July 6, 2017

When to worry about your good stores

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You probably have a handle on which locations in your chain are your bad stores. But what about outliers in the other direction? Did you ever consider that some of your stores could be too good? If you have a store that always turns in perfect reports and never misses anything, your first instinct is probably to be thrilled. You might even consider using them as an example for the rest of your stores.

 

However, it’s important to remember that in retail – as in life – there’s no such thing as perfection. If you’re faced with a good store that’s practically flawless, you need to look a little closer. There may be one of three things going on:

 

  • Fraud. Stores can use paperwork to try to hide shrink. At one store I audited, after digging into too-perfect paperwork, it turned out that it was all forged. For example, one associate had high refunds, and there was a bogus reason listed on the follow-up paperwork. We realized that the associate was performing fraudulent refunds and taking the money, and management wasn’t doing anything about it – they just filled out the paperwork to make it look as if they had.

 

  • Box-checking. Some stores aren’t doing anything nefarious, but they’re also not spending any time on reporting. Instead, they’re just checking the appropriate boxes to send along – giving you the paperwork they think you want to see. So many times, stores told me, “This is just what we were told to do.” Don’t accept that answer. If you do, you miss the opportunity to make improvements on easily-fixable issues.

 

  • Pursuit of unreasonable excellence. Of course you have high standards for your stores. But if employees are spending $50 worth of their time on the clock looking for a missing $5 bill so they can turn in a perfect report, they’re ultimately wasting your money. Develop a threshold under which a shortage doesn’t need to be reported or investigated at the store level. Most retailers find $20 is a comfortable limit.

 

So how can you figure out what’s really going on at a store that seems too good to be true? First, don’t accept completed checklists as proof that everything is great. Instead: 

  • Ask probing questions.
  • Determine if the store is completing the checklist as a “to do” or if they really understand why the items were put on a checklist in the first place.
  • Reiterate expectations of how much time to spend investigating discrepancies.
  • Compare store paperwork with reporting to check for suspicious activity.
  • Conduct regular training on monitoring and reporting systems.

 

You’ll always have top-performing stores, but it’s wise to keep an eye out for stores that never miss a beat when it comes to reporting. Your good stores need careful examination just as much as your bad stores. Either you’ll uncover best practices you can use to coach other stores to success, or you’ll discover new opportunities to improve training and compliance at those locations.

 

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Image: iStock