Claim Avoidance- The ROI That Keeps On Giving

The Challenge

In the world of retail, it often takes executives many attempts, over several years, to secure the necessary capital to implement a new solution. Every executive has been faced with the challenge of fighting for capital to purchase and implement what they believe to be a safety-enhancing or profit-enhancing solution that will benefit their respective companies. Yet, obtaining capital approval can be a daunting experience. But if the capital sought will benefit the company, why is it so difficult to obtain the coveted capital approval?

Anyone wishing to observe the capital approval process in a retail environment need not look too far. Watching executives fighting for capital is like witnessing a school of sharks fighting for a small piece of chum. That’s because the demand for capital is always high and the supply of capital is always low. And depending on the condition of the national economy, the difficulty is often exacerbated.

 

It’s the Stronger Wheel That Gets the Grease

Nearly everyone has heard the classic idiom, “The squeaky wheel gets the grease.” This classic American proverb is meant to convey that persistence will always put you in the “win” column. If this is true in most industries, then the retail industry seems to be an anomaly. One would be hard pressed to find a retail executive who would testify that they obtained capital approval over all other retail executives who were vying for that same capital, simply by being a “squeaky wheel.”

The truth is, obtaining capital in the retail environment takes strategy and preparation. Knowing when to ask is only a small challenge in the process. Knowing how to ask is the key and even that can be a certified art. Developing a comprehensive Return on Investment (ROI) to present to the holders of the purse strings is arguably the most difficult part of any loss prevention executive’s job. As executives, they are challenged to move the proverbial needle on shrink, robberies, loss of sales, employee and customer accidents, and all sorts of other damage-causing risks. Trying to execute a strategy that helps loss prevention executives succeed at meeting these objectives without providing them with the necessary capital is like throwing them into a lion’s den with both hands tied behind their back.

So how does one go about ensuring they have the “stronger wheel” before fighting the other sharks for capital? By following the money.

 

Following the Money

Understanding where and how the company’s money is spent is the first piece of the ROI puzzle, yet many executives have difficulty understanding this part of the equation. They often understand how the money is spent that falls under their department’s specific budget, but a much deeper understanding is needed. By understanding where the company’s money is spent in totality, the capital-seeking executive can find synergies between their needs and the needs of other departments. By successfully identifying synergies, the executive is not only better equipped to tie-in more returns into their ROI calculation, but enjoy the benefits of having other executives help champion their capital request. In other words, rather than a single executive asking for capital, several other executives will be more than willing to speak up to say the capital requested is a good idea because it helps them achieve their financial goals as well.

For example, assume a retailer has finally had enough of the losses they incur from Pushout Thefts. In response, the loss prevention executive decides to seek capital to implement Gatekeeper Systems’ Purchek™ theft prevention system, which prevents shoplifters from rolling shopping carts of unpaid merchandise out the door without first going through an active checkout.  Initially, the loss prevention executive will certainly include the obvious benefits of the Purchek™ solution, such as reduced shrink, and even increased sales due to having more merchandise on the shelf. However, by following the company’s money in totality, the executive quickly figures out that the Purchek™ system also financially benefits other departments.

One obvious beneficiary of the benefits provided by Gatekeeper’s Purchek™ theft prevention system is the Risk & Safety department. This is because many expensive claims have been derived from employees attempting to apprehend shoplifters as they pushout shopping carts full of unpaid merchandise. Since the Purchek™ system immobilizes shopping carts of merchandise if they fail to pass through a working register, employees no longer have to confront potentially violent suspects. Even if the company hasn’t had any claims caused by apprehending shoplifters, there is plenty of data to suggest they likely will at some point. In fact, PushoutTheft.com reports that 8% of shoplifter apprehensions result in violence, and statistics indicate that number is climbing.

 

Claim Avoidance

Preventing an injury or death of an employee or innocent bystander by avoiding shoplifter confrontation is an invaluable benefit to any organization. It is not just the cost of paying such claims, but the pain and anguish suffered by victims and their families can sometimes be unbearable. Damage to a company’s brand and reputation are also things that need to be considered after such violence erupts.

There are other types of claims the Purchek™ system helps to alleviate. For example, within the last several years some retailers have been accused of profiling. Profiling is a term used to describe how retail employees decide which customers to observe to ensure they are not shoplifting. The Purchek™ system is behavior-based, thus any associated events, alarms, stops, and the store-level response is based on behavior.

By tying in claim avoidance, the loss prevention executive did more than just incorporate one-time savings. Claim avoidance is perpetual. Keeping employees and customers from injury saves the company year after year in direct costs, but more importantly, keeps employees healthy and productive while keeping customers as loyal shoppers.

Not only will claim avoidance calculations provide a more robust and comprehensive ROI, but the loss prevention executive will undoubtedly gain support from leadership in the Risk & Safety arena, which will be pleasing to any chief executive concerned about the welfare of employees and customers.

 

Bonus Benefits

Continuing along the same line of identifying synergies with other leaders, consider facilities management and fixed assets expenses. It is not uncommon for retailers to lose shopping carts to theft. Unruly elements and neighborhood customers are commonly known for removing shopping carts from retailers’ properties without ever intending to return them. Is this really a big problem?

Consider this: Supermarkets typically average a net profit of only about 2%. This means that at a cost of $125 per shopping cart, it takes $6,250 in sales to generate enough profit to replace one cart. If we extrapolate this over a 250-store chain, then this particular retailer would be spending the profits generated from over $18 million in sales just to replace one shopping cart per store, per month. Those are huge numbers that would immediately get the attention of any retail CEO, much less the executive over the purchasing department.

Gatekeeper’s CartControl™ solution can be an easy addition to the Purchek™ system or can be purchased separately. Either way, CartControl™ forces shopping carts to stop rolling as soon as they reach the perimeter of the retailer’s parking lot, rendering them temporarily immobile until an employee retrieves them.

Again, adding this additional benefit to the ROI helps provide a well-balanced, extremely lucrative proposition to the executive team that has several executives supporting its likely approval.

 

About Gatekeeper

Gatekeeper Systems’ expanded product suite of intelligent cart solutions offers solutions for EVERY retailer’s needs to minimize merchandise loss and reduce asset and labor expenditures.

Gatekeeper’s loss prevention, retail analytics, and cart containment solutions utilize patented locking wheel technology to put an end to cart-based shoplifting, shopping cart loss, and uninformed decision-making. Cart management solutions increase safety and reduce labor costs by maximizing productivity while simultaneously resulting in a positive store image.

Intelligent pushout theft prevention solutions stop thieves and their cart full of unpaid merchandise from leaving the store. Customizable wheel technology allows retailers to defend their entire store or just a high loss department based on the store’s unique layout.

NEW Retail Analytics solutions provide increased visibility for informed decision making. Increase efficiency, optimize fleet size, and perfect the entire customer shopping experience with the store and enterprise-level analytics.

Find out why 19 of the top 20 retailers who have shopping carts rely on Gatekeeper solutions.

To learn more or to schedule a free consultation, click here.

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