Disappearing Shrink

Family Dollar cuts loss with chainwide rollout of RF-based EAS technology

Shrink is an unavoidable fact of life for retailers. But by leveraging electronic article surveillance (EAS) technology that places security tags on items, retailers can minimize the frequency and financial impact of shrink.

Matthews, N.C.-based Family Dollar Stores, Inc. has been using EAS technology to reduce shrink at select high-risk locations for more than 15 years. However, about three years ago, the retailer determined that using EAS tags on higher-priced items at all of its roughly 7,900 stores would help control external shrink throughout the chain.

RF versus AM

“We analyzed the acoustic magnetic (AM) system we had been using, as well as radio frequency (RF) systems,” said Chris Nielsen, VP loss prevention for Family Dollar. “We wanted store simplification, with one EAS system running in all stores so that we could tag items at the distribution center or supplier level and take the workload off store managers to let them focus on customer service.”

After researching RF-based EAS systems to test against its existing AM-based solution, in July 2012 Family Dollar decided to run a test of the Checkpoint Systems Evolve P10 Eco EAS system at 200 stores. The pilot ran six months in some locations and nine months at others. Upon conclusion of the pilot, the chain spent time analyzing results, including factors such as cost and ROI, as well as others.

“We liked the Checkpoint ‘soft tag,’” Nielsen said. “Both the soft tag and the AM tag we were using cause an apparel item to rip when removed, lowering the resale value for organized retail crime groups, but the soft tag can also have Family Dollar branding. The AM tag cannot be branded.”

Simple, but Effective

Around the end of the second quarter of 2013, Family Dollar decided to complete work with Checkpoint on a rollout plan of the Evolve solution. Checkpoint’s previous experience in performing fast EAS rollouts at other large retailers and its national field support organization also played a role in the decision.

“We scheduled stores and picked sites where we would roll out the new EAS system first,” Nielsen said. “We partnered with our store operations team.”

The actual technology install base at Family Dollar stores is fairly simple. Items are currently tagged at store level, although once enough stores are equipped with the Checkpoint EAS system to make widespread distribution of RF-tagged items practical, Family Dollar will shift to DC- and supplier-level tagging. Most stores have two pedestals that detect tag signals and also have tuning pads at each POS station. The store’s electrical system must also be accessible, and in some instances the retailer has to bring in electrical contractors to add power outlets. No software is involved.

To date, Family Dollar has rolled out the system to 1,600 stores and plans to complete chainwide rollout by December 2014. Shrink has fallen and sales have risen at stores where it is installed. And while so far the retailer is only using Evolve for loss prevention, it could expand the system’s functionality in the future.

“The system has the capacity to be utilized with RFID for things like inventory control if we so desire,” Nielsen said.

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