back-stock inventory levels? Here are 5 things to look for and consider:

  • Grocery back-stock should be organized by this week, last week and older. Simply, there should be minimal older back-stock.
  • Grocery back-stock (in total) should be no more than 8-10% of your total grocery inventory on hand.
  • You should have a clean, neat and organized Known Loss Control area. Known Loss can cost you from 9-17% of your shrink. Organize it, measure it, and minimize it and you can cut that number in half.
  • Do you have cigarettes, high priced HBC and beer/wine/liquor in a secured area?
  • Are you following best practices for backroom organization, receiving, door security
    control, key control, sanitation, and product handling? If in question, you can order the “Complete Guide to Backdoor Receiving” in the Products area at www.RetailControl.com.

2. Coolers – Let’s focus on perishable coolers. Proper product handling can reduce perishable shrink by 23-26%. It’s not debatable; the attitude with which you order, receive and handle perishables will lead to and have a direct correlation to display space allocation, freshness, quality and hence customer satisfaction and loyalty. Here are 5 must do Best Practices for Cooler Control.

  • Upon receipt and proper check-in get your refrigerated products in the cooler within 30-60 minutes.
  • Code date all cooler inventory with the date received.
  • Order for optimal in-stock conditions but manage to the Rule of 3 as an inventory turnover guideline.
  • Follow the RetailControl.com and National Supermarket Shrink Survey guidelines for optimal cooler temperature management.
  • INSPECT WHAT YOU EXPECT – make it your daily practice to walk-in to each storage cooler every day, twice a day. And, when you’re in there, look to assure that your control practices are in place.

3. Perishable Displays – Perishable display allocation is a very subjective subject. Some companies “pile-it-high and watch-it-fly” and accept elevated shrink in favor of increased sales, while others “cut-it-close” and display minimal quantities believed necessary to satisfy customer demand and minimize shrink loss. Regardless of your approach, there is a middle ground that demands you be first sales-drive, and second control focused. There are simply too many negative ramifications to a depleted sales rack, or controlled variety in the name of loss control. Here are a few ways to check you balance:

  • Depending upon the item being displayed and the store format, item display space allocation
    is determined by reasonable sales expectation. Ideally, most perishable items should sell through 1-3 times a day.
  • Every rack must be thoroughly culled no less than 2 times each day. That’s the easy and obvious drill. The not so easy comes from the result of the culling activity. Every item removed must be written down or at least recognized, because next day space allocation
    can (without violating plan-o-gram requirements) be slightly adjusted to continue the sales-driven attitude, but also the control of loss focus.
  • Remember: Signs sell. One of my earliest memories in perishable sales is that “signs are your silent salesman”.
  • There is an undeniable and irrefutable link between customer satisfaction and shrink
    control. Because we know that customers are loyal to perishables and you perishable
    Brand, sales growth and customer loyalty are therefore driven by the customer’s perception of your perishable freshness, quality and consistent variety. That said; proper ordering, proper storage, proper handling, proper display space allocation and proper known loss control management lead to effective shrink loss control and hence fresh product being available for customer sale.
  • Optimal perishable shrink loss control and profit are driven by a simple rule: sell what
    you buy/order within 3 days and sell it for the price you expected to sell it for. (Implicit
    key words: “within 3 days”).

 

4. Cash Office – The cash office is the hub of many important store controls. Included are: Cashier operations, cash handling, customer service / relations, cash security, banking, check cashing and credit card management, and more. And, all too often we turn its control over to P/T associates and as long as we’re told that to office balanced, we seldom formally audit the controls. We’ll let’s start with a few very important audit points that if not controlled are symptomatic of a problem environment.

  • Refunds: Simply, untended, un-audited Refunds is a license or at least an invitation to steal. So often, Refunds are just accepted without customer information, without a receipt, and without any follow-up checking to determine if it is a real Refund, that in over 83% of retail stores, Refunds are a very easy way for cash office personnel or even managers to steal un-abated.
  • Coupons: Coupon stuffing occurs in every store.
  • Cash Levels:
  • Money Order and Lottery Controls:

 

 

 

5. Talk about Shrink Control at all Department Manager Weekly Meetings – Of course, conducting a weekly department manager meeting is a staple of running a good store. The
formality of sitting down and discussing upcoming ads, promotions and employee practices is inescapably a vital part of every managers work week. At least monthly one meeting should be
set-aside to discuss internal shrink loss control.

 

Here are 3 powerful loss control topics that should be reviewed:

  1. Shrink Prevention Awareness: Shrink awareness is an oft talked about but seldom understood condition that we create, or fail to create. Real awareness isn’t about understanding alone but
    it does start there. Consider and challenge yourselves to think that awareness occurs when understanding meets execution by knowledgeable, motivated employees. So, to reiterate, challenge that awareness is something that we want to see demonstrated when employees at all levels are educated and trained properly. Technology doesn’t create awareness. Policies don’t create awareness. Both can create a stimulus / response action but not real awareness. But, when you get to the point where your store teams are demonstrating their awareness by seeing shrink and acting to prevent shrink, then, you’re on your way to a natural state of shrink control and a branded Loss Prevention program.
  2. Review department shrink control goals: there are two kinds of goals here that you need to be very cognizant of: First are of course your quantifiable dollar and percentage goals. Those like sales, inventory turns, shrink loss as a percentage of sales, etc. But second and even more important are the practice, presentation, control and operating goals that will lead you to hitting your quantifiable goals. If you discuss, demonstrate and make visible these goals, then every department head will have in his/her minds-eye what control looks like. If you continually walk department heads around the store (avoiding departmental myopia) then you cause dozens of eyes to be looking at your control points. Wow… that’s powerful!
  3. Review each department’s key Best Practices: let the grocery manager hear the meat manager’s best practices and shrink goals and visa versa. The best culture of control is established when
    all department heads and employees operate in a natural state of shrink awareness. (More on “natural state shrink prevention” in an upcoming article.)

6. POS Checkout Area – every dollar of profit that you create at retail must pass through the POS and be touched by a cashier. And, cashiers make up the biggest segment of your employee population. That said; it is imperative that your POS check-out controls be structured, well trained and consistently implemented.

7. Safety & Sanitation
– integral to your stores image both in the minds of your employees and customers, we must assure a safe and sanitary store. In supermarkets, we are in the most intimate of business. We sell what people eat. What they want to put inside of their bodies. So, we have to represent our stores a clean and worthy.

8. Secured Product Areas – people don’t steal cheap products and much as they do expensive products.

  • Are your cosmetics, beer, wine, HBA, electronics, cigarettes and other high priced products secured and protected from would be thieves?
  • Change the locks on all secured product areas. Change them today. Redistribute keys to only those authorized.

9. Door Locks and Key Control – two of the most basic control devices are keys and locks, yet they are the most neglected by most store operators. Are you sure you know who has the keys to your store? Are you sure all of your locks even work? When a secured door is opened, do you know it? If your grocery crew or Manager wanted to unload a truck-load of inventory out of your backdoor, would you be alerted? Maybe these audit points will help:

  • Do you have a written Key Control Policy that specifies who can and who can not have key, etc.?
  • If you’re not certain who has keys or fear that an old employee might still have a key, or that copies of keys may have been made, consider having your doors re-keyed.
  • Do an exterior store walk and look for all doors to see that external breach has not been attempted.
  • Every door should have a posted hours of operation sign. Further statement should be made that doors may not be opened during unauthorized hours without the presence of the Store Manager.

10. Talk to your people about shrink loss control – make this a daily practice, not an event.
Here’s why: in its basic form, store management is all about loss prevention for profit realization. A manager must operate in a constant and consistent state of loss prevention. It’s his/her job.