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Background, Plans and VisionKevin Camper, Best Buy
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ECR Europe Shrinkage Group
Measuring “Hot Products” in RetailBest Buy Case Study
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AGENDA
Introduction to Best Buy
Best Buy Shrink Journey
Understanding ‘Hot Products” – Best Buy Lens
Best Buy Cycle Count Program
Summary
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INTRODUCTIONBEST BUY, INC.
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Best Buy – Who are We?
Founded in 1966, under the name of “Sound of Music”, (nine stores) and based in Richfield, Minnesota
In 1983, changes name to “Best Buy” and began pioneering the electronics superstore concept – “Big selection, low prices and a grab and go environment”
2004, Forbes names Best Buy “Company of the Year”
Today, BBY operates a global portfolio of ten brands with nearly 4,100 stores and 155,000 employees worldwide
Operates in the United States, Canada, Turkey, China Mexico, and just recently opened our first store in the UK
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SHRINK HISTORYBEST BUY, INC
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SHRINK HISTORY
BEST BUY IS KNOWN FOR THE LOWEST CE SHRINK RESULTS IN THE INDUSTRY
UNFORTUNATELY, THIS WAS NOT ALWAYS THE CASE
1995/1996 ‐WORST SHRINK PERFORMANCE 1.12%
SEVERAL CHANGES HAPPENED (LABOR AND CCTV’S ADDED, PRODUCT LOCKED UP, OVERBUDGET MEETINGS, ETC…) HOWEVER, DID THESE CHANGES HELP?
1996 1997 1998 2000 2002 2004 2006 2007
BBY 1.12 0.83 0.62 0.39 0.37 0.35 0.38 0.37
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
WHAT WAS THE #1 CHANGE THAT MADE THE DIFFERENCE?
sin(x) cos(x/2)]1/2 ∙ [sin(x/2) cos(x/4)]1/4 ∙ [sin(x/4) cos(x/8)]1/8 ∙ ...
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For it was our PEOPLE who introduced us to what is today fondly known as our company shrink plan: G.B.O.T
GENERAL MANAGER 3RD INTERVIEW
BAROMETER MANAGEMENT
OVER BUDGET MEETINGS
TALKING SHRINK
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UNDERSTANDING / LEAKY FAUCETHOT PRODUCTS
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UNDERSTANDING
80% shrink comes from 20% of sku’s
Products that have high market value in terms of “want” and “need”
Can be identified through highest vendor shrink and highest sku shrink at store level
Key Product class that impacts the entire organization – i.e. leaky faucet
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FY10 – SHRINK RESULTS
Class Class Name Shrink $
92VIDEO GAME SOFTWARE (18,167,809)
160 MP-3 DEVICES (9,453,346)
140 MOBILE COMPUTING (9,188,477)
96VIDEO GAME HARDWARE (6,256,339)
276 FLAT PANEL TV (5,935,089)
53 DIGITAL CAMERAS (5,207,965)
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“Fixing the Leaky Faucet”
Focus on the vital few amongst the trivial many
Greatest return in the quickest time
Generate company wide engagement
Vendor ownership and assistance (i.e. source tagging, Alpha security solutions)
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“GENERATE COMPANY WIDE ENGAGEMENT”
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BEST BUY’S CYCLE COUNT PROGRAM (ROLES / TOOLS / BENEFITS)
HOT PRODUCTS
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KEYS TO A SUCCESSFUL PROGRAM
Establish a schedule – start small and work toward a 12 week calendar
Constant Preparation – Sales associates prepping departments at closing.
Counts should be completed in the morning
All previous days receiving’s , transactions, deliveries must be reconciled before counting
Openly communicate results
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ROLES AND RESPONSIBILITIES
Warehouse Employees o Oversee the entire cycle count process
o Download cycle counts from the 12 week cycle count calendar
o Cycle count deviations are identified and adjustments are processed
o Product Process Manager communicates weekly shrink results
Store Employees o Participate in the cycle count program
o Help research and resolve any Cycle Count discrepancies
o Preparation of their departments
Store Manager o Ensure cycle counts are maintained on schedule.
o Ensure all inventory adjustments are submitted on a weekly basis
o Leadership discussion weekly
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TOOLS – CYCLE COUNT CALENDAR
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TOOLS – RETAIL SHRINK BAROMETER
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BENEFITS
Replenishment – Eliminate customer disappoints
Narrows the gap when discrepancies actually occurred. Able to diagnose the potentially problem more expeditiously.
Employee awareness of “hot zones” during morning chalk talks.
Employees walking through “hot zone” areas of the store –regardless if it is their department or not
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SUMMARYHOT PRODUCTS
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SUMMARY
Ask and Listen to your employees ‐ they will have the answers
Keep your cycle program small at first then grow
Generate company wide engagement – constant communication (Be Open and Transparent)
Leadership commitment to the program
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THANK YOU
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EXECUTIVE MESSAGE BRIANN DUNN, CEO, BEST BUY
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EXECUTIVE MESSAGE
Everyone has to think and act like a owner of the company
Listen to customers and employees
Embrace challenge and change
Ordinary people with a shared mission can achieve extraordinary things