Key Products Protection: Using research to deliver shareholder value

2. Key Products Protection: Using research to deliver shareholder value • Panel: • Kevin Ach, Office Depot • Tim Flowers, Best Buy • Read Hayes, LPRC • Mick Pinneke, Home Depot • Dennis Wamsley, Publix

3. LPRC- founded and driven by retailers • Provide fact-based solutions: • Product protection • Employee deviance reduction • Customer experience and sales enhancement • Supply chain operations improvement • Safety enhancement Real Science. Real Results.

4. StoreLabWhat Works, What Next Real Science. Real Results.

5. StoreLabWhat Works, What Next • LP/AP research and development • Sell more, lose less • Customer shopping experience • Company process, employee efficiency • Offender deterrence, hindrance Real Science. Real Results.

6. StoreLabWhat Works, What Next • LP/AP research and development • Measurements of Success: • Cost effective- ROI • Positive shopper experience • Long-term execution best practices Real Science. Real Results.

7. Trading Area Demographics Use Theory Tools Store Layout Protective Processes Product Performance Management Commitment Employee Execution Customer Intercepts Real Science. Real Results.

8. StoreLabWhat Works, What Next • LPRC research methods • Phase 1- R&D • In-store observation • Employee interviews • Customer intercepts  • Offender feedback • Preliminary performance data               • Phase 2- Field Evaluation • Units and dollars changes • Sales data • On-shelf availability data • Loss data • CCTV footage review • Employee and customer feedback • Cost to install and operate/ROI performance Real Science. Real Results.

9. Retailer Panel Perspective • Current challenges- • Ongoing crime and loss • Budgetary pressure to do more with less • Opportunities- • Use science to develop more effective and cost-efficient solutions • Generate better data to secure needed resources Real Science. Real Results.

10. StoreLabWhat Works, What Next • Current and Planned Projects by Panel • Best Buy • Office Depot • The Home Depot • Publix Super Markets Real Science. Real Results.

11. Case Study:Product Protection Test

12. Retailer Perspective • Why we are involved: • Inconclusive self-tests of protection products • Looking for intervention w/solid results • Not easily refuted • Statistically valid, scientifically researched • Essential team members: • Merchants • Retail operations • Stores • Loss Prevention

13. Create Teamwork • Teamwork in cross functional groups may not be easy • The grocery team may not know they really need help from Loss Prevention • You may have to sell them, and everyone else, on the value of the test – Become business partners • In the end we all want the same thing: • Sell more and lose less

14. Getting the Team in Sync • Getting the merchants on board • It is not all about how much they buy • It is about how much they sell • Purchase gross profit does not mean anything • Realized gross profit means everything • It is about the retail value at purchase and retail value at POS • It is important to share store loss information (ORC)

15. Keep Everyone Involved • Selecting fixtures, getting them installed takes coordination • Conduct kick-off meeting w/store managers • Set up weekly or biweekly calls with internal team • Establish roles and responsibilities • Assign someone to take charge • Ensure accurate and timely product counts • Get excited about results - then take action

16. Benefits of Test Participation • More participants, more data, better results • Share the same offenders • Work together to create universal solution • Ability to test several solutions at once • Brainstorm results of what we did, and what we did not do • Scientific results vs. swag results • Figures don’t lie, but can be interpreted differently

17. Benefits of Test Participation • Realize better economies by testing • Partner with different vendors • We both have skin in the game • Gain exposure to new vendors • Discover interventions that work in your unique environment • Get your numbers right • When you report to the CFO and compete for budget dollars, you must have the numbers right

18. Current Project Objectives Assess the protective effectiveness of Keepers, enhanced camera domes, and public view monitor interventions on blades and razors 11 razor and blade products in 60 test stores & 20 control stores in Atlanta, Jacksonville and Chicago areas retail stores Between June 16 and November 17, 2008

19. Current Project Objectives Efficacy- Loss reduction/Sales boost Cost-effectiveness- Positive ROI Customer experience Employee execution/ best methods Real Science. Real Results.

20. Project Background • Pre test period- series of two week segments: • Pre test- 6/16/08 to 9/7/08 • Post test- 10/7/08 to 11/17/08 • Provide total store item counts by SKU • Report any on the shelf out of stocks • Provide all ships and sales by SKU Real Science. Real Results.

21. Findings: Reduced Shrink • Shrink measured by units declined for the three interventions from the pretest to the test period. In contrast, shrink increased for the control stores across this period Real Science. Real Results.

22. Findings: Reduced Shrink Real Science. Real Results.

23. Findings: Sales Data Real Science. Real Results.

24. Findings: Sales Data Real Science. Real Results.

25. Findings: Financial Benefits Real Science. Real Results.

26. Findings: Financial Benefits Real Science. Real Results.

27. Findings: Financial Benefits Real Science. Real Results.

28. Findings: Customer Perspective • Awareness of Security Measures • Customer Reactions to the Interventions • Preferable to product being locked up • Improved feelings of safety • Common practice for retailers Real Science. Real Results.

29. Findings: Employee Perspective/Best Practices • Product Storage Areas • Training Content & Process • Customer Notification • Customer Reactions to the Interventions • Preferable to product being locked up • Improved feelings of safety • Common practice for retailers Real Science. Real Results.

30. Retailer Panel Insight • Good research support s company objectives • Develop focused AP/LP strategy • Secure needed resources • Boost sales while decreasing losses Real Science. Real Results.

31. Conclusion • As Asset Protection professionals, we have an obligation to present fact based research that supports our request for investment in solutions that allow us to ‘Sell More and Lose Less’, while satisfying the major groups of constituents: • Customers • Employees • Shareholders Real Science. Real Results.

32. Questions?

33. www.lpresearch.org