Profitect Hosts Video Roundtable Discussion: Focuses on Retail Profitability and What Keeps Successful Retailers from Going Out of Business

WALTHAM, Mass., Dec. 14, 2011 /PRNewswire/ -- At a recent Google Hangout video roundtable discussion hosted by Profitect, a profit-amplification solution provider for retailers, all panel members were in agreement — the term "shrinkage" is a hugely political term without one standard definition across the retail industry.  The discussion centered on leaking profits, how to effectively measure profitability, who within the retail organization should be in charge of profitability, and, most importantly, how can retailers solve the never-ending issue of shrinkage. “Profitect’s utilization of Google Hangout demonstrates how Google+ will enable the enterprise to change the way business is conducted,” said Amit Singh – Vice President, Enterprise Sales & Operations, Google. The complete video roundtable discussion can be found at http://www.profitect.com/video/?=prn.

(Logo: http://photos.prnewswire.com/prnh/20110712/NE33204LOGO )

Panel members of the video roundtable included:

• George Lawrie, Vice President and Principal Analyst, Forrester Research
• Adrian Beck, Published Author and Head of the Department of Criminology at the University of Leicester, UK
• Ted Bernstein, Senior Investment Professional
• Guy Yehiav, CEO of Profitect

Highlights from the video roundtable discussion:

• On retailers looking at same-store sales as a valid indicator for a retailer's growth and health:

"As an investor, while same-store sales are something I looked at, it is a data point that is an inadequate indicator of a retailer's health. I've seen many retailers report healthy same store sales numbers leading into actual Chapter 11 bankruptcy filings," said Ted Bernstein.

"I've worked with organizations that made profits, but lost as much profit as they make through shrinkage. Unless you take into account how much is lost, that profit number is meaningless. Retailers need to understand where and how the losses are happening, as well as the operational failures that generate loss, which ultimately impacts the profitability of the business," said Adrian Beck.

• On how retail organizations look at, measure and define shrink:

"For many retailers, the level of gross margin is often times complicated to determine before you take into account all the different types of shrink there are because so much of it is effective execution," said George Lawrie. 

"I think the term 'shrinkage' is a hugely political term, is completely compartmentalized and therefore is used by organizations in many different ways. Shrink is usually thought of as a malicious problem, when the reality is that 70% of losses within a retail organization are non-malicious. What we need to understand is the notion of product value management — how to ensure that retailers maximize the value of a product as it goes through the entire supply chain. It is not just about theft or damage, but about understanding where retailers lose value in their products," said Adrian Beck.

• On who in the retail organization owns profitability levels and how to change the way retailers think about shrink:

"For our customers, we typically suggest building a profit recovery team under the CFO or COO and one that is separate or extended from the loss prevention team. This team can be responsible for managing process failures and compliance issues within the retail operation. By having this team in place to look at profitability at the most granular levels, you can identify problematic stores, areas within the store, and quickly push solutions out to the field," said Guy Yehiav.

"I think that CFOs need to be more than just CFOs, they need to be cross-functional and understand the COOs role, too. Additionally, each department has to be a 'margin maximizer' and learn how to reduce shrink in the broad way that we have defined it. Moreover, I think that shrink has to be reported up through a profit maximizing team managed by the CFO," said Ted Bernstein.

"In order for retailers to stop thinking about the old traditional way of shrink and revenue, they must assign responsibilities for it and put in place a standard profit language, measurement and incentive for employees, top to bottom," said George Lawrie.

"When it comes to profitability, retailers need to understand their operational failures and the root causes of those rather than responding to the symptoms of shrink. Retailers must move away from the siloed approach to shrink and move toward a more holistic, root-based solution to the profit leakage problems that retail organizations face," said Adrian Beck.

About Profitect

Profitect's profit-amplification solution enables you to quickly discover and actualize untapped profit opportunities across the entire retail value chain. Profitect's algorithms quickly identify measurable profit optimization opportunities through the identification of value chain margin leakage, shrink, waste, process errors, and operational risks and damages — returning intelligent, prioritized actions for increasing profit. For more than 15 years, Profitect's expertise has successfully amplified profits for retailers worldwide and delivered immediate ROI supported by modular, quick, non-disruptive deployment of modern, scalable technology and time-tested best practices. With 100% customer success, Profitect consistently fulfills its commitment to deliver more than 5% profit increase within six months.

SOURCE Profitect