Inspect what you expect
By Joe Szvetitz
Senior management of this multi-store operation was making business decisions, mostly purchases based on information that they believed was accurate. Having been associated with retail loss prevention for about 40 years has given me a good vantage point to see what actually causes loss or shortage/shrink in a retail location and, honestly, it is not hard to recognize. We all know that the three major contributors to loss are: 1) Employee theft (43.7%); 2) Shoplifting (32.6%); and 3) Paperwork errors (12.9%).
(Stats are according to the 2010 National Retail Security Survey.)
For the past six years, our company Risk Management Services Loss Prevention, LLC, has worked specifically in the hardware, lumber and home improvement sector working with retailers, dealers and members of all the different flags carried in the industry, and we have uncovered a common thread to the causes of shrink: failure to inspect what they expect.
Business decision-makers need to rely on others, associates, department managers, buyers, POS reports, etc., to give them solid and truthful information about their operation so they can intelligently spend money on merchandise purchases, staffing and other areas that cost money in an attempt to increase sales activity and, ultimately, their bottom line. It’s called “cost of business.”
The problem develops when the information they get is bad, inaccurate and wrong. As mentioned in the beginning, this particular business kept making significant purchases of a particular high-demand and expensive item that all of the data indicated needed to be made in order to remain competitive and in stock. Unfortunately, local management was faking the numbers just to look good on paper and to not fall out of favor with ownership. The decision-maker was at a distance in the home office and, not wanting to be out of stock, kept on spending significant dollars to make sure the store would not run out.
Understand that in order to run a business, it is absolutely necessary to rely on information generated from your systems and the people you pay to manage them. However, instead of blind faith, we believe that there should be a “trust but verify” attitude in place. Simply put, inspect what you expect.
Example: Have you ever left the store and your employees think you have gone for the day only to return unexpectedly? I bet there were some surprises. Well inspecting what you expect is doing just that. It is taking a few seconds to proof the information.
Some suggestions for decision-makers are:
• Perform unannounced cash counts at your POS stations.
• Randomly do a count of popular merchandise and circle back to quantities on hand, sold and ordered.
• Do an actual audit of who has what level of access to your POS system. This catches many people by surprise because they actually find out that a part-time sales associate actually has management level authorization.
• Routinely change POS access codes.
Joe Szvetitz is managing partner at Risk Management Services Loss Prevention.
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Serving our community
Robert and Vicki Amberg, owners of Gerstner Hardware in Glenn, Mich., recently proved their commitment to their surrounding community by re-locating a nearby Post Office designated to close and incorporating it into their store.
The story reminded me of my Uncle Jerry, proprietor of an independent store stuffed with hardware SKUs and located in South Newfane, Vt.
Uncle Jerry, like the Ambergs, was not one to ignore the needs of his community, so when the hunters (local and visitor) who came into his store complained about the distance to the nearest reporting station, he signed up the store to be a new option for them. Similar needs of the local community began to be addressed as Uncle Jerry became the local butcher, Scout Troup leader, Justice of the Peace and, like the Ambergs, postmaster.
The store had everything from prime rib to hand tools.
Like most independent retailers, Uncle Jerry loved surprising his community with new products and better service. It is in that spirit that Home Channel News is excited to present two new products for the largest part of our industry community, independent retailers and dealers.
But most — that’s right, most (by a large margin) — of Home Channel News readers are independent retailers and building supply dealers, operating on or near what we loosely refer to as “Main Street,” and HCN is always looking for ways to help this community compete.
HARDWARE STORE CONNECT will be launched this month as yet another digital extension of Home Channel News. Since 1997, Home Channel News has been the industry leader, providing our business community with news every day from our award-winning website.
HARDWARE STORE CONNECT will take our vast digital audience into a new level of community communication. It will be a way for hardware store owners to communicate ideas, challenges and solutions for products, consumer sales, marketing, operations and more. Store owners in Vermont will be able to trade ideas with stores in Michigan, regardless of co-op affiliation, size or volume. This FREE service will give hardware store owners new digital tools to post photos, videos, business data and more.
It will be a place where the hardware store community can go to compete better.
TOOLKIT HR will also be launched this month, a new service for independent businesses in our market to help solve critical human resources issues for small operators. Home Channel News is partnering with The Society for Human Resource Management, the leading association in North America of HR professionals to create a new digital tool for owners/operators in the home channel community.
We know that many HR-related challenges that occur on a “Main Street” level are extremely daunting for small businesses: hiring, firing, training, safety and other employee-related practices vary wildly from state to state, and the national co-op and buying group capabilities are limited in their ability to assist the retailer or dealer on a local level.
TOOLKIT HR will fill this service gap with digital tools to help independent retailers and dealers manage HR issues, including a 24/7 call center for subscribers.
When you see a need in your community, as did the Ambergs and my Uncle Jerry, you try and step up and make an effort to help. If you do, your business wins, because your customers are better served. That is what Home Channel News’ two new products have been built to do: Serve our community.
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Survival of the fittest
The comment board on the Toledo Blade newspaper’s website takes a simple story of a closing hardware store — Fleeger’s PRO Hardware — and turns it into a tragedy and a mystery.
Tragic because of the loss of another business in downtown Toledo. Fewer jobs for fewer Americans. A way of life eroded. Mysterious because — well, who was to blame, really?
A poster named CindyS has little doubt and little sympathy, in her comment titled “survival of the fittest” — “If these local mom-and-pop operations can’t hack it in the business world, they NEED to go out of business!” she wrote.
Her post ends thus: “Good riddance!”
While CindyS came to bury Fleeger’s, others came to praise it. Case in point was a posting from “gjones,” self-described as an employee for the last five years. Owner Laura Fleeger-Koenig, he said, was a master motivator and sympathetic manager.
“Customer satisfaction was priority No. 1, no question. It was ingrained in her by her father and uncle who started the business.”
The store bought locally and even promoted other businesses for free, in its store newsletter, gjones said.
A long list of others praised the service, the people, the help and the memories. “Viracocha,” still has the cactus plant bought at Fleeger’s store in 1977.
Then again, the lengthy list of comments included a few grudges. One was from a former customer, still upset after all these years that the store didn’t accept his out-of-state check.
And there’s a former employee chiming in that he didn’t get a fair shake from the owners.
In their totality, the variety of viewpoints on the demise of an independent hardware store is more valuable from a business perspective than the typical case study found in the Harvard Business Review. (Read it all here.)
But more than that, the postings read like a novel. And an important theme shaping all of the action is the impact of the large national home centers.
As the final chapter of Fleeger’s comes to a close, the biggest story in home channel retailing continues to play out. The story is simple: It’s the intense competition and uneasy coexistence between the national home centers and the independent hardware stores.
There are many independent retailers under many banners that can claim exceptional growth — even during our downturn in housing, and even in the face of national competition.
On the following pages, Home Channel News editors offer examples of some high-performing Ace stores that are winning the battles in their markets.
Let us state our position clearly. Home Channel News encourages, supports and lends its voice to the spirit of retailing diversity. The more outlets, the more options, the more companies, the better for us all.
We pause to remember Fleeger’s PRO Hardware’s contributions, and the contributions of stores like it that have passed into memory.
And we move on.