The 2017 GCC Loss Prevention Survey conducted by Professor Adrian Beck was the first ever survey that sought to understand factors contributing to Retail Loss in the region.
One of the most significant findings of the survey was that respondents estimated that over a third of retail loss is attributed to process and admin errors. This should not be surprising given the transient nature and diversity of the workforce which is predominantly comprised of expatriates from surrounding Arabic States, Asia, North Africa and Eastern Europe where English is not the first language.
It is interesting to note how starkly the GCC experience stands in contrast to the Global Outlook where malicious factors such as external & internal theft are the biggest contributing causes of loss (as per the 2015 GRTB). It is these malicious factors that are often outside of the organisations direct span of control.
Fortunately, non-malicious factors such as process & admin failure are within the direct control of the organisation and training and awareness has proven to be the most effective means of mitigating this.
A study conducted by the ECR Europe Shrinkage & On-Shelf Availability Group in 2014, for which Professor Adrian Beck acted as an Academic Advisor, found that training and employee engagement have a far greater impact in mitigating loss than merely investing in Loss Prevention Systems. Although proper systems and technologies play an important role in Loss Prevention, it is imperative that the people in the organisation are strategically aligned to follow procedures and deliver effective Loss Prevention interventions.
This same study also found that staff are more motivated when objectives are clearly communicated and teamwork is promoted, which ultimately aligns the employees across the supply chain and ensures an integrated approach to mitigating loss.
In another study conducted by Professor Adrian Beck and the ECR Europe Shrinkage Group, it was found that retail profits could be 29% higher if companies reduced losses due to shrinkage by 50%. Consequently, reducing process and admin errors would present GCC Retailers an opportunity to improve profit margins that have come under extreme pressure by the current climate.
The Loss Prevention Pyramid; a model that has been developed by Professor Adrian Beck in conjunction with the ECR, details 11 key components of a successful strategy to mitigate retail loss. The foundation of the model relies on vertical strategic alignment. Management commitment to Loss Prevention interventions must be coupled with a consistent message throughout the business if it is to have a positive impact on operations.
This alignment is dependent on the creation of a Loss Prevention culture within the business, where the mitigation of loss is embedded in operational activities. For any alignment to be realised, each employee must have a basic knowledge of the various sources of loss and the appropriate action when encountering them within the context of their role. The importance of training and awareness cannot be overstated enough. The diversity of the workforce in the GCC and the current operating conditions further strengthens the need for routine and quality training regarding Loss Prevention – or more correctly stated, Profit Improvement.
Given that this first survey of retail loss in the GCC has also revealed that the extent of loss in the region is probably amongst the highest in the world (with an average of 1.7% of revenue at retail prices), there is a very clear and compelling case to invest in training and awareness programmes that are designed to create awareness of those factors contributing to retail loss and which promote process compliance.
It is therefore encouraging to note that most respondents indicated that loss prevention budgets would be directed towards increasing the frequency and quality of employee training followed by a focus on Audit & Process Management.
It is an unfortunate fact that in depressed economic trading conditions (such as we are currently experiencing across the GCC), security and training are often amongst the first casualties of cost reduction exercises. It is therefore critical that in a time where most GCC Retailers are cutting cost, that they recognise they can positively influence profit margins by focusing on reducing process failure and administrative errors. Surely this should be the preferred option before eliminating the cost of training or reducing headcount!
At Jard, we understand the importance of training and awareness programmes and the role that this plays in creating a culture of profit protection and have developed an e-learning & awareness programme that is designed for the diverse composition of the GCC workforce. This will be released to the market in due course.
Please contact us at firstname.lastname@example.org should you wish to receive a copy of the GCC Retail Loss Prevention Report or should you wish to discuss how you might access our e-learning content.