Retailers are trying to figure out what to do about Mexico. On the one hand, retailers who are there are doing great business year over year and it appears the retail market is going to continue to grow over the next several years. On the other hand, daily headlines about shootings, decapitations, and running gun fights in the streets would make any reasonable person cautious.
A few months ago, I had the opportunity to attend a CSO Roundtable meeting in Mexico City to get an update on the security situation in Mexico from experts from both the private sector and government. I will leave the detailed “on the ground” intelligence to the experts who deal with it everyday, but I did come away from the meeting with some key takeaways.
The bad news is that any improvements in the levels of violence being generated by the cartel battles is going to be slow and we will not likely see a major improvement in the next several years. There was a general consensus that until corruption issues in the law enforcement and judicial branches could be rooted out, there will be on-going problems. There is a presidential election coming up and a change in administration has some potential to alter the government’s approach but it is unlikely to significantly alter the current issues.
The good news is that the vast majority of violence and murder is cartel on cartel or cartel on government. There does not appear to be a targeting of innocent civilians or businesses other than for monetary gain through express kidnappings and extortion. As a result, most companies are finding they can continue to operate successfully in Mexico albeit with certain areas providing challenges.
One of the other significant issues is the shifting of violence geographically. The towns on the U.S. border have some of the most significant problems but new areas of concern are rising around the country. Monterrey, a major center for international businesses, has become a battleground for the cartels. Guadalajara was considered to be relatively safe a year ago, but is now experiencing some escalating violence. It will obviously be imperative to continue to monitor these shifts and take appropriate actions.
Finally, I thought the other lesson learned was the importance of networking with other businesses who have either faced these challenges or who are in the process of trying to figure out how to be successful in this significant market.
Frequently Asked Questions
2012 Retail Huddle: Using Procedural Review Audits to Tackle
Guest Blog: Andrew Wren
The year is quickly drawing to a close. With the final quarter upon us, retailers are tabulating the score for 2011 and building their game plan for 2012. Unfortunately for the retail industry, there was no economic rebound in 2011 and the economic malaise will likely continue. Surviving – and certainly winning – in this challenging economic environment will depend on retailers’ ability to maintain complete control and awareness over their business, and streamlining operations to achieve greater profitability and complete customer satisfaction.
Procedural review audits (PRAs) are an excellent way for retailers to do this. PRAs are designed to audit critical areas of retail operations in order to identify failures and enable managers to address them before they begin to cause significant losses. These audits help retailers move toward their goal, scoring better profits and customer satisfaction critical to their survival. Here are some things to keep in mind when reviewing your plays for 2012.
Start the 2012 Line-up Now
Economists are sending clear signals that an economic recovery will take longer than anticipated, painting a gray outlook for retailers in 2012. Higher gas prices continue to eat into discretionary income and also trigger increases in online sales, causing many brick and mortar stores to lose footing.
Savvy retailers will use the remainder of this year to begin mapping out their game plan for 2012: making the most of limited resources, focusing on known areas of loss, and putting measures in place to keep a close eye on what is going on in the field. PRAs are a critical part of this process. Retailers can begin identifying areas that require monitoring and create and issue audits in those areas so they can start off the new year with full awareness. Retailers can use this final quarter of the year to test audits in local stores to see what works and what doesn’t work, train employees on the audit process and to learn from the greatest loss-causing problems in 2011.
Strengthen Offense and Defense
Retailers’ efforts should be focused on two strategic areas in 2012:
Customers have a wealth of choices when it comes to where they shop. They expect and prefer clean, safe shopping environments where items are available, easy to find, and competitively-priced. They want their experience to be pleasant. They want good service and short lines. A bad experience could lead the customer to go elsewhere, never to return, and walking away with the retailer’s current and future revenue stream. PRAs should evaluate customer service to ensure that the experience is optimal for every customer, every time.
This could mean auditing merchandising to ensure that displays and promotions are properly and safely displayed, that shelves are stocked so that customers can easily find the products they want and need. Or it could involve checking front-end operations: conducting randomized audits to monitor wait times at checkout, determining if employees are asking customers if they found everything they needed, and ensuring the exits are clear of carts, boxes, debris. It’s a good idea for store managers to conduct an exercise to walk in the customer’s shoes all the way through the store, noting areas where frustration might occur and building those areas into audits.
Profitability depends on an enormous range of variables. From shrink, to streamlined operations, to labor efficiency – the list is virtually endless. Auditing profitability means conducting PRAs in areas including ordering, receiving, processing, mark downs, point of sale, security and risk management, shrink and theft, transportation and distribution, invoicing, DSD, employee awareness and hundreds of other key drivers in the retail environment. PRAs are a great way to build awareness of loss-causing problems in the field so that the retailer can defend profitability.
Search for Root Cause
The best PRAs will not only identify key risk areas, but will also reveal the root cause of the problem. Instead of asking exclusively if food storage areas are maintained at the correct hot or cold temperature, the better audit will ask additional questions about if all new employees have been trained on how to operate the equipment and if the equipment has been properly maintained. This allows the audit to point to the possible reason for the failure, enabling the retailer to address the root of the problem more quickly.
Don’t Fumble
Many retailers fumble when it comes time to take action on the findings of the audit. No PRA is successful if findings are ignored. Retailers must have processes in place to take immediate action based on PRA findings. The goal is to work through the point of failure and address it to strengthen the overall performance of the company. Companies must have processes and culture in place to assign accountability for someone to carry the ball to the end zone. PRAs can identify important and alarming trends and failures that the corporate office should be aware of to determine if lessons can be learned and problems prevented in other locations or company-wide. Executives should support audits and create a culture that values them and gives them the importance they deserve. This also means valuing the results from the audits, taking time to review them, and building incentives for stores and managers around completing audits.
In a tough struggle against a stagnant economy in 2012, PRAs will help retailers block and tackle their way through another challenging year in retail. With this type of game plan, retailers in even the toughest retail segments can avoid getting hit on their blind side.
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About the Author: Andrew Wren – Chief Executive Officer of Wren
Andrew Wren serves as Chief Executive Officer of Wren, a company founded by his father, Clifford Wren, in 1983. Wren is responsible for corporate and product strategy, leveraging his more than two decades of security technology expertise. Wren’s visionary leadership has transformed the company from a manufacturer of security components to a provider of software and technology solutions serving multiple industries including retail, education, government and healthcare organizations. Wren brings deep security industry expertise, an understanding of market requirements and knowledge of customer needs, enabling the company to develop and deliver innovative technology solutions that help customers advance their security, risk management and operational practices.
Under Wren’s leadership, the company has grown to a multi-million dollar physical security technology provider. Wren earned a Bachelor of Science degree in Marketing from Auburn University. For more information, visit www.wrensolutions.com.