The Art of the Steal

The Art of the Steal: Part 1

Minimize employee theft by letting your staff know that you’re paying attention to the details

C STORE RESCUE

By Roy Strasburger, CEO, StrasGlobal

WE HAVE A LOT to learn from George Clooney’s life of crime.

As you may remember, Mr. Clooney starred in the remake of “Ocean’s Eleven” and several sequels, as well as not appearing in “Ocean’s 8” (the one with Sandra Bullock). In these movies, Danny Ocean (Mr. Clooney) is a criminal mastermind who is always coming up with elaborate and complicated schemes in order to steal items from someone else.

Now, let’s put aside, for the moment, that Danny Ocean supposedly has a heart of gold and would only rob those who were deserving of it. What I want to concentrate on is that, in the movies, you always thought he had been caught, until he came up with a twist to get away with it. This is not dissimilar to what happens in our stores when we are dealing with in-store theft. I’ll explain more about that in a moment.

According to the 2020 NACS State of the Industry report, store “shrink” (which includes theft and breakage) averages about $12,700 per store per year. That is money that would go straight to the bottom line — if it stayed in the store. The reality is that no matter how good your customer service is, how effective your marketing programs are, or how pristine your store looks, there will be product that is either being consumed in the store or walking out of the store without being paid for.

The 2018 National Retail Security Survey published by the National Retail Federation stated that 33.2 percent of merchandise shrink is related to employee theft. (The other reasons are shoplifting, 35.7 percent; administrative/paperwork errors, 18.8 percent; vendor fraud, 5.8 percent; and unknown, 6.6 percent).

How do we handle this, and what actions can we take?

This is where I come back to Mr. Ocean and his schemes. In the movies, every time the authorities thought they had come up with a plan to catch him, he introduced a new element to keep them off-balance. Basically, the thieves are always one step ahead of the good guys. This is true in your store as well.

So, let’s address employee theft first (and let’s be clear — this is stealing). We have

tried a lot of different programs over the years to control employee theft. To clarify our definition, employee theft is anything that is removed from the store that’s not accounted for. That means it was either consumed and not paid for, or it was not written off as bad merchandise. Examples of this can range from someone putting a pack of cigarettes in their pocket and walking out, to eating food and not paying for it, to under-ringing a sale.

To be honest, we are never going to completely stop employee theft. All we can do is try to minimize it. The best way to do this is to let your store team know that you are keeping track of what is happening in the store. We try to do this in the following ways:

Store Paperwork

Keep all your store paperwork up-to-date and in order. If you have a good system of tracking sales, purchases, bank deposits, credit-card receipts and bad merchandise, you will send a message to your team that you’re paying attention to the details.

It will be up to each shift leader and the store manager to make sure everything is accounted for and that it all balances. If the staff knows you’re taking the numbers seriously, they will be less likely to create a situation that will show up in the paperwork.

Unfortunately, that also means they will work harder to cover up anything that is taking place in the store. Therefore, you need other tools to keep track of what’s happening with your store merchandise.

Regular Counts

We do a store inventory count every 30 days to see what our monthly inventory shrink is. We use an outside auditing company to perform this task to make sure we are getting an unbiased number. The store managers are held responsible for the inventory results and if there is a significant problem, we take corrective actions with the staff.

We also do cigarette counts either daily or by shift, depending upon our levels of sales or problems at the store. Keeping count of the inventory, as well as keeping excess tobacco inventory tightly locked up, helps us control our most valuable products.

The advantage of doing a count by shift is that we can start to pinpoint when problems are happening as soon as possible, and start taking corrective actions. It is unlikely that one shift lead will cover for another or, at least, be able to do it consistently over time.

Surveillance

We also use CCTV and let our employees, and customers, know they are being recorded. We believe that having video is a deterrent — people are less likely to steal if they think they are being watched. But it is not a complete solution. All you have to do is watch some of the shoplifting videos on YouTube to see what happens in the store — even when people know there are cameras in the store and the owners are posting the videos on the internet.

Frankly, we don’t use video to discover theft because we do not find it cost- or time-effective to watch hundreds of hours of video per store in the hopes of catching someone stealing something. Instead, we use video to investigate problems at the store once we become aware that we have a problem through our use of the other methods.

In all cases, we try to discover the problem as quickly as possible, investigate thoroughly to gather all the information we can, and then work to remedy the problem as quickly as possible either through counseling, repayment or termination. It’s important to not let employee theft go on any longer than necessary because all it is doing is costing you money.

Remember, just like Danny Ocean, your staff is always going to be one step ahead of you. Always keep your eyes open and look out for new and inventive ways people can steal from you. Listen to stories you hear from others in the industry to get insight about new tricks and strategies.

Watch out for any pattern of unusual things. For instance, pennies being kept on the register as counters (to keep track of how many sales weren’t rung up), regular “no sale” transactions (sales where the cash went into the pocket and not the POS), or staff refusing to work different shifts (because it will expose the fact that they have been under-reporting sales).

I don’t mean for this to sound overly paranoid, but a good dose of realism is always helpful. Other tricks to look out for are “sweetheart deals,” where friends and family get an unofficial discount, merchandise that is written off as damaged when it’s taken out of the store, or “inventory padding” when items aren’t checked in properly and are put on the shelf to replace product that was stolen.

Unfortunately, the list goes on and on. That is why it’s so important to find good people, train them thoroughly, pay a decent wage, and instill in them a sense of pride in their store and your company by treating them well and showing your appreciation.

The best defense against a dishonest employee is an honest one.

In my next column, I’ll talk about customer theft. Be sure to come back for the sequel! CSN

Roy Strasburger is CEO of StrasGlobal, a privately held retail consulting, operations and management provider serving the small-format retail industry nationwide. StrasGlobal operates retail locations for companies that don’t have the desire, expertise or infrastructure to operate them. Learn more at strasglobal.com. Editor’s note: The opinions expressed in this article are the author’s and do not necessarily reflect the views of Convenience Store News.

Tapping the HARD SELTZER category

Hard seltzer has been the

star of the beer category. Growth for the segment is up 29.9% YTD 2021 across all channels, according to IRI, and industry analysts expect Hard Seltzer to continue to lead category growth through 2021.

Hard seltzers continue to dominate growth in the overall beer segment with sales signi cantly outpacing all other category segments.

When C-stores take a more strategic approach to the category, they can boost performance and increase pro ts. While sales increases were greatest in C-stores compared to other channels in 2021, the category remains underdeveloped. IRI data shows that C-stores accounted for 8.8 % of category sales while grocery accounts for 13.0%.

“Growth in the channel is strong, but there is still ground to make up versus larger formats,” says Lauren Quaglia, National Channel Manager – C Store at the Boston Beer Company. “The biggest challenge is less space available compared to other channels. Additionally, C-stores have been slower to react in adding space and reacting to innovation.”

All Channels +29.9% Grocery +16.7% C Store +46.2%

Source: IRI Total MULO & Convenience YTD July 2021

THE SHARE C-STORES DESERVE

C-stores that are taking a more exible approach to the category are grabbing a greater share of hard seltzer sales. In an extremely dynamic category, keeping pace with growing trends is critical. Yet in an increasingly overproliferated category, making those tough choices about which products make the cut for an optimal assortment can be challenging.

Those chains focused on thoughtful brand allocation, year-round category review and exibility in adjusting assortment/space are seeing those e orts pay o in added pro t.

While there is some seasonality to the category, hard seltzer has proven resilient well beyond the summer months. “C-stores need to be able to adjust assortment/space throughout the year and not just during the once a year reset process,” says Todd Bollig, Senior Director, Category Management & Shopper Insights at the Boston Beer Company.

“Retailers should dedicate 15-20% of their cold space to the hard seltzer segment and ensure that those hard seltzer packages that make up 80% of the seltzer sales have enough holding power, then allocate remaining seltzer space to the innovation that provides the

ALL CHANNELS GROCERY C STORE

$'s (Millions) % Chg $'s (Millions) % Chg $'s (Millions) % Chg Hard Seltzer $2,386 29.9% $915 16.7% $1,081 46.2% White Claw $1,003 2.3% $334 -14.8% $531 21.4% Truly $661 56.2% $271 33.9% $268 97.4% Bud Light $199 20.7% $68 13.7% $94 26.9% Corona $79 16.7% $34 7.4% $29 23.5% Michelob Ultra $76 ++++ $31 ++++ $27 ++++ Vizzy $66 ++++ $30 ++++ $23 ++++

FIVE STEPS TO ELEVATE HARD SELTZER GROWTH

1. Ensure proper space allocation incorporating growth rates 2. Build assortment on lead brands rst 3. Monitor SKU performance to identify slow movers 4. Keep pace with innovation – swap with slow movers outside of standard reset process 5. Increase Hard Seltzer visibility to attract new shoppers through shelf position, blocking, signage, and display

biggest opportunity for incremental volume,” says Bollig. “Innovation has exploded in 2021.”

In addition to hard seltzers, cider seltzers, tea seltzers and wine seltzers have entered the marketplace. Accelerated innovation has made it even more di cult to manage the category. Partnering with a valuable supplier for data, insights and people resources can help C-stores better navigate selection. “Boston Beer is uniquely positioned to partner with retailers through our signi cant investments in data, insights, and people resources,” says Bollig. “We have invested signi cant resources in building out an innovation team that is focused on unmet consumer needs and identifying opportunities to expand occasions/ consumption.”

The brand is also invested in winning the preshop moments through tactics like geo-targeted mobile media and nearstore or in-store media initiatives. “That translates to increased basket purchases and higher rings at the register,” says Bollig.

THE CUSTOMERS C-STORES WANT

The hard seltzer consumer is a draw for C-stores. Hard seltzers are winning big with younger consumer who embrace a product they view as healthy (less calories and less lling than beer), that o ers the wide variety of choices they crave and is gender neutral. Hard seltzer’s portable, recyclable packaging also resonates with these consumers.

Retailers that are merchandising the way these consumers shop become a destination for

IRI $ % CHG - C STORE - YTD 7.4.21

Hard Seltzer 46.2%

Total Beer 3.5% Domestic Super Premium 5.8% Imports 8.7%

-4.4% Domestic Premium -7.3%

Domestic Sub Premium Craft 4.7% FMB 8.6%

Source: IRI Total MULO & Convenience YTD July 2021

Hard Seltzers are winning big with younger consumers who embrace a product they view as healthy (less calories and less lling than beer), o ers a wide variety of choices they crave and is gender neutral.

Truly is a category-driver with proven traction among Gen Z/Millennials, shoppers in higher income brackets, female and multi-cultural demographics—consumers that are highly desirable for the C-store channel.

TRULY ATTRACTS A DESIRABLE CONSUMER

40% of Truly shoppers are Gen Z/Millennial, 58% with income over $100k+. Truly is growing among multicultural buyers, particularly Hispanic/ Latino (+81.3%) shoppers Truly has appeal for female shoppers— a target market for C-stores these desirable consumers. “Younger generations of shoppers think di erently in their approach to navigating the beer category,” says (source). They think ‘beverage type’ rst, while older generations think ‘brand’ rst.” In fact, data from Consumer Decision Tree research shows that only 58% of Gen Z shoppers consider traditional beer in their consideration set compared to 80% for boomers.

Truly is a category-driver with proven traction among Gen Z/Millennial consumers, shoppers in higher income brackets, female and multi-cultural consumers—consumers that are highly desirable for the C-store channel. “Speci cally in C-store, Truly household penetration is up +86.2% and gaining ground in 2021,”Quaglia. The brand has the highest repeat rate (42.6%) and buy rate ($49.77) in hard seltzer across all channels.1

INNOVATION KEEPS CATEGORY SPARKLING

Innovation drives category growth and dynamic constant change is a given in this category. In a choice-driven category, Boston Beer helps partners react quickly to new trends and keep shelves stocked with the strongest performers and hottest new entries.

“Within hard seltzer, the last three launches from Truly (Lemonade, Tea and Punch) have o ered new avor pro les, bringing in di erent consumers, and delivering more incremental volume to the category,” says Quaglia. “The brand is focused on unmet consumer needs and identifying opportunities to expand occasions/consumption.”

Look for more innovation from Truly in 2022.

FOR VOLUME GROWTH IN 2021

ENSURE YOUR ASSORTMENT INCLUDES TRULY'S UNMATCHED PORTFOLIO OF FLAVORS