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Retailers in the
Philippines fight back
In the Philippines, retailers are putting up a fight to curb profit loss caused by internal and external theft. Tina Arceo-Dumlao reports from Manila.
Losing precious sales to theft may be inevitable for manufacturers and retailers but, in the Philippines, businesses are increasingly fighting back with the help of systems and processes that work best for them.
As shoplifters and thieving staff are known to keep trying to beat the system, retailers need to be constantly on their toes and respond promptly, knowing that failure to do so amid escalating market competition will shave off profits and even lead to business closure.
Bench Body, one of the country’s leading retailers of undergarments, cosmetics, scents and accessories, is vulnerable to shoplifters, not least because its small items can be easily slipped into a thief’s pocket unnoticed. High traffic at its stores also serves to shield marauders from even the most eagle-eyed employees.
Bench Body’s general manager, Jude Ong, says the company invests in antitheft devices to lower the level of pilferage. Bulkier items are tagged to set off an alarm when passed through the store’s exit before payment, alerting its personnel and security guards.
Ong says that the mere presence of these anti-theft devices go a long way to discourage would-be shoplifters from even trying. He adds that Bench Body also conducts regular checks to compare inventories against actual sales reports to detect significant discrepancies.
“We use an internally-developed software to check sales and inventory in each store. We also physically visit the store at least once a quarter to check on operations,” he discloses.
Ong says these measures work well to prevent losses from eating too much into the company’s profits.
However, he admits that the biggest challenge to Bench Body, and Philippine retailers in general, is theft from within the company. “There are 1,001 ways to steal, and we try to learn from each one. But [the thieves] always come up with something new.”
He shares incidents where the cashier would punch into the cash register ‘one’ for the quantity of an item sold, but the customer — who is either a friend or relative — got away with 10 instead. The difference is then charged to pilferage.
Filipinos are such family-oriented people that, for most, a weekend is incomplete without visiting a toy store like KidzStation as a treat to a child or grandchild. While this trend keeps toy retailers’ cash registers ringing, it also brings with it the headache of ensuring that
nobody leaves the store without paying for items taken off the shelf.
Anton Gonzalez, who heads the operations of the KidzStation stores in the Philippines, says that, more than investing in the latest alarm systems, the posting of security guards has proven to be most effective in combating losses.
“In the Philippines, the best way to control theft is to have a lot of security guards, especially for KidzStation because of its wide entrance”, where Gonzalez deploys about three or four
guards. “I also have one guard where customers leave their bags,” he says.
As the store sells a lot of small items, using security tags is not the ideal option.
Gonzalez says it is not feasible to put individual tags on thousands of individual units displayed at any one time.
The best way to tackle internal pilferage, he finds, is to give due consideration to the hiring process to ensure that only the trustworthy are employed at all levels.
Together with a proper software system to track inventory, delivery and sales, losses are kept to an acceptable 1%-3% of sales at KidzStation.
Where margins are thin, maintaining this level is critical to minimising losses, Gonzalez stresses. “If losses go beyond 3%, something is wrong with the system.”
Coffee Bean and Tea Leaf Co
Although Coffee Bean and Tea Leaf Co does not sell too many retail items that are within easy reach of customers, preventing losses remains an integral part of its operations.
Walden Chu, who heads the local company that holds the Coffee Bean franchise, says that intense competition puts a squeeze on margins in the world of coffee chains, so much so that the profit value can be greatly influenced by how well a company can realise all
products sold into income for the company.
As customers do not get easy access to its products, Coffee Bean largely guards against internal theft. Chu says that as there are many ways of skimming products from the
kitchen and commissary, the company has invested in a software that detects an “unacceptable” variance between sales and inventory figures.
“We take retail inventory daily ... so that it is easy to reconcile the figures. We also have wastage logs done weekly; if the wastage goes above an acceptable level, that’s the time we step in to investigate,” he says.
And, like KidzStation’s Gonzalez, Chu believes that, more than systems, taking the time to hire the right people is the most effective and permanent means of preventing losses from within.
“You will still end up having losses no matter how good the controls are if there is intent to steal,” he reasons. Chu personally interviews every job candidate called in. Not only does hiring the right people result in excellent customer service, he says, but it also minimises losses.