Halfords Case Study

Halfords is the UK's leading provider of motoring and cycling services and products. Customers shop at 386 Halfords stores, Performance Cycling at tredz.co.uk, the online bike experts for direct home delivery plus 2 stores (trading as Tredz and Giant), 645 garages (trading as Halfords Autocentres, McConechy’s, Universal, National Tyres and Lodge Tyre) and have access to 266 mobile service vans (trading as Halfords Mobile Expert, Tyres on the Drive and National) and 554 Commercial vans. Customers can also shop at www.halfords.com and tredz.co.uk, the online bike experts for pick up at their local store or direct home delivery, as well as booking garage services online also at www.halfords.com.

With a high number of stores and garages spread across the UK and Ireland, enhancing customer experience and optimising operational efficiency remained the key goals for Halfords

1. Inspiring customers through a differentiated, super-specialist shopper experience – this includes a modern and exciting store environment where customers can experience and test the products first-hand.
2. Developing modern technologies and infrastructure to realise operational efficiencies, while at the same time managing a wide range of risks in-store, online, and within its different business units.

Over the past two decades, a variety of manufacturers have installed Electronic Article Surveillance (EAS) systems at Halfords, using a combination of AM and RF technologies, with RF pedestals being dominant throughout the estate of several hundred stores.

As none of the pedestals were remotely monitored, Halfords relied upon store employees testing the systems each week and manually reporting faults.

Additionally, significant costs were incurred through the manual application of labels at store level, fixing outdated pedestals, and stock losses. Only products with the highest risk of theft were protected, around 17% of the entire range.

James Crowther - Support Centre Profit Protection Manager – said, “We completed a survey of all stores to review the performance of our EAS pedestals and discovered that only 20% of stores had systems that operated at optimum levels, with the biggest issue being older pedestals that had developed a ‘gap’ over time in the centre where a tag could pass through without activating the gates. We also found that 10% of stores had pedestals that did not work at all, but store employees were fully unaware of this fact.

With this insight it was decided we needed devices that are network connected into one EAS system, that could be remotely monitored so we would know instantly when they were not operating correctly.

Upon the completion of our review, it became evident that if we wanted our pedestals to activate every time a tagged product passed through (or as close to 100% as we could get), then Acousto-Magnetic (AM) technology labels best suited our difficult to tag product range, with the Sensormatic APX labels being our preferred choice.”

Going on the offensive against stock losses

Over the preceding years, losses connected to these challenges added up to circa £1million a year, which put pressure on the profit protection team to prevent shrink and help drive the profitability of the business.

James Crowther - Support Centre Profit Protection Manager, “After reviewing the stockloss numbers for all of our products, over 1,000 products were selected to be tagged at source (which is significantly more than can be tagged in store by the employees). With such a diverse range of products in Halford’s portfolio, there were several products that we wanted to secure but would struggle to activate most EAS pedestals due to challenges with either the product itself or the packaging. Many of our products contain fluids, have high metallic content or both, all of which are known to impair the performance of EAS labels.”

“To establish which technology would give us the best activation rates, we tested several easy products (no metal or fluid), together with some of our more challenging items”, continued James Crowther. We tagged each product with a variety of different manufacturers AM and RF labels and tested them using their recommended EAS pedestals.

As an average across all the products tested, the activation results ranged from 43% to 72% when using RF systems, but 90% to 98% of the time with AM systems. However, it was the difficult-to-protect product category that was the biggest differentiator when it comes to various EAS system performance.

Most of the tested RF labels simply did not work on those products, and even the very best labels did not achieve high activation rates. AM labels overcame these issues performing significantly better. The EAS system/label tag combination with the highest activation rates tested was the Sensormatic Synergy system using APX AM labels”.

Recognising the strategic importance of advanced loss prevention technologies for its business, Halfords decided to invest in a best-of-class loss prevention programme and focused on three project pillars.

During the first phase of the project, Halfords and Sensormatic Solutions decided to concentrate on immediate improvement opportunities, namely:

• Harmonise its EAS estate, as a first step in re-specification of all new store openings with AM EAS systems and increasing benefits of higher detection rates, especially on metal–containing parts.
• Invest in the Source Tagging as a Service (STaaS) programme on their top 400 product lines in order to help increase merchandise protection without compromising open merchandising and customer experience.
• Connect 25 new stores to the Sensormatic Shrink Management as a Service (SMaaS) platform in order to gather insights into the general usability of its EAS systems, as well as shrink patterns and advanced loss prevention analytics in these estates.

During the initial 25 store roll-out, Halfords profit protection team proved that a connected, integrated loss prevention system enabled them to substantially lower operating costs, while increasing the level of product protection across the tested estates. By connecting their test stores to the SMaaS platform, they gathered invaluable insights into how the EAS systems were being used, as well as initial shrink trends, causes and patterns.

Despite the slowdown in project roll-out during the pandemic, Halfords stayed on course, and by the end of September 2023, they have successfully connected 173 stores to SMaaS with new EAS gates.

Since the first stores were installed back in 2019, Halfords have seen an average of 9% reduction in shrink rates versus stores without Synergy EAS system.

Additionally, the SMaaS platform has also allowed Halfords to unveil alarm patterns and focus on stores with unusually high alarm counts. In many cases, bad processes and inaccurate tagging created a lot of noise and false alarms in stores, which store employees started to simply ignore. Tackling such issues meant that stores are now more focused and aware that when an alarm activates, action needs to be taken.

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