The term audit often invokes images of accounting firms behind closed doors, poring through boxes of receipts and invoices to validate financial reporting, uncover potential areas of revenue loss, and more. The same can be said of Store Audits, which occur at the store level, and are intended to ensure compliance as it relates to shrink prevention, and helps to foresee potential issues or prevent existing problems from escalating and causing loss to the company.
For many retailers, Store Audits are conducted primarily by their operations team; however, in many cases, loss prevention is just a small part of their overall responsibilities. In some cases, these audits take a backseat to more urgent issues, and for others, Store Audits become so repetitive and frequent in the same location that they become routine.
In other cases, retailers who conduct their own internal Store Audit program may be putting themselves at risk to subjective results, rather than true results which could potentially highlight high-risk, revenue-draining issues within stores.
However, other retailers have found that the key to effective Store Audits is to follow the same tactic as they would with their financial reporting, which is to partner with an objective third party who can conduct and report upon the results of a Store Audit. The following are four key benefits seen when conducting a Store Audit through a third party:
Sometimes, internal resources such as store, district, or loss prevention management have a tendency to be more subjective in completing an audit. Their reliance on the retail management to manage the store and partner with them in their efforts can cause the internal audit resource to give 'the benefit of the doubt,' and may remove objectivity from the audit in support of store management, etc.A third party audit provider enters the same situation with the opposite approach. As their only responsibility is to the customer (the retailer), there is no benefit to 'playing favorites,' or assuming that store personnel will do better next time, as there is no guarantee that there will be a next time.
Knowledge & Validation
Third party audit companies have the benefit of a client base; therefore, they have the advantage to conduct compliance audits in multiple environments. While audits are inherently unique to each retailer, there are a series of best practices that can be shared among the group of clients, which only services to strengthen each individual audit program. This industry-wide knowledge held by the third party provider can also serve to validate existing programs, and provide recommendations for growth or change when necessary.
Due to its objective position, the results of a third-party audit often provide a more accurate view of what is occurring within a retail environment. While initial results often show lower audit scores, many retailers realize that these results uncover long-standing issues of non-compliance and opportunities for loss that can be immediately fixed, thereby leading to a positive ROI for the audit program.
Lower Business Impact
Audits conducted by internal parties can often be taxing on time and labor resources, as those internal resources who conduct audits often do so as part of their overall business function.
However, unlike an in-house audit, a third-party auditor enters a location for the sole purpose of conducting the audit. They are not interrupted by the need to complete a sale, conduct an employment interview or deal with other store situations. Through experience, a third party auditor will also know that those within the retail unit should not be interrupted unless necessary, allowing the retail associates to focus on customer service and sales.
The use of a third party audit can bring great value to any retail organization. Retailers have seen that using a third party to conduct all audits throughout an organization or supplementing a third party for some of the audits brings a fresh set of eyes and a different approach to the research, review, and analysis of store results, which can lead to reduced loss and overall earnings improvement.