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Optimizing Shrink Reduction Strategy: A Retail Case Study

The Company

A major discount retailer with more than 900 stores

The Challenge

Shrink represented a major cost of business - equal to 3% of revenues. New inventory systems, RFID tags, and front door cameras were some of the options being tested in multiple locations, but management was reading mixed results. Furthermore, each program carried a significant required investment to implement.

The Solution

The retailer used APT's Test & Learn for Sites™ solution to isolate the true incremental impact of each program. APT found that, on average, each program was successful in reducing shrink. Test & Learn™ then drilled down to site and customer level segmentations. For example, the software found that a specific customer segment's discomfort with security cameras outweighed the technology’s reduction of shoplifting. Using APT's targeted predictive model, management invested in an anti-shrinkage strategy tailored to each store.

The Results

The retailer’s sophisticated security investment reduced shrink by 25%, and improved profits by $20MM. With Test & Learn™, management continues to track security efficiency in each store.
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