Wrong Incentives

By Evan Schuman  |  Posted 2005-01-05 Print this article Print

There are technological mechanisms that might help a little, such as using more sophisticated software that will look for product shrink patterns and then guide cameras to watch those areas more closely. For that matter, retailers could steal a tip from the casinos and use those cameras to more closely watch the checkout lanes. But ultimately, the technology can help only so much if you still have cashiers not paying attention. But Yankees Goodman suggests that they are paying attention. They are paying attention to what management tells them, and not necessarily to what the customer is doing.
If retailers are going to get more serious about the $40 billion annual retail theft problem, it has to start with different kinds of incentive plans for cashiers that must focus on observation and not merely acceleration.
"Cashiers have to be compensated for doing that properly. Youre adding another step in that process that is going to slow them down," Goodman said. "Ive seen this happen in the warehouse setting. When people are compensated and rewarded for speed, all kinds of things that management doesnt want to happen will happen," Goodman said. "If you are emphasizing inventory accuracy, but at the same time you are measuring the speed of a picker, hes going to get the product that is in the closest place every time because its faster and hes being rewarded for speed. People dont go beyond that." Its actually worse than that. The lack of a follow-through—where cashiers are rewarded or penalized for catching or missing thefts—is crucial. Anti-theft efforts "just get blacked out when its being measured on speed. Retail management needs to understand that what they are incentivizing could be counter to their anti-counterfeiting stance," Goodman said. To read more about the creative ways retailers are trying to combat fraud, click here. The retail industry is obsessed—and rightly so—with checkout speed, and its nowhere more an issue than in high-volume retail locations such as Wal-Mart and major grocery chains. "A lot of these POS systems are designed to handle 80,000 transactions a day per store. Theyre designed to crank it out," Chase-Pitkins Dorsey said. "There is a level of responsibility that every cashier has to assume. Clearly, these people [who scanned the bar-code fraud suspects items] dont even give the time of day when it comes to work. They just push products through a scanner and collect a paycheck." That may be true, but part of collecting that paycheck is an agreement to listen to and comply with the priorities set by management. In this instance, retail managers might want to rethink their fraud plans and tweak their incentive triage. Otherwise, some might say that their cashier anti-theft technique is little more than a fraud itself. Retail Center Editor Evan Schuman has tracked high-tech issues since 1987, has been opinionated long before that and doesnt plan to stop any time soon. He can be reached at Evan_Schuman@ziffdavis.com. To read earlier retail technology opinion columns from Evan Schuman, please click here. Check out eWEEK.coms for the latest news, views and analysis on technologys impact on retail.

Evan Schuman is the editor of CIOInsight.com's Retail industry center. He has covered retail technology issues since 1988 for Ziff-Davis, CMP Media, IDG, Penton, Lebhar-Friedman, VNU, BusinessWeek, Business 2.0 and United Press International, among others. He can be reached by e-mail at Evan.Schuman@ziffdavisenterprise.com.

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