Ranjan Winter Project

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A project of Future Value Retail

Ltd.

Title: Pilferage and loss Management

Submitted to:-

Pantaloons Retail India Ltd. Noida (U.P)

Under the guidance of: Submitted by:

GURPURAN SINGH (SM) RANJAN

PGDM (Retail) 08-10

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Acknowledgement

This project report has been made during the spring season of year 2010 andis the result of 17 weeks of hard work. These 17 weeks have been a veryinteresting period that has provided us with a deeper knowledge about thearea where shrinkage happens in store. With this project, I hope to identifyall the loopholes of shrinkage.

A study like this cannot be completed without help from other persons andtherefore I would like to express our gratitude to all persons havingcontributed to competition of this project.

First of all, I would like to thank our mentor GURPURAN SINGH, who hasprovided me guidance, inspiration, perspective and stimulating discussion,throughout the writing of this report?

Finally, I would like to thank our friends and family member for giving usconstant support and encouragement.

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PREFACE:

I RANJAN Completed Post Graduate Diploma Management (REATAIL) fromACCMAN INSTITUTE OF MANAGEMENT, Greater Noida (UP),undergone Management Training program in BIG BAZAAR( Mathura) whichis an arm of Future Group. I have been assigned a task as a project related tochecking out shrinkage in store. The project title is PILFERAGE AND LOSSMANAGEMENT. The project duration is four months.

I feel honoured and pleasure in presenting this research project which isessential in partial fulfillment of our Retail management program. ResearchProject is an integral part of curriculum ad its purpose is to provide the studentwith practical exposure of market in todays changing scenario. It helps indevelopment of practical scales and analytical thinking process. It also makesstudents aware of about the perception and taste of consumers. Thus it helps inmolding the students according to the requirement of the market.

After globalization there has been vast change in Indian retail market. Globalplayers have entered the fray which has forced the Indian retailers to changetheir strategies and culture. There is cut throat competition and have realizedthe value of customers. Consumers buying preferences, taste, choice haschanged and have become more quality conscious. It leads to boom in

consumer market and people were on the spending speed.

So in such a competitive retail market where every retailer is trying to capturemaximum no. of consumer market. For attracting more and more customerretailer are in the race to achieve a cost status. In this process they are settinglow margin and are also committed to provide good service to the customer atthe best of their ability. So in this competitive era even a less margin doesmatter and if shrinkage happens then it push back retailer at their back foot.Owing to that in this project I have put my all concentration on shrinkage its

causes and safety measure in order to make intensity of shrinkage less strong.

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Table of content

S.No. Particulars Page No.1. Project Title 1

2. Acknowledgement 2

3. Preface 3

4. Table of content 4

5. Executive Summary 5-7

6. Company profile 8-27

7. Pantaloons profile 28

8. SWOT analysis of Pantaloons RetailIndias Ltd..

29

9. Store profile 30

10. Work process at stock receiving point. 31-4011. Project analysis 41-64

12. Stock take 65-69

13. Recommendation 70-72

14. Conclusion 73

15. Bibliography 74

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Executive Summary

Retailing is emerging as a sunrise industry in India and is presently the largestemployer after agriculture. In the year 2004, the size of Indian organized retailindustry was Rs 28,000 Crores, which was only 3% of the total retailingmarket. Retailing in its present form started in the latter half of 20 th Century in

USA and Europe and today constitutes 20% of US GDP. It is the 3

rd

largestemployer segment in USA. Organized retailing in India is projected to grow atthe rate of 25%-30% p.a. and is estimated to reach an astounding Rs 1000Crores by 2010. The contribution of organized retail is expected to rise from3% to 9% by the end of the decade. The projection for the current year ie 2005is Rs 35,000 Crores. In India, it has been found out that the top 6 citiescontribute for 66% of total organized retailing. With the metros already beenexploited, the focus has now been shifted towards the tier-II cities**. The 'retailboom', 85% of which has so far been concentrated in the metros is beginning topercolate down to these smaller cities and towns. The contribution of these tier-II cities to total organized retailing sales is expected to grow to 20-25%. In theyear 2004, Rs 28,000 Crores organized retail industry had Clothing, Textiles &fashion accessories as the highest contributor (39%), where as health & beautyhad a contribution of 2%. Food & Grocery contributed to 18% whereas PharmaRetail had a contribution of 2%. Pantaloon Retail (India) Limited, is Indiasleading retailer that operates multiple retail formats, the company operates over12 million square feet of retail space, has over 1000 stores across 71 cities inIndia and employs over 30,000 people.

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Economic Overview: Indian is currently undergoing an economic revolutionwhich is generating fast-paced changes and development.

There is stable 8 % annual growth, but this year recession has down pace the

world economy so consumer purchasing power came down which derail the retailsector but with improvement of market retail in also improving. There is some factwhich rescues Indian retail market.

Rising foreign exchange reserves of close to USD 140 billion, Consistent and flowing Foreign Direct Investment(FDI) of close to UDS 8

billion, Export surge in excess of 20%.

This altogether enables the Indian economy to expand in coming years.

Investment eccentric: With a rapidly expanding consumer base (privateconsumption currently account for 61% of Indias GDP) and stabilized consumerprice index rate 4.2%. India is now preferred investment destination and hassurpassed the U.S to become the second most favorable destination for FDI, in theworld after China.

DEMOGRAPHICS AND CONSUMER BEHAVIOUR

A growing population, a youthful workforce and soaring consumer confidenceare solid argument for long term growth.

A growing population, a youthful workforce and soaring consumer confidenceare solid argument for long term growth.

More than 50% of the Indias Population is less than 25 years of age compared toothers developed countries. Age profile

% of totalpopulation

1999 2004 2009 Trend

0-14 years 34.0 31.7 29.6

15-64 years 61.4 63.5 65.2

Over 65 years 4.6 4.8 5.2

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MALL EVOLUTION PROCESS IN INDIA

Let us look at the evolution process

Detailing reasons why Indian organized retail is at the brink of revolution, theIMAGES-KSA report says that the last few years have seen rapid transformationin many areas and the setting of scalable and profitable retail models acrosscategories. Indian consumers are rapidly evolving and accepting modern formatsoverwhelmingly. Retail Space is no more a constraint for growth. India is on theradar of Global Retailers and suppliers / brands worldwide are willing to partnerwith retailers here. Further, large Indian corporate groups like Tata, Reliance,Raheja, ITC, and Bombay Dyeing.

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Company Profile:-

Pantaloon Retail (India) Limited, is Indias leading retailer that operates multipleretail formats in both the value and lifestyle segment of the Indian consumermarker. Headquartered in Mumbai (Bombay), the company operates over 12million square feet of retail space, has over 1000 stores across 71 cities in Indiaand employs over 30,000 people.

The companys leading formats include Pantaloons, a chain of fashion outlets,

Big Bazaar, a uniquely Indian hypermarket chain, Food Bazaar, a supermarketchain, blends the look, touch and feel of Indian bazaars with aspects of modernretail like choice, convenience and quality and Central, a chain of seamlessdestination malls. Some of its other formats include, Depot, Shoe Factory, BrandFactory, Blue Sky, Fashion Station, aLL, Top 10,Mbazaar and Star and Sitara.The company also operates an online portal, futurebazaar.com.

A subsidiary company, Home Solutions Retail (India) Limited, operates Home

Town, a large-format home solutions store, Collection i, selling home furnitureproducts and E-Zone focused on catering to the consumer electronics segment.

Pantaloon Retail was recently awarded the International Retailer of the Year2007 by the US-based National Retail Federation (NRF) and the Emerging MarketRetailer of the Year 2007 at the World Retail Congress held in Barcelona.

Pantaloon Retail is the flagship company of Future Group, a business groupcatering to the entire Indian consumption space.

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FUTURE GROUP:Future Group is Indias leading business group that caters to the entire Indianconsumption space. Led by Mr. Kishore Biyani, the Future Group operatesthrough six verticals: Retail, Capital, Brands, Space, Media and Logistics.

Apart from Pantaloon Retail, the groups presence in the retail space iscomplemented by group companies, Indus League Clothing, which ownsleading apparel brands like Indigo Nation, Scullers, john miller, Denial hecter,Remanika and Urban Yoga, and Galaxy Entertainment Limited that operatesBowling Co, Sports Bar, F123 and Brew Bar.

The groups joint venture partners include French retailer ETAM group, US-based stationary products retailer, Staples and UK-based Lee Cooper. GroupCompany, Planet Retail, owns and operates the franchisee of international

brands like Marks & Spencer, Next, Debenhams and Guess in India. Thegroups Indian joint venture partners include, Manipal Healthcare, Talwalkars,Blue Foods and Liberty Shoes.

Future Capital Holdings, the groups financial arm, focuses on assetmanagement and consumer credit. It manages assets worth over $1 billion thatare being invested in developing retail real estate and consumer-related brandsand hotels. The group has launched a consumer credit and financialsupermarket format, Future Money and soon plans to offer insurance productsthrough a joint venture with Italian insurance major, Generalize.

The group is currently developing over 50 malls and consumption centresacross the country and has formed a joint venture company focusing on mallmanagement with Singapore-based Capital and, one of Asias largest propertycompanies.

Future Groups vision is to, deliver Everything, Everywhere, Every time toEvery Indian Consumer in the most profitable manner. The group considersIndianness as a core value and its corporate credo is Rewrite rules, Retainvalues.

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Future Group Manifesto

Future the word which signifies optimism, growth, achievement, strength,

beauty, rewards and perfection. Future encourages us to explore areas yetunexplored, write rules yet unwritten; create new opportunities and new successes.To strive for a glorious future brings to us our strength, our ability to learn,unlearn and re-learn our ability to evolve.

We, in Future Group, will not wait for the Future to unfold itself but create futurescenarios in the consumer space and facilitate consumption because consumptionis development. Thereby, we will effect socio-economic development for ourcustomers, employees, shareholders, associates and partners.

Our customers will not just get what they need, but also get them where, how andwhen they need.

We will not just post satisfactory results, we will write success stories.

We will not just operate efficiently in the Indian economy, we will evolve it.

We will not just spot trends; we will set trends by marrying our understanding ofthe Indian consumer to their needs of tomorrow.

It is this understanding that has helped us succeed. And it is this that will help ussucceed in the Future. We shall keep relearning. And in this process, do just onething.

Rewrite Rules. Retain Values.

Group Vision

Future Group shall deliver Everything, Everywhere, Every time for Every Indian

Consumer in the most profitable manner.

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Group Mission

We share the vision and belief that our customers and stakeholders shall be servedonly by creating and executing future scenarios in the consumption space leading

to economic development.

We will be the trendsetters in evolving delivery formats, creating retail realty,making consumption affordable for all customer segments for classes and formasses.

We shall infuse Indian brands with confidence and renewed ambition.

We shall be efficient, cost- conscious and committed to quality in whatever we do.

We shall ensure that our positive attitude, sincerity, humility and uniteddetermination shall be the driving force to make us successful.

Core Values

Indianness: confidence in ourselves.

Leadership: to be a leader, both in thought and business.

Respect & Humility: to respect every individual and be humble in ourconduct.

Introspection: leading to purposeful thinking.

Openness: to be open and receptive to new ideas, knowledge andinformation.

Valuing and Nurturing Relationships: to build long term relationships.

Simplicity & Positivity: Simplicity and positivity in our thought, businessand action.

Adaptability: to be flexible and adaptable, to meet challenges.Flow: to respect and understand the universal laws of nature.

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Big Bazaar is not just an organization it is an institution, a centre of learning &development. We believe that knowledge is the only weapon at our disposal andour quest for it is focused, systematic and unwavering.

At Big Bazaar, we take pride in challenging conventions and thinking out of the box, in travelling on the road less travelled. Our corporate doctrine, RewriteRules, Retain Values is derived from this spirit.

Over the years, the company has accelerated growth through its ability tolead change. A number of its pioneering concepts have now emerged asindustry standards. For instance, the company integrated backwards intogarment manufacturing even as it expanded its retail presence at the frontend, well before any other Indian retail company attempted this. It was the

first to introduce the concept of the retail departmental store for the entirefamily through Pantaloons in 1997. The company was the first to launch ahypermarket in India with Big Bazaar, a large discount store that itcommissioned in Kolkata in October 2001. And the company introduced thecountry to the Food Bazaar, a unique 'bazaar' within a hypermarket, whichwas launched in July 2002 in Mumbai. Embracing our leadership value, thecompany launched all in July 2005 in Mumbai, making us the first retailer inIndia to open a fashion store for plus size men and women.

Today we are the fastest growing retail company in India. The number of

stores is going to increase many folds year on year along with the newformats coming up.

The way we work is distinctly "Pantaloon". Our courage to dream and toturn our dreams into reality that change peoples lives, is our biggestadvantage. Pantaloon is an invitation to join a place where there are noboundaries to what you can achieve. It means never having to stop askingquestions; it means never having to stop raising the bar. It is an opportunity

to take risks, and it is this passion that makes our dreams a reality.

Come enter a world where we promise you good days and bad days, butnever a dull moment!

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Partner Companies:

Home Solutions Retail (India) Limited (HSRIL)

Home Solutions Retail (India) Limited (HSRIL) offers completeretailing solutions for all products and services related to home buildingand home improvement. The key product categories are ConsumerDurable & Electronics (CDE), Furniture, Home furnishing & decor,Home improvement and Home services. HSRIL operates retail formatCollection-i, Furniture Bazaar, Electronics Bazaar, Home Town and e-zone.

Future Brands Limited (FBL)

Future Brands Limited (FBL) has been incorporated on November,2006 and is involved in the business of creating, developing, managing,acquiring and dealing in consumer-related brands and IPRs (IntellectualProperty Rights).

Future Media (India) Limited (FMIL)

Future Media (India) Limited (FMIL) was incorporated as the Groupsmedia venture, aimed at creation of media properties in the ambience of

consumption and thus offers active engagement to brands andconsumers. FMIL offers relevant engagement through its mediaproperties like Visual Spaces, Print, Radio, Television and Activation.

Future Logistic Solutions Limited (FLSL)

Future Logistic Solutions Limited (FLSL) has been incorporated as aseparate entity and is involved in the business of providing logistics,transportation and warehousing services for all group companies andthird-parties.

Future Axiom Telecom Limited

Future Axiom Telecom Limited is a Joint Venture with AxiomTelecom LLC, UAE. The Company has a 50% stake in Future AxiomTelecom Limited (FATL) which is a joint venture Company withAxiom Telecom LLC, UAE. The Company would be engaged insourcing and wholesale distribution of mobile handsets, accessories and

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in setting up service centers for mobile handsets in India.

Pantaloon Food Product (India) Limited (PFPIL)

Pantaloon Food Product (India) Limited (PFPIL) was incorporatedwith the object of sourcing and backward integration of food businessof the Company. PFPIL has sourcing and distribution bases at all keycities across the country.

Future Knowledge Services Limited (FKSL)

Future Knowledge Services Limited (FKSL) was incorporated onJanuary, 2007 and is engaged in the business of business processoutsourcing and knowledge process outsourcing.

Future Capital Holdings Limited (FCH)

Future Capital Holdings Limited (FCH) was formed to manage thefinancial services business of Pantaloon Retail (India) Limited andother group entities. FCH is one of the fastest growing financialservices company in India, with presence in Asset Advisory, RetailFinancial Services and Proprietary Research. The company operates aconsumer finance retail format, Future Money and manages assetsworth over US$ 1 Billion through Indivision, Kshitij, Horizon andFuture Hospitality Funds. FCH subsidiary companies include Kshitij

Investment Advisory Company Ltd., Ambit Investment AdvisoryCompany Ltd., and Indivision Investment Advisors Ltd.

Future Generali India Life Insurance Company Limited

(FGILICL)

Future Generali India Life Insurance Company Limited (FGILICL)was incorporated on October 30, 2006 to establish and conduct the business of life insurance in India, which comprises of whole lifeinsurance, endowment insurance, double benefit and multiple benefits

insurance etc. The approval for carrying on Life Insurance Business hasbeen received from the IRDA in September, 2007.

Future bazaar India Limited (FBIL)

Future bazaar India Limited (FBIL) is set up as the e-Retailing arm ofthe Future Group for providing on-line shopping experience.

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Futurebazaar.com was launched on January 2, 2007, and has emergedas one of the most popular online shopping portals in India. It wasawarded with the Best Indian Website award, in the shoppingcategory, by the PC World Indian Website Awards.

Staples Future Office Products Private Limited (SFOPPL)

Staples Future Office Products Private Limited (SFOPPL) wasincorporated on January, 2007 and is involved in the business ofdealing in all kinds of office supplies, office equipments and products.SFOPPL is a joint venture between the Company and Staples AsiaInvestment Limited (a subsidiary of Staples Inc USA). The companysfirst retail outlet opened in Bangalore in December, 2007.

Joint Ventures Companies:

CapitaLand Retail India

The group is a joint venture partner in CapitaLand Retail India, along withSingapore-based Capital and Limited. The company provides retail managementservices to retail properties owned or managed by various group companies andinvestment funds.

Footmark Retail

Foot mart Retail is a joint venture with Liberty Shoes and is engaged in theretailing of footwear products in India.

Planet Retail Holdings Ltd.

The group is a joint venture partner in Planet Retail Holdings Ltd., which operatessports, lifestyle and leisure retail chain. It also owns the franchisee and distributionrights of brands like Marks & Spencer, Guess, Debenhams and Puma in India.

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LINES OF BUSINESS

E-retailing: Futurebazaar.com.

Food: Brew Bar, Caf Bollywood, Chamosa, Sports Bar, Food Bazaar

Fashion: aLL, Big Bazaar, Central, Fashion Station, Ginny & Jony, Pantaloons,

Lee Cooper.

Home & Electronics: Home Town, Furniture Bazaar, Electronics Bazaar, E-zone,

Collection i.

Telecom & IT: Gen M, M bazaar, M-Port.

General Merchandise: Central, Brand Factory, Fashion Station, Shoe Factory,

Pantaloons.

Leisure & Entertainment: Bowling Co, F 123.

Wellness & Beauty: Health Village, Star Sitara, Tulsi, Turmeric.

Books & Music: Depot.

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COMPANY TIMELINE

Major Milestones

1987

Company incorporated as Manz Wear Private Limited. Launch of Pantaloonstrouser, Indias first formal trouser brand.

1991

Launch of BARE, the Indian jeans brand.

1992

Initial public offer (IPO) was made in the month of May.1994The Pantaloon Shoppe exclusive menswear store in franchisee format launchedacross the nation. The company starts the distribution of branded garments throughmulti-brand retail outlets across the nation.

1995John Miller Formal shirt brand launched.1997

Pantaloons Indias family store launched in Kolkata.

2001

Big Bazaar, Is se sasta aur accha kahi nahin - Indias first hypermarket chainlaunched.

2002Food Bazaar, the supermarket chain is launched.2004Central Shop, Eat, Celebrate in the Heart of Our City - Indias first seamlessmall is launched in Bangalore.

2005

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Fashion Station - the popular fashion chain is launched

aLL a little larger - exclusive stores for plus-size individuals is launched

2006Future Capital Holdings, the companys financial arm launches real estate fundsKshitij and Horizon and private equity fund Indivision. Plans forays into insuranceand consumer credit.

2007

Future Group crosses $1 billion turnover mark.

Specialized companies in retail media, logistics, IPR and brand

development and retail-led technology services become operational.

Pantaloon Retail wins the International Retailer of the Year at US- based National Retail Federation convention in New York andEmerging Retailer of the Year award at the World Retail Congressheld in Barcelona.

Futurebazaar.com becomes Indias most popular shopping portal.

2008 Future Capital Holdings becomes the second group company tomake a successful Initial Public Offering in the Indian capitalmarkets.

Big Bazaar crosses the 100-store mark, marking one of the fastestever expansion of a hypermarket format anywhere in the world.

Total operational retail space crosses 10 million square feet mark.

Future Group acquires rural retail chain, Aadhar present in 65rural locations.

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AWARDS & RECOGNITION

2009

Images Fashion Forum 2009

Most Admired Fashion Group Of The Year - Future Group.

Most Admired Private Label - Pantaloons, the lifestyle format.

Critics Choice for Pioneering Effort in Retail Concept

Creation - Central.

Coca-Cola Golden Spoon Awards 2009

Most Admired Food & Grocery Retailer Of The Year .

Most Admired Food Court.

Most Admired Food Professional.

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2008

Most Admired Retail Company of the year - Future Group.

Retail Face of the Year - Kishore Biyani.

Best Retailer Of The Year ( Hypermarket) - Big Bazaar .

Coca-Cola Golden Spoon Awards 2008

Most Admired Food & Grocery Retail Visionary of theYear: Kishore Biyani.

Most Admired Food & Grocery Retailer of the Year Supermarkets: Food Bazaar

Most Admired Food & Grocery Retailer of the Year -

Hypermarkets: Big Bazaar

Most Admired Retailer of the Year - Dynamic Growth inNetwork Expansion across Food, Beverages & Grocery:Future Group

Most Admired Food & Grocery Retailer of the Year -Consumer's Choice: Big Bazaar

2007

National Retail Federation Awards International Retailer for the Year 2007 Pantaloon Retail (India) Ltd.

World Retail Congress Awards Emerging Market Retailer of the Year 2007 Pantaloon Retail (India) Ltd.

Hewitt Best Employers 2007 Best Employers in India (Rank 14th) Pantaloon Retail (India) Ltd.

PC World Indian Website Awards Best Indian Website In The ShoppingCategory -Futurebazaar.com

Readers Digest Trusted Brands Platinum Awards Trusted Brands Platinum

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Award (Supermarket Catsegory) Big Bazaar

2006

Retail Asia Pacific Top 500 Awards Asia Pacific Best of the Best Retailers

Pantaloon Retail (India) Ltd Best Retailer in India Pantaloon Retail(India) Ltd.

Asia money Awards Best Managed Company in India (Mid-cap) Pantaloon retail (India) Ltd.

Ernst & Young Entrepreneur of the Year Award Ernst & YoungEntrepreneur of the Year (Services) Kishore Biyani

CNBC Indian Business Leaders Awards The First Generation Entrepreneur

of the Year Kishore Biyani

Images Retail Awards

Best Value Retail Store Big Bazaar Best Retail Destination Big BazaarBest Food & Grocery Store Food Bazaar Retail Face of the Year K.Biyani

Readers Digest Awards Platinum Trusted Brand Award -Big Bazaar

CNBC Awaaz Consumer Awards Most Preferred Large Food & Grocery

Supermarket Big Bazaar Reid & Taylor Awards for Retail Excellence Retail Entrepreneur of the

Year Kishore Biyani

2005

Images Retail Awards 2005

PRIL- Most Admired Retailer of the Year.

Food Bazaar- Retailer of the Year (Food and Grocery).

Big Bazaar-Retailer of the Year (Value Retailing).

Central-Retail Launch of the Year.

Voted by Business Today magazine as one of the

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Top 20 Companies in India to watch in 2005.

Indias most investor-friendly companies in the top 75.

Indias Biggest wealth creators in the top 100.

DAKS London

PRIL- Brand Builder of the Year.

2004

Images Retail Awards 2004

PRIL- Most Admired Retailer of the Year.

Food Bazaar- Retailer of the Year (Food and Grocery).

Big Bazaar-Retailer of the Year (Value Retailing).

Central-Retail Launch of the Year.

Reid & Taylor and DLF Awards

PRIL - Retailer of the year.

2003

Indian Express Award

PRIL Marketing Excellence and Excellence in Brand Building.

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Hierarchy of Pantaloon (Future Group)

Mr. Kishore Biyani, Managing Director

Mr. Gopikishan Biyani, Whole time Director

Mr. Rakesh Biyani, Whole time Director

Mr. Ved Prakash Arya, Director

Mr. Shailesh Haribhakti, Independent Director

Mr. S Doreswamy, Independent Director

Dr. D O Koshy, Independent Director

Ms. Anju Poddar, Independent Director

Ms. Bala Deshpande, Independent Director

Mr. Anil Harish, Independent Director

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Board of Directors

Mr. Kishore Biyani, Managing Director

Kishore Biyani is the Managing Director of Pantaloon Retail (India) Limited and theGroup Chief Executive Officer of Future Group.

Mr. Gopikishan Biyani, Whole time Director

Gopikishan Biyani is a commerce graduate and has more than twenty years ofexperience in the textile business.

Mr. Rakesh Biyani, Whole time Director

Rakesh Biyani is a commerce graduate and has been actively involved in categorymanagement; retail stores operations, IT and exports. He has been instrumental in theimplementation of the various new retail formats.

Mr. Vijay Kumar Chopra, Independent Director

V.K.Chopra is a fellow member of The Institute of Chartered Accountants of India(ICAI) by profession and is a Certified Associate of Indian Institute of Bankers(CAIIB). His banking career spans over 31 years and he has served seniormanagement positions in Central Bank of India, Oriental Bank of Commerce, SIDBI,Corporation Bank and SEBI.

Mr. Shailesh Haribhakti, Independent Director

Shri Shailesh Haribhakti, is a Chartered Accountant, Cost Accountant, and aCertified Internal Auditor. He is the Deputy Managing Partner of Haribhakti & Co.,Chartered Accountants and past president of Indian merchant Chambers. He is on theBoard of several Public Limited Companies, including Indian PetrochemicalsCorporation Ltd., Ambuja Cement Eastern Ltd. etc. He is on the Board of Company

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since June 1, 1999.

Mr. S Doreswamy, Independent Director

S. Doreswamy, is a former Chairman and Managing Director of Central Bank ofIndia and serves on the board of DSP Merrill Lynch Trustee Co and Ceat Limitedamong others.

Dr. D O Koshy, Independent Director

D. O. Koshy holds a doctorate from IIT, Delhi and is the Director of NationalInstitute of Design (NID), Ahmadabad. He has over 24 years of rich experience inthe textiles and garment industry and was instrumental in the setting up of NIFT

centres in Delhi, Chennai and Bangalore. He is a renowned consultant specializing ininternational marketing and apparel retail management.

Ms. Bala Deshpande, Independent Director

Bala Deshpande is Independent Director, Pantaloon Retail (India) Ltd. and alsoserves on the boards of Deccan Aviation, Nagarjuna Construction, Welspun Indiaand Indus League Clothing Ltd, among others.

Mr. Anil Harish, Independent Director

Anil Harish is the partner of DM Harish & Co. Associates & Solicitors and an LLMfrom University of Miami. He also serves on the board of Mahindra Gesco, Unitech,IndusInd Bank and Hinduja TMT, among others.

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Future group major format and its CEOS

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Rakesh Biyani CEO Retail

AnshumanSingh

CEO - Value Fashion

Damodar Mall CEO - Incubation & Innovation

Hans Udeshi CEO - General MerchandisingHemchandraJaveri

CEO - Home Solutions Retail (India) Ltd.

Kailash Bhatia CEO - Integrated Merchandising Group

MadhumatiLele

CEO - Services

Sadashiv Nayak CEO - Big Bazaar

Sadashiv Nayak CEO - Food Bazaar

SanjeevAggarwal

CEO Pantaloons

Vishnu Prasad CEO - Central & Brand Factory

KrubenMoodliar

President- Operations (Value Retailing)

MayurToshniwal

Head - Operations (North Zone)

Rajesh Joshi Head - Operations (West Zone)

Rohit Malhotra Head - Operations (South Zone)

SandeepMarwaha

Head - Operations (East Zone)

Sanjay Jog Head - Human Resources

Ushir Bhatt Executive Board Member

Atul Takle Head - Corporate Communications

Prashant Desai Head - Group IR & New Ventures (PE)

Vinay Shroff Head - Supply Chain Management

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SWOT ANALYSIS OF PANTALOONS

STRENGTH

High brand equity in evolving retail markets.

State of art infrastructure of the big bazaar outlets.

Point of purchase promotions to increase the purchase.

Variety of stuff under single roof increasing customer, time and available choices.

WEEKNESS

Unable to meet store opening target.

Falling revenue per square fit.

OPPORTUNITY

Organised retails are just 4.15% of total pie of Indian retail market.

Evolving customer preferences in recent years

Targeting Area more prone to.

Economic condition development.

Store experience improvements.

THREAT

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Competitors, Big global players are planning to foray into the market.

Unorganized retail market of India.

Government policies are not defined in emerging market like India.

Store profile

This store is situated under the Netaji subhash palace, metro station which is nearwazirpur. But just not how it sounds, size-wise. Yeah. This place is a humongous

building, and one only fails to wonder how the interior was managed to put in so manysections PLUS a food mart inside it.Loads of sections, Kids', women's, mens, personal care, home appliances, furniture,sports etc.

The Mens section is on the first floor. As for the prices, they're pretty reasonable. Its theshop around the corner. The services of the helpers are neat, and the managing staff ishelpful.

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They took immediate action against my complaint of one of the irresponsible counterpeople.Actually this store looks so specious from inside. It contains near about 50 employees.Here SM, ASM main motive to focus on customer satisfaction and work according toSOP

WORK PROCESS AT STOCK RECEIVING POINT

Doing project on shrinkage I worked on stock receiving point in Pantaloons Because thisis the area where chance of shrinkage is more. Any mistake can lead high amount ofshrinkage. There are many process has been followed on stock receiving point while

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inwarding and outwarding the merchandise, so with this view I would explain all theprocess underneath related to the work which occurs at stock receiving point.

Inwarding of Pantaloons Merchandise

Process examines the methodology of inwarding merchandise in big bazaar.

Transfer of merchandise undertaken by delivery centre to the store. Merchandise delivered by vendors directly to stores.

Merchandise belonging to SIS for entering/exiting the store.

Receipt of goods by the store warehouse for transfers effected by PRIL warehouse/delivery centers.

Basic principle governing the process.Goods are received according to the stock transfer note issued by warehouse..They are inwarded by:-SAP enabled stores:- By invoking the handling unit number and undertaking a global

count of items sent.CNon-SAP enabled stores:- By entering each items in the system and inwarding.

Receipt of goods at the store warehouse and security checking procedures.

Delivery vehicle arrives at the store warehouse or stock receiving point of store.

Security personnel to receive the supporting documents (like STN, gate pass) and

Hand over the same to SCM personnel undertaking the inwarding.

Document set is checked by SCM to ensure it contains a stock transfer note induplicate and outward gate pass issued by the dispatching warehouse.

NOTE:- Proceed with inwarding process, only if the relevant documentation is in order.

If any of the above documents are missing the staff should inform the SCM manager.SCM manager to examine the case and try to solve the issue by getting in touch withDelivery centre. In no circumstances, the merchandise should be inwarded, in variance tothe above.

SCM in charge to confirm from the respective DM/ADM on the stocks receivedfrom warehouse and obtain his signature on STN.

Security personnel to check the vehicle to ensure the seal on the cargo area.Note:- If seal is tampered with security personnel should bring it to the attention of thestore warehouse/logistic in-charge to make a note of the same on the STN and alsoofficially bring it to the notice of the manager of the dispatching warehouse. No onward

seal to be applied to vehicle in case if the vehicle is going to a second location fordelivery as the merchandise has already been exposed.

Unloading of merchandise and recording of the same in security register.

An H.U no.- Handling unit no. which is a unique no. is pasted on each carton.

During unloading, the inwarding staff should mark off each H.U no. on the STN.

Independently, the security personnel to maintain a count of the no. of cartons

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being unloaded.

When all cartons are unloaded, the inwarding staffs to check the STN and ensureall carton marked for delivery for the store have received. The no. of cartons fordelivery to the store (as indicated in the STN) is cross checked with the countmaintained by the security personnel while unloading.

In case of a difference (i.e. shortage/ Damage/ Excess in shipments) in shipment.

Security personnel to record the inwards in the store inwards register. Details of GRN areleft blank at this moment and will be filled in once the goods are inwarded into thesystem.Security personnel to stamp the two copies of STN with Inward received stamp,mentioning the inward number (according to their register), number of cartons unloadedand date. The security personnel should retain the original set of documents and handoverthe complete set to SCM personnel who in turn will hand over the duplicate copy of STNto the delivery vehicle staff verifying both the copies.

Re-sealing the vehicle for its onward journey

Deliveries in a lot of cases go to multiple locations. Hence once unloading at location oneis complete; security personnel from location one is to seal the vehicle again with paperseals. A stamp of the store and signature of security personnel to be recorded on the seal.

Inwarding of consignment

The unloaded cartons to be brought to the store. The STN governing thisconsignment is to be invoked in the SAP system.

Each cartons H.U. no. is displayed by the system. On selecting particular H.U.

nos. the contents of the carton are displayed by the system. It is very critical thatwarehouse staff opens all cartons and undertake a count the items contained ineach carton. This count should tally with the number of pieces displayed by thesystem.

Note:- No carton should be inwarded without counting.

Once inwarding is complete and saved, the system generates a goods receipt note(GRN) confirming the items which were received. The GRN is printed andattached to the set of documents pertaining to this consignment.

The details of STN, GRN and actual quantity received to be recorded in theinwards register.

The warehouse inwards register to be handed over to the security personneleveryday to enable him to record the GRN no. against the STN entry in theirsecurity register.

After which both registers are forwarded to the SM/ASM for his verification andsignature ensure 100% GRN at the end of the day.

The entire set of documents is forwarded by the warehouse staff of Zonal/store

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(wherever it is applicable) accounts department for effecting payment. A record ofall the documents sent to accounts to be maintained in register at the storewarehouse.

Sample erroneous consignments for testing the system

During every quarter, consignments will be sent which have a shortage of items. This isbeing done to check whether stores are able to detect the shortage while undertaking theinwarding process. These checks will form part of the audit process used for reviewingthe stores operational performance.

Scanning of items in REM systemCurrently the stores point of sale system is running on the REM platform. Hence a checkneeds to be performed on the items being inwarded to see if they are recognized by theREM system. Thus one SKU per carton received the REM system. If the items exist in

the REM system they are in order and can be shifted to the sales floor.Note: Any product not identified on REM is NOT to be put on the sales floor. TheArticle nos. of these items to be sent to the PRIL head office which in turn willSend idocs for these articles to the stores. Once these idocs are received andLoaded in the store REM system these items are ready to be placed on the storefloor for selling.

Handling Shortages/Damages/Excess in shipments

During the Inwarding process following types of situations may occur:1. Shortage/damage received during unloading of the merchandise.

2. Shortage encountered within sealed boxes/ H.U.Nos. )3. Excess merchandise received

Shortage/damage received during unloading of the merchandise

In case of in-transit shortage/damage, Store Warehouse Manager to identify the same.a. He must clearly mention the H.U No. & short/damaged qty. for theShort/damaged boxes on both the copies of delivery documents (i.e. STN /TaxInvoice and gate pass).b. Transporters signature to be taken on both the copies of delivery documentsMentioned above. Duplicate copy to be handed over to the transporter whileOriginal copy to be retained at store.c. He must then do the GRN for actual quantity received.d. Now value of short/damaged stock to be checked,If the value is greater than Rs 15,000:-GRN for the short/damaged stocks to be done separately.e. If Value of the short/damaged stocks is less than or equal to Rs 15,000:- GRN for shortor damage stock should be done with reason code.

As soon as debit entry is booked in SAP, an auto mail in

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this regard will go to Supplying Site Warehouse Manager for approval.If the request is approved, Store Warehouse Manager will get an auto mail andaccordingly he must Post the debit note document in SAP.As soon as debit notedocument is posted in SAP, an auto mail for the same will go to the transporter. In casethe request is rejected, Store Warehouse Manager has to find the reason of rejection and

accordingly take corrective action. In case the issue remains unresolved beyond 48 hrs. Itwill be auto escalated to Zonal Business Manager for final resolution.

Shortage encountered within sealed boxes/ H.U. Nos.

In case shortage is identified within the sealed boxes,a. SCM Manager to do the GRN of the actual quantity receivedb. GRN for the short quantity to be made separately.Note: - Hit squad can visit the store anytime to ensure that there are no boxesmisplaced at the store.

c. Transfer posting document for the shortage quantity must be created in SAPwithin 48 hrs of corresponding GRN Posting. It is mandatory to mention

Delivery No. & GRN No. while Transfer Posting.

d. As soon as this is done, an auto mail will go to Supplying Site WarehouseManager for approval.e. If the request is approved, SCM Manager will get an auto mailregarding the same and accordingly he must post the document (i.e. TransferPosting document) in SAP.f. In case the request is rejected, SCM Manager to find the reason ofrejection and accordingly take corrective action.

g. In case the issue remains unresolved beyond 48 hrs. It must be escalated to therespective Zonal Business Manager and the Commercial Head for final resolution.h. In case any shortage is identified at a later stage e.g. at the shop floor, the DMof the respective section must certify the shortage. He must then inform the SCM Manager& the SM about the same immediately.

Excess Merchandise received

On receiving excess items, SCM Manager to keep these items aside. These items are notto be inwarded .He must inform the dispatching site of excess delivery. The excess itemsto be sent back to the dispatching warehouse separately by sealing the truck with returnedgoods.

Receipt of Goods by the Store warehouse for deliveries affected by

vendors directly to the store

Basic Principle governing the process:

Goods are received strictly as per the P.O. issued. The consignment is inwarded by entering each SKU in the system.

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Arrival of goods at the store warehouse and document verification.

On arrival at the store warehouse the vendor informs the security personnel.

If a queue of vendors exists, security personnel to issue the vendor a tokennumber. On his turn, arriving security personnel to call the vendor and verify

The documents pertaining to the consignment.Document set is checked for the following: -A signed P.O. which has not expired

Invoice of the supplier

Delivery Challan in duplicate

NOTE:- If any of the above documentation is not in order security personnel to notify thestore warehouse staff. Who in turn should try and rectify the problem. However, in nocase are they to deviate from the below mentioned process of Inwarding. Security staff to supervise unloading of the consignment into the store Warehouse

and maintain a count of the number of cartons unloaded.

Warehouse personnel to ensure that the items are bar-coded by undertaking asample check.

Security staff to record the inwards in their Security Registers. Warehouse staff to open the cartons and do a global count of the items received to

confirm that the quantity received is in order.NOTE:- Any shortages are to be brought to the notice of the vendors delivery personnel

and noted on the spot on the delivery challan and invoice. Security staff to stamp the suppliers delivery challan with the inwards received

stamp. The store should get stamps made with the following fields:Store Name

P.O. No.Nos. of carton & pieces received

Received date

One copy of delivery challan to be handed over to vendor while the set ofdocuments consisting of P.O., suppliers invoice, original delivery challan tobe retained by the security staff and handed over to the store warehouse personnel.

Inwarding of the consignment

SCM staff to invoke the P.O. for that consignment on the SAP system. SCM staff to check

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the consignment and ensure goods delivered are as specified in the P.O. Each SKU to bechecked against what has been ordered in the P.O. with respect to item description,quality, quantity, condition of the product and price of the item. If any variance in qualityis noticed, the particular item to be kept aside and not inwarded. The supplier is notified ofthe variance and asked to pick it up within 15 days. After each item has been checked the

goods inwarded can be saved and the system generates a GRN. A printout of the GRNneeds to be taken and attached with the set of documents pertaining to the consignment.The consignment is to be recorded in the Inward Register maintained by the in store SCMpersonnel.Everyday the inwards register is handed to the security personnel to record the GRNnumber in the security register against the particular consignment.The entire set of documents is forwarded by the SCM staff to the accounts department foreffecting payment. A record of each set of documents passed onto accounts is to bemaintained in a register at the store.

Inwarding of SIS merchandiseBasic Principle governing the process:

SIS merchandise is the responsibility of the SIS vendor.

This inventory is neither inwarded nor outwarded in the PRIL SAP system. However, a check and record is to be maintained on the movement of goods by the

security personnel. Inwarding of SIS merchandise and recording of the same.

On arrival of SIS merchandise the security personnel is notified of the same. Security staffs to examine the merchandise to ensure the items pertain to what the

particular vendor is dealing in, take a count of the quantity being inwarded and

allow it to enter the store after verification from the SCM manager. The inward is to be recorded in the SIS Inward Register where the vendor

Details are captured; merchandise description and quantity are noted.

Outwarding of Pantaloons sMerchandise

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Basic Principle governing the process: For items to be outwarded, a forward STO needs to be created by the front end

category team (FEC) and sent to the store. At the store, each item is to be entered against this forward STO and outwarded

from the system.

Approval of items to be outwarded. It is of utmost important that, beforeoutwarding, permission to be sought from the store manager, zonal supply chainteam and the respective category team.

Preparation of the forward STO

After taking proper approval as mentioned above, Store Warehouse Manager to prepare alist of all the items to be outwarded in an excel sheet and send it to the FEC team. FECteam to create a forward STO for the same and send the STO details back to the store.Store SCM Manager to invoke STO No. in the SAP. Scanning and Outwarding of items toPRIL Warehouse/Delivery Centre.

The items to be outwarded are collected, checked against the underlying STO and packedfor dispatch.The outwarded items are saved as an STN, of which three copies are printed.Warehouse personnel to supervise loading onto the delivery vehicle according to the STN.The security personnel to simultaneously maintain a count of the cartons being loaded onthe vehicle and tally the same with the number of cartons as per the GRN.Security personnel to affix a seal containing stores stamp & securitys signature on thedelivery vehicle.Warehouse personnel to record the STN details, merchandise details and quantity in theirOutward Register.

Security personnel to record the outward in their Security Inward Outward Register andcreate a gate pass for the consignment.The STN and gate pass are stamped with an outward stamp by security.The outward number according to the security register, number of cartons and date are tobe recorded on the stamp.Two copies of the STN and the gate pass are to be handed over to the delivery vehiclestaff.The other copy of the STN and gate pass is handed back to the warehouse personnel forfiling of the same.When the consignment reaches the warehouse/D.C., the respective personnel toacknowledge the receipt of the goods on one copy of the STN, which needs to be then sentback to the dispatching store for their records

Outwarding of goods directly to vendor

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Outwarding of goods to vendors can take place directly without having to create abase P.O.

The items to be out warded are entered in the system and 3 copies of an OutwardGoods Receipt Note are prepared.

When the vendor arrives, the merchandise is handed over to the vendor. Security

personnel to maintain a count of the number of cartons being loaded on thevendors vehicle. This count is tallied with the GRN to ensure that no extramerchandise gets outwarded.

The vendors delivery personnel acknowledge receipt of the items on the GRN. Warehouse personnel to record the Outward GRN, merchandise details and

quantity in their Outward Register. Security personnel to record the outward in their Security Register. A gate pass is

generated to enable the merchandise to exit the store premises.

Security personnel to put an outward stamp on the GRN and gate pass. On theoutward stamp, the outward number (according to the security register), number of

cartons and date to be recorded. Security personnel to handover one copy of the GRN and gate pass to the vendors

delivery personnel and the other copy to the warehouse personnel. Warehouse personnel in turn to file one GRN for records and the other set to be

passed onto accounts for recording. Papers forwarded to accounts are to be recorded in a register maintained for this

purpose by the store commercial.

Outwarding of SIS merchandise Merchandise to be outwarded is checked by the security personnel to ensure items

not belonging to the vendor are NOT taken out of the store. If all items are in order security personnel to take a count of the items being

outwarded and allow it to exit the store after verification by the store manager.

A record is made in the Outward Register capturing the vendor details,consignment details and quantity being outwarded.

Inter-store Stock Transfers

Inter Store Stock Transfer refers to transferring of goods from one store to another withinthe limits. The reasons for inter stock transfer could be:

Fluctuating customer demand

Category initiated for newly open stores.The steps involved in Inter Store Stock Transfer are as follow:

Having identified the no of merchandise required for particular category, it is theduty Of DM to send the requisition of required merchandise to zonal front endcategory.

Front End Category then checks the status of all the stores within the octroi limits

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and raises the Stock Transfer Order (STO) against sent requisition.

Stock Transfer Order:

It is a document which is raised by the zonal front end category for transferring of goods

from one place to another. STO is raised and sent to the store which will transfer goods to

receiving store by the front end category .This document gives information about allmerchandise which needs to be transferred to receiving store. For example: articlenumber, quantity, storename (where goods need to be transferred) etc.

Front End Category then sends the 10 digit STO number by mail to the sendingstore.

Having received the STO number from Front End Category, particular categorysDM accesses the STO on SAP for full details.

On the basis of STO raised by Front End Category, DM sends the required numberof merchandise to the store warehouse. Store warehouse makes the physical countof the goods and scans the each merchandise in the system. Packing of goods is

done and STN (Stock Transfer Note) is generated by the store warehouse.

Stock Transfer Note:

It is a document which is raised by the sending store to receiving store. This documentgives information about all merchandise which is getting transferred to receiving store.For example: article number, quantity, store name (wheregoods need tobetransferred)etc.

The 3 copies of STN are issued:One copy stays with the sending store

One copy for receiving storeOne copy is an acknowledgement for the sending store

Against the STN, a Gate Pass must be issued by the sending store.

Store copy of STN and gate pass must be signed by the transporter for the numberof merchandise he will be delivering to the other store.

Records for the gate pass must be maintained by the store security personnel.

An entry must be made in the Outward Register, which is maintained at theSecurity.

Mobiles Stock Receipt and Sales Procedure

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The following process is to be followed for Mobiles Stock Receipt and Sales Procedure The GRN/STN must be prepared before products are taken to the sales floor to

avoid any stock discrepancies at a later stage.

The STO and STN updating must be done before the stock is taken to thedepartment.

While Inwarding, each and every product must be physically counted & checkedagainst the PO. Also check whether the seal is intact of all boxes. If not the same tobe intimated to the warehouse in-charge/ store manager. The stock must then bekept in a pre-designated safe zone.

It is important that the price points of the inwarded stock is checked (PO Vs STN)due to frequent price changes..

The store logistics person must maintain a Stock Handover Register which clearlystates the stock handed over to the respective DM/ASM.

The DM/ASM must in turn cross-check the stock received against the GRN.

The stock received must be kept under controlled lock and key. A duplicate copy of the STN must be documented by the respective DM for audit

purposes.

SM must ensure that there is a secured lock-up area in the store back-office wherethe majority mobile stock will be kept. Only a part of the stock, i.e. Model stockmust be kept at the mobile counter under lock and key.

The final accountability of the stock remains with the SM at all times.

To avoid negative inventory in the system, the stocks must be inwarded under thesame article code as per the PO. This will avoid duplication of codes, negativeinventory and stock miss-match.

The seal of the boxes should not be tampered with. The seal must be opened onlyafter the handset is sold in the presence of the customer. In an exceptional case, ifthe store has to open the seal, due permission must be taken from the category.

In case of boxes without seal, it is the responsibility of the DM/ASM to obtain thenecessary seal from the concerned category person within 3 days of opening thebox.

Registers maintained at stock receiving points.

1. Security inwarding and outwarding register.

2. Inwarding register.

3. Outwarding register.4. SIS register.5. Stock handover register.

6. Vendor returns register.

7. Non sellable inward register.

8. Non sellable outward register.

9. Outward gate pass.

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Pilferage

Pilferage is the reduction of inventory from the actual inventory. It is caused byshoplifting by employees or customers, by wrong inwarding, by merchandise being

misplaced or damaged, or by poor bookkeeping, by vendor errors or mistakes andinaccurate records.Example of employee mistakes are failing to ring up an item when its sold andmiscounting when its received or when physical inventories are taken. Inventoryshrinkage due to vendor mistakes arises when vendor shipment contains less than theamount indicated on the packing slip.Although shoplifting receives most of the publicity. Employee theft account for moreinventory loss. A recent survey attributes 46 percent of inventory shrinkage to employeetheft, 31 percent to shoplifting, 17 percent to mistakes and inaccurate records, and 6percent to vendor errors.

Calculating shrinkage

Shrinkage is the difference between the recorded value of inventory based onmerchandise brought and received and the value of the actual inventory in stores anddistribution centers divided by retail sales during the period.

Shrinkage = Inventory on record Actual inventory * 100Sales

For example, If accounting records indicate inventory should be1,500,000 the actualcount of the inventory reveals 1,236,000, and sales were 4,225,000 , the shrinkage is

= 1,500,000 1,236,000 * 1004,225,000

= 6.5%Reducing shrinkage is an important store management issue . Retailers annual loss fromshrinkage is between 1 and 5 percent of sales. Every rupees of inventory shrinkagetranslate into rupees of lost profit.

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Causes of shrinkage

1. Employee Theft

According to the National Retail Security Survey, the number one source of shrinkagefor a retail business is internal theft. Some of the types of employee theft include discountabuse, refund abuse and even credit card abuse. Unfortunately, this is one loss preventionarea that generally doesn't receive as much monitoring as customer theft. Employee

Theft from a retail store is a term that is used when an employee steals merchandise,food, cash, or supplies while on the job. However, in the eyes of the law, employee theftis just theftthe elements of the crime are identical. To commit theft, the employee mustintend to permanently deprive their employer of the value of the item stolen.

Employee theft can occur just like shoplifting by concealing merchandise in a purse,pocket, or bag and removing it from the store. It can also occur by stealing cash, allowingothers to steal merchandise, eating food, and by refund, credit card, or check fraud.Employee theft can sometimes be charged as embezzlement due to the trusted fiduciarystatus of the employee. All of these methods lead to loss of inventory (shrinkage) and/or

profit for the merchant.

Employee theft is an insidious crime because the merchant is paying a wage and benefitsto the thief on top of paying for the cost of their dishonestly. Studies have shown thatemployees can do a lot more damage than shoplifters because they are trusted and havean insiders knowledge of store security measures.

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Employee Theft Profile

There is no real physical profile for a dishonest employee. Dishonest employees come inall shapes, sizes, ages, sexes, ethic backgrounds, religions, levels of education, and

economic status. You simply cannot accurately determine who is likely to steal based ontheir demographic status alone. However, an employer can make reasonable assessmentsbased on their conduct, integrity, and judgment. A persons past conduct, integrity, andjudgment often provides the best indication of their future behavior.

Retail store employees have a constant opportunity to steal cash or merchandiseall theyneed is the desire and sufficient motivation to do so. What keeps most employees honestis moral character, loyalty, respect for the law and their employer, and the desire to beviewed as trustworthy. Studies support this by proving that shrinkage is significantly lessin stores with reduced employee turnover and fewer part-time workers.

For others, the only barrier to dishonesty is the fear of getting caught. The employee thiefrisks getting fired, being arrested, jailed, and paying restitution. The criminal record andbad job reference will have a compounding effect that will follow them for years.Merchants must not be sending a clear message to their employees because mostemployee thieves that I have encountered never thought they would be caught.

Cost of Employee Theft

According to the University of Florida 2005National Retail Security Survey, employeetheft was estimated to be responsible for 47% of store inventory shrinkage. That

represents an estimated employee theft price tag of about 17.6-billion dollars per year.This astounding figure makes employee dishonesty the greatest single threat toprofitability at the store level.

The 2003 study found the average dollar loss per employee theft case to be $1,762.00compared to $265.40 for the average shoplifting incident. Despite these facts, mostretailers mistakenly focus their loss prevention budgets on shoplifting.

Loss Prevention

Preventing employee theft is a constant challenge for retailers. The industry knows that itmust put systems in place to prevent or deter internal theft. To be effective, lossprevention systems must be designed to reduce the opportunity, desire, and motivationfor employee theft.

One way of reducing employee theft motivation is to show a deep commitment to preventlosses at every level and a desire to prosecute thieves. This sends a message to employees

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that shoplifting losses cannot be used as a excuse for shrinkage and that all thieves will beprosecuted.

Basic loss prevention steps involve good procedures for hiring, training, and supervisionof employees and managers. Procedures that are clearly defined, articulated, and fully

implemented will reduce the opportunity, desire, and motivation for employees to steal. Iwill talk about each of these concepts in future articles.

2. Shoplifting

Coming in at a close second is shoplifting. Customer theft occurs through concealment,altering or swapping price tags, or transfer from one container to another. Whileshoplifting remains a smaller inventory loss source than employee theft, stealing byshoppers still costs retailers about $10 billion annually. Shoplifting is a common crimethat occurs when someone steals merchandise offered for sale from a retail store.

To be convicted of shoplifting, one must "intend" to permanently deprive the merchant ofthe value of the merchandise. Merchants are often confused about the procedures forlawfully detaining someone suspected of theft from their store. What are the rights of themerchant? What are the rights of the customer? How much force can be used to detainsomeone who has stolen merchandise?

3. Administrative Error

Administrative and paperwork errors make up approximately 15% of shrinkage. Simple

pricing mistakes due to markups or markdowns can cost retailers quite a bit.

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4. Vendor Fraud

The smallest percentage of shrink is vendor fraud. Retailers report vendor fraud occurs

most when outside vendors send delivery of the material into the store.

5. Cashier errorCashier error may also lead to shrinkage. For example while wrapping the merchandise

cashier does do billing of merchandise.. Because, in hurry he forget one or twomerchandise.

6. Inwarding errorDuring inwarding and outwarding the merchandise a proper process has been followed.In case, if wrong process followed then it will also cause the shrinkage of merchandise.

7. Lack of maintenanceSome merchandise get damage because of improper inventory management and poormaintenance of merchandise.

8. Excess inventoryIf the inventory is excess in comparison to the efficiency of the floor and warehouseinventory it would lead mismanagement of merchandise and can cause shrinkage andDamage of merchandise.

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RETAIL LOSS PREVENTION

Retail loss prevention is a profession that is responsible for reducing inventory lossesinside retail stores. Loss prevention professionals manage in-store security programs

that focus on reducing inventory losses due to employee theft, shoplifting, fraud, vendortheft, and accounting errors. Like others in the security industry, retail loss preventionprofessionals must interact with store personnel and store customers when dishonestlyor carelessness occurs. As you can imagine, accusing someone of dishonestly orcarelessness is not a small matter and must be done with the utmost care andprofessionalism.

Loss prevention workers work closely with both retail security officers and retail buyers.They may also work with retail clerks and cashiers and retail merchandisers. In short, theloss prevention employee is in charge of exactly what the job title says - loss prevention.However, it isn't as simple as making sure children don't break glass items.

Loss prevention starts with security. A loss prevention officer will likely talk to newemployees or do training a few times every year in order to prevent shoplifting. Storesmay miss many shoplifters, but in general, they can tell at the end of the week how manyitems were stolen. At least, they can with a good loss prevention officer. It will be his orher job to keep track on inventory theft.

In addition to teaching employees way to spot shoplifters, a loss prevention officer mightgo undercover a few days a week to spot potential shoplifters. This is especially commonin stores where shoplifting happens often. The loss prevention officer will also makerecommendations about security cameras and may head up the team of security officershired by the store.

Loss prevention is about more than theft, though. These employees are also responsiblefor finding and righting paperwork errors that could result in the company losing money.For example, he or she may look for the error that caused the store to order 10,000 shirtsinstead of 1,000. When there is an excess of any kind of product, chances are that the

product will have to be put on sale, which means that the company will make little or noprofit.

Another job duty of the loss prevention officer is to look at ways the company can cutcosts. This often makes the loss prevention officer the "bad guy," since he or she makesrecommendations on whom to let go because there isn't enough work. Cutting costs canalso be done through cutting employee hours, replacing employees that are not motivated,and looking for alternative solutions to high expenses.

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Some stores hire a loss prevention officer to work purely for them. However, what ismore common is that there will be a loss prevention officer for a whole corporation or awhole region. This employee will travel from store to store. For stores that are not part ofa larger corporation, loss prevention consultants are available. Pay rate will vary based ona number of factors, with consultants usually making more. In this field, however,

education and experience are pluses.

How to Use Customer Service to Prevent Shoplifting

Good store management can be an effective tool against shoplifting. Retailers should alsouse store layout, adequate inventory controls and follow common security practices tocombat shoplifting. If your store has been designed to reduce shoplifting, another form ofprevention is to use customer service techniques to take away opportunities to steal

product. A standard process of store operation leads good customer service.

1. Staffing: Schedule an adequate number of employees to work at one time.

2. Greetings: Greet every customer that enters the store. This lets the customer knowyou are aware of their presence.

3. Be Attentive: Make yourself available to all customers and never leave the storeunattended.

4. Receipts: Give each customer a receipt for every purchase. Require receipts forrefunds for cash. Trash any discarded receipts immediately.

5. Stay Focused: Don't allow customers to distract the cashier while another personis being checked out.

6. Bag Check: Implement a policy and procedure for backpacks and bags brought inby customers.

7. Code 3: If you notice suspicious activities, alert other employees immediately.Many stores have a security code to alert staff of possible shoplifters.

8. Helping Hand: Approach the suspicious person and ask if he/she is findingeverything okay. Mention that youll be nearby should he/she need your help. Makethe shoplifter feel watched.

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9. Tag Swap: Cashiers should watch price tags and be on the lookout for priceswitching. Ask for a price check if something seems out of place.

10. Hidden Items: Shoe boxes, pocket books, baskets with lids and any otherproduct easily opened should be inspected by cashiers to be sure it does not containother merchandise.

11. Sealed Shut: Every bag should be stapled closed, with the sale receiptattached.

How to Use Store Design to Reduce Shoplifting

Security issue need to be consider when placing merchandise near store entrance ,delivery areas and dressing rooms. For example, easily stolen merchandise such asjewelry and other expensive items should never displayed near an entrance. By reducingthe height of fixture and having open sight lines to entrances and exits, store employeecan see customers in the store and watch for shoplifters while providing better services.Dressing room entrance should be visible to store employees so they can easily observescustomers entering and exiting with merchandise. The easiest way for retailers todiscourage theft in a store is by taking away opportunities to steal. A little thought intothe store's layout and design can prevent theft before a loss occurs. Here some tips to takeinto consideration store design.

1. Checkout: Design the store lay out so customers must pass the register area andstaff to exit the store. Never leave the register unlocked or unattended. Do not displaymerchandise near the store exits.

2. Tidy Up: Keep the store neat and orderly. Full displays and straightened shelvesallow employees to see at a glance if something is missing.

3. View All: Use mirrors to eliminate blind spots in corners that might hideshoplifters. Maintain adequate lighting in all areas of the store, keep fixtures anddisplays low for better visibility.

4. Under Lock and Key: Place small, expensive items in locked cabinets or behindthe counter. Rest rooms and dressing areas should be watched at all times. Keep

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dressing rooms locked and limit the number of items taken in by each customer. Usealarms on unlocked exits and close or block off unused checkout aisles.

5. Signage: Signs and posters reinforcing security messages should be used. Postanti-shoplifting signs like 'Shoplifters Will Be Prosecuted' in clearly visible locations.

6. Security: Use security equipment such as closed circuit television, security tagsand two-way mirrors. Uniformed security guards are also powerful visual deterrentsto the shoplifter.

Tips:

A well-designed store layout will not eliminate all shoplifting but will help reduce it.

Combine customer service techniques with good store design to combat shoplifting.

How to Identify Shoplifters

Shoplifters can be placed in one of two categories, professional and amateur. While bothgroups can be quite skilled at the art of thievery, professional shoplifters steal to make a

living and may use force or intimidation. The non-professional shoplifter may be easier tospot.

Shoplifter works as professionally, one should never think that all shoplifter are poorlydressed. To avoid detection professional shoplifter dress in the same manner as customerpatronizing the store. Over 90 percent of all amateur shoplifters arrested have the welldressed and well maintained and they pay either the cash, check, or credit to purchase themerchandise they stole.

Shoplifter Methods

Many of these thieves work in groups of two or more to distract the sales staff while theypilfer. Shoplifters learn to take advantage of busy stores during peak hours or they mayhit at times when employees are less alert, such as opening, closing and shift changes.

Hiding merchandise is the most common method of shoplifting. Items are concealed inthe clothing of the shoplifter, in handbags, strollers, umbrellas or inside purchased

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merchandise. Bold shoplifters may grab an item and run out of the store. Other methodsinclude price label switching, short changing the cashier, phony returns, and so on.

Spot the Shoplifter

Unfortunately, there is no typical profile of a shoplifter. Thieves come in all ages, racesand from various backgrounds. However, there are some signs that should signal a redflag for retailers. While the following characteristics don't necessarily mean guilt,retailers should keep a close eye on shoppers who exhibit the following:

Spends more time watching the cashier or sales clerk than actually shopping. Wears bulky, heavy clothing during warm weather or coats when unnecessary. Walks with short or unnatural steps, which may indicate that they are concealinglifted items. Takes several items into dressing room and only leaves with one item. Seems nervous and possibly picks up random items with no interest. Frequently enters store and never makes a purchase. Enters dressing room or rest rooms with merchandise and exits with none. Large group entering the store at one time, especially juveniles. A member of thegroup causes a disturbance to distract sales staff.

Recognizing Return Fraud

Does your return policy allow stolen merchandise to be returned for cash? We certainlyhope not! However, the National Retail Federation'sReturn Fraud Survey says criminalsoften take advantage of retailers with relaxed return policies.

The survey reports that an astonishing 95.2% of retailers have experienced most popularform of return fraud in the past year. While many retailers are tightening policies, some atthe expense of customer service, the retail industry will still lose $9.6 billion in returnfraud.

Common Types of Return Fraud

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The first step to avoid becoming a victim is to be able to recognize the scam. Some of themore common types of return fraud are:

The return of used merchandise

The return of merchandise using counterfeit receipts

.

Signs of Return Fraud

Spotting the above types of return fraud may be difficult for some retailers. Other signsthe retail store is being adversely affected by returns are:

High shrink rate

Dramatic increase in number of returns Return policy not being enforced Increasing number of markdowns due to returns. When customer doesnt eager to take a other merchandise in exchange and theyare putting emphasis on returning his/ her money.

Shoplifting Policies and Procedures

It is important to planpolicies and procedures for shoplifting early in the businessplanning stages. We all hope it will never happen in our store but in the event it does,retailers and staff should be prepared to handle the shoplifting situation. Take thefollowing questions into consideration when writing your shoplifting policies andprocedures:

Is your goal to prosecute or get the merchandise back? Does your store have a zero tolerance policy for shoplifting? Will you prosecute shoplifters under 18 or over 65? Is there a minimum amount before prosecuting?

How will you confront and detain the shoplifter? What will you do if the shoplifter shows remorse or offers to pay? Who is responsible for calling the police?

Consider a shoplifting policy that is fair but firm. If your store chooses not to prosecuteshoplifters, word will get around and your store may become a target. If shoplifters know

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your store takes theft seriously and is not afraid to prosecute, many thieves will avoidstealing from your business.

Stopping a Shoplifter

Store design, customer service techniques and technology go a long way at preventingshoplifting. Post signs saying that shoplifters will be prosecuted, if that is the store'sposition on shoplifting. If you see someone take an item, alert another employee and thenapproach the person. Ask "Can I help you?" or "Can I ring that up for you?"

Learn your local and state shoplifting laws. Contact the police station and they should beable to answer any questions you may have.

Laws vary by location, but most places require that one person must see the shopliftertake the item, conceal it and exit the store without paying for the merchandise, all whilenever taking their eyes off the shoplifter. Only then can that store employee apprehendthe shoplifter without force.

When approaching a suspicious person, try to remain calm and professional. It is possiblethat a misunderstanding has taken place and the person is not actually a shoplifter.

Treating the suspect in a polite, discrete yet firm and professional manner will help youand your store avoid a slander, false arrest, or discrimination lawsuit.

Shoplifting Probable cause

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To establish a solid base for probable cause, and prevent false arrest claims, there are sixuniversally accepted step that a merchandise should be follow before detaining someonesuspected of shoplifting.

1. You must see the shoplifter approach your merchandise.

2. You must see the shoplifter select your merchandise.

3. You must see the shoplifter conceal, carry away or convert your merchandise.

4. You must maintain continuous observation the shoplifter.

5. You must see the shoplifter fail to pay for the merchandise.

6. You must approach the shoplifter outside of the store.

Step 1: You must see a shoplifter either when they enter your store or approach a display

and that he/she does not have any merchandise in their hand or that they have notretrieved a item from their own purse, bag or pocket. This step prevent a commonmistake that occurs when a customer brings an items back to the store for a return anddoes not check in at the return desk first. If you detain someone after seeing them replacetheir own merchandise into their pocket or bag. You could be subject to a false arrestclaim although it is a seemingly mistake. Many false arrest claims are filed becauseretailers missed this important, but basic, first step.

Step2: You must see the shoplifter select the merchandise. Store employees canmisunderstand when they see a customer innocently put an item into their pocket or purse

and not realize that the customer had brought the item into the store with them forcomparison purposes. If you saw the shoplifter remove your merchandise from yourdisplay prior to concealing it, then you have a strong foundation for proof of shoplifting.

Step3: you must see the shoplifter conceal, carry away or covert the merchandise. Thisincludes concealment in bag, strollers, or on a person. Shoplifting can occur by wearingarticles in plain view once the tags are removed. Shoplifter can occur by conversion likewhen consuming food prior to being purchased. Exception is fitting room theft whereobservation is impossible. Once inside a fitting room store merchandise be concealedalmost anywhere. The important factor is to know what items go into the fitting room andwhat items dont come out in plain view. Of course, the fitting room must be checkedbeforehand to see it it is clear of merchandise and after the suspected theft to see that themissing items were not simply discarded.

Step 4: You must maintain continuous surveillance of the shoplifter. If your store policyis to detain and apprehend all shoplifters, then you must adhere strictly to this step.Experienced shoplifters will try to dump the concealed merchandise, without yourknowledge, if they believe they have been observed.

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Step 5:- You must see the shoplifter fail to pay for your merchandise. Typically, ashoplifter will walk out of your store, past all cash register, without making any attemptto pay for the concealed merchandise.

Step 6: you must approach the shoplifter outside of the store. Although not technicallynecessary, following this step eliminates all possibility that the shoplifter still intends topay for the stolen product. There is a safety in numbers and most shoplifters willcooperate if they believe that fighting or running is futile.

Why Employee Pilfer in store

Not all crooks roam the streets of the nation's cities. Many spend their time in themanufacturing plants of companies. There, disguised as honest citizens, they pilferwhatever comes to hand, often tampering with records to cover up their thefts.

To prevent pilferage, an owner-manager must recognize that some employees cannotbe trusted and make all employees aware that he or she is taking steps to thwartdishonest personnel. Such steps include setting up a system of loss prevention (devicesand procedures), administering the system rigidly, and auditing it often to discouragedishonest employees who try to bypass the system.

To steal or not to steal? That is the question facing employees in plants. Manyemployees answer that question almost unconsciously. They see items lying aroundand pick them up for their own use. They slip small hand tools into their pockets. Or

they dip into the bin for a fistful of nuts and bolts or snip off a few feet of wire for ahome repair job.

But not all employees who pilfer are nickel-and-dime thieves. Some are professionalswho carry off thousands of dollars worth of equipment and materials.

Misplaced Trust

One reason for pilferage is misplaced trust. Many owner-managers of small companiesfeel close to their employees. Some regard their employees as partners. These owner-managers trust their people with keys, a safe combination, cash, and records.

Thus, these employees have at hand the tools which a thief or embezzler needs for asuccessful crime. Unfortunately, some of the "trusted" employees in many smallbusinesses are larger partners than their bosses anticipate. Unless you're taking activesteps to prevent loss from in-plant pilferage, some are probably trying to steal yourbusiness, little by little, right from under your nose. Few indeed are the businesses inwhich dishonest employees are not busily at work. Usually, these employees are

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protected by management's indifference or ineptitude as they steal a little, steal a lot,but nevertheless, steal first the profit, and then the business itself.

One of the first steps in preventing pilferage is for the owner-manager to examine the

trust he or she puts in employees. Is it blind trust that grew from close friendships? Oris it trust that is built on an accountability that reduces opportunities for thefts?

A Climate for Dishonesty

In addition to misplacing trust, it is easy for an ow

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