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Securing Support for LP Initiatives in Difficult Economic Times

Conventional thought might be that tough economic times within the retail environment will very likely bring demands for reductions in Loss Prevention programs and initiatives from Senior Management. It is clear that these periods will certainly cause every business expense to undergo increased scrutiny—Loss Prevention related expenses included. While these times are to be expected in any business model which is dependent on the current economic comfort level of their customer base, they provide unique opportunities for Loss Prevention executives to show their leadership within the business.

Embrace Leadership

There are three basic aspects to this leadership example that LP executives, in particular, should embrace. These are:

  1. Are there aspects to the current store LP program where expense can and should be reduced? Are these reductions temporary or permanent?
  2. Are there new initiatives or equipment/technology rollouts that can reasonably be postponed until the company’s economic situation improves?
  3. Regarding those new initiatives that really should be implemented now, how can LP show an ROI that will demonstrate the importance of an immediate investment?

This article will focus on an analysis of these questions, and how Loss Prevention executives can provide both current and future savings and be seen as taking the appropriate measures prior to arbitrary cuts being dictated by others.

Are Current Expenditures Justified?

As indicated in the questions listed above, the initial examination that LP executives should undertake is to insure that the current level of spending for Store or Headquarter security and LP programs is necessary and justified. Within any organization, there are processes that are widely implemented at the beginning, but may not currently be necessary or necessary everywhere. An example of this category would include reports (both computer and manual) which are no longer used, or compliance/process reviews which are no longer important, but payroll is still being spent to conduct and report them.

Also, there are generally always processes which are initially established at a consistent level throughout, such as hours of coverage for security personnel, which may not be productive or needed at all locations equally. It is important to always challenge these expenses, and to insure that hours being worked are tailored to the specific location and the issues occurring there. The reality of the situation is that it is very likely that an open-minded review of these costs will identify significant opportunities for immediate payroll savings.

Can Expenditures Be Delayed?

Secondly, the same open mindedness used to analyze current payroll levels, must be employed to review all current capital expense requests. Look at requests, both approved and pending, and establish those where a delay in implementation can occur without a significant impact on current loss levels. For example, instead of an immediate rollout of a new technology companywide, can the implementation be completed now in the 20% or 30% of locations that will benefit most, provide a significant ROI now, as well as capital expense savings in the current period? Any adjustments that can logically be made to these programs will likely be embraced and appreciated. They may also stave off other less logical and more negative adjustments from occurring.

Prove Your Case

Lastly, due to the size of losses generally associated with Loss Prevention priorities such as inventory shrinkage and accident costs, it is many times somewhat easier to establish a meaningful ROI for LP requested expenditures. However, it is incumbent on the LP professional to always be prepared to prove their case. Where it is clearly necessary to implement actions without delay, it is important to make certain that you have the ongoing and continued support of key Executives within the areas most impacted. For example, if the solution is intended to reduce shrinkage or accident losses at store level, does Senior Management within the Store Operations Division still support the expenditure?

If that support has lessened, make your best case to the appropriate personnel that a delay will actually result in more expense, and that implementation will allow savings to these expense categories that will not be possible without the implementation of the improvements. Involve the CFO in these discussions and show ROI calculations, or industry studies, which are specific to your request and which confirm your conclusions.

Roll Up Your Sleaves and Sell!

While a difficult economy will always result in added pressures to reduce expenses, it does not have to have a negative impact of programs that are in the best interests of the company to continue. LP Executives just need to roll up their sleeves and sell the value of their initiatives. This is the exciting part of leadership.