December 28, 2001, 12:00 AM

How the web’s role is expanding in the fight against shrink

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McKimens won’t reveal what payback Farm Fresh is earning on its investment in the Shrink Trax system, other than to say, “We’re pleased with the results. The company felt it was cost effective enough to put me into this position full time.” Miller says a retailer will pay $5,000 per store for Shrink Trax modules that monitor POS terminals, CCTV installations, direct-to-store deliveries, scales and devices in peripheral departments, such as delis or photo counters. Average ROI, he says, occurs in as few as 12 weeks.

To back up his ROI figure, Miller offers the example of another East Coast supermarket where a glitch in meat scales across the chain printed a price label of 10 cents after every certain number of packages. The product scanned at that price at checkout. The Shrink Trax system flagged the problem across the chain. “The savings on that alone in eight and a half weeks exceeded the price of the software,” he says.

Others as well have stories of immediate recoveries. Holmes, for instance, cites the case of a cashier who was running fraudulent refunds. Within three days of the installation of the FraudWatch system, Bata nabbed her and determined she had been responsible for $7,500 worth of false returns.

Another area that FraudWatch helped Bata identify was unauthorized markdowns. Such reductions in price accounted for 1.5% of sales chainwide. “Across 250 stores, that’s a very significant number,” Holmes says. “A major selling point to our financial people was that we would be able to decrease unauthorized markdowns. That was all I needed.”

Says Switzer of Staples Canada: “Within the first three months the frauds that came up were completely buried or were anonymous to us. Those alone exceeded the monthly fees. It was a pretty easy sell to the rest of the organization.”

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