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Data mining strikes stock shrinkage gold for Jaeger

Classic British clothing brand Jaeger is to roll out a loss prevention programme based on data mining to cut theft and fraud by a fifth and boost its profit margins by 2%.

Classic British clothing brand Jaeger is to roll out a loss prevention programme based on data mining to cut theft and fraud by a fifth and boost its profit margins by 2%.

Steve Hearn, head of risk and business continuity at the 122-year-old business, said an exhaustive analysis had revealed the company had been focusing its loss prevention strategy on the wrong things.

"We were spending four times as much on garment tagging as on all the other areas, but shoplifting was only 30% of the problem," he said.

The analysis estimated that internal theft accounted for 42% of losses, poor processes for 21%, and suppliers for 7%.

Jaeger's new loss prevention programme aims to change managers' behaviour by giving them the data they need to take action.

Jaeger went to UK loss prevention specialist Oris, which has a strategic partnership with product identity and shrink management company Checkpoint Systems. Oris also supplied IDM Systems' Oracle-based LossManager data mining application.

Data from its electronic point of sale system lets Jaeger identify the source of losses, integrate information from other applications such as RFID and CCTV, monitor investigations, and provide action alerts for managers.

"From data mining we knew that 84% of goods stolen were taken from near doors, despite 70% of our [more than 120] stores having tagging," Hearn said.

This prompted Jaeger to install very high-resolution CCTV cameras so that it could pass good images of shoplifters on to police. The company was able to stop tagging clothes altogether in favour to pursuing convictions and recovering goods.

Once the application goes live this month, Hearn plans to make the data mining facility available to other parts of the business. These include time and attendance, buying and logistics, and sales and marketing.

Stores run by managers who had been through "shrinkschool" were consistently more profitable and suffered fewer losses, Hearn said. "Already we can see that company-wide sales are up 200% but the value of losses has stayed level," he said.


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