Reducing Labor Expense, an Ally to Loss Prevention Initiatives

Submitted by Adam Smith, CFE, CFI
Senior Regional Asset Protection Manager
Winn Dixie Stores

At the conference room table, everyone has an agenda. Resources are limited, and everyone needs some portion of them to affect change in their area of the business. In most cases, initiatives with the most significant financial impact are awarded these resources. Most organizations are focused on growing sales and cutting expenses to an extent far greater than the impact of inventory shrinkage.

However, if we take a closer look, we may be ignoring an ally. Proactive Loss Prevention departments routinely examine and refine controls and processes. These activities may have a direct impact on the labor required to perform them. In many cases, there may be labor savings. If so, it may make sense to include them in a formal presentation.

Retail salaries can exceed 10% of sales and account for one of the leading expenses for a retail store. When salaries become part of the conversation, they can add a significant financial impact to an inventory shrinkage initiative, which is a much smaller expense at 1.5% of sales (NRF average). The same could apply to retail utilities or any other positive impact to the business. On the other hand, there may be negative impacts which would reduce savings from an initiative. Nevertheless, Loss Prevention initiatives that positively impact multiple areas of the business may warrant more attention from the organization.