January - February 2012 by Loss Prevention Magazine

THE VOICE OF LOSS PREVENTION LPportal.com | V11.1 January – February 2012

LOSS PREVENTION

MAGAZINE

NINe Practices of the Successful Security Leader

THE CURRENT AND FUTURE ROLE OF RISK MANAGEMENT LOW-SHRINK RESULTS AT BJ’S WHOLESALE CLUB THE PRISONS ARE FULL THE IMPACT ON RETAIL CRIME

Powerful Deterrent Proven RO I

Finding Bad Apples Has Never Been Easier Gulfcoast Software Solutions, LLC Clearwater, FL 33756 (727) 441-2131 www.gulfcoastsoftware.com

Contents

6 PUBLISHER’S LETTER Jazzed about the New Year By Jack Trlica

The Nine Practices of the Successful Security Leader Common practices shared by seasoned executives

ON THE WEB

RETAIL SPONSORS

12 LOOKING BACK Ten Years of LP Magazine

By Kathleen Kotwica, Ph.D. Security Executive Council

14 INTERVIEWING Misconceptions about Eye Movements By David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP

26 ACADEMIC VIEWPOINT Crime Control in Singapore By Richard C. Hollinger, Ph.D.

The Current and Future Role of Risk Management

38 ASSOCIATIONS IN ACTION A Year in Review By Lisa LaBruno

Insights from Libby Christman, Ahold USA

48 CERTIFICATION Leaders vs. Followers By Gene Smith

By James Lee, Executive Editor

50 EVIDENCE-BASED LP Spotting Crime before an Incident By Read Hayes, Ph.D., CPP

58 FUNDAMENTALS Playing on Today’s Court By Mike Marquis, CFI

No-Frills Mentality Meets Low-Shrink Results

60 INDUSTRY NEWS Global Shrinkage Rises 6.6% By Robert L. DiLonardo

Profile of BJ’s Wholesale Club

By Adam Paul, Contributing Writer

CALENDAR

PEOPLE ON THE MOVE

ADVERTISER DIRECTORY

VENDOR SPONSORS

66 PARTING WORDS “Happy New Year to You!” By Jim Lee

The Prisons Are Full The impact of early release on retail crime

By Frank Muscato, The Muscato Group

January - february 2012

LPportal.com

No ID Required

Introducing Verify-2™ Return Authorization Reduce Fraud Easier Today

No ID, no problem. Now it’s easier than ever to protect your stores from fraud and abuse at the point-of-return, while still providing fair and friendly customer service. Introducing Verify-2™ Return Authorization with patent pending receipt triangulation™. Driven by The Retail Equation’s predictive analytics, you can reduce your shrink and cut millions from your costs without requiring the collection of ID on every return. The result? A more positive experience for your shoppers and increased revenue for you. To learn more about our comprehensive return optimization solutions, call 888.371.1616 or visit www.theretailequation.com.

Publisher’s LETTER MAGAZINE

Jazzed about the New Year

700 Matthews Mint Hill Rd, Ste C Matthews, NC 28105 704-365-5226 office, 704-365-1026 fax EDITOR AND PUBLISHER Jack Trlica JackT@LPportal.com

ast year was our tenth anniversary and was a terrific year. You would think that after such a great year, I would experience a letdown. Not so. I’m really looking forward to 2012 just as much. Maybe it’s the good sales season retail experienced. It’s great to see consumer confidence getting somewhat back to normal. Maybe it’s the word on the street that I hear both retailers and solutions providers talking about capital spending and purchasing rebounding. Maybe it’s our association partners talking about all the positive developments on the legislative and conference front, not to mention two trips to New Orleans this year. Maybe it’s our foundation partners excited about the momentum building as more and more professionals earn certification. Maybe it’s the fact that one of my sons is out of college and working in a terrific job, and the second is only a semester away. Whatever the combination of reasons, I’m kind of giddy about this year. I know one reason is that I have committed to getting out from behind my computer and visiting more of our retail sponsors on their home turf. It’s always good to see friends and business partners at conferences, but there’s something special about walking into their home office. Over the past several years I’ve visited Sears, OfficeMax, Belk, GameStop, and a number of other retail headquarters where I met with the LP executives and their staff. It’s a great experience to listen to these LP professionals talk about their organizations and offer their suggestions for articles and other magazine-related ideas. Last year I visited Atlanta, Dallas, and Boston where I moderated a series of “lunch-and-learns” sponsored by two solutions providers that brought together local LP professionals to discuss their experiences in implementing new technologies in their organizations. I’m working to do something similar again this year with tentative commitments in Toronto, Los Angeles, and Minneapolis. There’s a lot to be gained by foregoing email and even telephone and sitting face-to-face with the people who are living loss prevention day-to-day and hearing their problems, successes, and aspirations. It’s a lesson I’ve learned by observing my friend and business partner, Jim Lee, who practices this as well as anybody. So, don’t be surprised if Jim or I knock on your door sometime in the near future to say “Hello” and invite ourselves to share some time with you over a conference table, over a knife and fork, or over a golf ball. We’ll do our best to give you something positive in return, but, frankly, it’s what you give us that, in turn, benefits us and the magazine. Thanks to all of you who helped make 2011 a terrific year for the magazine. We’ll do our best to make 2012 a great year for our readers, sponsors, and advertisers. I’m excited. Hope you are, too.

There’s a lot to be gained by foregoing email and even telephone and sitting face-to-face with the people who are living loss prevention day-to-day and hearing their problems, successes, and aspirations.

CONTRIBUTING EDITORS Robert L. DiLonardo Walter E. Palmer, CFI, CPP, CFE John Selevitch Amber Virgillo CONTRIBUTORS William A. Alford, CFE Read Hayes, Ph.D., CPP Richard C. Hollinger, Ph.D. Mike Marquis, CFI Gene Smith Shane G. Sturman, CFI, CPP Kelby Woodard David E. Zulawski, CFI, CFE ONLINE EDITOR Matt Richardson MattR@LPportal.com CREATIVE DIRECTOR Larry Preslar PROOFREADER Amy Trainor DESIGN & PRODUCTION SPARK Publications info@SPARKpublications.com 704-844-6080 ADVERTISING

ADVERTISING MANAGER Bonnie Dodson 828-479-7472 office, 704-943-5797 fax BonnieD@LPportal.com WEST COAST REPRESENTATIVE Ben Skidmore 972-587-9064 office, 972-692-8138 fax BenS@LPportal.com SUBSCRIPTION SERVICES

CIRCULATION MANAGER Matt Richardson MattR@LPportal.com NEW OR CHANGE OF ADDRESS www.myLPmag.com POSTMASTER Send change of address forms to Loss Prevention Magazine P.O. Box 1088 Lowell, MA 01853 LossPrevention aka LP Magazine (USPS 000-710) is published bimonthly by Loss Prevention Magazine, Inc., 700 Matthews Mint Hill Rd, Ste C, Matthews, NC 28105. Print subscriptions are available free to qualified loss prevention and associated professionals in the U.S. and Canada at www.myLPmag.com. The publisher reserves the right to determine qualification standards. International print subscriptions are available for $99 per year payable in U.S. funds at www.LPportal.com. For questions about subscriptions, contact circulation@LPportal.com. Periodicals postage paid at Matthews, NC, and additional mailing offices.

Jack Trlica Editor and Publisher LossPrevention and LP Magazine are service marks owned by the publishers and their use is restricted. All editorial content is copyrighted. No article may be reproduced by any means without expressed, written permission from the publisher. Reprints or PDF versions of articles are available by contacting the publisher. Statements of fact or opinion are the responsibility of the authors and do not necessarily represent the opinion of the publishers. Advertising in the publication does not imply endorsement by the publishers. The editor reserves the right to accept or reject any article or advertisement.

EXECUTIVE EDITOR James Lee JimL@LPportal.com

January - february 2012

LPportal.com

The ClickIt Advantage

CAPTURE

A better way to manage your video asset technology

Analytics at the Edge

ClickIt offers a complete line of NVR, HVR, DVR and Embedded video solutions to meet the needs of

VIEW

the most demanding environments. Our Analytics at the Edge releases untapped potential of your video data to deliver value to all levels of

Smart 360 H.264

your organization. ClickIt’s Central Management provides a unique opportunity to truly manage your

ANALYZE

video systems by monitoring the health and well being of your video assets right down to the

Retail Analytics

camera level. And, our Smart360 now provides H.264 support making 360 video an excellent alternative.

RECORD NVR, HVR, DVR supporting H.264

Your choice for Digital Video Solutions

Central Management

MANAGE www.clickitinc.com

For more information regarding our complete line of Digital Video Solutions give us a call at 516-827-6326 or email us at info@clickitinc.com

ON THE WEB

Editorial Board

Columns

There are a number of articles on the magazine website you may have missed. Check out the following articles. Take Care When Detaining Minor Theft Offenders By Michelle Gomez, Esq. The Case for a Non-Profit LP Program By John Carr If You’re Reading This, You’re a Liar By Amber Virgillo For Civil Recovery, the Age of Majority Is Not Always Eighteen By James F. Welborn, Esq. Partnership with Local PD Nets Three Suspects; $25,000 in Retail Theft By Cpl Jeff Klayer

Weekly e-Newsletter

Get the latest news and features you need every Thursday. ■ C urrent loss prevention, retail, and technology news, ■ O riginal content from magazine staff and contributors, ■ P eople on the move listings, ■ H elpful links, and ■ A little fun to brighten your week. If you are not receiving our e-newsletter, visit the magazine home page at www.LPportal.com and click on the links under CURRENT NEWSLETTER to read the latest issue or to sign up. If you would like to contribute to the newsletter or have any comments, contact us at newsletter@LPportal.com.

Leo Anguiano Vice President, Chief Risk Officer, Central Parking Corp.

Chris McDonald Senior Director, Loss Prevention, Dollar General

Jim Carr, CFI Director, International Loss Prevention, Rent-A-Center

Randy Meadows Senior Vice President, Loss Prevention, Kohl’s

Ken Cornish Vice President, Retail Operations, The Kroger Co.

Monica Mullins Vice President, Asset Protection & Safety, Wal-Mart Stores U.S.

Francis D’Addario Emeritus Faculty Member, Strategic Influence and Innovation Security Executive Council

Tom Roan Group Vice President, Loss Prevention, Macy’s Tim Shipman Director, Corporate Investigations and Crisis Management, Food Lion

Patti Felz Vice President, Loss Prevention, Polo Ralph Lauren

Mark Stinde Senior Director, Asset Protection 7-Eleven

Barry Grant Senior Vice President, Operations & Loss Prevention, CPI Corp

Paul Stone Vice President, Loss Prevention and Risk Management, Best Buy

Bill Heine Senior Director, Global Security, Brinker International Frank Johns Chairman, The Loss Prevention Foundation

2010 Global Retail Theft Barometer Sheds Light on Strategies for Cutting Shrink Professor Joshua Bamfield, author of the Centre for Retail Research’s fourth annual Global Retail Theft Barometer, sheds light on this year’s findings and offers his insights as to what the survey results mean for retailers’ loss prevention strategies. In addition to such important statistics as sources of theft, high-theft product areas, and costs of retail crime, this 45-minute webinar also focuses on specific actions retailers are taking to reduce shrink, increase sales, and improve their bottom line.

Gary Johnson Vice President, Loss Prevention, Vitamin Shoppe Paul Jones Senior Director, Asset Protection, eBay Mike Lamb Vice President, Asset Protection, The Home Depot

Available at www.LPportal.com on the webinar page. Sponsored by

January - february 2012

Bob MacLea Senior Vice President, Loss Prevention, TJX

Charles Delgado Vice President, Manager of Asset Protection BJ’s Wholesale Club

Archived Webinar

Ken Amos Divisional Vice President, Loss Prevention Walgreens

LPportal.com

Bill Titus Vice President, Loss Prevention, Sears Holdings Bill Turner Senior Director, Retail Operations, Cole Haan Claude Verville Vice President, Loss Prevention, Safety & Hazmat, Lowe's Stanley E. Welch Vice President, Director of Loss Prevention, JCPenney Keith White Senior Vice President, Loss Prevention and Corporate Admin., Gap Inc.

Our bad boy is stronger than these bad boys. A Detex exclusive, the 230X multi-point locking device raises the bar on back-door security. When the bad guys try to muscle in, the super-tough 230X keeps them out. Designed with extreme-duty, three-bolt construction, this device is built with a larger side bolt that goes deeper into the frame, plus solid steel connecting rods rather than less-reliable hollow rod/cable construction. How tough is it? The bottom bolt goes 5/8-inch deep into the floor, preventing peeling up the bottom of the door. The largest side deadbolt in the category resists crowbarring. And at the top corner, the solid steel deadbolt provides needed stability. Testing proves that a 230X secured door withstands 10,000 pounds of pull force. Life safety and code compliant, the 230X is both panic hardware and a maximum-strength locking device. Ask us how this powerful new hardware can take the hit for your business, or go to detex.com/230X/.

800-729-3839 830-629-2900 www.detex.com

Retail SPONSORS

January - february 2012

LPportal.com

Join these great companies as an LP Magazine corporate sponsor. Email JackT@LPportal.com for more information. LP Magazine | january - february 2012

LOOKING BACK ON 10 YEARS OF LP MAGAZINE

A good regional loss prevention manager who is hungry to step up must begin to develop a few basic fundamentals and guiding principles that will lead them down the path to opportunity.

“ORC is hard to identify and understand if you do not step back, investigate, analyze, and look at data from a broad perspective.” – Brad Brekke, Target

One of [The Sport Chalet’s] most stolen items was baseball bats, which average $300 each. The LP team worked with their tag manufacturer to develop a special tag that has significantly reduced losses.

The Asda [LP] approach is one that enables us to focus on the full supply chain from the point of manufacture through to the point of sale and beyond.

“Our biggest challenge has been to take the unique culture of each of our brands and fit what we know as contemporary LP strategies into each brand.” – Dennis Klein, Abercrombie & Fitch

January-February

March-April

May-June

March – April 2008

May – June 2008

LPportal.com

V7.2

V7.3

al Internationtion Sec Special 51 Page

THE GLOBAL SUPPLY CHAIN

2008

With Risk Comes Opportunity

Subprime industry collapses.

“The company’s strong focus has always been on service, which, of course, is an effective way to deter both internal and external theft.” – Todd Reynolds, United Supermarkets

HIGH ENERGY LP AT A&F | PROFILE OF THE NEW MERVYNS SHRINK MANAGEMENT AT TESCO | LP AT ASDA RFID-BASED EAS SYSTEMS | SERVING CONSUMERS AT P&G

LEADING RETAIL’S RESPONSE TO ORC | JCPENNEY’S AWARENESS EDGE PROFILE OF GORDMANS | HOW TO BECOME A RETAIL EXECUTIVE

LPM 0308-Fin2-.indd 1

Linens ‘N Things files bankruptcy.

The 99 Cents Chili Crisis by Chris Manning Interview with Todd Reynolds, United Supermarkets Critical Components to a Supply-Chain Security Program by John Tabor Profile of The Sport Chalet LP Team by Michael Stugrin 2008 Loss Prevention Resource Guide

January - february 2012

3/4/08 4:14:29 PM

LPportal.com

5/18/08 1:36:03 PM

Mervyns files bankruptcy.

Breach! An LP Approach to Information Security by Chris Bitner Interview with Target’s Brad Brekke JCPenney Communications with an Edge by Ramona Hereford and Stephen Green Profile of Gordmans by Michael Stugrin How LP Managers Can Become Retail Executives by Dan Poelstra |

LPM 0608-Final-2.indd 1

The Global Supply Chain— With Risk Comes Opportunity by Kelby Woodard Interview with Dennis Klein, Abercrombie & Fitch Reinventing LP at the New Mervyns by Michael Stugrin International Special Section - METRO Group - Proctor & Gamble - Tesco - Asda

2008 “One of our most important jobs as leaders is to make sure we have staff members ready to take over if anything ever happened to us. As leaders today, we are building the future leaders of this industry.” – Thomas Stein, HMSHost

“There is a sense that we have been overly obsessed with the problem of external theft. There’s a danger it’s been turned into the bogeyman of loss prevention—that is, if in doubt, let’s blame the outsiders for our losses.” – Adrian Beck, University of Leicester

Testing remains critical to good business performance. Many factors, including safety, company reputation, and profitable operations, require that retailers continue to improve their best practices and ROI knowledge.

The hundreds and thousands of business trips made each year subject travelers to a myriad of risks. Business men and women will be robbed, assaulted, raped, kidnapped, and sometimes even murdered.

July-August

September-October

November-December

September – October 2008

November – December 2008

LPportal.com

V7.5

ORC

V7.6

al Internationtion Sec Special 53 Page

LEGISLATION

Addressing Loss Prevention or Competition Prevention?

How loss prevention executives and their organizations respond to this challenge will not only reflect on their professionalism, but also on how well…or not… the corporation survives the economic downturn.

THE ECONOMIC CRISIS Doing More with Less

SAKS FIFTH AVENUE’S TOM MATTHEWS | TELEPHONE INTERVIEWING 40 YEARS OF CHANGE IN LP | GLOBAL EXPANSION AT LINDEX HOT PRODUCT CONTROLLERS MANAGE SHRINK IN SOUTH AFRICA

NATIONAL SHRINK DATABASE | KROGER’S TESTING MODEL INTERVIEW WITH ADRIAN BECK | DEALING WITH PROBLEM EMPLOYEES

LPM 1008-15.indd 1

Lehman Brothers files bankruptcy.

President Bush signs TARP.

John Wayne Society— Preparedness or Paranoia? by Ed Minyard Interview with HMSHost’s Thomas Stein Protecting the International Business Traveler by David Katz Physical Inventory Counting Practices by Chris Richardson

9/7/08 7:02:53 PM

LPM 1208-Final2indd.indd 1

11/16/08 3:01:33 PM

Circuit City files bankruptcy.

ORC Legislation— Addressing Loss Prevention or Competition Prevention? by Jack Trlica Researching Loss in the Worldwide Retail Market by James Lee Better Performance through Better Testing by Ken Cornish The National Shrink Database by Michael Stugrin Dealing with Problem Employees by Bruce Tulgan

The Economic Crisis— Doing More with Less by Jack Trlica Interview with Tom Matthews, Saks Fifth Avenue Telephone Interviewing by Frank Borecki and Christopher Norris International Special Section - Lindex - Checkpoint - South Africa

LP Magazine | january - february 2012

“I have found that one of the most important things is marketing what you’re doing in asset protection. You need to over communicate to senior management.” – Tom Matthews, Saks Fifth Avenue

interviewing

Misconceptions about Eye Movements W

e had the opportunity to listen to a presentation by Dr. David Matsumoto on micro expressions at the Certified Forensic Interviewer Elite Training Day seminar in November. To establish the difficulty of identifying truth or deception, Dr. Matsumoto had everyone evaluate a series of videos and make judgments of the person’s truthfulness. He then asked for the reasons why the person was ranked truthful or deceptive by the observers. Some of the attendees made their decisions based on the individual’s verbal response, others used emotion, some word choice, but many focused on physical behavior to reach their conclusion. It was interesting to hear what people were observing, but clearly the observations were at chance level of us making a correct judgment. There was no behavioral norm for us to observe, no real threat of punishment for the subject if he was caught lying, no strong emotion to conceal, no ability to question, so the deck was stacked against the observer. What was most interesting, however, was the number of people who mentioned the individual was lying or telling the truth because he was looking right or left when he answered. These responses from the attendees appeared to be making reference to neuro-linguistic eye movement. Dr. Matsumoto correctly called these observations into question, noting that twenty-three of twenty-four research studies showed no support for eye direction being a predictor for truth or deception. We were inundated with questions from participants about how these studies contradicted our training. In fact, there is no contradiction between our training and the studies quoted. Let’s take a step back and look at where these ideas originated and developed over the years.

Neuro-Linguistic Programming

Back in the early 1970s, Richard Bandler and John Grinder began to observe therapists who had unique abilities to connect with and change their patients’ patterns of behavior. The observations they made were codified into what became known as Neuro-Lingusitic Programming™ or NLP™. It was a method of therapy to resolve the patient’s problems or create a structure for repeatable success. The method relied on communication techniques, reframing, and anchoring to bring about change. If you have heard of Anthony Robbins, he became wealthy using these principles to teach people to be successful through positive change. Today, he leads programs with thousands in attendance to learn his approach. Bandler and Grinder originally postulated that people have a primary basis of communication—visual, verbal, or feelings and

January - february 2012

by David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP

Zulawski and Sturman are executives in the investigative and training firm of Wicklander-Zulawski & Associates (www.w-z.com). Zulawski is a senior partner and Sturman is president. Sturman is also a member of ASIS International’s Retail Loss Prevention Council. They can be reached at 800-222-7789 or via email at dzulawski@w-z.com and ssturman@w-z.com.

emotions. While we can communicate on all these channels, we often have a preference for one. Visual people may use words like, “I don’t like the looks of that” or “When you see someone say” to represent their preferred communication channel. The auditory might say, “I don’t like the sound of that” or, perhaps, “That doesn’t ring true.” Those where feelings dominate use tactile phrases, grappling, “Sinking my teeth into it” or “Wrapping my head around it.” NLP suggests using the same channel as the person you are talking with in order to increase rapport and further your communication with them. The group also suggested that when people look left they are recalling something and right they are creating something not experienced. They also look in different places if they are communicating visually, verbally, or emotionally.

Neuro-linguistic eye movement is either recall or creation, and our job is to validate which it is and what that means. Law enforcement trainers took these ideas and used them, often incorrectly, by concluding if the person is creating, he is lying, or if he is recalling, he’s truthful. The law enforcement trainers also made the blanket statement that when people look to the left they are recalling and when they look to the right they are creating. This was also incorrect since some people reverse the two or don’t do it at all. Thus, these incorrect assumptions that creation is lying propagated a false, wide-spread belief throughout the law enforcement and loss prevention community. Today, there are a number of trainers who point out the incorrectness of these assumptions and dismiss the idea that there is any value at all to this observation of the eyes. Their lack of understanding leaves a valuable tool out of the investigator’s toolbox.

Determining Recall vs. Creation

Let’s examine the movement of the eyes. In general, eye movement assists us in locating information in the mind. Much like movement and gestures, which also assist in the recovery of memories and speech, eye movement establishes that there is a memory search and additional thought taking place. This additional thought could either be of a creative or recall nature. There is no way to establish whether this is the recovery of a truthful detail or the creation of a deceptive continued on page 16 |

LPportal.com

nd s th e ch al le ng es ta rs de un l na io at i³ In te rn at ey ar e a co m pa ny th Th . ce fa s er ad Le LP on ts fo r lo ss pr ev en ti of fe rs gr ea t pr od uc si ne ss xi bi lit y to de liv er bu fle e th h it w s, ed ne d , w hi ch ar e an ad de in te lli ge nc e m et ri cs s. in Sa le s & O pe ra ti on es iv ut ec Ex to e lu va Staples Canada. Loss Prevention for r, cto re Di l na tio Na Rui Rodrigues

The New Way to Look at Security Video

LP Departments are under tremendous pressure to perform more, with less. Less manpower, less equipment and, yes, less budget every year. With this in mind, i³ International, a digital video pioneer, has devoted 25 plus years in the development of intelligent video to address these issues. Find out more on how we have helped hundreds of retailers use video for more than just loss prevention. Visit www.i3international.com to download case studies and learn how i³ International challenges the traditional value proposition.

2012 NRF Big Show BOOTH # 2852 Visit our website at www.i3international.com/lp or Scan and read more with your smartphone

be a lie. If questioned we simply retrieve the agreed-upon alibi. An observer would expect us to use our eyes in a recall fashion to retrieve the outline of our deception. However, as he probes for details of a false story, it requires creation of new information. The details of our lie have been agreed upon only in general terms, and those established details are stored in our memory. When the interviewer begins to question other aspects of the alibi that had not been created, it requires additional thought and creation to construct the answer. In the alibi relating to playing cards the previous evening, nothing else in the way of details have been agreed upon. The subject must create each and every component of the story making sure that it does not contradict other information available to the interviewer. In this situation asking the subject what type of card game they played should result in a creative effort by the subject to expand the details of the story. Follow-up questions such as who sat to your left and right, who was the big winner and loser, could additionally validate the creative nature of the person’s response. The person should not have to create information if he is responding truthfully. Once a deception has been created, it now merely has to be retrieved accurately from the subject’s memory and repeated consistently. The use of the mental searching technique is most effective when obtaining that first untainted story from the subject and then probing for details. Once a story has been told several times, the need for creation diminishes, and it is more likely the individual will simply recall the details already created and accurately repeat them. The context of the story, the question type should tell the interviewer whether or not it is necessary for the subject to engage in a creative response. In our next column we will examine question types that can encourage a recall or creative response from the subject and discuss how to evaluate the response.

continued from page 14

component of the story. Shane often says that neuro-linguistic eye movement is either recall or creation, and our job is to validate which it is and what that means. Recall and creative eye movement alone has nothing to do with truthfulness or deception. It simply tells us the person is doing additional thinking. The question then becomes, should this extra thinking be required for the person to answer the question? The first step in making eye movements a useful tool is attempting to establish whether or not the individual has a pattern of eye movement associated with recall and creation. During the interviewer’s establishing of the behavioral norm, he is attempting to identify patterns relating to short-term memory recall, long-term recall, and creative narratives by the subject. People have individual patterns that must be established before one can determine recall or creation. Information used frequently is kept readily available in our memory, such as our name, address, date of birth, and other useful information. Less useful data is stored and requires a memory search to retrieve it from storage. Asking about the individual’s date of hire or his job history requires a more in-depth search of the memory. We might also ask a question of an individual that requires the creation of an answer. For example, tell me three things that you would change about your job to make you more effective? Clearly, the three things offered could be truthful or untruthful, but we can generally establish they were created. However, if the subject had been asked the question previously or had anticipated the question and created an answer he simply had to retrieve it from his memory. A lie previously created is simply recalled from memory and repeated to remain consistent. If we agreed to tell a story about playing cards with a group last night when we did not, it would

PROTECT YOUR BRAND. When it comes to civil recovery, how important is brand protection to your company? At Palmer, Reifler & Associates, we work closely with our retail clients to provide customized legal representation that is right for them. Our team of attorneys is integral to our civil recovery process, ensuring important legal standards and protections, while optimizing recovery performance.

Place your trust in the law firm with a focus on Civil Recovery Law.

Toll-Free in the U.S.: 866.875.6565

P 16

PRALPJF12.indd 1

January - february 2012

LPportal.com

M 12/23/11 5:21 PM

Cover feature

NINE PRACTICES EDITOR’S NOTE: While the following article is primarily aimed at executives, many of the insights discussed can be adopted by LP professionals at all levels to build better internal peer relationships and increase the effectiveness of the individual’s impact, be it at the store, district, or regional level.

n many professional fields, such as legal, technology, and finance, one can expect to find certain commonalities among the practitioners. These professionals share certain certifications or degrees, or they’ve progressed through a series of common steps or training regimens to reach their current position, where they share a fairly standard reporting level. The security profession—and in this designation we include retail loss prevention as well as corporate security and information security—does not fit into such a mold. We at the Security Executive Council have researched and studied this profession in depth, and the diversity of experience, responsibility, authority, and background we’ve found is stunning. However, across this varied landscape, commonalities of successful leadership do exist. The council’s community is comprised of many individuals who are recognized as highly successful security leaders. Because they have allowed us access to their time and insights, we were in a unique position to uncover and identify similarities between them that contribute to strong performance. A series of in-depth interviews in 2009 led us to identify the following nine practices that the most successful leaders have in common: ■ The creation of a robust internal awareness program for the security department, including formal marketing and communication initiatives. ■ Ensuring that senior management is made aware of what security is and does. ■ Walk-and-talk methodology—regularly talking to senior business leaders about their issues and how security can help. ■ Conversing in business-risk terminology, not “security” terminology. ■ Understanding the corporate culture and adapting to it. ■ Winning respect by refusing to exploit fear, uncertainty, and doubt.

It should also be noted that many of these nine findings are intertwined with others. Ensuring management’s understanding often requires having a walk-and-talk mentality, for instance, just as conversing in risk terminology is beneficial to achieving business goal alignment. asing the security program goals on the B company’s business goals. ■ Having top-level support from day one. ■ Portraying security as a bridging facilitator or coordinator across all functions. Some of these items the leaders have worked to achieve, such as creating internal awareness programs and conversing in business risk terminology. Others have come from luck or hard-won experience. The overarching principles that tie these nine practices together are strong communication and receptiveness as well as responsiveness to the desires and needs of the business and others, both up and down the chain. While loss prevention stands apart from other security disciplines in many ways, we believe these findings to be as pertinent in a retail LP setting as in corporate security.

■

Methodology

As a part of its goals, objectives, and strategic plans project, the Security Executive Council conducted in-depth interviews with twenty-seven Tier 1 Security Leaders™ to discover and compare best practices. Most of the interviewees were leaders of the security programs in large corporations, most of which operate internationally. Questions put forth to them January - february 2012

LPportal.com

addressed issues such as the top risks to the organization (not specific to the security department), business alignment and drivers, internal influence issues, and senior management’s view of the security function. In the resulting qualitative analysis, council researchers isolated commonalities reported among the leaders of the most successful, internally recognized security programs in the sample. Our research shows that much of the success revolves around communication and receptiveness. Each of our findings reflects how security or the security leader is perceived by other business leaders, management, and employees based on how the security leader presents risk and, to a great extent, him- or herself. It should also be noted that many of these nine findings are intertwined with others. Ensuring management’s understanding often requires having a walk-and-talk mentality, for instance, just as conversing in risk terminology is beneficial to achieving business goal alignment.

The creation of a robust internal . awareness program for the security department, including formal marketing and communication initiatives. A formal marketing and communications initiative builds internal awareness of the security department and raises the understanding of what security does and the value it imparts to the organization. This is not to be confused with a security risk awareness and training program. In this case, the successful leader knows that the security department is often not understood or that many employees do not even know there is one. The “marketing” in this case, for example, involves having an internal logo and tagline for the security department (that is, branding the department), holding brown-bag lunches with security issues infused into them, regular newsletters on security department happenings, and encouraging and rewarding employee security champions. When employees across the organization not only recognize the importance of security’s contribution, but become invested in furthering it, the security function’s potential for success dramatically improves.

NINE PRACTICES

Ensuring that senior management . is made aware of what security is and does. Management’s perception of security impacts funding and organizational support for security initiatives as well as the security leader’s ability to influence risk-related decision making at a corporate level. All of these limit the effectiveness of the security function. It will be difficult for a senior manager to develop an accurate understanding of his or her organization’s security function without direct input from the security leader. Because the structure and operation of security differ so much from business to business, past experience at other companies may lead a senior manager to a view of security that is unrealistic or erroneous in his or her present environment. In addition, because the security industry in general has done a poor job defining itself in a business context, many corporate executives continue to assume that security begins and ends with guns, gates, and guards until they are shown otherwise. What security managers often fail to do is to fully understand (or analyze)

their resource capacity regarding what the security staff is spending their time on and providing on a day-to-day basis. From this, what percentage is important and valued by senior leadership? Every other function needs to demonstrate where their time and resources are going—why would the security department be exempt from this? Several of the security leaders interviewed in this research hold seats in corporate strategy groups and on risk management teams and planning councils. Some hold C-level and vice president titles with direct reporting to executive management. All of these positions allow the security leaders greater access to communicate candidly and clearly with top corporate leadership. However, these high-level positions are likely also evidence that management already understands and appreciates security. The security leaders interviewed who still sensed that management required greater understanding took the important step of speaking directly to business unit leaders to understand what risk issues keep them up at night and what security services they find valuable. This is different than the casual

LP Magazine | january - february 2012

brown-bag activities. These one-on-one meetings often result in some kind of quantitative outcome that can be used to make senior management aware of how their direct reports value security’s services.

Walk-and-talk methodology— . regularly talking to senior business leaders about their issues and how security can help. The most successful security leaders we interviewed regularly speak to senior business leaders about their goals and concerns to determine how security can help. These meetings were held in addition to, not concurrent with, formal meetings, such as quarterly briefings with senior management or the board. Our successful interviewees take the initiative to set up meetings with senior executives as well as business unit leaders across the organization. As one leader stated, “I don’t wait for the phone call; I invite myself to major business meetings around the world.” Sometimes it means taking the initiative to learn business processes, especially if no one volunteers

NINE PRACTICES to show you the ropes. In some cases the security leader manages all these relationships himself; in others, deputies are charged with heading up regular communications with a select set of business units, making sure they understand their world and represent them in security plans. These meetings are most effective when the security leader enters them with a business-first attitude. Note the wording of the first sentence in this section specifies the goals and concerns of the business leaders, not the concerns of security, come first. Security leaders begin by asking what senior management wants and needs to accomplish, then present themselves as helpers in accomplishing those action items. Security does not set the agenda; the business sets the agenda. Both these elements are critical to effective “walk and talk.” If a security leader tries to insert him- or herself into regular meetings with senior management, but ignores the second lesson on the tone and content of the talk, he or she may be viewed as arrogant or micromanaging.

Conversing in business-risk . terminology, not “security” terminology. “We are business professionals who happen to be experts in security,” stated one of the leaders interviewed in our research. Interviewees remarked that they emphasized their role as “business assurance” rather than “security.” Some noted the importance of SWOT (strengths, weaknesses, opportunities, and threats) analyses and cost-benefit analyses within the security department to build better performance and to better enable the security staff to “talk business.” Even if the mission, goals, and strategies of the security function are perfectly aligned with the same in the business, if they are not communicated in the right terms, they may be rejected by senior management. The language of security is not easily translated by non-security business executives. Terms that describe security tactics, operations, or projects may have double meanings… or no meaning at all…in business language. “Perimeter” has different meanings in corporate security and information security.

culture values most, then negotiates security policies and solutions that leave those values intact, the perception of that leader will be markedly different across the organization.

The overarching principles that tie these nine practices together are strong communication and receptiveness as well as responsiveness to the desires and needs of the business and others, both up and down the chain. “Convergence” is a commonly used term in many functions whose definition varies with its speaker. Even the word “risk” has a broader meaning for business (for example, taking a calculated risk to enhance revenue) than for security. Speaking about business issues in business terms helps enhance management’s understanding of security and increases the chances of management support.

Understanding the corporate culture . and adapting to it. Many security leaders feel it’s their job to change the corporate culture into something that is more security-centric. Our research showed that successful leaders believe the opposite. Their job is to learn the existing corporate culture and find the best ways to fit security into it. An IT services company that prides itself on its relaxed and open philosophy is unlikely to appreciate a security leader whose focus is on locking the employee population out of newer communication technologies, for example. Staff and management may look at that individual as a roadblock to be surmounted rather than a partner. If on the other hand, the security leader talks with human resources, employees, and management to learn what the corporate

January - february 2012

LPportal.com

W inning respect by refusing to . exploit fear, uncertainty, and doubt. Respect is won over time, so this accomplishment requires long-term improvement and consistency. While tapping into the fears of business may seem the easiest way to gain support and elicit reactions, ultimately it results in a loss of influence and trust. The successful leaders we surveyed focused on communicating risk in business terms, as something to be transferred, mitigated, avoided, or accepted, not feared. If the security leader is consistently level-headed in describing risks and their implications on the business, clear in conveying the options for managing the risk, and receptive to management’s concerns and decisions, he or she is likely to earn lasting respect.

B asing security program goals on . the company’s business goals. One of the most common terms in the interviews conducted in this research was “enable.” One interviewee stated, “Security enables the business to take risks; we don’t block them.” And another said, “Our strategic plan is to enable the company to be the company.” Many of those interviewed stated that the goals and strategies of the security function cascaded down from the CEO. If brand protection was a major corporate concern, for instance, it became the priority of security. Some security leaders who took this approach reported that management and other business units began coming to security to ask for assistance and advisement on various issues. The security leader who puts the business before the function is more likely to experience long-term success than the one who works to drive the business in a direction set by security. There are several reasons this may be the case. When every function works toward the common goals of the business, setting internal goals that further the corporate mission, the entire organization should become more efficient and effective. This business

NINE PRACTICES optimization then reflects back on the individual functions, creating a cycle of higher performance and building success. Communication is another factor. Basic psychology holds that a leader who is constantly asking “How can I help you?” will be met with less resistance and will be more positively perceived than one who is constantly interjecting “You can’t do that.” This positive perception easily translates into greater influence, always a factor in improved performance.

Having top-level support . from day one. Those interviewed who came aboard the organization with a high level of management support performed best. They reported that management places high value on the security department, that they are given one-on-one access to the presidents and chairman, and that their advice, if not always acted upon, is never disregarded. The lesson here is to try to make this level of support a condition for your next career move. The success of these leaders may be as attributable to their acumen as to the clear

organizational focus on security’s value. This finding should dispel any doubt of the correlation between organizational support and security success. To have such support is an enviable position in which few security leaders find themselves. However, a caveat—if your internal success relies on this relationship, you may be out the door when a senior management shake-up occurs. Make sure the other practices are in place to thwart immediate displacement.

Portraying security as a . bridging facilitator or coordinator across all functions. Every business unit in an organization is subject to, and sometimes owns, various risks. Many of the leaders we spoke with took it upon themselves to become central points of contact on risk for other business units. One stated that his organizational risk committee regularly sends information to business units to review and asks them to report back, ensuring they have an opportunity to make their voices heard. Another remarked on his function’s close relationship with no less than seven operational functions. That

leader further stated that strong security requires these business units to be engaged in risk management rather than periodically reminded of it. When security acts as a bridge between functions throughout the organization, it can help minimize redundancies and optimize resources. The security leader who focuses on achieving this also has the opportunity to identify, understand, and respond to business unit risks more quickly.

What Does This Mean to You?

While our research identified nine common practices from the collective knowledge of industry-recognized leaders, no doubt there are more. But this report provides a rare wrap-up. Strive for the practices you can implement in your current organization, or look for opportunities that may support these types of practices in the next phase of your career. The extent of information sharing these interviewees offered for this study is unusual in our industry, but more such sharing is required. The security function needs to share its wisdom to

30.5"

LP Magazine | january - february 2012

nk Retailers Lessons from Low-Shri

NINE PRACTICES

Ways to Save

become a better understood, more highly recognized, and more valued contributor to an organization’s bottom line. If you are at the tail-end of your career, consider playing a role in the passing on of knowledge by sharing this report with your promising staff.

About the Security Executive Council

9$18 billion

The Security Executive Council (www. securityexecutivecouncil.com) is a leading problem-solving research and services organization focused on helping businesses build value while improving their ability to effectively manage and mitigate risk. Drawing on the collective knowledge of a large community of successful security practitioners, experts, and strategic alliance partners, the council provides strategy, insight, and proven practices that cannot be found anywhere else. Our research, services, and tools work to help organizations identify and mitigate risks to people, assets, and the bottom line. To find out how to become involved, email contact@secleader.com.

By Adrian Beck and Colin

Peacock

area of retail loss prevention, In the generally unyielding in have been highly successful a few U.S. corporations problem of shrinkage—the staunching the pervasive This that refuses to go away. $42-billion-a-year problem companies and highlights article looks at five of these adopted that could have they s approache nine key $18 billion a year. potentially save U.S. retailing

Lessons from Low-Shrink Retailers

and approach to the problem, reactive rather than proactive analyzing globe, trying to catch thieves than practitioners across the who feel more comfortable or retail loss prevention to are fit for purpose and designed solution to tackle the perennial whether retail processes trying to find the “best” losses. been a long and largely maximize sales and minimize problem of shrinkage has that retail have been some companies they have been victims of Despite all of this, there at yet frustrating journey. Partly become particularly successful have seen them as an inevitable, have bucked the trend and as organizational cultures that identifies caused has industry the below what business. This perception keeping their losses well retail regrettable, part of doing of the stories can be found in most peripheral to the core activities the norm. These “success” often be them to be perceived as can thieves and arresting representatives for and their responsible sectors around the world and organization and primarily by at loss prevention conferences have also been partly seduced heard making presentations loss installing alarms. But they quick-fix they have managed to achieve persistently offer yet more seminars highlighting how they technology providers who loss. average. In many respects to the problem of stock well below their national technological panaceas describe as “new largely operated rates would we have that they working recently of have adopted a way in In addition, until relatively instinct that is systematic, grounded decisions based upon gut loss prevention”—an approach for in a data desert, often making analysis. developing the right solutions solid data and informed evidence, and focused on and guess work rather than the industry reliable and timely data, specific problems. which, Indeed, in the absence of on the most overt form completed by ECR Europe, study a exclusively from on almost focus Following has tended to extent of looking at the scale and the detriment of other key as part of a broader survey of shrinkage—external theft—to In turn, identified a number of common theft and process failures. the problem of shrinkage, problems, such as internal to with lower levels of shrinkage. world to traditionally look organizational themes associated this has led the loss prevention policy, a recruitment, leading to generations existence of a written corporate for the police included and This military the adopting a viewed as more adept at of managers who can be

September – October

8/31/07 5:30:25 PM

LPM 1007-BOOK-10.indb

In similar research conducted by Adrian Beck and Colin Peacock, five U.S. retailers were surveyed to determine common practices shared by loss prevention organizations with historically low shrinkage rates. Coincidentally, the authors also identified nine organizational themes that contributed to their success. While these nine factors are not identical to those discussed in this article, the similarities are striking and, taken together, add further insight into this important topic. To read a text version of this article, search the Archives in the magazine website, LPportal.com, or click the e-Magazine link to locate the digital version of the September-October 2007 issue.

KATHLEEN KOTWICA, Ph.D., is executive vice president and chief knowledge strategist for the Security Executive Council (SEC). She develops strategies and processes to identify, store, understand, build upon, and disseminate the council’s Collective Knowledge™ and insights. She leads development and production of council tools, solutions, and publications, and conducts industry research and analysis to further security and risk management practices. Kotwica earned a Ph.D. in experimental psychology from DePaul University in Chicago.

VIDE O SURVE I LLANCE

VI DEO I NTELLIGENCE

Video intelligence takes retail security beyond mere observation, into the proactive worlds of protection, investigation, and rapid apprehension. What’s more, 3VR’s comprehensive platform is even helping retailers rethink video’s potential. Our ever-expanding toolkit of advanced software is being used to visually analyze a wide variety of consumer behaviors, resulting in increased sales and better service. And because we’ve made integration with existing camera, POS, RFID, and time card systems so easy, 3VR is not only highly intelligent, it’s also street smart. VIDEO INTELLIGENCE PL ATFORM™

www.3VR.com

2007

LossPrevention

8/31/07 5:29:38 PM

Visit us for your complimentary Buyer’s Guide to Video Intelligence for Retail.

January - february 2012

LPportal.com

3vr.com/retailguide

Are you swimming in a pool of candidates?

Finding it hard to determine who is the right catch for your organization? See why over 30,000 companies use LexisNexis innovative technologies to help them higher the right people faster. Give us 20 minutes and we can show you how. Contact us today for a free demo. For more information 800.590.8535 (Inside U.S.) +1 561.999.8624 (Outside U.S.) screening@lexisnexis.com lexisnexis.com/screening

Award winning background checks and drug screens.

Corporation for American Banking L.L.C.*

Risk Solutions Screening *LexisNexis Employment Screening Solutions are endorsed by the American Bankers Association through its subsidiary, the Corporation for American Banking. Nevada Private Investigator’s License Number 1377. LexisNexis screening solutions are consumer reporting agency products provided by LexisNexis Screening Solutions Inc. Due to the nature of the origin of public record information, the public records and commercially available data sources used in reports may contain errors. Source data is sometimes reported or entered inaccurately, processed poorly or incorrectly, and is generally not free from defect. This product or service aggregates and reports data, as provided by the public records and commercially available data sources, and is not the source of the data. LexisNexis and the Knowledge Burst logo are registered trademarks of Reed Elsevier Properties Inc., used under license. Other products and services may be trademarks or registered trademarks of their respective companies. Copyright © 2011 LexisNexis. All rights reserved.

“I’m certified. Here’s why.” Sandy Chandler, LPC, CPP Regional Director, Loss Prevention Rite Aid Corporation

With the evolution of our profession, it is imperative that retail LP professionals become true business partners. Whether you are a seasoned LP professional or just starting out, the Foundation certification courses have valuable content to meet that goal.

These courses contain a wide range of subject matter that validates our ever-changing roles, showing how valuable our position is to our retail organizations. The LPC allowed me to become more proficient on some subjects not previously utilized. For example,

“I have a job. Why do I need certification?”

Certification not only prepares you for the future, it helps you when you need it most—in your current job. Certification refreshes and validates your knowledge base while teaching you critical business expertise to round-out your skill set. It not only covers key components of loss prevention, it teaches you solid business skills to prepare you for your next promotion. “Yeah, but…” “It costs a lot.” Certification is very affordable and can even be paid for in installments. It is one of the best investments you can make for yourself and will pay for itself over again as you advance in your career. “I don’t have the time.” Certification was designed by seasoned professionals who understand the demands on your time. The coursework allows you to work at your own pace and at your convenience. Everyone is busy, but those who are committed to advancement will find the time to invest in learning. “I’ve never taken an online course.” The certification coursework is designed with the adult learner in mind. The online courses are built in easy-to-use presentation style enhanced with video illustrations to elevate comprehension and heighten retention. “What if I fail?” Both the LPQ and LPC certifications have been accepted for college credit at highly respected universities, and as such, passing the exam demands commitment and study. However, the coursework includes highly effective study and review tools to fully prepare you for the exam. In the event you fail the exam, you can review the coursework and retest after 30 days. “Okay, how do I get started?” It’s easy to get started. Go online to sign up at www.LossPreventionFoundation.org. If you need help or want more information, contact Gene Smith at Gene.Smith@LossPreventionFoundation.org or call 866-433-5545.

the compliance module enhanced my expertise, giving me an edge in our highly regulated retail environment. In order to promote career knowledge and advancement, the Rite Aid LP department endorses both the LPC and LPQ courses, and selects key personnel every year to receive scholarships. Why?

Because these certifications provide the business skills necessary to maximize our contributions, not only within our department, but to impact the company on multiple levels, substantiating a higher return on investment and further advancing our industry through continued professional development. www.losspreventionfoundation.org

ACADEMIC VIEWPOINT by Richard C. Hollinger, Ph.D.

Crime Control in Singapore D

uring this past fall semester, I was on an academic sabbatical. This is a time when professors are temporarily relieved of their everyday teaching and administrative duties in order to travel, write, conduct research, and generally “recharge their intellectual batteries.” In October I was invited to Bogotá, Colombia, to present a keynote presentation at the very first loss prevention conference sponsored by FENALCO, which is the Colombian national retail association. Then in November my wife and I traveled to northern Thailand primarily to visit the cities of Chiang Mai and Chiang Rei. We rode elephants, crossed the Mekong River into Laos, Myanmar, and visited the Golden Triangle. Moreover, we spent a significant share of our time during this three-week Southeast Asia trip in the remarkably modern city-state of Singapore.

The Republic of Singapore

According to Wikipedia, the Republic of Singapore is a collection of sixty-three islands with a population of 5.18 million people. Singapore is highly urbanized, yet remarkably, almost half of the country is covered by greenery. More land is being created for development each day through land reclamation. The port of Singapore is one of the five busiest, most notable for being the biggest transshipment port in the world. On a clear day the harbor is full of container ships as far as the eye can see. The country is a very wealthy one, as it is home to more millionaire households per capita than any other in the world. The World Bank notes Singapore as the “easiest place in the world to do business.” Thanks to some personal contacts arranged by Rex Gillette, a former resident of Singapore during his long career with ADT, I experienced visits with a number of loss prevention directors and retail stores, talking at length to them about their retail crime problems. It turns out, however, most types of crime, especially serious property and violent crime, are almost non-existent in Singapore. This is due to the fact that this former British colony is a very tightly controlled social environment. Littering, spitting on the sidewalk, and even chewing gum are all considered illegal activities in Singapore. You may recall that this is the place that gave an American teenager a painful “caning” as his punishment for vandalizing a car in 1994. Crime is just not tolerated in Singapore. You learn this very quickly even before arrival. As your plane lands, the cabin attendants remind the passengers that drug trafficking is punishable by death. In fact, during the week we arrived,

January - february 2012

Dr. Hollinger is a professor in the Department of Criminology, Law, and Society at the University of Florida, Gainesville. He is also director of the Security Research Project, which annually conducts the National Retail Security Survey (www.crim.ufl.edu/srp/srp.htm). Dr. Hollinger can be reached at rhollin@ufl.edu or 352-392-0265 x230. © 2012 Richard C. Hollinger

three suspects were arrested at the airport for drug possession and were immediately tried and sentenced to be hung. In short, Singapore just does not tolerate crime.

Citywide Video Surveillance

Remarkably, you don’t feel an oppressive police presence while visiting the city. We did see police dressed in army fatigues carrying machine guns at “immigration and customs” while in the airport, but after that it was rare to see even a single uniformed police officer walking the streets or riding in a patrol car. This is due to the fact that the whole city is blanketed by a very sophisticated CCTV system that apparently is watching your every move in public. If a crime is detected on camera, police are quickly dispatched to the scene of the offense. A former police officer, now working as a retail security guard, told me that most officers are not walking a beat, but rather, sitting in centralized offices watching CCTV monitors during their typical shifts.

The Republic of Singapore is a modern, beautiful city that has made crime control and public order a major priority. Civil liberties and freedoms from search and surveillance have been placed behind the goal of living in a crime-free society. Cameras are everywhere with obvious signage to warn the citizen who does not recognize the presence of video surveillance. You see cameras on the streets placed on tall poles, in parking ramps, on sidewalks, in hotel lobbies, and in virtually all businesses. The impression that you get in Singapore is that you are constantly being watched. At first I found this level of surveillance to be somewhat disconcerting, but when I asked typical residents, they told me that they were glad that police and security were constantly watching and protecting them. Singapore citizens seemed reassured that crime was well under control, and they expressed that they felt safer as a result of the public-view video “eyes” that were seemingly everywhere. |

LPportal.com

As you might expect, CCTV is used extensively in the typical retail store as well. I visited one retail store located in the “Little India” section of town that consisted of a number of interconnected buildings that were covered by 1,500 separate cameras. The monitor control room was larger and more impressive than anything that I had ever seen. Attentive LP staffers were found sitting in this relatively small room all day long, monitoring hundreds of both fixed and pan, tilt, and zoom video cameras. Shoppers were monitored from the moment that they entered the store until they left. The LP director in this store told me that they made many apprehensions that were all criminally prosecuted due to a close relationship between the store and the police precinct officers. He also felt that the deterrent effect of using this many cameras profoundly reduced store shrinkage. Signage, fixed cameras, and domes were everywhere in the store, making sure that both the shopper and the employee knew that they were always being observed. Yes, the feeling was that “big brother” was constantly watching, but the effect was clearly believed to create a positive atmosphere to all those in the store environment, not an oppressive draconian atmosphere like might be experienced in a high-security prison or jail.

Retail Crime

CCTV was not the only deterrent to retail crime. Other factors also make Singapore a safe place to live and work. For example, I asked about the prevalence of armed robberies of convenience stores. The response was that they seldom occurred. One LP director was hard pressed to come up with two recent robbery examples, one with a club and the other with a knife. Gun

KEY_002_Final_Outlines.indd 1

possession is illegal in Singapore, except at shooting clubs where personal guns are kept and unlocked only when used. I asked about employees stealing from the cash drawer and was told that it seldom happened. In Singapore most retailers directly garnish the wages of employees who present cash drawers with cash shortages. The most common internal retail theft seems to be of food and edible products, not hard goods or cash. External theft seems to be focused on those products that are on outpost tables near entrances and exits where they can be easily taken. Virtually all packages and shopping bags are sealed with simple nylon friction ties that cannot be removed while in the store or taken to other stores for shoplifting purposes. When I raised the topic of ORC, most retail LP executives had heard the term, but were not experiencing the level of organized gang crime that we see here in the U.S. The Republic of Singapore is a modern, beautiful city that has made crime control and public order a major priority. Civil liberties and freedoms from search and surveillance have been placed behind the goal of living in a crime-free society. I suspect that the ACLU would label Singapore a repressive society, but I did not experience this feeling. In fact, it was nice to know that my person, wallet, camera, and passport were being protected in this virtually crime-free environment. In 1968 the legal scholar Herbert Packer wrote that crime control and civil liberty can be located at two ends of a continuum in most societies. Clearly the people of Singapore have moved the pendulum of this continuum toward the goal of crime control at the possible expense of some civil liberties and due process of law. Only time will tell whether this trade off will be detrimental to their democracy.

LP Magazine | january - february 2012

2/24/11 11:26 AM

PARTNERING WITH RETAILERS

It’s that time of year when we asset protection professionals look back and evaluate our accomplishments, successes and failures, and determine strategies for next year and beyond. In that spirit, allow me to review the two-year evolution of eBay’s Global Asset Protection (GAP) team.

Where We Were With operations in North America, Asia, Australia, and Europe, GAP was feeling the pain of geographic separation. This included at times operating with inconsistent goals, metrics, reporting lines, varying disclosure practices, and time-consuming manual processes. This led to development of our leadership mandate—Enhance protection of eBay assets driving measured customer trust, improve stakeholder synergies, and grow brand reputation. By conducting fact-based, root-cause analysis, including soliciting and listening to feedback from customers and stakeholders, we quickly realized a shift in strategy was necessary. New organizational objectives focused on protecting the true customers, still maintaining valued law enforcement partnerships, while creating synergies with our retail industry partners. The new strategy included renewed focus on minimizing resources dedicated to reactive work by improving efficiency, developing robust exception reporting, increased usage of automated tools, defining practices, and re-leveling talent by aligning skills with the new objectives. An intense effort was necessary to change external perceptions of the company’s efforts toward ferreting stolen goods from the site, while developing retailer partnerships to create meaningful solutions and impactful legislation at both the federal and state levels.

Where We Are Today With the new goals in mind, functional consolidation was the answer. In shifting team members’ roles to those fitting the newly defined investigative model, trust, safety, and user protection from criminal activity was greatly improved. Role clarity was addressed resulting in a leaner organization. PROACT. Through its partnerships with retail LP professionals and law enforcement officers, our retail investigations team specializes in working cases involving organized retail theft. There are more than 325 retailers enrolled in the PROACT program dedicated to working toward mutual solutions on the stolen goods front. The efforts created robust exception reporting, internal filters, and policies preventing high-risk items from showing up on our platforms. PROACT also attends conferences across the country to help enhance awareness of our efforts and promote further collaborations in the LP community. Global Investigations. The investigations team is responsible for keeping the eBay and PayPal platforms safe by minimizing financial loss related to criminal activity. The team specializes in investigations 28

By Dave DeSilva

involving financial crimes, such as money laundering and bank fraud. Another one of the team’s primary functions is to satisfy information requests from law enforcement and regulatory agencies. Anti-Counterfeiting Operations. As retailers begin to use our platform as an additional venue, the detection and removal of counterfeits has become more important. GAP expanded its operations to include a team dedicated to combating counterfeit goods. Anti-counterfeiting operations (ACO) objectives include developing processes and systems to use data from all platforms to more effectively identify and prevent the sale of counterfeit products on the sites. ACO continues to explore ways to recover losses related to the sale of counterfeits. Through these efforts and strong cross-functional synergies, we will continuously progress counterfeit deterrence and detection, which will improve public perception creating retail-like trust.

Dave DeSilva is a member of eBay’s Global Asset Protection team.

With continued technological enhancements, our ongoing shift will advance further, which will be a huge benefit and reward for our community and industry.

Leveraging Technology. Manually replying to annualized requests was one of the biggest contributors to the global workload. So the team devised an automated method to reduce work and use data and analytics to build advanced predictive exception reporting that provided early warning indicators of potential bad behavior. Additionally, based on investigative findings, numerous product-based filters and rules were developed and introduced across marketplace platforms. They supported existing fraud-detection models and proactively prevented specific high-risk listings. Our team created in excess of twenty forward-looking exception reports, which have already been notable in the identification and arrest of hundreds of bad actors. Customer Focus. Taking the principle of focusing on customers into account, the team knew a scalable solution of growing skills, leveraging automation, and using predictive reporting would have an immediate positive impact on the business. Standardized metrics linking business objectives are now available and shared to measure our progress. Continuous Improvement. Through all of these efforts, our team has demonstrated marked improvement toward desired results. Initial assessments of the new operating model have been very positive. Refocussing on more proactive fraud detection has allowed us to better anticipate the ways fraudsters attempt to exploit eBay. With continued enhancements, our ongoing shift will advance further, which will be a huge benefit for our industry.

January - february 2012

LPportal.com

INTERVIEW

The Current and Future Role of

Risk

Management Insights from Libby Christman, Ahold USA By James Lee, Executive Editor LP Magazine | january - february 2012

RISK MANAGEMENT EDITOR’S NOTE: Lizabeth “Libby” Christman is vice president of risk management for Ahold USA, where she is responsible for claims and insurance management, safety, property protection, corporate and operational crisis management, and business continuity. Christman was named to Progressive Grocer magazine’s 2010 Top Women in Grocery and Business Insurance magazine’s Women to Watch in 2011 lists. EDITOR: For those in our readership

who are not familiar with the name, tell us about Ahold. CHRISTMAN: Ahold is an international group of quality supermarkets based in the United States and Europe. Ahold USA supports four regional Divisions—Stop & Shop New England, Stop & Shop New York Metro, Giant Landover, and Giant Carlisle—that together operate more than 750 supermarkets in thirteen states and the District of Columbia. In addition, we operate Peapod, the nation’s leading e-commerce grocery shopping/delivery service. EDITOR: Congratulations on your

recent promotion to vice president of risk management. Summarize your responsibilities. CHRISTMAN: Thank you. I have a number of responsibilities. One is safety, which includes occupational safety and health as well as customer and vendor safety. Another is property protection, which includes fire protection and other systems for protecting physical assets. In addition, I oversee claims management, litigation management, business continuity, and crisis management. EDITOR: What type of background

do you have that would allow you to assume this type of position? CHRISTMAN: My undergraduate degree is in finance and economics, and I later earned an MBA degree. My first position out of college was with an insurance company. I worked in a variety of different types of claims roles for a number of insurance companies, handling workers’ compensation, general liability, and auto liability claims for large, commercial accounts. I also have experience with underwriting as well as safety training. About fifteen years ago I transitioned to Giant Food Stores in Carlisle to manage the workers’ comp program, and my

responsibilities have expanded since to include assuming this corporate role in July 2010. EDITOR: As a corporate executive,

describe your working relationship to the multiple operating divisions. CHRISTMAN: Ultimately my responsibilities are the identification of occupational risks, physical site and operational risks, and application of programs and technologies to reduce those risks. All of the employees who work in the risk management department are corporate support, but we have safety specialists physically located within all of the geographies of stores. One of the things that we’ve been working on since I took this position has been to work with each division independently and identify specific opportunities to make our operations a safer environment for associates and customers. To achieve that we have to apply different types of policies, programs, and methodologies within stores, sometimes targeting specific departments, to put reductions within those risk factors. Reducing risks and changing management

and associate behavior ultimately manifests itself by reducing the number of claims we have, which reduces the cost of insurance and, in turn, improves the bottom line. EDITOR: Do the divisions have directors

of safety or risk management that you interface with? CHRISTMAN: No, they don’t. All of the people who support risk functions work in my department. I have a senior safety manager, who is an Ahold USA employee, and we have safety specialists that support each one of the divisions, including the warehouse operations. EDITOR: Interesting. In a more traditional

corporate environment with multiple operating divisions, oftentimes the corporate office serves more of an advisory role. Yours sounds much more hands-on. CHRISTMAN: Since 2010 we’ve been in a state of transition as the entire Ahold USA organization was reorganized. I’ve spent the last year trying to make sure that I’ve been engaged with our division and operations leadership to make sure that they understand the intent and the strategy behind what risk management is all about. I found out early on in this transition that the definition for risk management that I had at the Giant Carlisle division was very different than what risk management was doing in the Stop & Shop or Giant Landover divisions. So we have been trying to bring a common theme to what and how we want to accomplish our goals. Then we have to figure out the best way to have those protocols or changes executed

My goal at Ahold USA is to expand the assumed definition of risk management. As a support function, we can get pigeonholed into just focusing on safety or claims, but I believe we have a lot of expertise that can add value to many areas of the business. We’ve been meeting with other departments and business areas to help them understand not only what our function is, but also what our function can be; how we can add additional insight on risk factors to the things other departments are doing. january - february 2012

LPportal.com

RISK MANAGEMENT within each one of the divisions, which operates with its own management team. EDITOR: What operating functions in the

divisions do you typically work with? CHRISTMAN: First and foremost, we interface with operations. But we also work closely with quality assurance, finance, human resources, and of course, our LP group, which we call asset protection. We have really made great strides working with asset protection on a number of initiatives in the past year that I think has opened the eyes to our AP professionals about where we have common goals. EDITOR: What are some of those initiatives

or relationships that have helped the asset protection person better understand how they can make an impact on safety and accident reduction? CHRISTMAN: One of the biggest initiatives involves our CCTV camera systems. Within the Giant Carlisle division where I worked previously, there was a good understanding that risk management needed cameras almost as much as asset protection did—many times

for different reasons. Certainly we wanted to be able to take a look at video for accident investigation. Sometimes we need to do a deeper dive into whether or not a potential claimant was trying to commit fraud with regard to their alleged injury. We had worked with asset protection to identify different placements of cameras for our mutual benefits, because a lot of times the traditional places where loss prevention put cameras didn’t really help us. For example, putting cameras focused strictly on cashiers or in the books, magazines, video tapes, or even the health-and-beauty aisles, are not high-frequency areas for either customer or associate injuries. So part of our education process this year in the Stop & Shop and Giant Landover divisions was identifying where risk management needed cameras, why do we need them there, and what was the ROI for using the systems. EDITOR: Many LP people think video is only

for fraud related to slips and falls. CHRISTMAN: But that’s not really the case. There are two major reasons we want video

LP Magazine | january - february 2012

of customer accidents. First and foremost, it is very helpful to really see what happened in an incident; to see whether or not there was a hazard on the floor. Just because there may be a hazard involved doesn’t automatically mean that as a retailer, we’re liable. Trying to detect how a hazard got on the floor and how long it has been there are important considerations for us. But one of the more significant reasons, it’s become a necessity for most liability claims to have the evidence—most of the time that would be considered the video of the incident—preserved for something called “spoliation purposes.” What that means is that if we are asked at some point after the event to provide a copy of a video for an attorney representing someone who had an incident in our stores, we have a legal obligation to save that evidence. If we don’t save the evidence, there’s an assumption that what was on the tape implies that we were negligent. So right now, it has become more and more a legal requirement that we have those videos. EDITOR: In the past in the grocery

environment, slips and falls were the

RISK MANAGEMENT number one cause of customer injury, predominantly in the produce area. CHRISTMAN: For most all grocery retailers, the prevalence of customer slips and falls is very high. However, we don’t see the highest percentage in the produce departments anymore. EDITOR: Why is that? CHRISTMAN: For a couple of reasons. We

have been more proactive with proper flooring and the strategic use of rugs in select areas such as where we use sprayers or have ice cases. Plus, the way we’ve changed how we merchandise certain items has helped. Take grapes for instance. Grapes come packaged in a plastic bag so that they are no longer loose to fall on the floor. By being more proactive, we are actually seeing slips and falls in produce declining.

The goal is to decrease the amount that we’re spending on claims, which impacts our insurance premium costs, lost wages replacement, medical costs. I don’t mean that to sound like we’re only interested in dollars. Obviously, we don’t want customers or associates injured because of the possible pain or suffering that may result. But reducing accidents and the severity of injuries can have a significant financial benefit to the company.

EDITOR: Many food retailers conduct

safety inspections or audits on a routine basis. Do you have similar programs that impact accident prevention? CHRISTMAN: Absolutely. I have a team that a big part of their function is doing physical audits of stores. The audits encompass taking a look at the entire physical property of the store, both outside and inside. In addition they look for compliance with OSHA regulations as well as established policies and procedures. But in the midst of doing the audit, they also take the opportunity to walk the store with the manager. They coach department associates. This is an opportunity to gain insight as to whether or not people are comfortable with procedures and the personal protective items that we ask them to wear, such as cut-resistant gloves. EDITOR: Do the stores have safety teams? CHRISTMAN: Each store has a member

of the salaried management team who is designated as the safety promoter or safety coach and is responsible for safety in the store. They also lead the safety committee, which is comprised of both management and hourly associates representing all the major departments in the store. The safety committee meets on a monthly basis to discuss any incidents that have occurred, any physical hazards that need to be repaired, and review the training information we send out monthly in what we call a “Skill Builder.” In addition to the committee, each

department manager is accountable for safety in their department and is required to perform a monthly safety audit. EDITOR: And are any of those monthly

activities reported up to your office or some of your people to ensure that those things are actually happening? CHRISTMAN: Yes, but because of the sheer number of stores across the divisions, we can’t look at all of them every month. Safety specialists look at the reports when they visit a store, and we certainly conduct random spot-checking as well. Of course, if certain stores have more incidents or claims, they’re going to get more scrutiny. EDITOR: You mentioned a term

that sometimes brings fear to store managers—OSHA. While OSHA has been around a number of years, it appears that they have become more aggressive with retailers in the last few years. CHRISTMAN: I think across the board OSHA has become much more focused on inspections and citations for employers. I don’t think it’s necessarily related just to retail or grocery. It’s really across all january - february 2012

LPportal.com

industries. In my conversations with other grocery retailers through our FMI [Food Marketing Institute] risk, insurance, and safety group, the consensus is that everybody has seen OSHA more frequently over the last eighteen to twenty-four months. I can say for a fact that we’ve spent a lot of time dealing with OSHA on sometimes what are nuisance issues that may or may not be based on fact. We have to do an internal investigation to identify whether or not we’ve done anything wrong and whether or not we need to remediate an issue. Unfortunately, it has a tendency to take our focus away from trying to be proactive, which is really where we want to be. EDITOR: If there is an accident in a

particular store, does the store get charged or suffer financially from that accident? CHRISTMAN: We have an internal allocation system that we utilize to charge back for claims. Each of our divisions has their own insurance premiums for workers’ compensation, general liability, property, and we do allocate those costs directly to each division. That premium is allocated to all locations, but stores that do not perform the required safety activities or have a higher frequency of severe claims will have a higher allocation by rate of sales. We have found that certainly some managers use that as a motivator to improve their business. EDITOR: We talked about slips and falls

from a customer standpoint, what’s the primary cause of employee accidents? CHRISTMAN: We used to see a fairly high number of injuries related to associate

RISK MANAGEMENT slip-and-fall claims. However, all of our divisions have a pretty stringent slip-resistant shoe program that has been rolling out in varying degrees since 2007. The program is mandatory for associates in fresh departments, in particular the deli, meat, and bakery departments. The floors there have a tendency to become not only wet, but also greasy. We’ve seen a wonderful decline in the number of associate injuries since rolling out those programs because the shoes work. We always see strain injuries—necks, shoulders, knees, lower back. Because most of our jobs within the store are physically demanding, there is an increased risk for injury when associates lift, twist, or bend the wrong way. These types of injuries have a tendency to result in higher value claims, and certainly more lost workdays. It can be more difficult to rehabilitate and bring associates back to work after those types of injuries. We do make use of an aggressive return-to-work program in all locations, to get associates back in to the workplace sooner, keep them engaged, and reduce our lost work days.

EDITOR: What are you doing to

address those types of injuries? CHRISTMAN: One of the things that we’ve been doing in our Giant Carlisle division, and that’s in pilot in some of our other divisions, is a nurse-triage program. When an associate reports an injury, the first thing that we do is store management phones a nurse. With the associate present, they talk to the nurse about where the injury occurred and how the person was injured. Then the nurse goes through a list of protocol questions with that associate privately, for confidentiality purposes, and will make an assessment as to what type of medical attention that associate may need. If it’s something simple, such as a cut on the finger that doesn’t require stitches, they may tell the associate to put some antibiotic ointment on it with a Band-Aid, and they may be able to go back to work immediately. On the other hand, if the nurse determines that the associate should see a physician immediately, the nurse has a list of all the physicians in the area of the store where that person should seek

LP Magazine | january - february 2012

treatment. The nurse may instruct the associate to go to a hospital emergency room, an occupational health clinic, or perhaps to see an orthopedic surgeon. So we’re trying to get associates to the right type of physician sooner rather than later. Most importantly, what the program does is allow us to not rely on the store manager to make the decision about where the person needs to go for medical treatment. EDITOR: Are you seeing reductions

in cost or lost time? CHRISTMAN: We have definitely seen a reduction in the number of cases where an associate needs to go for outside medical care, number one. Where previously the store manager may have sent someone with a minor injury to the hospital, we’re finding now that most of those people really don’t need to go to the doctor. They’re perfectly satisfied with resolving the issue by talking to a nurse on the telephone. But the other thing that we’re seeing is that with those associates who have potentially a more serious injury, we’re getting them to the right type of physician right away,

RISK MANAGEMENT which leads to quicker, more appropriate medical intervention. That results in getting associates back to work quicker, and with a higher level of satisfaction for the resolution. EDITOR: That’s a pretty strong, very

proactive program. Speaking a little more globally, what are the key factors in measuring an effective risk program? CHRISTMAN: There are a couple of common methods that are universal. Certainly, we measure our frequency of accidents. In the workers’ comp area, we measure the number of claims against our labor hours. We basically compare our number of incidents by the number of claims per 200,000 man-hours. This gives us the ability to have a common metric across all of our divisions, all of the stores. No matter what size they are, the metric is consistent, which allows us to know whether or not a store’s performing where they need to be. We use a similar metric for customer accidents, where we compare the number of customer claims versus the number of customer transactions. We also take workers’ comp claims and narrow them down to only those claims where lost days are involved. This is important because those are the claims that are more severe and likely to have a negative impact on a store. So, we track these numbers and measure them against labor hours as well. For most companies, the number of lost-time claims in comparison to the total number of claims is usually a much smaller number. Depending on the jurisdiction, it could be 40 percent or it could be 15 percent.

the amount that we’re spending on claims, which impacts our insurance premium costs, lost wages replacement, medical costs. I don’t mean that to sound like we’re only interested in dollars. Obviously, we don’t want customers or associates injured because of the possible pain or suffering that may result. But reducing accidents and the severity of injuries can have a significant financial benefit to the company.

those particular protocols that really needed to be implemented in a time of crisis. We’ve spent an awful lot of time in the past year putting these teams together, meeting with the teams, drafting and redrafting plans and procedures, and utilizing actual events as crisis drills to rehash what we did well, what we didn’t do well, and how we can make continual improvements.

EDITOR: To change the subject a bit,

management as it relates to major crises, like Hurricane Katrina or 9/11. What are some examples of other types of incidents that require a crisis management team to get engaged? CHRISTMAN: Some of them are not related specifically to multiple stores. For example, let’s say you have a fire or a bomb threat in a store. People need to know what to do, whether the bomb threat comes in a letter in the mail or a telephone call. Guidelines on what to do are necessary for store personnel as well as your crisis management team. Some of these events are not necessarily going to generate a huge amount of press, but it’s something that we need to prepare for and be able to react immediately.

you had mentioned that one of your responsibilities is crisis management. What role do you play in your world? CHRISTMAN: In Ahold USA crisis management really is focused on how well we are prepared with people and procedures to react to certain types of events. Over the last year since our reorganization, we instituted crisis management teams within each one of our divisions, distribution centers, as well as here at Ahold USA corporate. Our team has a manager of business continuity that leads this effort with representation from store operations, asset protection, food safety, human resources, and communications. We have not only recommended designates for each of the teams, but also alternate representatives. We have put together written plans to make sure that we have identified in advance

EDITOR: Do these measurements

somehow convert to dollars? CHRISTMAN: Absolutely, that’s where the rubber meets the road. The goal is to decrease

I think across the board OSHA has become much more focused on inspections and citations for employers. I don’t think it’s necessarily related just to retail or grocery. It’s really across all industries. In my conversations with other grocery retailers, the consensus is that everybody has seen OSHA more frequently over the last eighteen to twenty-four months. 34

january - february 2012

LPportal.com

EDITOR: Often we think of crisis

EDITOR: At the same time given

the events of September 11th, how would you describe the change in your responsibilities since 2001? CHRISTMAN: One thing that we’ve certainly become more aware of is the whole idea of business continuity. September 11th showed us that an event can occur to disrupt the core functions of your business. You need to be prepared and have a plan in order to keep your business viable. We’ve placed a significant amount of focus on how we continue to run our business in the event a catastrophe takes out a warehouse, an office building, or somehow takes out our systems. We are making sure that we have documented plans and roadmaps as well as alternative worksites in place to ensure we can continue business. EDITOR: Shifting gears once again, let’s

talk about your role as the chairperson of the FMI risk insurance and safety committee. What types of initiatives are under consideration by that committee? continued on page 36

Hook your customers up for the ride of their lives.

Read more with your smartphone

As the global leader in network video, Axis is setting a fast pace for the industry. Now it’s time to bring the whole analog gang along for the ride. Axis video encoders are the ideal way for you to approach the huge analog market — offering customers IP surveillance benefits even if they aren’t ready to jump off the analog bandwagon yet. Axis encoders protect your customers’ investments by enabling a mix of analog and network cameras.

And with the broadest range of encoders in the industry, Axis helps you fit any need and price point. When your customers are looking to migrate to IP surveillance, give them (and yourself) a head start. Axis video encoders — the fast lane to growing your video surveillance business. Get the Axis picture. Stay one step ahead. Visit www.axis.com/encoders

A complete range of video encoders • Multiple video compression formats • H.264 for reduced bandwidth • Power over Ethernet for cost savings • Intelligent video capabilities • Rack solutions simplify scaling

axis_ad_hookedup-car_lossprev_fpc_us_1112.indd 1

6/12/2011 3:18:04 PM

RISK MANAGEMENT We all win when we have good solutions. And sometimes the best way to do that is to not reinvent the wheel, but to find out how somebody else is making it work.

get pigeonholed into just focusing on safety or claims, but I believe we have a lot of CHRISTMAN: First of all, we really want expertise that can add value to many areas to rebrand FMI to the risk, insurance and of the business. We’ve been meeting with safety community within the retail arena. In other departments and business areas to help prior years, the risk and safety group was them understand not only what our function primarily focused on conference planning. EDITOR: Does your committee have Now we have a group of industry experts in responsibility for putting together specific is, but also what our function can be; how risk and safety that will be focused on several sessions for the upcoming asset protection we can add additional insight on risk factors to the things other departments are doing. initiatives to bring value to FMI members. and safety conference in March? Apart from working with the asset One of the things we are looking at is CHRISTMAN: Yes, we’ve tried to put benchmarking. We are trying to determine together sessions that focus on safety, claims protection department as we discussed earlier, we’ve also been working closely with the best way to get participation from management, medical management, and our maintenance department on proactive FMI member groups to participate in a other areas where we can give attendees measures in stores. We’ve been working benchmarking study that’s relevant for all something practical that they can take with our human resources group on some of us. We all want to be able to measure away and put into action at their own conceptual training ideas. We’ve been ourselves, and who best to measure company. I think people want to go to a working with store operations to a greater ourselves against than other retailers or conference where they can hear something degree not only on tactical things, but also wholesalers in the grocery business. that was successful for somebody else more strategic solutions for risk factors. We’re also looking at how we can do and have the tools or information to take We’ve been taking a look at construction to a better job with sharing information. We back to their company and implement a provide input on particular design elements want to implement some type of an e-share solution. We plan to have a lot of sessions that have caused problems. We’ve been system where we can ask questions, share that are going to be like that. (See sidebar working with our purchasing department on answers, and become engaged with one below for a list of risk and safety topics ergonomic issues with certain equipment. So, another on a more frequent basis. Like scheduled for the upcoming conference.) we’re trying to insert ourselves into different loss prevention, risk and safety are areas business areas that weren’t accustomed where we feel a little bit freer about sharing EDITOR: Looking forward, how do you to seeing somebody in risk management information about what we’re doing and see your role, and risk management in have any input or opinion before. how we’re doing it because we’re not general, evolving in the retail industry? sharing proprietary information. At the end CHRISTMAN: My goal at Ahold USA is of the day, what we’re all trying to do is to expand the assumed definition of risk EDITOR: That’s very proactive and protect our associates and our customers. management. As a support function, we can shows that today’s risk management executive should be a value-adding business partner, not just someone looking at reports and numbers. CHRISTMAN: That’s very true. But even when it comes to data, we are using technology today in a much more sophisticated way than in the past. For Following are some of the educational sessions that may interest risk, example, we’ve been working with our insurance, and safety professionals at the Food Marketing Institute’s Asset claims group on a predictive modeling Protection Conference March 11 – 14 in New Orleans. Go to www.fmi.org for project that takes a decade worth of claims more information. data and tries to pinpoint what factors contribute to a bad claim. If we can identify ■ S afety for Smaller Footprint General Sessions these factors so that we know within thirty ■ P ower-Lift Training—A Practical Operators ■ to sixty days that a claim has the potential C yber Risk Liability Guide to Reducing Material■ R isk Data Mining and Analytics Handling Injuries to be open for ten years or cost half a ■ C ■ H urrent and Innovative Trends in ow to Prepare for an OSHA Audit million dollars, then we can determine what Risk and Safety we can do proactively to make sure that ■ P reparedness Is NOT Paranoia Roundtables that doesn’t happen. Risk management has ■ C laims and Insurance come a long way in the past decade, and I ■ E nvironmental Compliance Breakout Sessions believe we’ll continue to grow and contribute ■ M anaging Your Fleet to Reduce in many different ways in the future. Losses and Improve Operations Workshops ■ R ■ T esponding to the Catastrophic echniques of Risk Management EDITOR: No doubt. Thank you for ■ A ctive Shooter—Readiness, Claim—Are Your Routine sharing your thoughts on risk Response, and Recovery Investigative Protocols Sufficient? management with our readers. continued from page 34

FMI’s Risk, Insurance, and Safety-Related Conference Sessions

january - february 2012

LPportal.com

New Digital Magazine Format Optimized for iPad and Tablets

Check out our new digital magazine format with easier navigation, higher resolution, and more functions for readers who want LP Magazine on their computer, iPad, or tablet PC. ■ Save PDFs of articles ■ Print or email pages ■ Share pages directly to social networks ■ Fast keyword search ■ Hot links to outside content and advertiser offers

LOSS PREVENTION

MAGAZINE

Bookmark the new digital magazine at digital.lpportal.com Ten years of archives still available at digital.losspreventionmagazine.com

Associations in Action by Lisa LaBruno

A Year in Review A

s I reflect on the initiatives driven by the RILA LP team in 2011, two things stand out to me about the loss prevention profession. First, retail LP continues to evolve at a rapid pace. Second, LP executives are stepping out of their corporate silos to collaborate with industry peers and external stakeholders. Gone are the days of LP professionals living their professional lives as crime stoppers. Retail crime remains a significant risk that will require our ongoing attention. But, today there is much more to retail LP than fighting crime. Thanks in part to corporate reorgs and budget constraints, LP professionals have been forced to diversify. Individuals hired years ago to catch shoplifters have taken on additional roles, like safety manager, hazmat specialist, human resource investigator, and auditor. With diversification comes the reality that LP professionals may not always have the answer, and they may need to look outside their organizations for help. All one needs to do is look at RILA’s key LP initiatives in 2011 to see how diversified the LP function has become, and how the spirit of collaboration is alive and well in the industry.

Workplace Safety

Our Workplace Safety (WS) Committee grew exponentially with nearly 100 safety professionals representing forty retailers. The numbers in and of themselves show a desire on the part of retailers’ to collaborate. In 2011 the committee convened regularly to discuss emerging trends (the good, the bad and the ugly), top challenges, and leading practices for minimizing workplace injuries. In the fall committee members met in Washington, D.C. and welcomed the unprecedented participation of executives from the U.S. Chamber of Commerce, National Institute for Occupational Safety and Health (NIOSH), and Occupational Safety and Health Administration (OSHA), delivering on our commitment to look outside our organizations for sustainable solutions. Throughout the year, the WS committee commissioned several benchmarking surveys covering a broad range of topics including fall protection, corporate safety programs, and trends in general liability and workers’ compensation claims. RILA closed out the year by hosting more than 150 safety professionals on a webinar addressing the impact of OSHA’s enforcement actions on the retail industry.

Disaster Preparedness

2011 saw its share of natural disasters, both domestically and overseas. With each event came a reminder to LP executives of the critical role of preparedness in a retailer’s response and recovery efforts. This past year, RILA’s Disaster Response and Preparedness (DRAP) Committee was keenly focused on corporate and industry preparedness,

january - february 2012

Lisa LaBruno leads the asset protection offerings in the areas of loss prevention, retail crime, workplace safety, disaster recovery, operational audit, research, and benchmarking for the Retail Industry Leaders Association. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs, and more than 100,000 stores, manufacturing facilities, and distribution centers domestically and abroad. LaBruno can be reached at 703-600-2024 or lisa.labruno@rila.org.

working together and with external stakeholders to develop strategies for mitigating the impact of disasters. DRAP members met regularly to discuss preparedness and response protocols, leading practices, and strategies for streamlining industry efforts. They “downloaded” in the days following significant weather events to share challenges, successes, and lessons learned. They developed a communication mechanism to facilitate information sharing during a crisis. In addition to peer collaboration, we…once again…looked outside our industry for answers. We forged strong partnerships with key external stakeholders, including the Federal Emergency Management Agency (FEMA) and the Department of Homeland Security (DHS). In the spring FEMA hosted DRAP at the National Response Coordination Center (NRCC) in Washington, D.C., where Administrator Fugate and other FEMA executives spent a full day brainstorming with committee members about methods for driving public-private partnerships and opportunities for enhancing the agency’s initiatives to better align with retailers’ needs and capabilities. Several months later, RILA and DRAP members played an important role at FEMA’s first national conference on building resilience through public-private partnerships. And, RILA takes pride in the fact that two of the four companies to sit in the private-sector seat at the NRCC this inaugural year were DRAP members. One of the most humbling experiences of my professional career occurred this past year when I had the opportunity to travel to Joplin, Missouri, to lead DRAP members and 250 other volunteers from RILA retail member companies in “Retailers Rebuilding Joplin,” a large-scale cleanup and rebuilding effort following the F5 tornado that ripped through the small Midwestern town.

Operational Audit

This year, the Operational Audit Committee (OAC) released the second edition of the RILA Store Operational Audit and Loss Prevention Guide, written in partnership with KPMG. The guide is a resource tool to help retailers develop, enhance, and update store audit department structure and reporting hierarchy, store audit processes, selection criteria, and reporting. Following its release, committee members helped lead a webinar to review the guide’s contents with the more than 250 audit professionals in attendance. Throughout the year, the committee commissioned several benchmarking studies, including surveys on regulatory compliance, store and distribution center inventory practices, and store-level receiving processes and controls. continued on page 40 |

LPportal.com

continued from page 38

Industry Leadership

Technology

Helping to drive the development of cutting-edge, theft-deterrent technology is a key objective of RILA’s Horizons Committee. Committee members kicked off 2011 in Chicago to continue their work on creating an industry business requirements document designed to provide suppliers with retailers’ common requirements for solutions that address retailers’ top loss prevention concerns.

Retail Theft

RILA’s Crimes Against Business (CAB) Committee was more active this past year than in years past. We expanded our focus to include all crimes against business, recognizing that organized retail crime (ORC) is one of many criminal risks retailers face. Consistent with this expanded vision, we broadened the scope of RILA’s annual crime trend survey to solicit information regarding emerging crime trends and new solutions for mitigating criminal risks. In the fall CAB members met in Minneapolis to hear presentations discussing such topics as intelligence infrastructure, use of force during apprehensions, workplace violence, in-store portable POS units and proof of purchase, cargo theft via rail cars, use of the RICO statute in prosecuting ORC cases, internet fulfillment and LP strategies for online fraud, video solutions, serial robbery investigations, alternate-source suppliers, and using tactical, strategic, and administrative analysis to combat ORC. And, RILA announced a partnership with Verisk Analytics to help drive participation in CargoNet and LERPnet2.0 as part of our ongoing effort to help stem the tide of ORC.

january - february 2012

I am particularly excited about RILA’s Asset Protection Leaders Council (APLC), and I believe it will be a game-changer for the industry. Setting aside the fact that the APLC is comprised of the top LP executives from the leading retailers in the world, the APLC’s process-driven shrink initiative has gained significant momentum since its launch just a few months ago. This initiative is part of a collaborative industry effort to better understand shrinkage, identify the most significant operational risks causing shrink, and develop sustainable solutions for mitigating loss. In the fall APLC members, product manufacturers, and renowned academic researchers convened in Minneapolis to discuss shrink and to develop a forward-looking research agenda to zoom in on the shrink implications of the emerging operational retail environment. In the coming year, the group will be focusing on the true cost of shrink, the next generation of self-scanning, and engaging the business in LP.

LP Conference

Finally, a recap of the year’s accomplishments would be incomplete without reference to RILA’s 2011 Loss Prevention, Audit, and Safety (LPAS) Conference. Record-breaking attendance, a sold-out exhibit floor, unprecedented networking opportunities, and thought-provoking session content led by topical experts helped make LPAS 2011 a huge success.

Looking Ahead

2011 was a banner year for RILA and the LP executives who helped drive our initiatives. Looking ahead to 2012, we will continue to drive initiatives that reflect the key priorities of LP executives, keep pace with the evolving LP function, and facilitate collaboration among our membership for the good of the entire industry.

LPportal.com

Profile

BJ’s Wholesale Club No-Frills Mentality Meets Low-Shrink Results By Adam Paul, Contributing Writer

BJ’s WHOLESALE CLUB

J’s Wholesale Club represents a novel way of doing business for a large warehouse type store. Headquartered in Westborough, Massachusetts, and endowed with a large presence on the East Coast, BJ’s is a curious mix of a bare-bones warehouse outlet and the contents of a local grocery store fused to create a unique concept that has inspired a legion of devotees. From its humble beginnings in 1984, BJ’s has grown into an impressive retail force, operating 192 clubs in fifteen Eastern states. If the word “club” evokes images of a sort of paid exclusivity, that’s because it’s exactly what BJ’s does—it charges $50 for an annual membership, which essentially buys the consumer the privilege of walking through the door. BJ’s Wholesale Club is different from other warehouse clubs. While all of them operate on a similar model and share similar features—the spartan concrete floors, minimal décor, and an abbreviated customer service staff—that’s where the similarities end. BJ’s is simply different because of its mission—BJ’s target customer is the individual family. Because of the emphasis on families, you’ll find things at BJ’s that you simply won’t find at other warehouse-type stores, like supermarket-sized single products in multipacks that many families request, in addition to the massive bulk sizes popularized by wholesale chains. BJ’s also does things unheard of in this market sector, like accepting all manufacturers’ coupons and offering the option of payment with every major credit card, once again restating their commitment to the consumer. BJ’s willingness to delve into the supermarket side of the product line while operating under the warehouse model translates to the largest selection of products in the warehouse store industry—over 7,000 items in an average store. Of course, BJ’s also has the obligatory selection of member services, such as optometry, travel, and wireless phone services. Emphasizing its consumer-centric focus, BJ’s also goes out of its way to be an excellent community citizen. Cornel Catuna, BJ’s executive vice president of club operations, explains that BJ’s ideology is to go into a community, oftentimes one that other retailers have failed to penetrate, and personally meet with the key players in the community, from the mayor to the chiefs of fire and police, and

At BJ’s loss prevention professionals are not only homogenous with the sales staff, they sometimes even operate the stores. Catuna quips, “How many other stores can have their AP people run the sales floor? AP has become part of our DNA.”

Cornel Catuna, Executive Vice President of Club Operations

forge a close bond and partnership. BJ’s real estate and construction professionals—those responsible for actually scouting and building the stores—are expected to embrace a community’s standards. It’s this “we’re your neighbors” philosophy that has allowed BJ’s to enter and even thrive in communities that have previously rejected other retailers. Even more interesting is that BJ’s is a chain that has managed to not only provide excellent service, exemplary community relations, and a massive selection of products, it has also managed to achieve some of the lowest shrink numbers in the industry.

Loss Prevention at a Glance

BJ’s loss prevention efforts are headed by Charles Delgado, its vice president of asset protection. Delgado is the type of person eminently suited for a role as an LP executive. He combines the qualities and know-how of a good detective, yet has the sensibilities of a sales operation manager; a crucial combination unless you want to have every single product on lock down. Delgado brings a wealth of investigations experience to BJ’s. He served in the United States Navy shortly after high school and then proceeded into a sixteen-year career with the Massachusetts Department of Corrections, where he was an expert in fugitive apprehensions and gang intelligence, january - february 2012

LPportal.com

Charles Delgado, Vice President of Asset Protection

developing a skill set that would eventually give him an uncanny insight into organized retail crime (ORC). After working a loss prevention stint at Target, he was asked by BJ’s to come aboard and form an investigations program to combat the new emergence of ORC. He remains there four-and-a-half years later. Delgado most certainly has his work cut out for him at BJ’s. As he explains, “If BJ’s didn’t have an investigations model, the stores would potentially be a soft target. The clubs are an area of opportunity.” The massive size of the stores, between 85,000 and 120,000 square feet, coupled with the relatively small

BJ’s WHOLESALE CLUB staff for a store of this size and the sheer number of products makes a combination that could potentially be disastrous. Says Delgado, “Due to our big-box environment, BJ’s has the square footage and size to maintain at least three times the inventory than that of a normal retail environment. Therefore, we are at a greater risk in terms of the impact and damage that an ORC group can inflict in a short period of time.” As a matter of fact, it’s precisely within this environment that BJ’s has been able to achieve shrink numbers that are among the lowest in its industry segment. To understand why the stores could potentially be an LP nightmare, one needs to look no further than the business model. You start with a massive warehouse with concrete floors and metal shelving in keeping with the low-overhead, no-frills model. You then staff the store—one that contains as many products in a single location as four Walmart stores combined—with a bare-bones staff of the minimum number of people to get the job done. To top it off, you sell, among other things, extremely high-value

products like televisions and electronics in a cash-and-carry format, and you can see why BJ’s is a loss prevention challenge. There isn’t a small army of sales associates wandering the floor, keeping an eye out for trouble; there are just a few. There aren’t 2,500 SKUs like your average store; there are over 7,000. And yet, Delgado and his team have posted some of the lowest shrink numbers in the industry.

According to Delgado, their loss prevention efforts begin with the hiring and training of the LP team. BJ’s boasts a formidable training program for its asset protection teams, and Delgado watches over the stores with an avid sense of pride and dedication. He’s leveraged his law enforcement background to augment the training and education of persons continued on page 44

To understand why the stores could potentially be an LP nightmare, one needs to look no further than the business model. You start with a massive warehouse with concrete floors and metal shelving in keeping with the low-overhead, no-frills model. You then staff the store with a bare-bones staff of the minimum number of people to get the job done. To top it off, you sell, among other things, extremely high-value products like televisions and electronics in a cash and-carry format, and you can see why BJ’s is a loss prevention challenge.

LP Magazine | january - february 2012

BJ’s WHOLESALE CLUB

BJ’s takes this lean concept and gives it a novel twist with the addition of crosstraining. Many of BJ’s loss prevention personnel have gone on to be promoted in other areas of the company and have taken that LP experience with them so that it pervades the everyday operation of the stores.

Christine Neppl, Executive Vice President of Merchandising Logistics

continued from page 43

maintain large investigation teams, BJ’s lean AP team doesn’t have that luxury. Instead who previously didn’t know the process of preserving a crime scene and collecting evidence we diligently seek out opportunities to work smarter.” to combat the growing scourge of ORC. Additionally, BJ’s takes this lean concept “Random groups of people can hit clubs from New Jersey to Florida in a matter of days,” says and gives it a novel twist with the addition of cross-training. Many of BJ’s loss prevention Delgado of the necessity of an investigations personnel have gone on to be promoted in model required to fight ORC. other areas of the company and have taken that LP experience with them so that it pervades A Lean LP Model the everyday operation of the stores. Catuna The no-frills mentality doesn’t stop at the explains that BJ’s asset protection department is sales floor at BJ’s. It continues up into the actually part of its sales operations department, management structure. BJ’s simply doesn’t have the luxury of a top-heavy LP department. and that each AP manager in every store is actually part of the store’s management team. According to Delgado, “The BJ’s asset It’s this interesting approach that gives BJ’s an protection team is a super-lean group of LP edge in loss prevention. professionals who are armed with formidable At BJ’s loss prevention professionals are educational, real-life and business experiences. not only homogenous with the sales staff, they Contrary to many LP departments that

january - february 2012

LPportal.com

sometimes even operate the stores. Catuna quips, “How many other stores can have their AP people run the sales floor? AP has become part of our DNA.” LP is so woven into the management structure that Catuna estimates that 20 to 25 percent of mid-level managers at BJ’s have worked in an AP manager capacity at a BJ’s club at some point in their careers. Further to that, these former AP managers promote to other parts of the company in non-AP roles. The previous vice president of asset protection, for example, is now running the logistics division, and that person takes all of their AP experience and brings it to bear on their new duties. It’s an incredibly novel and effective way to do business and, quite simply, it works. Catuna explains that this cross-training, this mixed LP-and-sales operations attitude was “part of our culture from the beginning,” and LP personnel, in contrast to other stores, aren’t looked upon as outsiders. He believes that no other retailer has done this as effectively as BJ’s or posted shrink numbers as low as theirs in any similar type of stores. Catuna is zealous about his shrink numbers. “We wake up every day trying to fulfill our promise to our members. We can’t offer good prices if shrink is out of control.” According to Catuna, shrink at BJ’s has always been low due to their unique model, but not as low as it has been within the last two or three years, which is phenomenal considering the rapid emergence of ORC during this time. Christine Neppl is BJ’s executive vice president of merchandising logistics, and previous to that, has served in BJ’s finance division for twenty-five years. She knows shrink—“We need less of it,” she states pragmatically, while at the same time noting that a certain amount of it in such a high-velocity, low-margin environment is a reality of doing business. She seems very pleased with the shrink numbers that BJ’s is posting, which is rare for someone in finance, which demonstrates how good the operation really is. She voices the same sorts of issues as anyone in sales would, noting that typically, LP is viewed as the “sales prevention department” and that most LP managers want merchandise in lockup rather than on the sales floor, where sales managers want it. BJ’s has struck an excellent balance in this regard, with only the most expensive technology and small footprint items actually being secured. Says Delgado, “As an LP executive, I filter every decision I make

BJ’s WHOLESALE CLUB to ensure that I maintain a focus on what is in the best interest of the clubs in driving sales, reducing shrink, and providing a safe, secure working and shopping experience.” Additionally, according to Neppl, BJ’s has worked closely with manufacturers to ensure high-dollar value and high-theft items come protected from the factory, and BJ’s constantly maintains an accurate perpetual inventory of all high-value items.

Maximize Cash Flow

Success Stories

BJ’s isn’t immune to thefts or ORC and has had its share of crime. BJ’s investigations team is aggressive, however, and won’t rest until the thieves are caught. When asked about one of his more successful cases, Delgado goes on to recount one of the most recent successes. “One case in particular stands out,” explains Delgado. “BJ’s Club operators in the South Florida market were experiencing a high-level of electronics theft by an aggressive ORC group. The group would stage a vehicle in a fire lane and then push flat-bed carts loaded with various high-dollar electronics through the fire exit. This fluid group moved quickly from location to location, but through the diligence of our manager of special investigations, field AP teams, the club operators, and local law enforcement, the suspects’ vehicle was positively identified and a GPS tracking unit was placed on the vehicle. Once the device was installed, BJ’s AP team created a

Besides hiring the right people and training them formidably, BJ’s employs the best technology available from EAS systems to IP video. High-theft items like televisions, hard drives, and other high-value items are counted daily to ensure BJ’s knows where it stands at any given moment. five- to seven-mile geo fence around all of the BJ’s locations in South Florida. Once the vehicle penetrated the geo fence, we informed law enforcement, and they were able to track the vehicle back to the ORC group’s safe house, which was heavily secured with perimeter cameras, alarms, and glass breaks. A SWAT team was utilized to breach the safe house, and a large amount of merchandise from multiple retailers was recovered by law enforcement, resulting in several arrests.” BJ’s has also experienced high-tech crimes. A recent case came to light where a group of two men where travelling from Georgia to the Carolinas with a trailer in tow. Inside the trailer they had a series of sophisticated printing equipment and had managed to make exact copies of BJ’s sales receipts, which they would actually generate in the parking lot of the store they would hit. They’d simply walk inside, grab a piece of merchandise, and return it to the customer service center, phony receipt in hand, for a cash refund. It didn’t take Delgado’s team long to realize what was happening and immediately begin keeping an eye out for the suspects, who were caught and arrested shortly thereafter in Florida.

aCCePt BILLS and dISPenSe CoIn wIth ConFIdenCe and vISIBILItY • Increase visibility and “anytime reporting”– remote access management and immediate view of cash flow, with detail reports for accountability audits • Employee self-service – increase cash management productivity with direct, authenticated and traceable employee deposits • Remote management – remote access management and support for software rollouts, updates, setup control and data retrieval or upload • P.O.S. and back office integration – track the flow of cash to the transaction level

to Move ahead to learn more about products that can take your operations to a new level, please contact us today at (800) 528-9900 ext. 4 or visit us at www.remotecashcapture.net.

The Right Combination

LP Magazine | january - february 2012

BJ’s WHOLESALE CLUB

In-store face time is critical. “Every single executive at BJ’s spends time in the clubs. All LP professionals must understand that we don’t have cash registers in our offices. It is vitally important that we spend time in the clubs and with our field teams to truly appreciate the hard work that goes into every sale.” Technology Plus Face Time

Delgado’s in-store LP measures are up to the highest standards due to the nature of their business. Besides hiring the right people and training them formidably, BJ’s employs the best technology available from EAS systems to IP video. High-theft items like televisions, hard drives, and other high-value items are counted daily to ensure BJ’s knows where it stands at any given moment. Delgado is also quick to point out that BJ’s logistics process—a “best-in-class” system, as he puts it—ensures very tight controls using a cross-dock process where everything is tracked right from distribution centers. Additionally, Delgado believes that in-store face time is critical. “Every single executive at BJ’s spends time in the clubs, and I’m certainly no exception,” he says. “All LP professionals must understand that we don’t have cash registers in our offices. It is vitally

important that we spend time in the clubs and with our field teams to truly appreciate the hard work that goes into every sale. I visit clubs on a weekly basis, speaking to cart attendants, cashiers and managers, and members in an effort to educate myself in how they view the business and asset protection. I believe you have to make a solid effort to make yourself available to the front-line teams in the clubs, and at no point can you confuse effort with accomplishment.” So where does BJ’s go from here? Onwards and upwards. From Neppl to Catuna to Delgado, the consensus is that there’s still room for improvement in the shrink number, and BJ’s won’t rest until their shrink is lower yet…and maybe not even then. In a business model where profit is sometimes measured in pennies per item, it’s simply impossible to not be aggressive about reducing shrink and preserving what little profit there is left. It’s also easy to see why BJ’s is so successful with their loss prevention program. As Catuna states, “AP is sales ops, and sales ops is AP.” It’s this attitude, this culture of vigilance, where an AP manager might be charged with running the sales floor from time to time that pervades the organization, making sure everyone keeps loss prevention at the forefront. BJ’s sees no reason to deviate from this model, and for good reason—it works. And judging by their sales and shrink numbers, BJ’s will continue bringing value to the families it serves for years to come. ADAM PAUL is a business writer based in Los Angeles, California, and a new contributor to LP Magazine. He can be reached at AdamP@LPportal.com.

Tired of losing sales to defensive merchandising? Reclaim sales with the OPEN Merchandising System. Our product facing system with integrated security delivers a powerful shopping experience while remaining tough on shrink. Now with public viewing monitor for added brand messaging and theft deterrence.

The results are in! Monitor switches from brand messaging to public viewing upon product removal

MERCHANDISING SYSTEM

•

Up to 88% reduction in shrink

•

6 month - 8 week ROI

•

Double-digit increase in sales

Sweep sounds alarm

info@intelligentlossprevention.com www.intelligentlossprevention.com 800.747.4384

january - february 2012

LPportal.com

Hyatt Regency New Orleans, Louisiana March 11-14, 2012

Explore New Ways to Protect Your Company’s Assets

Safety Risk Management Crisis Management

People

Loss Prevention

Reputation

Worker’s Comp

Property

Shortage Controls

Participate in hands-on exercises,

Fraud

learn from industry experts and share best practices with your peers to tackle your biggest challenges. Register online today! www.fmiassetprotection.com

Food Defense

Certification

Leaders vs. Followers I

’ll never forget having dinner with a well-known industry leader just after the team at Wicklander-Zulawski & Associates launched the certified forensic interviewer (CFI) certification in 2002. It struck me how critical this individual was of the program. He voiced the belief that our industry didn’t need another interview-and-interrogation class. He questioned why any seasoned professional in our business would need a certification, firmly believing that years of experience should simply speak for itself.

Value of Certification

This person had no understanding of the true value of certification, and the validation of knowledge that results when completing a professionally developed exam. He failed to realize that by only participating in seminars, conferences, and workshops, regardless of how good those programs might be, there is very little confirmation that the message is understood and the lessons learned. There is no constant standard that measures comprehension or successful application of the information. Even our pillars of higher education can lack consistency. With each professor and each university interpreting and communicating information in their own way, it can be very difficult to ensure that students always learn the same lessons and share a common understanding. Certification not only offers a forum for learning, but a benchmark for consistency. Everyone must demonstrate that they understand the content by passing a validated exam. That same person now embraces the CFI program. Why? He opened his mind and took time to evaluate it objectively. Ego and personal agendas were replaced by the heart of a leader. He realized that just because he wasn’t involved in developing the program, it didn’t mean that it wasn’t a great thing for our industry. He also decided to welcome positive change and accept progress by taking a leadership role, for it takes vision and guts to be one of the first.

by Gene Smith Smith is president of The Loss Prevention Foundation, the not-for-profit organization charged with the responsibility of managing certification. He was formerly president of the industry’s largest executive search and consulting firm. During the past fifteen-plus years, Smith has provided career counseling for thousands of industry professionals nationwide. He can be reached at 704-837-2521 or via email at gene.smith@losspreventionfoundation.org.

could be anything but a positive reflection on the industry? Could it be the fear of finding out that, regardless of their years of experience, they might not actually know as much as they thought? Perhaps the fear that others might find out they failed an exam? These same executives resisted MBO plans and opportunities for self-discovery and improvement. They were the ones who hated to establish goals and objectives. They were often the ones who would prefer to be critical versus volunteering to help create. They were the ones who always seemed to criticize peers who took the time to speak at national conferences, but would never volunteer themselves.

Some Just Don’t Get It

I have concluded that some people just don’t get it, and others just don’t want to get it for self-serving reasons. Some say they are career-motivated, global thinkers and want to advance, yet are not willing to invest time and energy into learning. They fail to see that it is their responsibility to educate themselves and not their company’s responsibility to do it for them. They always offer the excuse that they are too busy. Deep down inside, I think they are afraid to push the envelope. Ultimately, they are followers, not leaders. Why should we embrace certification for our teachers, financial planners, realtors, tax preparers, internal auditors, safety, and human resources, but not loss prevention? I think you know why. Just look at past actions and attitudes, and the reasons become crystal clear. As 2012 starts, we want to thank the Wicklander-Zulawski team for having a vision to elevate our industry. And, thanks to the majority of LP executives for supporting the Foundation’s efforts to further evolve this industry into a true profession. Recently Certified

“A Waste of My Time”

Kevin Ach, LPC Carson Altice, LPC Anthony Arnold, LPQ Wes Bank, LPC Lee Bland, LPC Mark Bunyan, LPC Jeffrey Cotterman, LPC Tom Counts, LPC Dereck Ethington, LPC Grady Fuller, LPQ Christopher Gibson, LPC Gina Guardamondo, LPC Jarod Gustafson, LPC Keith Harmon, LPC Tyrun Haynie, LPC Brent Holley, LPC Reginald Holliday, LPC Ronald Holliday, LPC Thaddeus Hugues, LPC Laura Kay, LPQ Patrick Kerby, LPC

I remember in 2006 when LP Magazine led discussions for creating a general industry certification. I had someone tell me that participating on a content-development committee was “a waste of my time.” I remember others becoming defensive about the idea for many of the same reasons cited above. Over the years since, I have had many conversations with senior LP executives regarding whether our profession needs professional certification. I’ve concluded that clearly those that did not express a positive attitude toward continued learning were often threatened by the idea of professional certifications. They were those who were unwilling to take the time for self-improvement; those who were skeptical and often resistant to the idea of something new. How can anyone possibly believe that establishing industry educational standards and the creation of LP-specific degree programs

january - february 2012

LPportal.com

Jody Kershaw, LPC Jason Lutz, LPQ James McClory, LPQ Kevin McMenimen, LPC Dane Meaux, LPQ Michael Miller, LPC Mark Mnich, LPC Anthony Nelson, LPQ Thomas O’Mara, LPQ Andrew Palmer, LPC Dan Provost, LPC Danielle Pyle, LPQ Glenn Rowe, LPQ David Shaffer, LPC Nesha Smith, LPC Ron Taylor, LPC Renee Thomas, LPQ Joseph Throneberry, LPC Stephen Trefry, LPQ Daniel Tucker, LPC Kevin Valentine, LPC Melissa Van De Carr, LPC

LOSS PREVENTION AUDIT & SAFETY

APRIL 22-25 • GAYLORD TEXAN RESORT & CONVENTION CENTER • DALLAS, TX

Strengthening the Enterprise Operations. Risk. Finance. IT. Supply Chain. Compliance. Human Resources. Successful loss prevention executives leverage partnerships throughout the enterprise to achieve the common goal of business growth. Through this synergy, the result is greater than the sum of its parts. At RILA’s Loss Prevention, Audit & Safety 2012 — Retail’s Comprehensive Asset Protection Conference — join subject matter experts, industry partners and solution providers to tackle the issues facing the industry and asset protection in particular. Bring your team to cover the full breadth of the program — investigations, strategy & planning, leadership development, workplace safety, technology & innovation, and audit & analytics.

TITLE SPONSOR

Evidence-Based LP

Spotting Crime before an Incident I

t all starts somewhere and somehow. Many, or maybe even most, crime attempts are spontaneous; they rarely involve much planning. But many crimes are planned, even if just a little. And often criminals and terrorists signal what they’re up to as they plan and scout. We teach our students to use “pre-incident indicators” or PIIs to detect potential events, help solve crimes, and improve prevention efforts.

Pre-Incident Indicators

Pre-incident indicators can be described as observable or otherwise detectable anomalies or incidents (clues) that may precede a crime attempt or attack. PIIs may indicate planning, preparation, recruiting, communication, scouting, or mobilization activities. It’s important to keep in mind, the observation of any one indicator may not, by itself, suggest a possible attack; contextual clusters of PIIs are better indicators. PIIs can help determine: ■ A specific asset being targeted, ■ The general or specific timing of a planned attack, and ■ The attack method and tools to be used. Following are examples of PIIs for both robbery and terrorism activities. ■ Robbery—Individual makes one or more visits, drives slowly through the parking lot, is spotted concealed behind a dumpster, or loiters by the cash office. ■ Terrorism—One or more subjects is seen taking photos; uses twitter or texting to report details, recruit, or otherwise communicate; is seen loitering near targets.

Often criminals and terrorists signal what they’re up to as they plan and scout. It is important for loss prevention teams to identify important clusters of PIIs that could indicate pre-planning, and then to pass these on to field teams. Most retailers prefer very suspicious and potentially violent situations be reported to the proper authorities rather than have store employees trying to take action. We also teach our classes that post-crime investigations should include looking for signs of pre-strike scouting or set up, such as hiding spots or previously unknown communications or tool acquisition, since this helps identify serial crime situations. Further, knowing about PIIs helps LP departments plan PII detection programs and crime prevention actions.

january - february 2012

by Read Hayes, Ph.D., CPP

Dr. Hayes is director of the Loss Prevention Research Council and coordinator of the Loss Prevention Research Team at the University of Florida. He can be reached at 321-303-6193 or via email at rhayes@lpresearch.org. © 2012 Loss Prevention Research Council

Predatory Criminal Styles

Another important concept LP professionals should consider using with serial offenders and crimes is to learn how to profile offender hunting and attack styles. In a 2007 Journal of Family Violence article, criminologists Beauregard, Rossmo, and Proulx broke these styles down to aid criminal investigations and preventive programs alike. Most offenders use some rationality as they search for, assess, and commit crimes. This rational choice perspective is what drives most crime prevention efforts, including our team’s research and development projects. In the case of serial criminals, Beauregard and his coauthors recommend looking at these factors: ■ Offender and victim routine activities ■ Choice of hunting ground ■ Victim selection ■ Method of approach ■ Attack location choice ■ Method to bring the victim to the crime site (if applicable) ■ Crime location choice ■ Method to commit the crime ■ Victim release location choice (if applicable) Based on this approach, the authors propose several main hunting styles: ■ The Hunter—committed within an offender’s city ■ The Poacher—outside city or other than home base ■ The Troller—opportunistic, encounters victims through routine activities ■ The Trapper—potential victims come to them (such as child care centers) And just as important, actual attack styles include: ■ The Raptor—attacks almost immediately upon encountering ■ The Stalker—follows, watches, waits for opportune moment ■ The Ambusher—committed where the offender has a great deal of control

Theory vs. Practice

Why is this information important to loss prevention professionals? Commercial robbery, burglary, and booster groups; bad-check passers, diversion groups, fraudsters, rapists, abductors, child abusers, and murderers all regularly shop in retail stores, and many hunt and attack there. We recommend LP executives learn more about the whys and hows of these dangerous people to better protect customers and employees, and, hopefully, help law enforcement apprehend them. |

LPportal.com

Feature

The Prisons Are Full The Impact on Retail Crime By Frank Muscato

THE PRISONS ARE FULL

veryone knows that prisons in the U.S. are full. So, what has that got to do with the retail industry? Many of the people we apprehend stealing merchandise from our stores, writing bad checks, using forged or counterfeit credit cards, and passing bogus gift cards are former convicted felons and/or have cases pending in criminal court for the very crime for which they are now being apprehended. The vast majority of these convicted felons served only a small portion of their sentences behind bars, due to “prison overcrowding and the expense to keep them locked up,” therefore allowing them back out onto our streets, into our community, and into our stores. Retail losses due to external theft continue to rise and a major reason is that those people involved in retail theft can continue their crimes with little fear of significant punishment for their crimes. If the crimes they are committing are not listed in the “violent offense” category, very few will ever see the inside of a prison. The end result is retail loss prevention organizations continue to deal with the same people over and over again.

The Debate on Crime and Punishment

The problem is not from lack of discussion. We hear concerns about the many issues involving prisons and punishment from judges, prosecutors, law enforcement, prison officials, not to mention politicians and legislators. Interestingly, those criminals who are committing these retail crimes also hear this discussion. Here are a few of the major points in this debate: ■ The prisons are full, which means for every person taken in, someone has to be released. ■ Offenders learn how to commit crimes while in prison. ■ The cost to house a prisoner is $30,000 or more per year. ■ There is little if any rehabilitation for offenders serving time in prison. ■ The U.S. houses more prisoners than any other country. How often have we heard these statements, especially from government officials and the media? How many times have we heard about the deplorable conditions of our prisons, the dangers inside

these facilities, how little room is afforded these criminals, and how these prisoners learn from other inmates? I have discussed these issues with a great many loss prevention professionals as well as law enforcement personnel. I have asked their opinions and talked at length about what we can or should try to do to combat this situation. I have also talked with a few retail industry researchers about the possibility of doing research on the effects of early-release prisoners. One professor told me that research on the cost of housing a prisoner in a penitentiary versus the cost of that person being out in the community could offer some important insight into these issues… if only funding could be found for such research. There is no doubt that this is a sensitive issue. Many states are dealing with retail theft and fraud by simply raising the felony theft levels, which apart from lowering the states’ crime statistics does nothing to combat crime. It simply makes more retail crime a misdemeanor offense. Some states are actually researching the possibility of making misdemeanor theft from a retail store a “civil matter” between the thieves and the retailers. In this situation the value of the merchandise would determine whether the crime would be criminal offense or a civil matter. Just imagine how those thieves and their attorneys could manipulate the criminal/civil figures. This would be yet another burden placed on the retailer. Retailers need to be vigilant, watching for these types of bills circulating within the state legislatures. Once a bill like this is passed in one state, other states will see this as a way to improve their budgets by eliminating these costs in their criminal justice systems. At some point retailers are going to have to get involved in this debate and in the correcting of these criminal justice issues that contribute to significant retail loss. For this reason I offer my thoughts on the who, what, where, when, why, and how of our prison systems.

Many times those involved in property crimes receive probation the first, second, and even third offenses. This keeps those individuals out on the streets with the ability to continue committing thefts in our stores. We have heard offenders over and over say, “Retail theft is very profitable, with little consequence.”

The Prisons Are Full

We hear this oft-repeated statement from legislators and state government officials: “Our prisons are full and there is no place to put these new offenders unless we release those that are already there.” For many in the public, this argument creates the perception of multiple bunks in a tiny cell with little room to move january - february 2012

LPportal.com

THE PRISONS ARE FULL

Gastronomy. The Gallileo III restaurant in Washington, D.C.,

Many states are dealing with retail theft and fraud by simply raising the felony theft levels, which apart from lowering the states’ crime statistics does nothing to combat crime. It simply makes more retail crime a misdemeanor offense.

takes full advantage of Milestone XProtect® Professional software to secure their premises. Also, the head chef uses the video surveillance to monitor all 80 dining tables during service, so he can prepare and send out his award-winning dishes at a perfect pace. Proving again that XProtect is more than security.

around and absolutely no privacy. But many of us see a different image. We picture many of those offenders who should still be behind bars out on our streets committing more crimes. There is no doubt that the threat of incarceration is no longer a deterrent to crime. You can almost hear the criminal saying, “Where are they going to put me if they catch me. Even if they do send me to prison, I won’t be there long because the prisons are full.” Many of those involved in committing these crimes are actually quite open about how they work the criminal justice system. I never pass up a chance to interview these offenders, and the information I gain is very interesting and undeniable. When encouraged, an ex-convict will brag about defeating the system and what they can get away with. They laugh about the times they were arrested and how they beat the retailer who brought the charges against them. This is especially true for those involved in fencing stolen property. They know how hard it is to prove “that they knew the property was stolen before they purchased it.” Even if the arrest was accomplished through a sting operation, many times these fences just “walk.”

Learning Crime in Prison

In my opinion this is a weak argument. Sure offenders learn things in prison, but not any more than they learn right out on the streets. To be convicted for an offense that puts someone in prison, they had to commit a crime. This is not a chicken-or-egg argument. They first learned right in their own community—from their peer group, their gang, their family, on the street, on the Internet, by many means. A person certainly does not need to go to prison to learn how to best steal large quantities of merchandise from a retail store without being detected, steal someone’s identity, or many other retail crimes. So, the “prisons just create offenders” argument just doesn’t ring true.

Milestone XProtect® is the world’s leading IP video surveillance management software and is reliable, future proof and easy to use. It supports the widest choice in cameras and seamlessly integrates with business and security solutions such as video analytics. Which means your possibilities are unlimited and you can keep your security options open.

The Cost to House a Prisoner

Cost is one of the most discussed issues concerning prisons. So, let’s look closer at the many issues surrounding the cost of housing offenders. While in prison the state has to pay for food, living quarters, clothes (which are generally recycled and reused), medical

Discover more with Milestone and try our software for free at: www.milestonesys.com

continued on page 54 LP Magazine | january - february 2012 halfpage_retail_LP Magazine_Galileo.indd 1

53 03-11-2011 10:49:59

THE PRISONS ARE FULL continued from page 53

No one can argue that our prison system does not need to be fixed. The fact that our prisons are full is not an excuse to open the doors to retail criminals who continue to prey on our stores over and over again.

expenses, miscellaneous needs, and, of course, the prison guards and staff. The amounts vary by state. Some say it costs as much as $50,000 per prisoner, but the most realistic figure is closer to $20,000 to $30,000 per year. How do those figures compare to the cost to the public when offenders are released back into the community? Keeping in mind that the recidivism rate is 60-plus percent, tax payers are paying for both those incarcerated as well as when they are released. While they are in our community who pays for their food, their clothes, their living quarters, and their medical needs? Who pays for the parole officers who watch over these parolees? Who pays for the public defender the next time they are arrested? Who pays for the police who have to work on these new crimes? One could argue that the cost to the tax payer for early-release offenders could easily exceed the amount to keep them behind bars. Remember, too, that we’re not talking about first-time offenders. No one gets sent to prison for their first or even second felony, unless it involves serious violent crimes, such as murder or aggravated rape. Even those convicted of robbery will usually get second chances unless they hurt someone during the commission of the crime. For example, I recently interviewed a person who was arrested in Texas for felony theft, which in Texas is $1,500 or more. During the interview we discussed his past history of retail theft. He is an undocumented alien from Honduras and has been in the United States for six years. He came illegally into the U.S. specifically to work in organized retail crime (ORC). After extensive training and working with an experienced team, he became the leader of his own three-person “clan” who traveled throughout the Midwest and Southeast committing retail crimes. He told me that he went “on a trip” approximately two times per month, staying out for three to five days each time. During those trips, his group would steal more than $20,000 in product from drug and grocery stores each day. He acknowledged that his team had stolen more than $100,000 on many of these five-day outings. Each evening his clan would box and ship the stolen items to a fence, who was affiliated with the MS13 gang, for approximately 20 to 25 percent of the retail value.

january - february 2012

Here is the most interesting part of the interview. He said that in the six years he had been doing this, he had been arrested four times, all in Texas. Although he had been stopped several more times, these were his only actual arrests where he was taken into custody. The first felony theft case he “plea bargained” for two years probation. The second felony theft arrest a year later, he plea bargained to extend the probation to four years. The third felony theft arrest two years later, he plea bargained to extend his probation to five years. All these probations occurred while this person remained an undocumented alien. When I asked him how the prosecutor handled his being undocumented, he said that the prosecutor told him that the immigration service would be notified of his case. Immigration never contacted him. These cases all occurred within four years, and he had never even slowed down his ORC activities. He said that while in training, his fellow undocumented counterparts told him that as long as he didn’t hurt anyone physically, nothing would really happen to him, other than a few days in jail. When discussing the issue of costs, what about the victims of these crimes? Who pays for the victim’s suffering, their losses, or their recovery from these crimes? Again, the cost to crime victims through city, county, state, and federal government may also exceed that $20,000 to $30,000 figure. Again, wouldn’t it be nice to find the funds to conduct research that could answer the question of the cost of releasing offenders early versus keeping them in prison for their full sentence? Remember, when an offender is in prison, he is not in our stores.

Lack of Rehabilitation in Prison

For those who argue that there is no rehabilitation in our prisons, for the most part it just isn’t true. There are educational and occupational courses offered in all U.S. prisons. The difference is the required cooperation needed of those prisoners who want an education. Prisons are limited to imposing work on prisoners unless they want to work, or requiring them to get an education unless they want to be educated. They can’t be required to learn a new skill to assist them when they get out unless they |

LPportal.com

THE PRISONS ARE FULL want to learn that skill. All these requirements would fall under the legal concept of “cruel-and-unusual punishment.” At the same time, most of us support a criminal justice system that offers prisoners the opportunity to change their lives through education or by learning productive skills. Most of us would even support giving someone a second or third chance if they are actually trying to succeed at rehabilitation.

Retail losses due to external theft continue to rise and a major reason is that those people involved in retail theft can continue their crimes with little fear of significant punishment for their crimes. Many feel that if there is a way to help rehabilitate these folks, we as a society should try hard to accomplish that goal. In fact, many high school and college educators, religious and social organizations, and business people donate their time to help educate the prison population. Education is probably the most important element to rehabilitation. The prisoners

who participate in educational and occupational training have a much better chance of being successful once released from prison. But how many truly want these classes and actually think that it will help them when they are released? The federal government has even passed a bill that allows tax incentives to businesses that hire ex-convicts. Yes, there are incentives to hire those who are released early from prison. We all want these folks to succeed when released from prison, but in my opinion it should be after they have served the time for the crimes they committed in the first place.

More Prisoners than Any Other Country

We certainly can’t disagree with the statement that there are more prisons and prisoners in the U.S. than any other country in the world. It can be sized up with one word and that’s “freedom.” The reason we have more people in prison here is because we have more freedoms than any other country. Generally speaking, individuals here in the U.S. can be whatever they want to be, but they have to earn it. They have to put in the time, the work, and the effort to get the things they want. It’s all right here for the taking, but it’s not free for the taking. Unfortunately, for a great number of reasons that could be offered by psychologists, sociologists, and criminologists, many in our society do not want to earn their way. They have decided it is easier to simply take what they want

LP Magazine | january - february 2012

THE PRISONS ARE FULL retail theft and fraud are considered non-violent crimes. It won’t be long before prisons will not accept anyone who has not committed a serious violent crime. Some states are already leaning that way. For example, last May California was ordered to release 40,000 non-violent prisoners to ease overcrowding. Many times those involved in property crimes receive probation the first, second, and even third offenses. This keeps those individuals out on the streets with the ability to continue committing thefts in our stores. We have heard offenders over and over say, “Retail theft is very profitable, with little consequence.” No one can argue that our prison system does not need to be fixed. The fact that our prisons are full is not an excuse to open the doors to retail criminals who continue to prey on our stores over and over again. Retailers can and should take the lead in addressing this problem with state legislatures. Controls have to be created, and states should be held responsible to protect tax payers from these offenders.

or need knowing, as we have already discussed, that it is often easy to get away without getting caught, and even if they are caught, little is done to them. It is an unfortunate aspect of our society that the freedom and opportunity afforded our citizens contributes to the crime in our stores and ultimately to the large numbers in our judicial and penal systems.

Reform of the Justice System

At some point our justice system is going to have to change. This discussion centered on just five of the many reasons and excuses states use to release prisoners early. Because of our current economy, “cost” seems to be the primary motivating factor in most state and federal government decisions. We as retailers need to encourage our government leaders to look at the big picture, beyond the dollar sign, and take in all accounts of the costs, not just what appears on the bottom line. We are experiencing these crimes every day in our stores, and the number of these offenses will continue to rise because

FRANK MUSCATO retired from the Dallas Police Department’s Intelligence Division as a case supervisor in 1993 following twenty-five years of service to help create retail’s first organized retail crime division inside Walmart. After eleven years with Walmart, he went to Walgreens to assist in creating their ORC taskforce. In 2010 Muscato established The Muscato Group based in Dallas, specializing in ORC training and special investigations. He is recognized nationally for his expertise in ORC and in lobbying for ORC legislation and is affectionately referred to as “The Godfather of ORC” by his peers. He is also the coordinator of state representatives for the Coalition of Law Enforcement and Retail (CLEAR). Muscato can be reached at 214-930-9359 or fcmuscato@gmail.com.

If your business is

33RD ANNUAL CONFERENCE NATIONAL FOOD SERVICE SECURITY COUNCIL

about doing business with loss prevention, security and safety executives from the restaurant industry, then the NFSSC

Hyatt Regency Baltimore — Inner Harbor Baltimore, Maryland

Annual Conference is

AUGUST 5 - 8, 2012

a must attend event for you. No other event allows you to meet and interact with the industry’s

Exhibit space and sponsorship opportunities are available — for more information, call 240-252-5542 or email Jim.Forlenza@NFSSConline.org.

top decision-makers.

www.nfssc.com 56

january - february 2012

LPportal.com

 



 

Fundamentals by Mike Marquis, CFI

Playing on Today’s Court W

ith the recent NBA lockout, my cable provider provided “Celtic Classics” for the pro basketball fan. For the first time I had the chance to see Jerry West, Elgin Baylor, Bob Cousy, Tommy Heinsohn, and Bill Russell in a full game. I was also able to revisit Dave Cowens, John Havlicek, Oscar Robinson, and a young Kareem. Finally, I got to relive the Larry Bird, Kevin McHale, Robert Parish battles with Dr. J, Moses Malone, or an older Kareem and Magic. With the black-and-white TV era, I found myself wondering how each player’s ability and game would transition to today. I’m not sure that a Heinsohn, Erving, or Cowens of years gone by would make the Hall of Fame if they played today. Bill Russell might not be the greatest winner ever (eleven titles in thirteen years), and Baylor might be just another role player.

Wham! Just like that an entire approach to technology’s door was slammed shut. The ray of hope was in Justice J. Summer’s lone dissent. Sure Bird could shoot in any era, but I’m not sure he’d get as many shots off; and West and Havilicek would struggle, too. Moses, Kareem, and Wilt? Their size keeps them on the court, but would they dominate? Oscar and Cousy, their court vision is there, but the rest of their skills…I don’t know. I guess that’s the cool part of these types of debates. But hey, this is a loss prevention column. And as is my habit, I eventually tie things back to my career. In this case, I got to wondering who or what of days of old makes the transition to 2012. My first nominee is Justice J. Summers from Louisiana. Yep, a State Supreme Court Justice. Here’s why. You see in 1973, EAS protection was a big deal. I.H. Rubenstein department stores had finished installing their first system in Baton Rouge. They took out ads in the newspaper, letting everyone know they had this new technology. They posted signs in the store letting customers know what the new devices on the merchandise were. They spent time training every employee on how to apply, remove, and respond to EAS tagging issues.

january - february 2012

Marquis is currently an assistant vice president of loss prevention with the TJX Companies. His more than twenty-four years of LP experience includes senior leadership positions with Limited Brands and Urban Outfitters. Marquis invites your comments at mike_marquis@tjx.com. The opinions and commentary expressed by Marquis do not necessarily represent the TJX Companies or any of its divisions.

Despite intensive training, over the first three days, they had multiple failure-to-remove (FTR) alarms. One of the FTRs was on Mrs. Frank Clark, a regular customer who had made several purchases. She was asked to return and the errant tag was found. The entire incident lasted less than five minutes. Mrs. Clark later said the clerk and manager were very polite and never indicated that they thought she had stolen anything. However, Mrs. Clark found the experience so upsetting that she had to take medication and a few days later sued. The trial court denied her petition. The appellate court affirmed the trial court. But the State Supreme Court reversed the decision, asserting, “Store personnel should have known that the alarm was just another false alarm. They should not have approached and detained Mrs. Clark.” Wham! Just like that an entire approach to technology’s door was slammed shut. The ray of hope was in Justice J. Summer’s lone dissent. He laid out a logical methodology wherein retailers could approach customers who had set off EAS technology regardless of the reason, and in doing so, provide retailers a roadmap to legal protection used today. Prior to the Clark decision, the Louisiana merchant protection statutes had been considered some of the strongest in the nation. Justice Summer’s dissent was instrumental in the rewrite of the merchant protection statutes in Louisiana, which included consideration of the relatively new technology where EAS activation was defined as reasonable cause. Justice Summers could play on today’s retail court.

Join Us Online LP Central

Our LinkedIn group is called LP Central because it is intended to be the central meeting place for LP professionals who want to connect with their peers to discuss important issues in the industry.

LP Voices

Our Facebook page, LP Voices, allows LP professionals to share not only the activities they are involved with in the industry, but also their personal lives with their friends, family, and community.

LP Mag The magazine’s Twitter page is @LPmag, where you can get frequent updates on what’s happening in the world of loss prevention.

LPportal.com

Don’t Hire Monsters

Hire Winners Instead

Why recruit LP professionals on those monster job sites? Use the premier Internet site for retail loss prevention professionals...LPjobs.com. We have more traffic than any other site dedicated to the LP industry. So your positions will be seen by experienced LP folks looking for career advancement. From store level to management, our clients find winners, not monsters, quickly and cost effectively. Visit the web and see for yourself why retailers both big and small rely on LPjobs.com. E-RECRUITING FOR LOSS PREVENTION

Industry News by Robert L. DiLonardo

Global Shrinkage Rises 6.6% T

DiLonardo is a well-known authority on the electronic article surveillance business, the cost justification of security products and services, and retail accounting. He is the principal of Retail Consulting Partners, LLC (www.retailconsultingllc.com), a firm that provides strategic and tactical guidance in retail security equipment procurement. DiLonardo can be reached at 727-709-6961 or by email at rdilonar@tampabay.rr.com.

he Centre for Retail Research recently published its 5th annual Global Retail Theft Barometer (GRTB) for the twelve-month period ending June 2011. Total global shrinkage cost respondent retailers $119.1 billion, an average of 1.45 percent of retail sales. The results are 6.6 percent higher than last year’s 1.36 percent, adjusted for the inclusion of first-time participant South Korea and currency exchange rate changes. Shrinkage rose in all geographic regions. A fifth geographic data subset, Middle East/Africa, has been added this year.

Global Shrinkage for 2011

Europe and North America remain the largest components. A three-year look at global totals indicates that the sharp increase in shrinkage in 2009 to 1.44 percent, no doubt caused by the recession, may not have been an anomaly after all. This year’s 6.6 percent increase in shrinkage to 1.45 percent places the global estimate at a level slightly higher than 2009. This is the fourth consecutive year that Latin America has recorded the highest shrinkage as a percentage of sales.

GLOBAL SHRINKAGE FOR 2011 ($US in billions)

Shrinkage as Percentage of Sales

Change in Shrinkage Rate 2010 – 2011

Europe

$48.615

1.39%

+7.8%

North America

$45.321

1.58%

+6.0%

Asia-Pacific

$18.288

1.22%

+0.8%

Latin America Middle East/ Africa

$6.053

1.67%

+4.4%

$0.815

1.22%

+0.8%

Global Total

$119.092

1.45%

+6.6%

Region

Total Shrinkage

The countries with the highest rates of shrinkage as a percentage of sales were India (2.38%), Russia (1.74%), and Morocco (1.72%). The lowest rates of shrinkage were found in Taiwan (0.91%), Hong Kong SAR (0.95%), and Switzerland (1.04%). Twenty countries posted shrinkage rates that exceeded the global total, down from twenty-two in 2010. Twenty-three countries posted lower rates, up from twenty in

2010. Shrinkage was estimated at 1.30 percent in first-time participant South Korea, below the global total.

Sources of Shrinkage

Globally, customer theft, including shoplifting and organized retail crime (ORC), was thought to cause the greatest shrinkage in most countries—43.2 percent of total shrinkage—compared with 42.4 in 2010 and 42.5 in 2009. Employee dishonesty was estimated to be responsible for 35.0 percent of total shrinkage, compared with 35.3 in 2010 and 35.5 in 2009. Internal error and administrative failure, such as pricing, process, or accounting mistakes, accounted for 16.2 percent of total shrinkage, compared with 16.9 in 2010 and 16.4 in 2009. Suppliers/vendor fraud accounted for 5.6 percent of total shrinkage, compared with 5.4 in 2010 and 5.6 in 2009. As in the previous years, there is an interesting divergence of opinion among respondent groups over the sources of shrinkage. North American and Latin American retailers regard dishonest employees as the biggest problem (44.1 and 42.6% respectively). Shoplifters and ORC account for 35.8 and 33.2 percent respectively. North American retailers have focused vigorously on ORC issues over the past few years. European and Asian retailers, on the other hand, identify customer theft as the largest shrinkage component (47.7 and 53.3% respectively). Dishonest employees account for an estimated 30.2 and 22.7 percent respectively.

SOURCES OF GLOBAL SHRINKAGE FOR 2011 Shoplifters/ ORC

Employees

Suppliers/ Vendors

Internal Error

Europe

47.7%

30.2%

6.0%

16.1%

North America

35.8%

44.1%

4.2%

15.9%

Asia-Pacific

53.3%

22.7%

6.8%

17.2%

Latin America

33.2%

42.6%

7.5%

16.6%

Middle East/ Africa

37.2%

36.2%

8.6%

18.0%

Region

continued on page 62

january - february 2012

LPportal.com

2012 MRC Annual e-Commerce Payments & Risk Conference

LAS VEGAS | MARCH 27-29

2012 MRC European Congress

DUBLIN | 25-27 APRIL

Join the world’s top multi-channel merchants, solution providers and industry experts at these unparalleled events and take advantage of our Early Bird rates before these popular conferences sell out! Dublin, Ireland

MRC’s 2012 Las Vegas e-Commerce Payments and Risk Conference offers all industry stakeholders the unique opportunity to come together and discuss emerging payments and security strategies while exploring specific solutions in fighting and mitigating online fraud risks.

Featured speakers include:

MRC’s 2012 European Congress features an all-star lineup of the world’s most recognized Michael Chertoff Former Secretary, Homeland Security

Kevin Mitnick

World’s Most Famous Former Hacker

“MRC’s 2012 Las Vegas conference provides an unrivalled opportunity for payments and risk professionals to come together to discuss the issues and advancements in the industry today. E-Commerce is one of the few global sectors currently bucking the general economic downturn and the need to make e-Commerce more efficient, profitable and safe has never been more important.” -Floris de Kort, CEO of e-Commerce, WorldPay

e-Commerce leaders delivering unique and valuable insights on topics such as expanding e-Commerce markets beyond Europe, digital and card issuer fraud, transforming mobile payments and law enforment collaboration.

January - February 2012

Articles inside

PARTING WORDS

ASSOCIATIONS IN ACTION

PEOPLE ON THE MOVE

INDUSTRY NEWS

EVIDENCE-BASED LP

FUNDAMENTALS

PUBLISHER’S LETTER

ACADEMIC VIEWPOINT

CERTIFICATION