This article was published in the October 2016 issue of STORES Magazine.
Looking to reduce theft and other forms of "shrink," enhance employee safety and create in-store operational efficiencies, Abercrombie & Fitch recently upgraded to a secure Internet-connected, reliable “smart safe” cash management system. The results go beyond the retailer’s original goals, though, and have helped with capital management as well.
Sam Bosson, senior director of accounting operations for A&F, says the company was looking for a cash management system that would simplify store operations and facilitate reconciliation validations.
“We weren’t just looking to reduce the shrink, shortages and theft expenses,” he says, “but also to reduce the payroll hours that our employees were spending managing cash deposits when they could have been out on the floor helping customers.”
In addition, employees no longer need to take cash deposits to a bank, which has helped enhance their safety, he says.
Tracking discrepancies
After a six-month pilot with a number of smart safe providers and various banking partners, A&F installed the Tidel Series 4 System in 475 stores. Through a secure Wi-Fi connection, the information collected by the safes during the day is integrated into a database at a remote location. The database is linked to A&F’s banking partner, Huntington Bank, based in Columbus, Ohio.
Both sales information from A&F’s point-of-sale system and the information from the Series 4 smart safes flow into the sales reconciliation system A&F uses. “We go through that and reconcile the POS with the deposits,” Bosson says. “It works very well.”
Sales auditors and loss prevention personnel can access hundreds of reports, including information on cash orders and transactions.
From this database, A&F’s sales auditors and loss prevention personnel can access reams of information collected by each safe, including coin orders, cash collections, transaction reports, end-of-day reports, current content reports and the unique identification numbers of store personnel who log into the system.
“There are hundreds of reports that a safe can produce that can be accessed through a dashboard on the network,” says David Barclay, Tidel’s director of global marketing.
Annie Bruner, vice president of treasury management and senior product manager with Huntington Bank, says A&F uses those reports to find exceptions, “validating that the numbers the bank has received match the numbers the stores said they sent."
“If there is any kind of discrepancy,” Bruner says, “it is infinitely easier to track down because every transaction at each safe is reported by the user. So if something is off, it is easier to establish … if there is a pattern going on.”
The system has a feature that allows managers to make manual drops if funds cannot be deposited into the bill validators. By examining exception reports, which can be used to identify above-average numbers of manual deposits, loss prevention can detect whether such activity is out of the norm, providing retailers with a tool to conduct a more thorough investigation.
Managers “have to take an active role when logging onto the system to make a cash deposit,” Bosson says. “That takes some of the risks we had before out of the process. We can track deposits by manager by day in almost real time, which gives us leveragability.”
Equipped with two SC Advance note acceptors that provide enhanced recognition technology, the Tidel system delivers faster note-to-note counting speed and improved bar code recognition, making it possible for A&F to validate customer payments for authenticity while tracking exactly how much cash enters the safe throughout the day, continuously enabling a fully reconciled cash position.
A&F started the pilot in the holiday season of 2015; after choosing to partner with Tidel and Huntington, the formal rollout began in early 2016 and was completed in August.
“With a project this size that touched so many of our teams,” Bosson says, “communication was the key to why it went so quickly and why it exceeded our expectations and drove our success. We were all on the same page.”
Bosson also notes that, relative to the other vendors in the pilot, A&F’s management felt “right out of the gate that Tidel and Huntington were better. They had done this before with other retailers. We felt it was a good partnership.”
The fact that Huntington is a local bank appealed to A&F’s management. Both Huntington and Tidel “were always ready to answer our questions,” he says. “They also proactively brought our various implementation partners into the planning process so we were able to get the implementation team involved up-front. And today, our relationships continue to be strong.”
Creating efficiencies
In addition to giving a big boost to A&F’s loss prevention team, the system has created significant financial and operational efficiencies.
Before the upgrade, A&F was working with several different drop-safe vendors and banking partners, but now the cash management partnership is exclusively with Tidel and Huntington Bank.
“It simplifies our store operations,” Bosson says, “so we have a more consistent model that each of the stores receive. We don’t have different instructions going to several different stores. That gives us efficiencies with our opening and closing processes.”
Because the safes are integrated with real-time reporting capabilities with the bank, A&F receives credit for deposits at the end of each business day, even though money may not yet have been physically transferred, making working capital quickly accessible for use.
“Instead of waiting two to three days to see our funds credited, we see the deposits the next day.”
“We share real-time information with our bank when making deposits,” Bosson says. “Instead of waiting two to three days to see our funds credited, we see the deposits the next day.”
A&F also purchased Tidel’s automated bulk bill validator/feeder, which means that store workers don’t have to personally feed bills one at a time, so deposits can take less than five minutes. Some stores have dual bulk bill feeders, “which helps speed up the process,” he says.
That alone “saves employees 30 to 45 minutes a day, compared with deposits they used to make in drop safes,” Barclay says, representing what he describes as “an incredible labor savings.”
“We found that it didn’t take as long as anticipated for employees to deposit money into the safe,” Bosson says. “That was one of our biggest concerns, and it wound up being a nice savings on the store operations side.
“It’s just a more efficient process for our employees.”
Lowering costs
The Tidel Series 4 has a seven-inch color screen with enhanced touchscreen capability, which allows for easy menu navigation. In addition, the central processing unit and power supply are easily accessible via the console, so service calls are faster, more secure and less expensive. A note validator maintenance door enables store managers to clear some jams without the need for a service call.
Bruner says store-level service calls average less than once a year with Tidel compared with other smart safe vendors she has worked with. “Service calls ranged from one to as many as four calls a year per store” with those other vendors, she says.
The system also gives A&F the ability to lower its change fund costs. In the past, A&F would deposit each store’s entire day’s cash and then order when change was needed. Now small denomination bills are kept at the stores, so they order change less frequently and at lower amounts.
“This way,” Bruner says, “we’re not charging A&F when they make a deposit and then recharging them when they order change. In effect, they’ve become their own in-store bank. They’ve become smarter with their money.”
Huntington also offered A&F the flexibility of being able to determine on a store-by-store basis how long a lease would be optimal, Bruner says, giving the retailer the ability “to better manage their costs.”
The amount of time it takes to upgrade an individual store is typically between four and six weeks, Bosson says. “That’s going full circle from site surveys to installation to training to getting deposits in to reporting to being up and running.”
Retailers can think beyond easing pain points like cash shortages because of theft, he says. “Creating efficiencies, achieving working capital benefits by having the cash in our account quicker and ensuring enhanced associate safety certainly shouldn’t be left out of a cost benefit analysis.”
Given all the improvements and efficiencies, A&F is “expecting a positive return on our investment,” he says.