Discounts and other incentives that are handled incorrectly at the POS can result in significant losses for retailers.
By Derek M. Rodner
Retailers are increasingly running promotions and loyalty discounts for their customers, ranging from basic buy-one, get-one (BOGO) free offers to more complex deals to help vendors launch new products. While these promotions are aimed at building loyalty and improving sales, they are also common causes of significant losses.
Sales circulars and loyalty discounts are constantly changing and some promotions, such as buy one item, get a different for free, can be read incorrectly, causing confusion amongst employees and customers. Promotions and incentives must be executed correctly from the very beginning, but unfortunately many are often mishandled or poorly executed.
Promotional issues are difficult to identify, so retailers are often either unaware of these issues or realize them too late. Further, poorly handled executions often span the entire chain. To prevent losses associated with poor promotion execution, retailers should consider implementing technology that can detect these activities immediately.
Here are some commonly mishandled promotions:
Several retailers have realized that many of their cashiers routinely scan manufacturer BOGO promotions incorrectly. For this promotion to work properly, the cashier must scan both items. However, many cashiers scan the first item and not the second. Since most retailers pay for a product upfront and then bill the vendor back for its promotion, if an item is not scanned then retailer loses money.
Cross promotions are commonly found in sales circulars and are often aimed at promoting new products. Unfortunately, cross-promotions are often poorly defined, making them unclear to both customers and cashiers. For instance, in an effort to cross-promote their brand, Lipton ran a promotion “Buy One Lipton Tea, Get One Gold Leaf Tea For Free.”
Many customers, confused by the one-inch ad in the sales circular, brought two of the same tea to the cashiers. In order for the promotion to properly work in the POS system, one Lipton and Gold Leaf tea must each be scanned. Thus, when the cashiers, who were also unclear of the promotion, scanned the same teas, the POS system would not register one tea as free. Cashiers, determined to keep the lines moving, either voided the second item or avoided scanning the second item.
Promotions Aimed at Increasing Basket Size
In an effort to increase basket size or sales of a particular item, retailers run promotions that require customers to purchase a minimum amount in order to receive the deal. For example, “chicken is $1.99 per pound when purchasing 3 pounds or more.” However, many cashiers offer them to customers whose purchases do not meet the minimum requirements.
To prevent poor execution of promotions, retailers need to invest in loss prevention technology that is able to immediately identify issues and provide them with the actionable intelligence to correct the problems from the start.
Small mistakes can lead to big losses very quickly, making it essential for retailers to employ loss prevention technology that delivers data and video in real-time. To prevent losses from poor promotion execution, retailers require solutions that ensure weekly circular offers are entered correctly into the POS system and that store employees are properly executing the promotions at the POS.
For instance, within just one hour of opening its stores and beginning a new promotion, a grocer was able to identify and correct a significant error, thanks to the immediate availability of its POS data. The grocer realized that customers were receiving $2 off of their purchases rather than $1, the result of the promotion not being properly entered in the POS system and it was corrected within a half hour of identifying the issue.
Many retailers are still employing loss prevention tools that provide only data, giving them just a one-dimensional view of activities occurring at the POS. Video enables retailers to dig deeper into data that reveals a potential margin-robbing activity, giving them more visibility and insight into patterns of losses such as incorrect scanning of promotional items. Further, video is also a powerful training tool for retailers.
Every retailer who runs promotional programs is likely to suffer losses from poor promotion execution. Retailers with visibility into these issues can improve their promotion execution strategy and adjust the way they communicate promotion offers by detailing how to correctly execute promotions.
Derek M. Rodner is vice president, product strategy for Agilence, Inc., a Camden, N.J.-based provider of point-of-sale video auditing solutions. For more information, visit www.agilenceinc.com.