Fashion retailer BESTSELLER trims fraud and loss with Dynamics 365 Fraud Protection

BESTSELLER brands and products are available online, in approximately 2,750 branded chain stores and 15,000 multibrand stores, and in department stores across Europe, the Middle East, North America, Latin America, Australia, and India. So BESTSELLER knows the ins and outs of the retail business and what it takes to make its more than 20 individual fashion brands successful.

The company was founded more than 30 years ago on a set of 10 guiding principles that include loyalty, honesty, and a commitment to keeping promises. Its employees take pride in setting good examples for one another and creating an atmosphere of trust—employees can trust that the company will treat them well, and the company trusts that employees will act with integrity and professionalism.

Like companies in all branches of the retail industry, BESTSELLER must deal with issues of fraud and loss—also called “shrinkage”—and while this sometimes stems from customer transactions, these incidents can occasionally be employee related as well. In any given situation, BESTSELLER wants to ensure that suspicion isn’t cast unfairly on employees and that any potential issues are thoroughly researched and evaluated before discussing the matter directly with an employee. To facilitate this process, BESTSELLER has implemented Microsoft Dynamics 365 Fraud Protection, a solution that can utilize transaction data from Dynamics 365 Commerce.

A robust solution for fraud protection

In-store fraud and loss can take a number of different forms. Sometimes stock just goes missing, but other times someone might take advantage of an employee discount and re-sell merchandise online at a higher price. Or an employee could accept returns without a receipt for clothing that wasn’t purchased in the store or was purchased at a sale price and returned for full price. 

These may be honest mistakes that merely require additional employee training. That’s why BESTSELLER is so careful when researching potential problems.

“These scenarios are very difficult to investigate when you do it manually,” explains Søren Rasmussen, Software Architect at BESTSELLER. “We have a relatively small—and extremely thorough—fraud team, so an investigation can take quite a while because we don’t want to make any inaccurate statements to employees about fraud. Yet the fraud could continue during that time, so we need to be able to identify fraud and loss problems faster, and using Dynamics 365 Fraud Protection helps us do that.”

Fraud Protection includes adaptive AI technology that learns to identify transactional patterns and inventory data in order to highlight potential instances of fraud and loss. The cloud-based solution provides broad awareness of potential fraud activity across an entire network of stores while safeguarding confidential information and supporting privacy controls.

BESTSELLER initially rolled out Fraud Protection to 76 stores in Europe, with enlightening results. “The solution quickly identified 15 potential fraud situations across those stores,” says Kim Guldager, Senior Program Manager at BESTSELLER. “Coincidentally, our fraud team had separately identified 5 of those same situations, although it had taken much longer. This showed us that Fraud Protection is not only fast, but it is also accurate.”

Statistics from the pilot period showed a 1.2 percent reduction in discount fraud and a 2.9 percent reduction in return fraud as a result of using Fraud Protection. As BESTSELLER rolls out the solution to more stores, those percentages will translate into millions of dollars in savings for the company.

An expanded deployment and empowered managers

Due to the success of the pilot rollout, BESTSELLER increased the number of stores covered by Fraud Protection, and the company will continue to deploy it throughout Europe and eventually the world. BESTSELLER is also looking at extending its Fraud Protection initiative to include e-commerce and expanding its use of Microsoft Dynamics 365 to provide end-to-end business intelligence with Dynamics 365 Finance and other products. And the company has chosen Microsoft Power BI as its preferred business intelligence platform globally.

BESTSELLER hopes that its broad use of Fraud Protection will not only identify instances of fraud and loss, but also help enhance the bond of trust between the company and its employees. “We operate in an industry that traditionally has a high annual staff turnover—we’re essentially hiring the equivalent of our entire workforce every year,” says Guldager. “We want to be sure that all employees know and follow the rules and encourage each other to do the same. By identifying fraud and loss quickly with Dynamics 365 Fraud Protection, we’re boosting business outcomes and building a culture where our core value of honesty is practiced by everyone every day.”

The operational efficiencies provided by Fraud Protection can help BESTSELLER empower its area managers to take on some of the responsibility that had previously been the work of the fraud department. Additionally, the company has the opportunity to identify managers whose stores have very little fraud and learn from them what helps them succeed. With data from Fraud Protection, managers also get the chance to have face-to-face conversations with employees suspected of fraud and defuse the situation.

“When managers can deal with the situation directly, they have the opportunity to find out what is happening with a particular employee and why,” says Guldager. “It may just be that the employee needs a second chance to be taught about proper store policies. We don’t want to ruin people’s lives with a fraud accusation—we are much happier if we can give them a second chance and stop them from doing something wrong again. With Dynamics 365 Fraud Protection, we have fast and accurate data that helps us identify problems quickly and come to the best possible resolution. We also promote our founding principles of honesty and integrity as we deploy the solution to more stores and expand on its operational efficiencies.”

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