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A leading discount retailer realized that they had a problem with turnover, but was unsure about how much turnover was really costing it beyond the typical "HR Costs." Also, the company was significantly underinvested in shrink (any unplanned loss of margin) resources, tools and prevention capabilities to combat internal and external theft in their stores. To become competitive and achieve a significant financial improvement, they sought assistance from Deloitte in their efforts to identify selective investments in prevention capabilities to achieve competitive parity or advantage. Deloitte helped the company take an alternative approach to investigating turnover by helping them analyze the cost of store and district manager turnover under the hypothesis that manager turnover could potentially impact store profitability. In addition, Deloitte also assisted in identifying trends and correlations by analyzing all existing data about Store Manager and District Manager turnover and comparing it with key store performance metrics, like profitability and shrink. The analysis found that shrink percentage was consistently less in stores with lower turnover. To overcome the challenges identified, Deloitte helped the company create a three-point plan for attacking shrink through people, processes and technology. It included a technology plan that involved the roll out of computers in their stores, a software solution, and organizational alignment at corporate and in the field and executive commitment.
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