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As with most companies running a retail operation, shrink accounts for a significant enough portion of revenues to justify a full department dedicated to reducing it. At adidas Group, this department is called Profit Protection.
With a diverse background that includes law enforcement, IT, data analytics and retail, the Profit Protection team is no stranger to the world of investigations. The team applies their law enforcement case management experience to the corporate world, which is of great benefit to adidas Group. This, coupled with the team’s extensive IT and retail inventory experience, allows adidas Group to apply case management principles practically.
The Profit Protection team supports a vast organization. adidas Group is an omni-channel business that sells their product through corporate owned stores, eCommerce platforms and authorized resellers. This requires an extensive team of regional Profit Protection managers responsible for covering specific geographic areas. These regional representatives apply a set of best practices defined by the global team, and perform store audits to ensure these best practices are applied.
‘Brick and mortar’ retailers are all too familiar with the negative impact that inventory loss due to employee theft and shoplifting can have on their profit. According to the Global Retail Theft Barometer, inventory shrink represents, on average, 1.42% of sales globally, with 77% of that number made up by shoplifting and employee theft.
For businesses selling through multiple channels, things get even more complex. With the proliferation of eCommerce sites, there is an emerging risk from counterfeit and grey market product. This emerging risk opens up a new world for applying principals of case management. It also calls for a proportionate potential expansion of Resolver’s original scope to include Brand Protection and Physical Security.
Before implementing Resolver software, the adidas Group Profit Protection team was relying on a complex incident tracking system that consisted of many disconnected tools. They decided to move forward with Resolver globally, after their U.S. counterpart had seen great success with the product for a number of years. adidas Group found the implementation process to be collaborative, supportive and informative, exceeding their business needs and expectations.
adidas Group currently tracks about 600 incidents a year in Resolver’s software, with this figure guaranteed to rise as the solution is rolled out across a larger user landscape within adidas Group. These incident reports support anything related to the function of Profit Protection, such as store investigations. Whether it’s in-store shoplifting, or an employee stealing sneaker designs, adidas Group uses Resolver to document the record of events and manage their investigative processes.
adidas Group’s goal is to extend the principals of case management, and the use of this tool, beyond how it is currently deployed. Proposed future integrations include other functions such as Human Resources, Physical Security and eCommerce. They currently combine shrink data—made available from their store data analysis tools—with incidents to initiate investigations in Resolver.
The adidas Group Profit Protection team suggests that companies come up with a clear understanding of what they intend to capture, and adopt a S.M.A.R.T.—Specific. Measurable. Accurate. Realistic. Timely. —approach to investigations. By coming to the table with a sense of what you want to report on before you get started, you will be able to ensure that you will capture what you need on the front end.
Implementing Resolver software has enabled the adidas Group Profit Protection team to increase transparency. As a result, they now have more timely reports for all of their markets, and they can provide senior management with a clear picture of the trends and the impact that specific incidents have on the organization.
To achieve intelligence led investigations, you need to build a database of useful information. That is adidas Group’s goal with Resolver–build up patterns of behavior, and use that information to help all of adidas Group’s stakeholders.
As retail and eCommerce begin to increasingly overlap, intelligence led investigations become all the more important. These days, there is a higher chance of a consumer buying a grey market adidas Group product online. For example, an employee can purchase adidas shoes with their employee discount and offer these shoes to the market at a premium. In situations like these, the Profit Protection team has been able to show that shrink risk is more of an internal risk than an external risk, which ultimately influences the organization’s investments.
While store-level shrink is significant, if adidas Group were to lose a shoe design that is going into manufacturing, it can cause significant damages both financially, and to the brand. This would be much more troublesome to adidas Group’s bottom line than an empty shoe box in the back of a stock room.
adidas Group plans to integrate Resolver software with other Profit Protection tools and functions, further supporting intelligence led investigations and protecting their profits.
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