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Loss Prevention

Protecting the Good Stuff

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Much as its name suggests, Hedonism Wines is a place to find very fabulous, very expensive wines and spirits. A place to indulge, if you will. What sets the London retailer apart from other wine and spirit retailers, however, is the fact that those expensive bottles are displayed openly on shelves — not locked away in cases and cabinets.

This store and its merchandising strategy are the brainchild of Russian entrepreneur Yevgeny Chichvarkin. Some 8,000 bottles deemed “affordable” are offered at $48 and below, but the stars of the assortment are priced near $200,000, with a few tracing their lineage back to the vines of 1774 and 1811.

Acquiring such a selection of choice products was challenging enough, but once those remarkable bottles were in hand, the key question became: How could Hedonism allow shoppers to examine potential purchases — picking bottles up, reading labels and inspecting corks — while ensuring that the equivalent of several first-class diamonds or a couple of luxury cars didn’t just walk out the door?

With the store’s first anniversary coming up this summer — and without any suspicious shoppers having been wrestled to the ground — Hedonism Wines has found its anti-theft solution in Checkpoint Systems. Whether it sells for $12 or $12,000, “every bottle in the shop has a tag,” says Tatiana Fokina, CEO of Hedonism Wines. “Our customers can pick them up, touch them.”

Those tags do much more than convey price points, though. If a bottle is taken past security gates at the entrance and exits without having been paid for, it triggers an alarm.

The greater challenge was designing reliable and effective tags that wouldn’t damage foil wraps, some of which bear the work of Picasso and Chagall. Who would buy a $20,000 bottle of wine if the foil wrap looked tattered and unkempt?

And given the store’s commitment to very high standards of customer service, a security system couldn’t convey the impression that the store’s management considered every visitor a security risk.

“We are committed to providing an unsurpassed level of customer service, which is [often] provided by former sommeliers whose attitude is more in tune with that of a concierge than a sales person,” says Fokina. “We get very positive feedback on our floor people. They are very approachable and friendly — most of them know what their customers like. It’s all about developing a relationship with customers and knowing their tastes.”

Preventing shrink, boosting sales
The security tags are attached to each bottle with a steel band that can only be removed by a sales associate with the appropriate key in a quick, one-handed movement. To ensure no damage is done to the delicate foil, a rubber insert is used between the steel band and the bottle.

These specific solutions were developed by Alpha, a division of Checkpoint Systems, which reports that while the global rate for all retail theft is 1.45 percent, that figure rises to 2.47 percent within the alcohol/liquors category.

“That rubber insert is not typical for Alpha, but it was important that the bottle [and its foil] stay intact,” explains Jennifer Johnson-Parrott, product manager.

The actual tag, customized with the store’s initials, contains an aluminum circuit tuned to a radio frequency. If someone should decide to make a run for the door without paying for a purchase, that aluminum circuit will trigger an alarm at a gate inside the store.

“We make sure our solutions don’t get in the way of the merchant and his plans to promote his goods,” says Bill Beatty, Checkpoint vice president of global product management. “The confidence of our clients comes into play when they do their intercepts with thieves and the thieves … have to go elsewhere. In one recent rollout of Alpha’s bottle cap solution with a pharmacy chain here in the U.S., all the thieves moved on to the next retailer.”

The solution Alpha developed for Hedonism Wines is one of the most recent examples of its custom work. “We will do this for any customer, with minimum order quantities,” says Johnson-Parrott. “We have a really good team that does these customized solutions.”

For Hedonism, the solution included a quick turnaround involving 50,000 customized wraps with steel bands and rubber buffers, as well as labels, all bearing Hedonism’s logo and color scheme.

A successful quest
In a report issued earlier this year on global retail crime and loss prevention trends over the previous two years, Checkpoint Systems reported the findings of the Centre for Retail Research. The report confirmed that 78 percent of shrink is due to dishonest shoppers or employees. It also showed a growing preference among retailers for protecting items most preferred by thieves using electronic article surveillance (EAS) source tagging, along with special high-theft solutions. Of the 50 most-stolen products, three out of four are now being protected with item-based solutions.

The typical timeframe for retailers to get a return on their investment with Alpha and Checkpoint Systems can vary, depending on the scope of the problem.

“It’s a matter of the percentage of losses,” Beatty says. The retailer knows firsthand what its margin percentage is for a given period, as well as its cost position and revenue streams. “They know their turns on that merchandise and the cost of our security device and the labor cost of that device — in application and removal,” he says. “It’s a simple matter of measurement: What are their losses today based on their beta tests and field tests with and without our gear in their stores?”

Hedonism “worked for a long time with Checkpoint to make sure the security solution met our needs,” Fokina says. “The tags are less noticeable, and no one before had requested what we did — it wasn’t done by anyone else.”

Given the success Chichvarkin is enjoying with his first Hedonism Wines shop, is it likely others will follow? “It’s not likely,” she says. “Not in England and not in the near future elsewhere. Most likely, it will be the only one in Europe.”

And what do Hedonism Wines’ customers do with their high priced — sometimes exceedingly high priced – purchases? “The majority of the wines and spirits are for drinking,” Fokina says. “We do have some collectors, but the majority is for drinking now.”

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