Agenda. Risk Considerations: 6/5/2014. Omni-Channel Loss Prevention. Strategies for Managing Risk in a Multi-Channel Retail World

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1 Omni-Channel Loss Prevention Strategies for Managing Risk in a Multi-Channel Retail World Bryant McAnnally Disney Store USA, LLC. Joseph Biffar Chico s FAS, Inc. Cheryl Blake Verisk Retail Omni-Channel Retailing is concentrated on a seamless approach to the consumer experience through all available shopping channels, i.e. brick and mortar, mobile devices, internet, television, catalog, etc. Executionof an Omni-Channel Retail LP program requires seamless IT integration, superb planning and exceptional foresight. DO YOU HAVE WHAT YOU NEED TO MAKE IT LOOK SEAMLESS? 1 Agenda Ground Rules for system integration Developing a risk strategy/mission System exposures and data integration Exception Reporting / Investigations Questions? Merchandising arm of Disney Consumer Products, a segment of The Walt Disney Company. Global Retail Division with over 350 stores within North America, Europe and Asia as well as 9 E-commerce sites. Times Square Champs Elysees Risk Considerations: Store within a store concept System Integration YAF Store Imagination Park Disney Baby New concept website Returns Management/Analysis - External & Internal Friendly Fraud / Resale Exposures Outlets 1

2 Who are the right partners? C-Suite Buy In -CEO/COO/CIO IT at all levels Store / E-Commerce Operations Inventory Control / Supply Chain Finance / Accounting Marketing / Social Media Vendors Buy In Store or Online/ Ship to Home or Pick up in Store Purchases made in store or online and shipped directly to the Guest or picked up at their favorite local store. Have we insured a seamless integration between Online and B&M POS systems? Order Cancels -How to flag these sales for exception reporting and analysis? Returns -How do we stop Guests from performing returns of misshipped or items allegedly not received back to our stores? Pick up process -How do we insure cashier and system accuracy when closing out merchandise pick ups in store? Returns of Online Purchases at B&M Account Lookup (Name, Address, address, Phone or Order #) Recording of online order information in POS. Moving one problem to another? DC returns decrease while in-store returns, MOS increase. How does this impact payroll? Policy considerations Friendly Fraud / Resale Exposures What is Friendly Fraud? Importance of insuring pricing, promotions, etc. are consistent amongst omni-channel environments Exceptioningto deter and detect both online and at brick and mortar? How do you manage Guest/customer relations and expectations between the channels? 10 E-Receipt Usage When and where electronic receipts can be issued (POS/Mobile) Are there controls to prevent multiple distribution? Exceptioningmultiple receipts going to the same address Suggestion -Add an electronic attribute to identify when an E-receipt is issued 2

3 Who is Chico s FAS, Inc.? Chico s FAS, Inc. consists of four women s specialty brands offering private branded, sophisticated, casual-to-dressy apparel, intimate apparel, complementary accessories and gift items We ve grown from a single boutique on Sanibel Island to nearly 1,500 locations in the U.S., Canada, Mexico and the Caribbean, and four E-commerce sites with more than $2 Billion in annual sales. Chico s White House Black Market SOMA Boston Proper What Does Omni look like at Chico s FAS In a single word Relationships Relationships with our Customers Technology Business Partners Industry Peers/Vendors In Store Technology Mobile Devices o Hardware: IOS devices, ipad Air/Mini o Mobile checkout o Web Ordering o Retail Theater/Clientelling Tech Table o Powered by Mac Pro o Endless Aisle o Virtual closet o Web Ordering RFID o Expanded Pilot in Soma Brand o Sales lift with improved inventory accuracy E-Commerce/Mobile Fraud Proactively identify and stop fraud at transaction level Strong investigative follow up when fraud does occur Accomplished by leveraging/integrating LP technology Fraud Modeling/Analytics Positive Profiling Omni Investigations Fraud Modeling/Analytics Fraud Model Accept Reject Review Process Accept Reject Is it right for my business? Benefits Proactively identify fraud prior to processing; improved customer experience through speed & secure promotion offerings Cons Costs: Technology, labor, potential recurring cost per transaction Additional Considerations Build in house vs. Purchase, Manage or Outsource, Store Visibility Proactive Fraud Modeling for Mobile Automated Fraud Scoring/Key Control Points Multiple Risk Profiles comprised of weighted rules Technology Considerations Velocity Checks Speed is Life - Automate Negative Lists Automated SLA Protections Seasonal Risk Profiles 3

4 Power of Positive Profiling Positive Profiling what is it? Improved Shopping Experience, lower labor costs, improves focus on fraud identification Mitigate outlier customer issues Risk Exposure Account Take Over Fraud, Friendly Fraud, internal collusion Creating a Positive Profile Criteria: leverage CRM data, lifetime spend, return rate, account identifiers, etc. Protect your profile Ability to adjust on the fly Challenges of Omni Investigations It s all about Relationships Silos of Excellence Disparate systems Unorganized data Disjointed policies Omni Investigations - Tactical Approach Fraud Identified Stop the bleed Investigate associated data points Remove channel boundaries for investigators Communicate Impacted teams/business units Customer Contact; Caring Support or Tough Love? Outside Partners/Law Enforcement Plan Ahead 360 Review, can you repel future attempts? Automate? Set Trip Wire/thresholds in exception reporting & fraud model to identify associated accounts Omni Investigations Strategic View Data Aggregation: Visibility & Communication Dashboard Multiple data streams, B&M, E-commerce, CRM teams, etc. Holistic Exception Reporting incorporating all Channels Comprehensive Data Collection & Collaboration are key Shared Case Management Fusion Center Communication Analyst team tasked with identifying cross channel fraud/trends Shared communication between Field LP, ECommerceLP and Business Access to shared systems and previously identified cross functional resources who may be called on during an investigation. The Seamless Customer Experience 4

5 Not Always Internally, it has often been anything but seamless Systems don t talk to each other No/limited visibility from other channels Different item masters Fulfillment from a different company Credit cards are tokenized by different methods Departments are often totally separate silos Key info from a transaction/order not included in all systems What Does YOUR Omni Look Like? Identify ALL of your channels today s and tomorrow s! How Do They Buy It? How Do They Pay For It? How Is It Fulfilled? How Do They Get It? Identify Where Processes are Different Returns At store At returns center Price adjustments Accommodations Approvals/Overrides Common System Landmines Return of merchandise not sold in stores/sold at different price? POS doesn t accept/validate order info Returns center systems Different credit card token systems Moving registers video interface Document validation/entry What Technology Do You Need? Robust Entity resolution! Purchase authorization Continually updated with new info Exception based shipment audits Distribution center and stores Returns authorization and transaction analysis Linking Brick &Mortar and all other channels Video analytics Fraud analytics for new fraud methodologies Powerful Queries Brick & Mortar Associate ringing most returns/exchanges OR most price adjustments against on-line store Invoice used multiple times Return name/address match to customer service accommodations Generic SKU use for sales or returns Mismatch of address or tenders 5

6 Powerful Queries Fulfillment/Return Center Multiple system overrides Multiple returns to address/name by associate Weight mismatch for package & returned items Multiple items same associate Reverse engineer chargebacks Gift card/e-certificate purchases NEW! Info You Need IP address/computer ID Ship to/bill to information Source Shipping charge Shipping method Shipper # of boxes Weight of box/boxes Authorization of system overrides/associate ID Rejected shipments Associate ID for each part of the process Receipt type (e-receipt, invoice, etc.) Information from customer service Customers complaining that they did not get their item/all of their items Reships Where s the Data? The data has to be somewhere Challenge is to identify where it is and how to get it Possible sources Transaction log from POS and Order System Extract from EDW Shipping system May need to update systems Link together where needed Questions... 6