by Katie B. Davis/staff writer
Agilence, a leader in point-of-sale (POS) video auditing solutions, recently did a 30-store pilot with a grocer that the company’s VP of product strategy Derek Rodner referred to as “one of the top three grocers in the country.”
Ninety days in, the chain stopped the pilot.
“We had six months to prove a 10 percent reduction in shrink,” Rodner told The Shelby Report. “At day 90, they called us in and said they were stopping the pilot and going straight to rollout. We’d found $3 million (in losses) in just 30 stores in 90 days.”
Agilence developed Hawkeye, a POS video auditing solution that enables retailers to quickly identify losses caused by operational errors, promotion execution, systemic errors and employee fraud. Hawkeye is designed to identify storewide losses at the point of sale before they can erode profit margins and typically can provide retailers with a 6-to-1 return on investment (ROI) in less than 12 months.
“I’m loathe to go higher because people barely believe 6:1,” Rodner said. “But the reality is it’s far greater once we’re installed. Raley’s had an $18 million reduction in shrink in their first full fiscal year using our product, and that’s while their sales actually were flat.”
And that isn’t the lone example.
Over the past year, Agilence has seen a 160 percent increase in the number of retail locations using its Hawkeye solution and a 50 percent overall growth in its customer base.
The end of 2010 brought the beginning of an agreement with Rite Aid Corp., one of the nation’s leading drugstore chains. Agilence is providing its Hawkeye POS video auditing software and professional auditing services at nearly 600 Rite Aid locations.
According to the Agilence website, Draeger’s Markets, a San Francisco-based grocer, saw an ROI of more than 20 times its initial investment in less than one year by gaining insight into previously unknown POS losses.
Chief Super Market Inc., a 12-store Ohio-based grocer, realized an immediate ROI by proactively eliminating shrink activities and recognizing that shrink encompasses more than just fraud.
“A lot of loss prevention technologies and organizations have been focused on catching the bad guy,” Rodner told The Shelby Report. “The old-school loss prevention folks want body bags, they want to tackle somebody going out of the store, they want to catch a cashier who’s been stealing for a long time. Our goal is early identification. This is not my quote, I forget who it came from, but the person who ran the loss prevention department said, ‘Any day you get a large admission of guilt is a bad day for loss prevention, because it means they’ve been doing it for a long time.’
“What we’re finding is that we’re helping to change the mindset for loss prevention. Sure, we’re going to catch the bad guys, we’re going to catch the crooked cashier or the person coming in with a stolen credit card,” he added. “At the end of the day, however, how much is a cashier going to steal from you? Even if they’re really good and it’s high-ticket items they’re going to get $10,000. That’s a lot of money, but we had issues with cases of water ringing up for the single-bottle price at Raley’s and it was about $180,000 loss to them. We’re helping to change the mindset. It’s the operational, systemic and the promotional issues that are far greater.”
Agilence, which was founded in 2006 and is headquartered in Camden, N.J., uses a patented technology that synchronizes data with video—data being primarily the point-of-sale data with the video in real time. The company then provides a query tool that enables a customer to, as Rodner states, “very quickly and efficiently look at transactions at the point-of-sale to identify losses.”
“We have a team of auditors capable of doing the auditing for (the customer),” Rodner said. “I’d say at this point about 50 percent of our customers hire us to do the auditing for them. We just deliver to them, basically, the actionable results.
“The benefit of that is that our team of analysts has combined probably 200 years of experience in retail operations and loss prevention; they really know what to look for. Another benefit is because we’re looking at a whole bunch of different retailers, we can learn from one retailer and apply it to a different retailer, so they get the benefit of learning from others without even knowing it.”
In early June 2010, Agilence introduced Hawkeye 4.0, the latest version of their point-of-sale (POS) video auditing software. In January 2011, Agilence introduced AdCheck, a service within Hawkeye that enables retailers to protect their promotion and loyalty programs by reducing losses associated with promotions and coupons. The service ensures that weekly circular offers are entered correctly into the POS system and that store employees are properly executing the promotions at the point-of-sale.
“Let’s assume the ad breaks on Monday. We start auditing it at 8 a.m. local time to the customer and start looking at those transactions to determine whether the cashier is running them correctly, the cashier understands the promotion, the customer understands the promotion and whether or not the promotion’s been entered in the point of sale correctly,” Rodner said to The Shelby Report.
Agilence has the ability to look at all stores at once and returns the analytical details customarily within four hours of the start of auditing. The results have been both tangible and lucrative for retailers.
“A promotion was run by a snack food provider and they told the retailer that it was a variable coupon—they’re alternate instructions that come with coupons, a variable coupon means that the cashier puts in the price of the coupon. It was a buy two, get one free coupon,” Rodner said. “The reality was that the coupon was actually a fixed-value coupon for $1.99. There was an inconsistency there and we were able to go in very quickly and see that the cashiers were putting in the wrong amount, so we were able to help them fix that right away and prevent a significant loss to the retailer.
“There was a presentation at FMI from one of our customers, and he said that every single week we find a problem with their circular. Even though we’ve been doing it for a year. Especially in grocery, it’s such a complex business. You’ve got 12,000 SKUs, you’ve got promotions running constantly, there’s just so much going on that you’re going to miss something and our job is to be there to find it.”