Raley's Cuts Shrink With POS Video Auditing Solution

Thanks in large part to its adoption of Agilence’s patented item-level synchronization software Hawkeye, Raley’s was able to implement a successful comprehensive asset protection program focused on centralized and objective auditing as well as operational improvements.

Hawkeye is a point-of-sale (POS) video auditing solution enabling retailers to efficiently identify losses. The software pulls data directly from the POS systems and combines it with video in real time. Each individual item scan and key punch within a transaction is thus linked to its associated video image.

Agilence enabled Raley’s to instantly view both the data and cashier activity for each suspect line-item in a single screen, permitting analysts to monitor up to 50 times more transactions daily than any other tool on the market, according to the Camden, N.J.-based vendor.

“We did not realize the extent of losses occurring that were not related to fraud and that were causing substantial shrink,” noted Michael Teel, CEO of West Sacramento, Calif.-based Raley’s, which operates 134 stores. “Agilence helped us detect several operational issues that were occurring frequently in many stores. By immediately identifying these costly activities, Agilence has already yielded a significant ROI.”

In one instance, the grocer discovered that a packaging issue was leading to many scanning errors at several stores. Bottled water cases have bar codes on each individual bottle in addition to the bottom of the case. Since the case’s clear plastic overwrap is transparent, the scanner often read the UPC on the individual bottle rather than the correct UPC on the bottom of the case. As a result, customers bought water bottle cases for 69 cents, a $4.80 loss that could have cost the chain more than $80,000 annually.

Raley’s also pinpointed the causes of high shrink rates at its self-checkouts. In many self-checkout transactions, the podium clerk wasn’t present, causing shoppers in need of assistance either to abandon their orders or even leave with unpurchased items.

“Operational shrink is much more costly than fraud and theft,” noted Agilence VP of marketing and product strategy Derek Rodner. “Whereas fraud is isolated to a single person or a group of people, operational shrink includes mistakes that many cashiers are repeatedly making chainwide. Raley’s identified these widespread errors with unprecedented speed, allowing them to address the issues early and before they caused substantial shrink.”

Along with operational and systemic issues, Agilence helped the grocer uncover employee fraud and theft, including two cases of longtime associates who had been pocketing cash for years. The experienced employees knew how much they could steal before traditional exception reporting tools found them out. Agilence doesn’t have to rely on trends and exceptions to sniff out shrink, however, so the workers were no longer able to evade detection.

“By investing in the right technology and bringing in a team of professional managers who focus on results and precise execution, we created and implemented a comprehensive asset program that has improved our bottom line while in a down economy,” noted Teel. “With Agilence’s item-level synchronization capabilities, we have been able to quickly and accurately detect losses -- hidden operational shrink and theft -- that significantly impact our profitability.”