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Shrink Reduction Success At Grocery Retail Chain

Agilence : 29 March, 2010  (Application Story)
Los Angeles grocery retailer reduces losses and implements policies and training programs in retail loss prevention as a result of installing Agilence's Hawkeye item-level synchronisation software connected to the company's point of sale system
Jons Marketplace is a 14-store grocery chain located throughout Los Angeles. As part of their companywide initiative to reduce shrink, Jons deployed Agilence's point-of-sale video auditing solution, Hawkeye, in May 2009. By the fourth quarter of 2009, Jons' shrink as a percentage of sales were at the company's all-time lowest. In addition to Jons' newly implemented policies and training programs, Agilence had a significant contribution to the grocer's shrink reduction.

Agilence's patented item-level synchronization software, Hawkeye, pulls data directly from the point-of-sale system and marries the data with video in real-time. The data for each individual item scan and key punch is perfectly linked to its associated video image. These capabilities enable Jons to instantly view the data and video of cashier activity for each item in a single screen, allowing them to quickly and accurately identify all POS losses - operational and systemic issues and fraud - that are directly affecting their profitability.

"In addition to being a highly effective loss prevention tool, we found Agilence to be an excellent training tool," said Manuel Sauceda, Director of IT at Jons. "Agilence identified several costly operational issues, such as inadvertent employee errors. We were then able to use the software's video to show cashiers the correct and incorrect way to handle such activities as scanning items and administering credit card transactions."

For example, Jons found many employees across the chain improperly scanning manufacturer buy-one-get-one (BOGO) promotions. This issue caused losses each time the scanning error occurred. By identifying this issue early on, Jons was able to re-train employees before the error caused considerable shrink.

Agilence has also helped Jons identify employee theft and fraud. Employee theft costs retailers billions of dollars annually. However, many existing loss prevention tools miss much of this theft because they focus only on trends and outliers. The efficiency of the Agilence solution enables retailers to analyze every irregularity within a transaction, helping them to identify such issues as sweethearting. Sweethearting occurs when a cashier gives the customer, typically a friend or relative of the cashier, an item for free. The cashier will make it appear as though he is moving the item over the scanner but will actually bypass the scanner to avoid ringing up the item.

"Agilence based Hawkeye on the philosophy that every irregularity within a transaction is a potential shrink activity," remarked Derek Rodner, VP of Product Strategy at Agilence. "By developing a patented technology that synchronizes every scan and button push to the corresponding video, Agilence provided analysts with a solution that would enable them to review the large volume of suspect transactions. This enabled Jons to identify shrink activities that previously went undetected, including operational issues and sweethearting."

Another capability that Jons has found useful is the immediate availability of data. Agilence provides data and corresponding video for each item scanned within a transaction in near real time. Therefore, within minutes after a transaction is completed, Jons can analyze a cashier's actions to identify any operational issues or fraudulent behavior, allowing them to address issues immediately and before they cause substantial shrink.

For example, within an hour after opening their stores and beginning a new promotion, Jons analysts realized that an employee was giving each customer $2 off of their purchase rather than $1, the result of the promotion not being properly established in the POS system. Thirty minutes later, the grocer fixed a widespread issue that would have been very costly.

"In addition to helping us identify operational issues and fraud, Agilence has proved to be a valuable training tool that we can use to prevent future losses from ever occurring," stated Sauceda. "Agilence has been a big part of the success we have had in reducing point-of-sale losses."
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