What is meant by ‘profit protection’? And is anyone really doing it?
Chair: Martin Gill
Paul Bessant – Founder of Retail Knowledge
Sarah Cork – Group Commercial Director at Lodge UK and International Service
Scott Taylor, CPP – Managing Director at Praesidium Risk and Resilience
Sarah Cork starts by thinking about the characteristics of Profit Protection, a term Sarah favours over for example, Loss Prevention. It is key that the issue is seen as a process, end to end security, there needs to be a clear set of objectives, there needs to be an expressed commitment to protecting profits (supporting the corporate sales pitch), and there needs to be a recognition that the ultimate aim always includes a safe and secure environment in which to operate, and protecting assets that include premises, data and people are always a focal point. The sector has been focussed on understanding risks (e.g. weaknesses in the customer chain, BREXIT) but there is a need for a greater emphasis on the Return on Investment. A focus on business continuity matters too but the process always starts with an effective strategy, albeit most don’t, as few as 5% was Sarah’s estimate. Crucially many do not fully understand what constitutes retail loss and shrinkage.
Paul Bessant laments that all too often profit protection is interpreted as sales prevention and that is its nemesis. The problem starts with the wrong people being in charge bringing dated skill sets. Ex law enforcement are mentioned here, it is not that there are not good ex cops and soldiers etc in commercial loss prevention it is more the culture that too often comes with that style, catching offenders rather than helping a retailer make a profit by preventing loss. Stopping sales is never a good strategy, understanding the customer experience is key and from this base minimising different risks can be proposed. In terms of risk Paul emphasises the dangers posed by staff theft and fraud, which he considerers to be a major threat and often the most significant one, but many times is underestimated or barely recognised at all. This point leads to another issue, the importance of both process and culture, the first to guide behaviour the second to engage people in a positive way. The problems are not new, they have persisted over time, and while many retailers fall short Paul estimates that a third are striving to be part of the elite. That said he reminds us that being excellent is not easy; offenders are improving too. In a comment about what is covered by Profit Protection Paul notes that tackling fraud is an important strand, and that on line loss is another risk albeit a different one but certainly commonly understood and increasingly so.
Scott Taylor adds a new dimension in his opening statement where he underlines the importance and gains that can be accrued from effectively managing suppliers – consulting and engaging them – which all too often is not done well. He points to other areas where focus is often lacking with an interesting discussion about process failures. There is never any substitute for the business commitment to the task, generating information and insights form across the organisation that can inform profit protection; it is everyone’s business. He argues it should not operate in a vacuum or a silo – thereby creating gaps – albeit it often does, a key reason why only 5% are elite and this needs addressing. He calls for profit protection to be in everyone’s job description, teamwork to represent the different interests, this will also enable a holistic look.
Protecting profits and being able to show that is done effectively are the Holy Grail of security. The sense some may have that in retailing, where they have the reference point of the shrinkage rate offers a good model. Such a view needs to be informed by the evidence from this panel, namely that only a few are elite, albeit many are striving, but there are many who do not recognise or understand the problem. The key then is to identify the elite.
5th August, 2021