March - April 2011 by Loss Prevention Magazine

THE VOICE OF LOSS PREVENTION LPportal.com | V10.2 March – April 2011

MAGAZINE

The Challenges of LP in Mexico Interview with Walmart’s Monica Mullins Top Three Pitfalls of Vendor-Retailer Relationships Overhauling Your Online Fraud Prevention Strategy

FIRM COMMITMENT. FOR OVER TWENTY YEARS, the legal staff at Palmer,

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Contents

17 The Challenges of Loss Prevention in Mexico The reality behind the gruesome headlines.

By William A. Alford, International Lighthouse Group

Making LP a Talent Destination for Retail Careers A conversation with Walmart’s Monica Mullins.

ON THE WEB

RETAIL SPONSORS

LOOKING BACK Ten Years of LP Magazine

ACADEMIC VIEWPOINT Nature Versus Nurture By Richard C. Hollinger, Ph.D.

FUNDAMENTALS Game Changers in LP: Part 2 By Mike Marquis, CFI

62 ASSOCIATIONS IN ACTION The Need for Federal ORC Legislation Remains By Lisa LaBruno

By James Lee, Executive Editor

45 Top Three Pitfalls of Vendor-Retailer Relationships Best practices for building great working partnerships.

By Amber Virgillo, Contributing Editor

57 Overhauling Your Online Fraud Prevention Strategy How one U.K. retailer improved results.

By Phil Mead, Carphone Warehouse March – April 2011

PUBLISHER’S LETTER March Madness Takes Study By Jack Trlica

14 INTERVIEWING & INTERROGATION Looking Back Over Ten Years By David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP

LPportal.com

EVIDENCE-BASED LP Environmental Criminology By Read Hayes, Ph.D., CPP

INDUSTRY NEWS - Emerging Cyber-Security Threats - U.S. Cargo Theft Studies Identify Two-Year Trends By Robert L. DiLonardo

CALENDAR

PEOPLE ON THE MOVE

CERTIFICATION March Momentum By Gene Smith

ADVERTISER DIRECTORY

VENDOR SPONSORS

PARTING WORDS Spring Forward By Jim Lee

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Publisher’s LETTER MAGAZINE 700 Matthews Mint Hill Rd, Ste C Matthews, NC 28105 704-365-5226 office, 704-365-1026 fax

March Madness Takes Study

EDITOR AND PUBLISHER Jack Trlica JackT@LPportal.com

was invited into a NCAA basketball tournament pool at the last minute with a group of friends who get together every year to watch the tournament. Without much in-depth knowledge of college basketball teams, I knew I didn’t have much chance of picking winners. And, I was right. While I did luck into a couple of winners, it made me realize that it takes ongoing observation and study, not just of your favorite team, but of all the teams in the tournament to do well. The same can be said of your success at winning inside your corporation. Like the basketball tournament, your company is made up of a number of teams, each with its own team philosophy, star players, strengths, and weaknesses. In this case, however, you and your team are not trying to beat the other teams, but work with them to win the retail game. (Yes, I realize the analogy is not perfect.) Think about all the various teams with whom you interface—operations, finance, logistics, merchandising, HR; not to mention those other teams out there who are trying to steal from you. Unless you know how operations works, for example, how will you know where to pass the ball to hit them in stride for a layup? Likewise, unless you know the latest shoplifting techniques, how will you know how to cut them off before they reach the basket? All of this takes experience, knowledge, and ongoing study…not just of loss prevention techniques, but also of all the various offensive and defensive plays all these teams employ to be successful. That’s why you hear so many loss prevention executives encouraging the LP professionals in their organizations to become knowledgeable of the entire business, not just loss prevention. That’s why the LPQ and LPC certifications have been designed to address all the many disciplines inside of retail. That’s why college degrees require courses in a large variety of subjects [see “Making LP a Talent Destination for Retail Careers” on page 29]. Because team members and strategies change over time, it also requires ongoing study to keep up with the changes. While Michigan State and Baylor were strong picks in 2010, that doesn’t mean they were good picks this year. (Michigan State lost in the first round, and Baylor didn’t even make the tournament.) If you are committed to advancing your career to the Sweet 16, the Elite 8, and ultimately to the Final Four, you need to commit yourself to the study and work it takes to get there. Fortunately, your company and the LP industry have a number of resources to support you. But it’s up to you to make the time and invest the effort to be a winner. And don’t overlook the many coaches inside your company who will gladly help you become a better team player and potential star.

CONTRIBUTING EDITORS Adrian Beck Robert L. DiLonardo Walter E. Palmer, CFI, CPP, CFE 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 ART DIRECTOR Mindy Kuhn 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 Kelly Durham, LPQ KellyD@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

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

March – April 2011

LPportal.com

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.

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ON THE WEB

Editorial Board

As publications offer readers multiple ways to access information and connect with each other, LP Magazine is going digital in a variety of ways. Most, if not all, of the digital offerings below are available to you now. Further down the road, we are working on digital editions formatted for the iPad and other tablet PCs as well as smartphone apps that will help you manage our digital content. If you want to connect with us digitally, first of all please participate in the online channels below. You can also help us by providing content, suggesting other online possibilities, and providing input as a beta tester. If you are interested in working with us to expand digitally, contact our online editor Matt Richardson at MattR@LPportal.com or one of our digital advisory board members below: Chris Giunta, Polo Ralph Lauren Scott Glenn, Sears Holdings Tom Hacker, Home Depot Mark Hibbs, JCPenney Andrew Holmes, Walmart John Matas, Macy’s Gary Moncur, Dollar General

Leo Anguiano Vice President, Loss Prevention & Risk Management, Central Parking Corp. Jim Carr, CFI Director, Loss Prevention, Rent-A-Center Ken Cornish Vice President, Retail Operations, The Kroger Co. Daniel Doyle, CFI Vice President, Loss Prevention & HR Administration, Bealls

LP Portal MAGAZINE

We are launching a completely redesigned web site with cleaner navigation, enhanced search capability, and better access to archived articles in both text and PDF formats.

Patti Felz Vice President, Loss Prevention, Polo Ralph Lauren Barry Grant Senior Vice President, Operations & Loss Prevention, CPI Corp

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, will allow 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.

LP Pulse

We are expanding our e-newsletter to a more focused, more frequent vehicle that will deliver important news, events, links, and other industry happenings right to your inbox.

After experimenting with videos last year, we will expand our offerings with interviews, news items, research, and other LP-oriented videos.

March – April 2011

Tom Roan Group Vice President, Loss Prevention, Macy’s Tim Shipman Director, Corporate Investigations and Crisis Management, Food Lion Mark Stinde Senior Director, Asset Protection 7-Eleven

Frank Johns Chairman, The Loss Prevention Foundation

Bill Titus Vice President, Loss Prevention, Sears Holdings

Gary Johnson Vice President, Loss Prevention, Vitamin Shoppe

Bill Turner Senior Director, Retail Operations, Cole Haan

Paul Jones Senior Director, Asset Protection, eBay

Claude Verville Vice President, Loss Prevention, Safety & Hazmat, Lowe's

Doug Marker Vice President, Loss Prevention and Safety, Michaels Stores

LossPreventionTV

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

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

Bob MacLea Senior Vice President, Loss Prevention, TJX

Thanks to a suggestion from a regional LP manager who wanted to listen to our articles as she drove between stores, we will have audio versions of select articles available for download to your smartphone.

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

Bill Heine Senior Director, Global Security, Brinker International

Mike Lamb Vice President, Asset Protection, The Home Depot

Podcasts

Chris McDonald Senior Director, Loss Prevention, Dollar General

LPportal.com

Stanley E. Welch Vice President, Director of Loss Prevention, JCPenney Keith White Senior Vice President, Loss Prevention and Corporate Admin., Gap Inc.

Retail SPONSORS

March – April 2011

LPportal.com

Join these great companies as an LP Magazine corporate sponsor. Email JackT@LPportal.com for more information. LP Magazine | March – April 2011

LOOKING BACK ON 10 YEARS OF LP MAGAZINE “Through my years of doing investigations, I’ve come to the conclusion that if you teach people what you expect of them, you clearly measure and audit them on a regular basis, you recognize and reward positive and negative behavior, and you consistently follow up on these things, they’ll do the right thing.” – Claude Verville, Lowe’s

LP departments that want to continue to expand their success and become “profit enhancers” will need to develop programs to partner with their merchants, store operations, inventory accounting, and vendors to identify and analyze the paper shrink component of loss.

“The web is absolutely revolutionizing what we do today. Loss prevention professionals are either going to be a part of it, or they’re going to be on the sidelines.” – Dan Faketty, Harris Teeter

“Before we had the exception-reporting database, we were always trying to find out if we had a problem. The system was now telling us not only when we had a problem, but who was responsible.” – John McNamara, JCPenney

March-April

May-June

2003

January-February

“Loss prevention reports to me because talk is cheap. At the end of the day, it is much more important where I visit, where I spend my time, who I see, and what I talk about. I believe that unless someone at a senior level is willing to engage at the level of more than words, you can’t achieve the kind of change that we’re trying to manifest here in loss prevention.” – Leonard Schlesinger, Limited Brands

Wal-Mart tests RFID in Gillette razor blade packages.

Home Depot rolls out self-checkout.

Emerging Trends in Loss Prevention by King Rogers Interview with Dan Faketty, Harris Teeter Operational Shrink: There’s More to LP than Preventing Theft by Terry Hennessee Planning for Terrorist Attacks Against U.S. Retailers by Charles Miller Web Technology: The Backbone to Pep Boy’s Refuse 2 Lose Awareness Program by Sam Rowell

March – April 2011

Kmart emerges from bankruptcy.

Identity Fraud—A Growing Epidemic of Fraud by Frank Abagnale Interview with Claude Verville, Lowe’s Implementing an e-Learning Strategy for LP Training by Greg Saputo and Kathleen Pobur Stopping Theft with the Click of a Mouse by John McNamara A Primer on LP in DCs by John Christman |

LPportal.com

70 LP executives attend ThinkTank 21.1 in Scottsdale.

Interview with Leonard Schlesinger, Limited Brands Protecting Your Company Against Check Fraud by Frank Abagnale Solving Multiple-Suspect Thefts by Barry Grant Monitoring and Securing Cargo with Electronic Padlocks by Andrew Chapman Why Is It Getting So Much Harder to Manage People? by Bruce Tulgan

2003

The Hollywood LP team is completely paperless with all LP audits performed on Palmpowered cell phones.

July-August

Every successful organization needs someone at the top who is charged with running the day-to-day operations. This collection of very diverse individuals has at least one thing in common. They get things done.

September-October

Blackout hits 8 northeastern U.S. states.

Leveraging People, Technology, and Relationships by Randy Meadows, Jason Rackley, and Dustin Ares Getting the Job Done: The Go-To People Inside LP by James Lee Thinking Outside the Small Box by Kevin Wolfe AAFES Loss Prevention—A Mission with a Challenge by Colonel Dale Hewitt Refund Fraud and Abuse by Benjamin Guffey

“This company is one that puts a premium on respect for everyone in the organization. The respect and partnership that we nurture in our organization transcends to our vendor base as well.” – Richard Mellor, Helzberg Diamonds

November-December

Redesigned $20 bills introduced.

Personal Safety While Traveling Abroad on Business by David Katz Interview with Richard Mellor, Helzberg Diamonds Targeting Shrinkage with a Comprehensive Program for High-Risk Stores by Lee Bland Managing Response to Protest Campaigns Against Retailers by Robert Rice and Dr. David Walsh Building the Foundation for a Strong Logistics LP Department by Frank Devlin

The Economics of EAS by Robert DiLonardo Interview with Roger Osborne, Hollywood Entertainment Boosting Employee Shrinkage and Safety Awareness in the DC Environment by Susan Sonnesyn Brooks The Challenge of TargetStore Programs in Specialty Retail by Charlie Miller Developing Talent at Circuit City by Walter Palmer

LP Magazine | March – April 2011

The loss prevention professional working in a distribution center today must not be viewed as simply the cop of the facility, but more as a highly trained, crossfunctional management liaison for the DC management team.

Retail chains that are partially saturated with EAS are struggling with a conundrum: There can be no meaningful source tagging until EAS is cost-justified in all locations. But, cost justification will not occur without the economic benefits that accrue from source tagging.

If certain merchandise is a high-shrink item within our stores, then it will also be a potential high-shrink item within the logistics pipeline.

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

Looking Back Over Ten Years O ur favorite magazine is ten years old. Ten years! These years have gone by so quickly. Congratulations to Jim Lee, Jack Trlica, and the LP Magazine staff for ten years of providing good reading and a visionary platform of communication for the industry. Things seem to slip through the cracks in the rush of cases and day-to-day business. We poured over LP Magazine’s last issue, which contained a timeline of loss prevention for the last ten years. What a flood of memories—people, places, cases, new ideas. What a ten years it was. Thank you for letting this column be part of the magazine’s success. The publisher has kindly agreed to renew our column for another year. Dave’s high school English teacher, Mrs. Polack, would be sooooo astounded! Having read Dave’s essays for four years, she was ready to take an early retirement. How often can you write Rule 19a at the top of a paper and not become bored. For the uninitiated, Rule 19a equals “trite.” According to Mrs. Polack, trite means “lacking in freshness or effectiveness because of constant use; [oh no] cliché.” We hope you have found something interesting or useful in our columns, despite Mrs. Polack’s critique. We have written almost sixty columns, ranging from the interpretation of behavior to report writing and testimony. We have addressed questions from the field along with career development. Each of these areas helped us better understand the interview process and how it applies in our industry.

Admissions and Implications

From our readers’ comments, we found they particularly appreciated our commentary on the interview process. One of the areas that we discussed in some detail over several issues was the development of an admission and eliciting admissions of other employees’ theft activity. When we started to think about the development process we initially looked at it as the endgame of the interview. However, after we started to draft the column, our thinking on the topic became markedly different. Instead of the endgame of the interview, development is strongly tied to how the interview is begun and the strategies employed in the opening moments of the conversation. For example, if the interviewer elected to use a direct accusation—accusing the dishonest associate of stealing what was known from the investigation—the resulting admission tended to be lower, because the associate knew or strongly

March – April 2011

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. © 2011 Wicklander-Zulawski & Associates, Inc.

suspected what the investigation had revealed. The direct accusation also failed to gather intelligence from the dishonest employee’s behavior about other methods of theft activity at the company. In addition, the direct accusation increased the level of resistance to an admission by encouraging the dishonest associate to make denials. The direct accusation also revealed strongly what the investigator knew and, once it was revealed, it limited the interviewer’s ability to determine when the subject was still lying. By revealing his evidence early, the investigator helps the subject identify the limits of the investigator’s knowledge. The subject then knows what he may continue to conceal. Another column addressed an additional problem area related to development—obtaining implications of other employees involved in theft activities. Previous research at Service Merchandise Corporation in the 1980s indicated about 20 percent of their employees had knowledge of other people stealing at the organization. In order to explore how an interviewer might increase his implications, we decided to examine our case files to determine the frequency of implications. An examination of Wicklander-Zulawski and Associates case files indicated about 30 percent of employees made implications about another associate stealing. An interesting sidenote related to our examination of the files was the age dispersion of the employees who had knowledge of others stealing. We found that the employees in the 18- to 25-year-old range accounted for 72 percent of the people with knowledge. Those employees between ages 26 and 32 accounted for an additional 17 percent. When these two groups are combined they account for almost 90 percent of the employees who admitted knowing of another associate involved in theft activity. Clearly, one can assume that the greatest level of theft and knowledge of theft activity comes from the younger population. If we go back to Dr. Hollinger’s early research on employee theft, we find a similar high-risk group in the late teens through mid-20s identified as being thieves.

Statistics of Success for the Wicklander-Zulawski Method

Another important statistic came to light when we examined our files for audios and videos we had reviewed for companies. We were primarily looking for whether or not the interviewer had used our non-confrontational approach |

LPportal.com

in conducting the interview. We divided these 96 cases into the following categories: ■ Full W-Z method used, presented well with little or no errors: N=44 ■ Partial W-Z method used, done well enough to count, but with a number of missing parts or errors: N=28 ■ W-Z method not used: N=22 When we examined these against whether or not the employee made an admission, we found that using either the full or partial W-Z method resulted in a confession 68 percent of the time. Unfortunately, we did not have the complete case facts relating what the investigator knew prior to the interview, so many of these could have been cold or implication cases—as a result, the actual confession rate may be much higher. Those investigators using their own methods obtained a confession only 27 percent of the time and no confession 73 percent of the time. Interestingly, we also found those interviewers using the W-Z method had admissions three times higher than those who got a confession using their own interview styles. Also, those interviewers using the W-Z method had confessions disclosing a much wider range of thefts and frauds types, implications, and policy violations then the non-W-Z method interviewers.

Promoting Yourself as a Business

Another column dealt with promoting the business. Think of yourself as a business; you are one in every sense of the word. You have a balance sheet with money coming in and out of your

checking account, as well as the marketing and sales of your product—you. There are three keys when promoting a business. First is having a marketing plan that actively brands you as someone who can perform. Number two is sales; selling yourself through your efforts and performance to provide a recognizable return on investment to those interested in you. Finally the key to it all is writing. Each report, resume, or email provides the reader with an indication of who you are and the quality of work you will perform. A poorly written report or resume reflects on who you really are. A close fourth key in promoting a business is to associate yourself with or hire the best people you can find. Associating yourself with the best performers will make you a better employee and investigator. Hire someone who is capable of taking your job. Not only is it smart to create a succession plan, but it will also keep you on your toes and running.

The Future

Our next column is going to deal with an area we have never written about before, which is the history of interviewing. We are presenting at RILA in April on the history of interviewing. How did we get to this point using these techniques? While attempting to answer that question, we will also try to predict the future of interviewing in the coming decades. How might the interview process evolve over the coming decades? If you happen to be at RILA, we would love to have you join us while we take a historical look at the past and predict the future. For those of you who may not be able to make the convention, we will summarize our thoughts in our upcoming columns.

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LP Magazine | March – April 2011

Cover feature

IN Mexico Loss Prevention

The Challenges of

By William A. Alford

LP Magazine | March – April 2011

Mexico

n October 2010 I was asked to speak at the annual LP conference sponsored by ANTAD Mexico, Asociación Nacional de Tiendas de Autoservicio y Departamentales, or National Association of Supermarkets and Department Stores. Traveling to Mexico City, where the conference was held, was quite a treat since I had never been to Mexico City. While I was very aware of the escalating drug-fueled violence in Mexico, I was not worried at all about making the journey. However, many of my friends and family expressed concern, which prompted me to seek out others who were familiar with the Mexican culture and customs and day-to-day living experiences. At the October ASIS International annual seminar in Dallas, I had my opportunity when I was seated at a table with two Mexican security executives who live in Mexico and work for a U.S. auto manufacturer. When I expressed my family’s concern, I was expecting to receive reassurances that the fears were overblown and that I had nothing to worry about. The executives were quick to agree with me that I should not have any safety issues in Mexico…if I just practiced two common sense rules: Rule 1—They said, “Carry two wallets on the trip to Mexico. Keep most of your cash and credits cards in a wallet in your room safe. It is okay to carry the second wallet with you, but with only a small amount of cash and maybe one credit card. That way, you can give a robber something so they leave happy and do not hurt you.” At this point, I was not feeling very assured. Rule 2—“Only ride in taxis that the hotel calls for you. Or if you must hail a taxi yourself, only get in a taxi that other passengers are getting out of.” When I asked why, the executives calmly stated that there were many taxi drivers who would take you to a back street where their partners were waiting to rob you. The executives also assured me that it was okay to get into a taxi

March – April 2011

that other passengers were getting out of if they did not look scared or frightened, which meant they probably were not robbed. While these recommendations were not very reassuring and heightened my anxiety, my walks around the downtown area of Mexico City were without incident. I have since found out that these issues with taxis in Mexico City have been going on for years. Like any large urban city anywhere in the world, travelers can be victims of crime if they are in the wrong place at the wrong time and don’t use common sense. [See “Protecting the International Business Traveler” July-August 2008.]

Unique Challenges

My conversation with the Mexican security executives provided me a glimpse into the unique challenges faced by retailers in Mexico. The headlines reflect a country plagued by violent crime and bloody gang turf wars. Even the long “off limits” tourist areas are feeling the effects. Last year, thirteen people were killed in and around the Mexican beach resort of Acapulco. Five of the victims killed were police officers and of the other eight victims, four were beheaded. Kidnappings, gang assaults on businesses, cargo hijackings, brazen daylight robberies; these are just a few of the unique challenges facing LP executives in Mexico. However, coupled with the challenges comes political corruption that is beyond comprehension here in the U.S. Policeman are either part of the gangs that rule the streets or are so poorly trained and under paid that their effectiveness is minimal in assisting with retail-related crime. Worse, if the robbers and criminals are arrested, corruption within the judicial system allows the criminals to receive a greatly reduced sentence or escape prosecution altogether.

LPportal.com

Mexico

ANTAD Conference

These and other topics were highlighted at the ANTAD LP conference in Mexico City. The conference was a first-class affair and rivaled many LP conferences in the U.S. The conference was broadcast via radio and podcast across Mexico. Also, a professional videographer filmed the entire conference in order to capture the valuable information on the ANTAD website for their members. Dr. Richard Hollinger of the University of Florida and I were the only two speakers from the U.S. Real-time translation services were provided to the attendees during our presentations. Attendees at the ANTAD conference were from a wide range of retail segments, from small local chains to national chains with thousands of stores. Also represented were many American retailers, including Walmart and AutoZone. The vendors and suppliers that displayed their services and products in the vendor court were a mix of Mexican companies and a few U.S. companies, including Alpha/Checkpoint and ADT. While the conference reminded me of similar events in the U.S., the challenges and issues faced by the LP executives of Mexico certainly make our problems here pale in comparison. One of the most popular speakers was a federal judge who spoke about her very personal fight against gangs and crime. Several years earlier, she was trying a case that involved a gang member. To persuade the judge to dismiss the case, the gang targeted the family of the judge and kidnapped and murdered the adult son of the judge. The judge was devastated at the loss of her son, but refused to be intimidated. Her strength, courage, and resolve led to the conviction of the gang member and the passage of new law against this type of crime. She received a standing ovation at the end of her presentation. As with most conferences, the opportunity to network with peers and share best practices was extremely beneficial. The LP executives shared their philosophies and opinions about the role of LP in retail businesses in Mexico today.

The LP Profession in Mexico

Many retail executives of Mexican-owned companies view LP as a necessary evil and have little respect for the role. Carlos Lopez of AutoZone provided several theories for the reason LP is not valued in Mexico. “Traditionally, many of the LP personnel, even at the highest levels, are former military personnel or from a law enforcement background. They want to ‘catch the bad guys,’ which is what they are most comfortable with, and they have not been provided training and education on the core business for whom they work nor have they received education on LP best practices. Therefore, much of what they do is reactive and viewed as security, not true prevention of loss.” The situation sounds very similar to how our industry was viewed in the U.S. several decades ago.

LP Magazine | March – April 2011

Mexico Lopez began his career in operations with Walmart, which provided a very valuable education on the intricacies of operations. According to Lopez, “To truly make an impact on the bottom line of any retail chain, LP must be a proactive and integral part of the organization and understand all aspects of the operation from management’s point of view.” During the conference, Lopez stated that he and his fellow Mexican LP executives desperately want to bring specific U.S.-based LP training and education resources to Mexico, such as Wicklander-Zulawski interviewing training, the LPQ and LPC certification programs, as well as LP Magazine. When asked about LP philosophies, an LP executive for a major department store stated, “A true LP executive must be a business person and understand the intricacies of the operation and, most of all, understand that the company is in business to make a profit, not to provide LP personnel with a place to work.” ANTAD and their loss prevention committee are making great strides to promote this philosophy through education of the LP community as well as educational programs about LP at other ANTAD retail executive conferences. Francisco Martin, director of program development for ANTAD, has a burning passion for LP and truly believes that retailers in Mexico need to embrace prevention. “Our goal at ANTAD is to educate, inform, and support our retail members in all aspects of their operation. LP is one of the key components to increasing profits and protecting assets, so at every opportunity possible, we stress the importance of having LP best practices in place.” [See sidebar page 24.]

According to one LP executive in Mexico, “Crime is going to happen. The challenge we face is how do we minimize the loss and the risks to customer and employees?” Some of those best practices include life safety measures to keep employees and customers safe from harm. This is an especially critical initiative due to an incident that occurred in November 2010 at a Coppel Department Store in the city of Culiacan in Northwest Mexico. Coppel has over a thousand department stores throughout Mexico. The incident involved the death of six workers who were killed when a fire engulfed the store. It was during the night when the store was closed, and employees were stocking the store and performing inventory. According to news accounts, the doors were locked and fire fighters could not enter the store in time to save the employees on the upper floors of the three-story building. Vinyl substances, plastics, and other products that burned in the fire gave off smoke that killed the store employees. Mexico’s labor department says there were no fire detectors or emergency exit continued on page 22

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March – April 2011

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23-02-2011 17:07:33

Mexico continued from page 20

signs in the store. Coppel executives were quoted as saying that the supervisor in the store had a key and should have let the workers out. Coppel, which did not have an LP department at the time of the incident, is now creating one.

Violent Crime

But the overwhelming issue facing retail LP executives in Mexico is violent crime, which is in the news and creating a climate of fear in the resident population, visitors, and business community. Executive kidnappings have forced LP executives to become expert in providing executive protection for their management team. Such kidnappings are not for political reasons, but for plain, simple greed. AutoZone’s Lopez stated that LP has come a long way over the years from when he first started in the business. “Back then, we did not even have executive protection programs in place. Now, every company must have a plan to keep their executives safe since kidnapping is a very real threat to the executives and the company.” One of the largest convenience store chains in Mexico is OXXO (pronounced O-X-O) with over 8,000 stores across the country. As one can imagine, robbers who look for quick access to cash frequently target OXXO stores. Robbers with weapons ranging from handguns to assault rifles will burst in and demand cash. According to LP Director Pedro Dávila, “We know that we cannot stop the robberies altogether, but we can take proactive measures to reduce the risks to our employees by minimizing the amount of cash available to the robbers.” While this does appear to reduce the losses at OXXO, it is somewhat disheartening that it simply drives the gangs to other retailers. This philosophy seems to be pervasive among the LP executives in Mexico. Another LP executive who did not want to be named, stated that one of his main goals is to allow the robbers and thieves to get away with a minimal amount of cash or product. But again, he was quick to point out that the threat of violence requires that the robbers and thieves be permitted to leave with something. “If we lock every item down or put it behind steel-reinforced cases, the criminals will just escalate their violence until they can get something during the attack.” The chain where this particular LP executive is employed has some very unique LP merchandising strategies for their high-end products that allows some modest amounts of merchandise to be taken while securing the vast majority of product. For obvious reasons, the specific items where this merchandising strategy is employed cannot be identified. Of course, every LP executive has an overwhelming desire to keep their employees and customers safe during any attacks. The Mexican LP philosophy, like that in the U.S., is that the attackers should never be confronted so that they will leave as soon as possible without harming employees or customers; again, minimizing the loss and getting the attackers out as quickly as possible. While most agree that employees should never fight or resist an armed robber, OXXO’s Dávila , frustrated with the

March – April 2011

AutoZone’s Lopez stated that LP has come a long way over the years from when he first started in the business. “Back then, we did not even have executive protection programs in place. Now, every company must have a plan to keep their executives safe since kidnapping is a very real threat to the executives and the company.” seemingly never-ending attacks by gunman lamented, “Perhaps if our employees were allowed to carry weapons, the robbers would think twice about robbing our stores.” [AUTHOR’S NOTE: As this article was being written, four Walmart employees in Layton, Utah, were terminated for overpowering and disarming a shoplifter who pulled a gun when confronted by the employees. The terminations were based upon Walmart’s policy entitled “Investigation and Detention of Shoplifters,” which instructs employees to retreat if an individual brandishes a weapon. This is an age old dilemma. Employees who successfully disarm assailants are viewed by the public as “heroes” while their employer views the actions of the employees as negative because the employees put themselves and the public in harm’s way. In this recent case, the actions of the employees resulted in a positive outcome. However, had they failed in their counterattack, the outcome could have been devastating. This dilemma will surely rear its head again and again.]

Technology

One Mexican retailer is fighting back against crime using advanced technology that helps identify the criminals before they strike. In all areas of the store, CCTV is utilized. However, in select high-risk areas, the store additionally utilizes facial-recognition technology to identify potential threats. “If a person is walking around an area for a period of time, leaves and comes back within a given period of time, our facial recognition program alerts our in-store LP staff,” stated the LP executive. The LP staff is highly trained on how to properly and effectively approach the suspected criminals in order to defuse the situation and prevent the attack. continued on page 24 |

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Mexico continued from page 22

Another unique example of the effective utilization of technology by this particular retailer involves refund fraud. The philosophy of this retailer is much like Nordstrom here in the U.S.—good customers can return any and all products without a receipt or question. Except with this Mexican retailer, they do require the customer place his or her finger on a biometric scanner. According to the loss prevention director, “We take the philosophy that all customers are good and treat them as such unless we identify them as otherwise.” This identification comes in the form of a proprietary database that holds the fingerprint of any customer or employee who has ever been arrested for crimes against the retailer. Just prior to a detained shoplifter or employee being transported from the store by the police, their fingerprint is taken, and the biometric information is entered into the retailer’s database. If a customer returning merchandise is in the database, they are barred from returning merchandise unless a receipt or proof of purchase can be produced. But there are challenges in properly deploying technology in Mexico according to Carlos Agami Zaga, national sales director for Agasys, a supplier of CCTV and monitoring systems. “In Mexico, there are many companies like ours who believe in installing quality security systems and educating our customers on the properly utilization of their systems to its fullest to maximize their investment. However, many security vendors only want to install the system as quickly and as cheaply as possible with little, if any, instruction or direction to the retailer. The retailers who purchase these substandard systems are then hesitant to upgrade or change systems in the future for fear of wasting more money.”

ANTAD Mexico

ANTAD Mexico, Asociación Nacional de Tiendas de Autoservicio y Departamentales, or National Association of Supermarkets and Department Stores, is the primary retail trade organization in Mexico. ANTAD supports 101 retail chains in Mexico with over 17,000 retail locations and 650,000 employees. When you add in the vendor and supplier community that ANTAD supports as well, the number of employees they impact reaches well over 2.5 million people in Mexico. Like trade organizations in the U.S., ANTAD focuses on education and training for their membership while also representing retail interest in governmental affairs and legislative matters. For example, Mexico has imposed a fee to retailers on the use of plastic bags, and ANTAD is attempting to help companies convert to alternative solutions, such as recyclable, ecologically friendly bags. An overarching initiative of ANTAD is to promote “sustainability and recovery” in the event of crisis situations, such as hurricanes, earthquakes, floods, fires, and other disasters. ANTAD is promoting retailers as critical to the Mexican infrastructure and the communities in which they serve when a crisis occurs. In order to help the communities, retailers must be given first consideration when deciding where to restore power. Also, trucks sent by retailers with relief supplies must be allowed access into the affected areas. Regarding loss prevention initiatives, ANTAD has developed an annual survey of the primary security concerns of the membership and last year, a phenomenal 80-plus percent of their membership participated in the survey. The survey mirrored many of the concerns in this article about violent crime and criminal activity, especially robberies, hijackings, and kidnappings. ANTAD is committed to the profession of loss prevention and the ANTAD loss prevention committee though the development of education programs and informational seminars and conferences for LP executives. By partnering with vendors and suppliers, ANTAD exposes LP executives to innovative technological solutions and cutting-edge tools that can help keep retailers profitable while protecting employees and customers in the challenging environment of Mexico.

Major Reasons for Crime in Mexico

Statistics exist that indicate that the rate of violent crime, including kidnapping, is decreasing in Mexico, and that these rates in other Latin American countries are actually higher than in Mexico. But this is of little solace to the LP executives charged with protecting profits and people in Mexico. The reasons for the unacceptable violent crime rate are many, but a starting point is the low-risk, high-reward scenario in Mexico. This is exacerbated by the socioeconomic environment not unlike other countries where the poor are getting poorer and feeling increasingly frustrated. Secondly, as mentioned before, the police are under-trained, under-paid, and under-equipped to handle the escalating crime problem in Mexico. Mexico City’s urban population is estimated at 20 million, which is comparable with New York City. However, Mexico City’s police force is only two-thirds the size of New York City’s and policemen earn less than a quarter of what their U.S. counterparts earn. This may be why many officers turn to corruption to augment their pay. According to stories from everyone from taxi drivers to LP executives, members of the police are themselves sometimes involved in criminal activities such as “shaking down” truckers and other motorists traveling on rural highways. But it is the continued on page 26

March – April 2011

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Mexico continued from page 24

bribes and flow of easy cash that causes some members of the police to turn a blind eye or protect the criminals and even participate in gang activity. According to multiple Internet resources, the police are often presented with the option of choosing “Plata o Plomo,” which means they can either accept a bribe (plata = silver) or they will be killed (plomo = dead). According to the Comisión Nacional de los Derechos Humanos (National Commission on Human Rights), only one out of every ten crimes is reported in Mexico. This is due to lack of trust from citizens regarding the authorities. Furthermore, only one out of 100 reported crimes actually goes to sentencing. This means that one out of every 1,000 crimes is punished. There are roving gangs of armed young men attacking businesses with impunity because the risk of getting caught or punished is far less than the rewards they reap from robberies. Thirdly, and probably the core of Mexico’s crime problem, is the rampant drug trafficking fueled by the insatiable hunger for cocaine, heroin, and marijuana in the U.S. With the untold billions to be had by the drug cartels, comes corruption of every level of civil service, government, and political leadership.

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Of the many people interviewed for this article, several refused to be identified for fear of reprisals…and rightfully so. One LP executive relayed a case where they caught an employee stealing and had a solid case. When the case was presented to the magistrate, the magistrate chastised the retailer for bringing the case to court and dismissed the charges. The magistrate was not required to explain why the charges were dismissed. Executives told of other cases that made direct connections between local politicians and criminal activity, such as hijacking of trucks, cloning of credit card numbers, and others. However, for the sake of the many retail companies who relayed information, the specifics of these disturbing stories cannot be shared publically. Suffice it to say that ANTAD and their LP committee are continuing to advance the role of retail loss prevention in Mexico with education, training, and awareness balanced with the overwhelming need to protect property and people in an extremely challenging environment. In just the few short months since October 2010, some of the “wishes” of Carlos Lopez of AutoZone have started to take shape. Wicklander-Zulawski conducted their first Spanish training class in November 2010. LP Magazine is in discussion with ANTAD about providing editorial content for a web portal project in Mexico. And the Loss Prevention Foundation is exploring the feasibility of offering their LP certification programs in Spanish. ILLIAM A. “BILL” ALFORD is president of W International Lighthouse Group, a risk management firm specializing in the identification and prevention of risks, threats, and liabilities that affect the retail industry. He is a nationally recognized speaker and consultant and the author of numerous articles on LP in the retail sector. Alford can be reached at 704-841-7759 or via email at bill@billalford.com.

Security » Innovation » Service

March – April 2011

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ACADEMIC VIEWPOINT

Nature Versus Nurture A

by Richard C. Hollinger, Ph.D. 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. © 2011 Richard C. Hollinger

s the human genome is ever more accurately mapped by medical and biological researchers, one of the most intriguing questions involves whether there is a gene that influences involvement in criminal behavior. From the very beginnings of the study of deviant behavior, criminologists have hypothesized that crime propensity might be inherited and can be passed from generation to generation. Over the past few hundred years, crime researchers alternatively have accepted and then dismissed this theory of criminal behavior. As a result, the genetic linkage to crime has become one of the most controversial debates in the discipline. Early criminologists, such as the nineteenth-century Italian medical doctor, Cesare Lombroso, discovered that criminals locked in prison had bushy eyebrows, sloping foreheads, and “ape-like” characteristics. He hypothesized that the antisocial behavior of criminals was due to what he called an “atavistic throwback” to earlier pre-human traits. When this research was subjected to more scientific examination, it was discovered that these scary-looking people were more likely to be incarcerated and accused of offenses, regardless of whether they were, in fact, guilty of crime. The spurious nature of early criminological research of this type was provocative, but generally not supported by fact.

groups and a particular variation (called the 10-repeat allele) of the dopamine transporter gene (DAT1). Moreover, the study’s analysis of family, peer, and DNA data from 1,816 boys in middle and high school found that the association between DAT1 and delinquent peer affiliation applied primarily for those who had both the 10-repeat allele and a high-risk family environment, meaning one marked by a disengaged mother and an absence of maternal affection.

New Findings

Alternatively, adolescent males with the very same gene variation who lived in low-risk families, that is those with high levels of maternal engagement and warmth, showed no statistically relevant affinity for antisocial friends.

Over the decades, many other criminological theories emerged that linked crime to genetic characteristics, but were not well supported by scientific examination. Recently, however, Florida State University criminologist, Kevin Beaver, has published a series of well-vetted, scientifically valid papers that suggest that perhaps adolescent males with delinquent peers are more likely to possess a specific genetic trait. In 2008 Beaver and his colleagues’ research had a groundbreaking effect on the discipline because it showed that the propensity in some adolescents to affiliate with delinquent peers is tied up in a single genome. As I have noted, criminological research has long linked antisocial, drug-using, and criminal behavior to delinquent peers. In fact, belonging to such a peer group is one of the strongest correlates to both youthful and adult crime. But the study led by Beaver is the first to establish a statistically significant association between an affinity for antisocial peer

March – April 2011

Recently, Florida State University criminologist, Kevin Beaver, has published a series of well-vetted, scientifically valid papers that suggest that perhaps adolescent males with delinquent peers are more likely to possess a specific genetic trait.

Role of Environment

“Our research has confirmed the importance of not only the genome, but also the environment,” Beaver said. “With a sample comprised of 1,816 individuals, more than usual for a genetic study, we were able to document a clear link between DAT1 and delinquent peers for adolescents raised in high-risk families while finding little or no such link in those from low-risk families. As a result, we now have genuine empirical evidence that the social and family environment in an adolescent’s life can either exacerbate or blunt genetic effects.” Beaver worked with research colleagues John Paul Wright, an associate professor and senior research fellow

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at the University of Cincinnati, and Matt DeLisi, an associate professor of sociology at Iowa State University. The biosocial data analyzed by Beaver and his two coauthors derived from “Add Health,” an ongoing project focused on adolescent health that is administered by the University of North Carolina Chapel Hill and funded largely by the National Institute of Child Health and Human Development. Since the program began in 1994, a total of nearly 2,800 nationally representative male and female adolescents have been genotyped and interviewed. “We can only hypothesize why we saw the effect of DAT1 only in male adolescents from high-risk families,” said Beaver, who will continue his research into the close relationship between genotype and environmental factors—a phenomenon known in the field of behavioral genetics as the “gene X environment correlation.” “Perhaps the 10-repeat allele is triggered by constant stress or the general lack of support, whereas in low-risk households, the variation might remain inactive,” he said. “Or it’s possible that the 10-repeat allele increases an adolescent boy’s attraction to delinquent peers regardless of family type, but parents from low-risk families are simply better able to monitor and control such genetic tendencies.” Interestingly, among female adolescents who carry the 10-repeat allele, Beaver and his colleagues found no statistically significant affinity for antisocial peers, regardless of whether the girls lived in a high-risk or a low-risk family environment.

Complex Explanations

Does this mean that someday we will identify a single gene for theft, helping us understand the causes of employee dishonesty or shoplifting? I doubt it. Personally, I still believe that most of the variation in property-theft behavior can be best explained by social learning, differential association, rational choice, and deterrence theories. None of these theories are based upon the genetic differences found in the human genome. However, I am willing to keep my mind open for new developments in the complex explanations that we can use to better understand why employees steal from their employers and customers shoplift from retail stores. AUTHOR’S NOTE: The original quotes used above attributed to Kevin Beaver are from ScienceDaily, retrieved March 15, 2011, from www. sciencedaily.com/releases/2008/10/081001130004. htm. To read the original article, see “Delinquent Peer Group Formation: Evidence of a Gene X Environment Correlation” by Kevin Beaver, John P. Wright, and Matt DeLisi, published in The Journal of Genetic Psychology, 2008, 169 (3): 227 – 244.

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LP Magazine | March – April 2011

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Interview

Making LPa

Talent Destination for Retail Careers

A Conversation with Walmart’s Monica Mullins

By James Lee, Executive Editor LP Magazine | March – April 2011

Interview

EDITOR’S NOTE: Monica Mullins is the vice president of asset protection and safety for Walmart Stores U.S. She oversees more than 9,000 corporate and field-level AP associates who are responsible for execution of AP and safety programs in 3,804 retail locations. Prior to her current role, Mullins was the VP of asset protection, safety, and compliance for the company’s logistics division. Before joining Walmart thirteen years ago, she was a risk control manager at ShopKo Stores and, prior to that, served as the assistant regional director of a non-profit agency that provided residential and vocational services to individuals with developmental disabilities, traumatic brain injury, and mental illness. In addition to her corporate duties, Mullins is a board member of the Loss Prevention Foundation, a member of the LP Magazine editorial board, and vice-chair of the Retail Industry Leaders Association’s (RILA) Asset Protection Leaders Council. EDITOR: How do you view your role as the leader of Walmart’s U.S. asset protection and safety efforts?

MULLINS: My role is to provide the AP and safety team with the overall strategy and mission of the organization and how that aligns with Walmart’s mission. As a team it’s our responsibility to drive execution of processes related to shrink, accident reduction, and security; support operations and merchandising in driving sales and profitability; and participate in developing the next generation of talent for Walmart. Additionally, we have to approach the business strategically, look to the future and what the organization needs to do or how we need to change to stay relevant to the changing needs of the business. I have a terrific and talented group of men and women in the AP and safety organization who consistently deliver results and who play an important role in the organization. EDITOR: Do you see your role as different from other retailers because of the size of Walmart? MULLINS: Our size adds complexities and responsibilities, but there are similarities with colleagues in the industry regardless of the size of their March – April 2011

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AP is one of the most diverse organizations in terms of how much the people know about “the box.” They know inventory management; they have a good grasp of HR; they’re great investigators; they know more about operations than they sometimes give themselves credit for; and they understand merchandising. They may not be HR professionals or professional merchants at the time, but being a generalist in these areas makes them attractive.

Interview business or LP team structure. Becoming more involved with the LP Foundation and RILA, where I met LP executives like Mike Lamb for The Home Depot, Brad Brekke from Target, Libby Rabun from AutoZone, and others in similar roles, it became more apparent to me how much we have in common. I try to stay tuned in to the LP executives at the smaller retailers, especially the specialty stores, because there is a great deal we can learn from them. RILA and the LP Foundation provide a good avenue to do that. We have a good partnership with several other retailers with whom we do benchmarking. That’s invaluable. EDITOR: Tell us about your organizational structure and give us a picture of the breadth of your internal responsibility. MULLINS: I oversee the Asset Protection and Safety Division for Walmart Stores U.S., which includes our field team and the support functions based out of our home office. The field team is approximately 400 associates at market, region, division, and business-unit levels. At store level, most stores, depending on location and format, may have an asset protection coordinator, who is a member of the store management team, and asset protection associates. Additionally, we have safety managers and directors who also support field AP and operations.

Within the home office, there are a number of different support functions including the merchandise protection and operations support; systems and analysis; the AP recovery and restitution team; facilities safety and security; event safety and security; AP health and wellness; and AP investigations. EDITOR: Is there a particular initiative that is something that you spend time on because of its importance or because you enjoy it? MULLINS: There are several ways to answer that question. First, what’s most important to Bill Simon, president and CEO of Walmart Stores U.S., is most important to me. EDITOR: That’s a good answer. MULLINS: We have great support from our executive leadership team. I’ve been in this position since 2007, and we are closely aligned with the business mission. We have to spend time on those things that matter most and will have the greatest impact, although it’s easy to get distracted given the nature of the business. I look at our AP and safety organization and ask, “How does our organization help Walmart achieve its mission?” We develop our business plan continued on page 34

30.5"

LP Magazine | March – April 2011

Interview continued from page 33

to reflect that. Everything we do has to support the greater good.

We are looking for people with diverse backgrounds because the job itself has become more diverse. Give me a person who has great leadership capacity, we can teach them asset protection through LPQ and LPC and on-the-job training. We have thousands of years of experience in AP within Walmart.

EDITOR: Give us an example. MULLINS: It’s important to Bill and the operating division to have an acceptable performance in shrink. It’s important that we reduce our accidents and provide a safe working and shopping environment. These are two of the big “go-gets” for us. One of the others is talent development. Bill has said that if you’re not developing your people, you’re not doing your job. One of my priorities is to ensure we are developing our AP associates to get them ready for their “next step,” whether that’s in operations, asset protection, or any other function. EDITOR: How do you convince people at the lower levels that there are career opportunities both inside and outside of AP at Walmart? MULLINS: We do that by sharing other associate’s stories—those associates who spent time in asset protection and were promoted into operations, logistics, merchandising, finance, or whatever area it might be. Every time someone is promoted into or out of AP, we send an announcement out to the field. I think we have to continue to recognize the importance of communication. Additionally, we talk about it. During evaluations, one-on-ones, traveling together, I always ask “What’s next? What would you like to do in your career?” Since being in a leadership role in asset protection, I’ve told the team that I want AP to be a talent destination for the company. I believe we have an enormously talented group. My message to our AP associates has been that if you limit yourself to AP, you’re limiting your career. Years ago loss prevention, and retail for that matter, was very vertical. The typical career path was to move up or promote within your functional area. March – April 2011

LPportal.com

I think that’s changing. We encourage our people to think bigger and broader. As Walmart grows, we encourage other divisions to look at our AP associates as their need for talent grows. EDITOR: Why do you think of AP as a “talent destination?” MULLINS: AP is one of the most diverse organizations in terms of how much the people know about “the box.” They know inventory management; they have a good grasp of HR; they’re great investigators; they know more about operations than they sometimes give themselves credit for; and they understand merchandising. They may not be HR professionals or professional merchants at the time, but being a generalist in these areas makes them attractive. Also, AP professionals tend to be great at delivering results. They know how to plan, organize, and get things done. Then, as they grow in their roles and as their roles become more complex, we challenge them to move away from being the “doer” to being the idea developer, being more strategic in their thought process, thinking more globally. We challenge them to be the ones who are developing the AP and safety strategy for their region, division, or business unit. On the other hand, I don’t want to discourage the person who says, “I love AP and this is what I want to do.” Then, our challenge is to see how we can continue to keep that person engaged and excited about AP and help them develop the skills necessary to grow within the organization. We work closely with our training and development department to look at how we build the competencies and leadership skills that our AP people need to become future AP leaders. EDITOR: If I were a young person with little or no AP experience and just heard what you said, I would ask, “What credentials do you want from me? How do I become a candidate for a position on the Walmart AP team?”

Interview MULLINS: We’re finding that young people looking to get into retail asset protection do really well at the entry-level, store-level AP coordinator positions. It’s a great entry point, not only to AP, but to retail. They don’t have to have an AP background. It is helpful, but not required. On the other hand, a market-level AP management position requires some supervisory experience. People going into that role need to have managed people at some point. While neither of those positions requires a college degree, is a college degree advantageous? Absolutely. Not only in AP, but in general. It gives you that extra advantage over somebody who does not. However, we also understand that a lot of men and women are supporting families, caring for elderly parents, or are single parents and do not have the resources to complete a traditional four-year degree program. I think that’s where the Foundation’s LP certification programs are a great opportunity. Another great approach is the online degree. Many of my associates have gone back to school online and have had great experiences and success. But I will say again that it is great to have the LP Foundation’s LPC and LPQ programs available for people for whom a four-year degree is not practical or affordable. We need to provide educational opportunities for people who have a desire to excel and to do more, but who can’t swing the four-year degree. In fact, Walmart recently began

a program for our associates that allows them to get college credit for the work they do in stores that can be applied toward an online degree from our university partner. EDITOR: Apart from experience, what do you look for? MULLINS: Generally, I’m looking for men and women who are enthusiastic, enjoy a challenge, and demonstrate leadership capacity. I’m interested in people, for example, with internal audit, business management, or safety and compliance-related backgrounds. But basically, I’m looking at the person first, the experience second. EDITOR: If you go back twenty or thirty years, most LP professionals understood that to make a name for themselves and get promoted, they needed to become adept at investigations or demonstrate an ability to catch shoplifters. How do you explain to a young person today that there is more to LP than just catching shoplifters? MULLINS: We have to do a better job explaining what our job is all about. It would be great if we could have an interested candidate spend a day in the life of an asset protection or safety professional at Walmart. Catching shoplifters and focusing on shrink are obviously very important. However, at least at Walmart, AP has evolved significantly. Our people must be able to organize

LP Magazine | March – April 2011

continued on page 36

Interview continued from page 35

and plan, have at least an elementary understanding of retail compliance issues, understand how to prevent accidents, and how to build a safety culture in which people take more ownership for their behavior at work. They have to understand how to navigate through a crisis, whether man-made or a natural disaster. AP is often called upon to help intervene and respond to these types of occurrences. And they have to understand how to manage and develop people. That is why we’re looking at less-traditional avenues for recruiting. While we continue to value people with criminal justice backgrounds, we’re also interested in people with undergraduate business degrees, security backgrounds, emergency management and safety degrees, as well as MBAs. We’ve also had good success with men and women coming out of the military. Just as we do not minimize a traditional law enforcement background, we are looking for people with diverse backgrounds because the job itself has become more diverse. Give me a person who has great leadership capacity, we can teach them asset protection through LPQ and LPC and on-the-job training. We have thousands of years of experience in AP within Walmart. We can teach them AP. EDITOR: If I’m a young person, where do I go to find out about these opportunities and how does Walmart market these opportunities? MULLINS: In recent years, we have become involved with recruiting programs and external events that are more outside of our organization. For example, we are involved with the International Organization for Black Security Executives (IOBSE), and we’ve done some recruiting with the Loss Prevention Foundation. We’re getting more integrated with other organizations across the country, including the retail organizations. I am also working with the recruiting team that’s dedicated to asset protection. We’re working together to look for candidates with more diverse backgrounds. Walmart recruits from major colleges and

universities across the country. But we always want to hear from other schools that have students with interesting and diverse backgrounds and work experience. EDITOR: Over the past eighteen months, you have broadened your personal work within the loss prevention community as a leader of some of those outreach initiatives. How can the leadership of today’s major retailers become more active in attracting young, new, and different talent to the AP field? MULLINS: I’d love to be able to go on the road with colleagues from the industry to visit universities and talk with students about the opportunities in retail AP. One challenge for all of us is time, and so we need to use other approaches. We need to take advantage of technology, such as recruiting via webinars or live video, and figure out how to use social media more effectively. I believe that I have an obligation to go out and find up-and-coming talent for Walmart and, of course, to develop the talent within the organization. For leaders of the retail LP industry, there is an obligation to do things together to attract talent to our field. At LP Foundation meetings and through RILA and FMI events, there is less sense of competition among our companies. This gives us the opportunity to be more open in sharing ideas and unified in this common effort. EDITOR: I know that you and other senior LP executives will be participating in the upcoming Asset Protection Leadership Committee session at RILA. Could you talk about that committee and some of its initiatives? MULLINS: One of the things we are looking at is talent development and recruiting; how we attract more people into the retail LP and safety field. We’re also looking at shrink management and inventory management processes, at how we can share best practices, using the expertise of the organizations that are around the table. Initially, there was concern that what happens at the big-box continued on page 38 March – April 2011

LPportal.com

It’s okay to stumble every once in a while. It keeps you humble, and I think humility is important as we grow as leaders, which is a never-ending process. It’s important to learn from the mistakes you’ve made, and to recognize the signs when you might need to take a step back and refocus.

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I believe that I have an obligation to go out and find up-and-coming talent for Walmart and, of course, to develop the talent within the organization. For leaders of the retail LP industry, there is an obligation to do things together to attract talent to our field.

continued from page 36

retailers is not necessarily what happens at some of the smaller retailers. I think we’ve done a good job ensuring that, when we’re brainstorming and sharing experiences, we are inclusive and representing the entire industry. We are not motivated by wanting to solve Walmart-specific or Home Depot-specific problems. Rather, we want to afford our colleagues a venue to get together, look at how we can further advance the LP profession, discuss retail industry issues, and share best practices. We are also careful about not taking on too much and staying true to the desires expressed by industry leaders in the latest survey. In particular, they were interested in sharing best practices with regard to shrink management and talent development. It’s interesting to be a part of this grassroots process. EDITOR: You have mentioned that you didn’t wake up one morning as a young woman and say, “I want to be an AP

March – April 2011

LPportal.com

executive in the retail industry.” Tell us about your career. MULLINS: As an undergrad, I majored in secondary education. But when I graduated, I decided I did not want to be “stuck” in the classroom. I already had some exposure to health and human services and social work. My mother worked for many years in social services and human services, and family members were in that field as well. That led me to become involved in the mental health field. I worked for several years in human services with children and adults with developmental disabilities, mental illness, and traumatic brain injury. I joined a non-profit organization that provided group home and apartment-living programs for people who had come out of state mental health institutions. It was a wonderful experience. After eight or nine years, I was ready to explore other opportunities. I heard about a graduate program in occupational safety and health and completed my master’s degree in safety at the University continued on page 40

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Interview continued from page 38

of Wisconsin-Stout in Menomonie. I envisioned staying in the healthcare environment and was interested in compliance and licensing. As it turned out, I went into retail and started in the field with ShopKo Stores as a risk control manager. A few years later, I had the opportunity to join Walmart and did so in 1998 as a risk control manager. In 2002 I went to our logistics division as the director of loss prevention, safety, and compliance and was promoted to vice president in 2005. Two years later, I was invited to interview for this job, vice president of AP and safety for Walmart Stores U.S. I came into this role in June of 2007. EDITOR: In your early years at Walmart, were there individuals who were instrumental in helping or mentoring you? MULLINS: Walmart has a great environment in that regard. People want you to be successful. Along the way, various colleagues recognized that I had more to give or a learning curve to climb or they would challenge me to step out of my comfort zone. While I did not see myself here in this current role, as the company grew I was encouraged to take on additional responsibilities and look for opportunities that would give me a broader view of the business. Going into logistics was one of the best experiences I’ve had because I learned a lot about that side of the business as well as about LP. I also learned about what I needed to do differently in leading. My team taught me a great deal.

What I love about Walmart is that there are so many supportive people who surround you. We want one another to be successful. I never go it alone, and that’s what I want my team to recognize. If you build these relationships and if you have the skill of collaborating and building business partnerships, you learn so much more. EDITOR: We can hear your passion and commitment. Fifteen years from now, how will your colleagues and team members talk about you as a mentor? MULLINS: I try to do for them what my mentors did for me—listen and provide counsel and candid feedback. I don’t have all the answers, but think I have a listening ear. I’m willing to share…formally and informally…the good experiences that I’ve had that helped push me forward in my career as well as the mistakes I’ve made. EDITOR: Like what? MULLINS: Not to get too distraught when things don’t go your way or when you feel like you’ve failed. It’s never as bad as what we think it is and it’s important to keep it all in proper perspective. It’s okay to stumble every once in a while. It keeps you humble, and I think humility is important as we grow as leaders, which is a never-ending process. It’s important to learn from the mistakes you’ve made, and to recognize the signs when you might need to take a step back and refocus. I don’t have all of the answers and most people who I mentor recognize that it’s more of a dialog, a discussion, a sharing of experiences and ideas between one another.

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While I am beginning my twenty-ninth year of retail LP leadership, the LPC helped me benchmark my skills against the best in class to ensure that I am providing my company and team members

what they deserve by my leadership and knowledge. After the word filtered out to our field team that I had successfully completed the LPC program, I received numerous phone calls and

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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 Kelly Durham at Kelly.Durham@LossPreventionFoundation.org or call 866-433-5545.

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E-RECRUITING FOR LOSS PREVENTION

Feature

3 Top

Pitfalls of Vendor-Retailer Relationships By Amber Virgillo

LP Magazine | march – april 2011

Top 3 Pitfalls

hen did “vendor” become a bad word? Was it around the same time retailers’ buying process morphed into rounds of golf and months-long free store pilots? At least both groups agree the vendor-retailer relationship is complicated, time-consuming, and sometimes frustrating. But if it’s the right relationship, it is mutually beneficial and everyone is happy…or mildly dissatisfied, depends on your perspective.

Vendor vs. Solution Provider

It’s often intriguing when a whole group of people starts calling themselves a different name. Why did the vendor community start to rebrand itself as “solution providers?” According to some retailers, a rebranding effort was needed due to a large percentage of the community giving “vendor” a bad name from over-promising and under-delivering, misleading them through the process, or nickel and diming them through the contract. This rebranding initiative was an interesting topic to explore and after multiple interviews with “solution providers,” it was clear that both vendors and retailers have a story to tell when it comes to buying process etiquette. Although it is well understood that the industry distinction of “solution providers” is they supposedly bring a complete solution to the selling table while “vendors” are selling a stand-alone product, the industry group as a whole will be referred to as “vendors” throughout this article…no offense intended. This article will examine the top three pitfalls of the vendor-retailer relationship from both perspectives. After more than twenty-five separate interviews, it was interesting that all the pitfalls discussed from both retailers and vendors seem to fit into three broad categories: ■ Making assumptions, ■ Inconsistencies in the process, and ■ Misleading information. Each one will be discussed from both perspectives to hopefully shed some light on the main frustrations of this complicated, tedious, and apparently sensitive process.

Relationship Troubles

Vendors and retailers define the ideal relationship between them fundamentally

Why did the vendor community start to rebrand itself as “solution providers?” According to some retailers, a rebranding effort was needed due to a large percentage of the community giving “vendor” a bad name from overpromising and underdelivering, misleading them through the process, or nickel and diming them through the contract. the same. But it was interesting that no matter what the product or service and no matter the retail category, the gripes and suggestions for improvement fell into a few main pitfall categories. When conducting some academic research on the subject, I was surprised that it was extremely difficult to find a current philosophy or methodology discussing the relationship after the sale. march – april 2011

LPportal.com

Yet, there were certainly many books on the steps leading up to the sale, such as Getting to Yes!, Cha-Ching!, and Selling 101: What Every Successful Sales Person Needs to Know. In Stephen Guth’s book, The Vendor Management Office, the author explains the benefits of having an in-house organization that solely deals with vendors. He also offers several definitions that are helpful in outlining the typical best practices for dealings between vendors and retailers. Guth offers a list of attributes exhibited by vendor organizations that focus on operational excellence with clients: ■ Caring culture to address the human needs of the customer and a high degree of customer intimacy. ■ Engaged and trained employees that are held accountable (through metrics) to produce results. ■ Disdain of bureaucracy’s sake combined with organizational agility to cut through red tape. ■ Strong focus on process rigor and introduction of best practices. ■ Constant self-evaluation, including through formalized customer feedback, and corresponding organizational evolution in order to consistently deliver more value. ■ Improvements in speed of service and reductions in cost through automation and process improvement. When it comes to best practices, within the retail community there are definite differences among what are the most important variables to create a valuable vendor partnership. “My view of a good vendor is one that knows our business intimately and proactively comes up with solutions that save us money or increase our ability to serve our customers,” said Jeff Levitt, senior manager of asset protection for Panera Bread/Paradise Bakery. According to Levitt, “Retailers should look at a few key elements before signing on with a vendor: ■ “Length of time in the industry. You don’t want to sign a contract with a company that will be closing their doors in a year or two. ■ “Relationships with strategic partners. Especially with technology, it helps to

Top 3 Pitfalls have numerous strategic relationships within the industry when the focus is a complete solution, not just a product. ■ “Service. No matter how big the vendor, it’s always nice to have immediate and ongoing attention to your business needs.” Other retailers agree. “The most valuable vendors are those that have the best interests of Vera Bradley at heart,” said Shaun Slaughter, director of retail store operations for Vera Bradley. “When retailers find a partner that really understands our business and makes us a priority, that creates a real, lasting business relationship.” Some retailers have a simple and straightforward view of how the vendor-retailer interaction should be conducted. “Be genuine,” said Paul Pillsbury, director of loss prevention at Big 5 Sporting Goods. “I don’t appreciate an over-the-top sales-type approach. I look for three main things among others when researching a vendor—service, features, and then price. Of course, the price must be reasonable, but it’s only

a small part of the equation. There has to be a valuable balance of all three.” Looking at the positive, best practices of complex relationships is always helpful. However, candidly examining the pitfalls as seen through the eyes of both vendors and retailers is potentially a new way to reach a valuable level of understanding.

Pitfall 1 Making Assumptions

Throughout the research and interviews, one pitfall that brings the vendor-retailer relationship to its knees is when either side makes assumptions. Incorrect assumptions can be made about everything from the actual buying process and internal communication to why sales people are calling and the evolution of salesperson turned account manager relationships. But the most discussed and passionately debated are the assumptions made about expectations. From the vendor perspective, Robert Walters, vice president of sales and marketing for The Retail Equation states,

“It’s vital to properly identify what the objectives are before you enter a relationship. Unrealistic expectations can come from both the solution provider or retailer side. When both parties work together to set realistic goals and objectives for a project, it significantly increases the chances of success.” Retailers expect the vendor’s staff to be well-educated on the details of the product…all staff, including sales people. “A lot of sales people out there don’t know the intricacies of their own products and will sell the retailer anything they want to buy,” said Ed Wolfe, director of business development at WG Security Products. Wolfe also has a distinguished and extensive career in retail loss prevention in varying categories. “That’s not the best way to forge a long-lasting, mutually beneficial relationship. Retailers must have trust in their salesperson to provide the best product, and they must explain what problems it will solve for the retailer in their language. The only good business is long-term business. For solution continued on page 48

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Top 3 Pitfalls continued from page 47

providers to truly help retailers, they have to know what challenges the retailer faces on a daily basis.” Retailers are also frustrated when vendors make assumptions not based on experience in the stores or training from that particular retailer. “One of the biggest pitfalls is when a vendor doesn’t take the time to understand us as a client and makes too many assumptions based on prior deals or other retailers,” said Steve Waldron, director of loss prevention for Danier Leather. “A vendor needs to be completely honest from the beginning. If you can’t meet a delivery schedule, don’t promise me that you can. “My advice to vendors is to understand our needs by spending time with us…not time trying to sell…time listening and understanding,” continued Waldron. “Visit our stores, try to understand the operation, and consider a full year’s operation. Summer operation is definitely different than winter or fall.” Making assumptions about communication is also a major pitfall. Both vendors and retailers expect open communication lines when it comes to resolving issues, relationship transitions, hiccups in the budgeting process, and absolute honesty regarding implementation issues. “One of the biggest pitfalls from my perspective is the practice of pigeonholing customers,” said Pillsbury. “Big 5 has grown into a mid-size retailer, and it’s frustrating when we are not treated with high priority just because we are not Walmart. How a vendor treats a client shouldn’t be dictated by their store count or revenue stream. Communication needs to continually flow from the salesperson to the project manager and out to the service-level professionals as well. The salespeople must be knowledgeable about the product they sell and set the interaction up for success from the beginning by communicating effectively within their organization and maintaining that communication throughout the sales and installation process. “We’re currently rolling out APIS from Enabl-u Technologies and it’s been refreshing how flexible Enabl-u and its CEO, Kevin McMenimen, have been to help us finally implement this solution,”

Testing a company’s products or services before you commit possibly millions of dollars to the project is a smart plan. The issue comes when vendors or retailers feel taken advantage of their willingness to provide product or willingness to open up a retail environment. A pilot turns to pitfall when clear expectations aren’t set, communication is dishonest, and the investment isn’t shared by both parties. said Pillsbury. “Kevin and his team are a testament to knowledgeable staff and going the extra mile.”

Pitfall 2 Inconsistencies in the Process In general, both vendors and retailers are troubled by inconsistencies in the march – april 2011

LPportal.com

process. Here the process refers to the sales, contract, implementation, and services processes, among others. The frustration on the vendor side is regarding inconsistent communication about the contract process and who ultimately makes a buying decision. The retailer community is most annoyed with inconsistent client contact and a high frequency of vendor turnover or being “passed off” to less-knowledgeable vendor account managers. In his book Guth states, “Frequent turnover of vendor staff that service an account is a leading indicator of a possible degradation in quality. Staff turnover can cause disruption to the customer, impact quality of service due to the new staff’s unfamiliarity with the customer, and require additional training of the vendor staff by the customer.” This ultimately leads the retailer to question, “Is this vendor swapping out higher quality staff with lower cost, lower quality staff now that they have my business?” Slaughter from Vera Bradley said, “It’s very important to us to be treated as a priority. We understand vendors have multiple clients with varying needs. Even though we are not a huge chain, that doesn’t mean we should be last on the priority list. It should never be difficult getting a response from your vendors. “It’s also very important that the vendor communicates well internally,” continues Slaughter. “It can be frustrating when people working on your account aren’t well-versed in your business challenges and that specific product’s solutions to those challenges. A downfall in customer service in my opinion is being passed off to an account manger after the sale has been made and that individual hasn’t been briefed on all the pertinent, necessary information. Those types of poor transitions leave communication gaps and don’t create a feeling of urgency or priority.” “Inconsistent people throughout the retailer-vendor interaction is frustrating and leads to poor project management,” said Danier Leather’s Waldron. “It takes more than an excellent sales person to keep a customer satisfied with the product or service they have purchased.” Panera’s Levitt concurs. “I believe it is also extremely important to have continued on page 50

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Top 3 Pitfalls continued from page 48

consistency with relationships. So many times I attend a trade show in a new year, and you receive a whole new set of business cards from the same people with different companies on them. Staffing consistency is a big indicator of the level of customer service you will receive from a vendor. “My camera solution provider is UAS, and they consistently come to me with a full solution on how to make Panera’s business better,” continues Levitt. “As a retailer, you couldn’t ask for a better business relationship than an engaged vendor that truly cares about the success of your company.”

Pitfall 3 Misleading Information

Anytime a vendor or retailer feels misled, that can obviously be a major pitfall within the confines of a buying relationship. There were several topics that seem to be the most detrimental to the relationship when the misleading occurs, either intentionally or by an honest mistake.

KEY_002_Final_Outlines.indd 1

From the retailers’ perspective, the most damaging to the relationship is when they feel they are misled about the delivery of a product or service or the cost of the product or service. Vendors’ largest frustrations center on misleading information on execution of pilots for retailers, being asked for return-on-investment (ROI) numbers without being given accurate metrics to complete an accurate assessment, and their product being treated as a commodity. To Test Or Not to Test. Vendors and retailers agree pilots can be valuable exercises. Testing a company’s products or services before you commit possibly millions of dollars to the project is a smart plan. The issue comes when vendors or retailers feel taken advantage of their willingness to provide product or willingness to open up a retail environment. A pilot turns to pitfall when clear expectations aren’t set, communication is dishonest, and the investment isn’t shared by both parties. Vendors provided some candid feedback about this touchy subject anonymously to truly hear the heart of the matter.

march – april 2011

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“Have clear and concise expectations,” said a vendor in the camera technology market. “Retailers set vendors up for failure when they don’t define expectations of a pilot or test. It’s about mutual respect—the retailer respecting the amount of money and resources that go into a pilot, and the vendor respecting the time investment and skin in the game that the retailer has. Establish key performance indicators and, most importantly, if all those metrics are successfully met, move forward as promised.” WG’s Wolfe added, “Retailers should determine if they really need the product before moving into a testing phase. The only way to do that is to sign a non-disclosure agreement and have a candid conversation about the challenges at hand. As a vendor, my organization should be able to speak both technically and practically about the product. Meaning, we should know how the product will work within the retailer’s technical infrastructure as well as how it will practically work for associates or loss prevention in the real world.” continued on page 52

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Top 3 Pitfalls continued from page 50

A technology vendor with more than ten years experience in loss prevention offered, “The worst situation is when retailers’ pilot and test solutions they never intend to buy. Why test it if they never had the budget or forethought to buy it anyway? It’s only wasting everyone’s time and a significant amount of money for us.” In an industry based on integrity, situations like this should never occur. From an investment perspective, many stated it was important for both parties to have “skin in the game” when it comes to pilots. If the relationship is one-sided from the beginning, that doesn’t demonstrate the commitment needed to embark on what will definitely be a complex and time-consuming process for all. The investment by the retailer demonstrates they have organization support and have communicated the viability of the solution up the chain of command. “There is nothing a retailer should get for free,” said another LP camera vendor. “If we as vendors start giving everything away, where is the skin in the game for the retailer? If you’re dealing with honest retailers that are truly invested in seeing your product succeed, they will want to share in the pilot investment in some capacity.” A five-year vendor in the LP communication industry said, “A wise man once told me, ‘You don’t have to be talking to be selling.’ In fact, the less a salesperson talks, the more they can listen to the actual challenges retailers are facing. Retailers set vendors up for failure by abusing pilot scenarios and by not having any real intention to buy the products. I often ask myself, ‘Do retailers really even understand the investment required for a pilot?’ It’s very important to be honest and up front from the beginning. And lastly, don’t pretend you’re the check writer or decision maker if you’re not. It may be fun for your ego, but it doesn’t help the process for anyone.” Put It in Writing. Some said just when they thought all the hard work was over, then it was price negotiation and contract time. When it comes to the final phase of pricing and the contract, this stressful negotiation can often be a pitfall. Misleading information about the actual

There is a viral video on YouTube that has received nearly two million hits that hilariously depicts how some vendors view negotiations. Go to the magazine website to view the video. contract details or pricing in general can be extremely frustrating for both parties. Vendors often feel treated unfairly when it comes to extreme discounts and other leverage retailers hold over their heads for a lower price. During these negotiations, retailers often request a ROI analysis. It’s very difficult for vendors to provide accurate ROI analysis when a retailer is misleading or doesn’t want to provide sufficient current and historical metrics. “The ROI question is definitely one we get a lot,” said Brad Fick, president of Direct Source. “It can be a complex formula to determine especially when you’re factoring in how much a retailer is currently paying just in maintenance of old equipment. It’s the most helpful when a retailer is up-front and provides full disclosure to the details of their challenges. If a retailer doesn’t provide all necessary information, of course the ROI information will be skewed, which might end up costing us the partnership.” Turning products into a commodity negotiation is also frustrating for the vendor community that feels a complex solution should be evaluated in the same complex manner—looking at several key performance indicators, not one number. Unfortunately, purchasing departments offer little help and are focused on what they do best—getting the lowest price and placing orders. In reality, the complexity of a technology system, training solution, or physical security products requires much more than price-to-price comparisons. “Acquiring loss prevention solutions for a retail company is an art form best left in the hands of LP executives,” said Kevin Lynch, executive director at ADT. “The variables that have to be evaluated to pick march – april 2011

LPportal.com

the appropriate vendor are too intricate to be left in the hands of a purchasing department. Reverse auctions are a death knell to any loss prevention department. If retail companies think that buying exception-based reporting systems, EAS, or CCTV is as easy as buying pencils or toilet paper, they are doomed to fail. Retailers need to evaluate the whole picture, financial strength of a company, quality of the equipment, installation teams, maintenance, financing options. I would advise any retailer to do their homework in a more forensic manner.” “The vendor-retailer relationship should be ‘buyer beware,’ but retailers need to understand, we’re not making a ton of margin on these technology products,” said a loss prevention professional now working with a vendor company. “I think the misconception is we’re charging as much as we can to acquire the most margin possible, when the reality is, we’re already coming to the table with just enough margin to satisfy our bosses and close the deal. “Most of the time I’d like to ask the retailer, ‘Would someone be allowed to shop in your store every day with a 75 percent discount? Or would you allow consumers to have a free day in your stores?’ Of course, we would get laughed out of the room, but that’s essentially what the retailer is asking us to do.” Another vendor with more than fifteen years in the LP market said, “When comparing prices of products, it’s so frustrating when retailers aren’t really comparing apples to apples. It’s like asking the retailer, ‘Can I pay the knock-off price for this designer handbag?’ Of course they are going to say no. A tip for retailers is if the price is higher, most of the time there is a reason. A good loss prevention practitioner will investigate what the price difference is and really know the ins and outs of the two comparisons before basing his or her decision solely on price.” On the other hand, retailers are frustrated with misleading information about hidden prices and unaccounted fees within a contract or service-level agreement. “When I was in retail, a major issue that always bothered me was when vendors tried to minimize the total cost of the project and then spring unexpected

Top 3 Pitfalls costs on you last minute,” said Wolfe, now with WG Security Products. “Vendors should come to the retailer with an all-in price. It really puts loss prevention professionals in a bind when they have to go ask for more money for an already budgeted project.”

Avoiding the Pitfalls

Creating a mutually beneficial relationship is a long-term proposition that requires complete honesty, constant communication, and trust to avoid these pitfalls. Although it is an intense, time-consuming process to build an effective and beneficial partnership, the benefits far outweigh the negatives when two companies come together for the ultimate satisfaction of the retail shopper. “Credibility is what keeps me in the forefront of some loss prevention executive’s rolodex,” said Lynch. “If I maintain my personal credibility, then ADT’s reputation is also intact. It’s about putting out brush fires before they become forest fires. If you hold your company to a standard of excellence in support of the customer, you have gone

a long way in cementing your place as a solid business partner. There are only two reasons to be in a retailer’s reception area. One, your solution will save them money outright, or, two, your solution will bring efficiencies to their business that will save them money. End of story.” In his book Guth describes one of the most important parts of the retailer relationship as vendor commitment. “Vendor commitment is a combination of customer focus, trust, sharing information, and other elements that demonstrate a vendor’s interest in helping a customer succeed. Of all vendor expectations, vendor commitment is the most critical to sustain an ongoing successful business relationship between vendor and customer.” The Newell Rubbermaid CEO, Mark Ketchum, describes the vendor-customer process as going from customer push to consumer pull in the November-December 2010 issue of Business to Business magazine. He describes the customer-push mentality as when a vendor creates a product, puts it on the shelf, and then goes to the customer to ask, “What is

LP Magazine | march – april 2011

it going to take to sell this?” With the consumer-pull mentality, the vendor works to understand consumers’ unmet needs and address them by offering a superior product or performance. Consumer pull means working with retail partners to produce something of real value, and that is the ultimate result of avoiding these pitfalls. To read more comments from retailers and vendors on this subject, including specific etiquette for sales calls for both parties, visit the magazine website at LPportal.com. Also, let us know your thoughts and your own experiences. Check out LP Magazine’s newest communication channels to stay plugged in through Twitter (@LPMag), Facebook (LP Voices), and LinkedIn (LP Central).

AMBER VIGILLO is a contributing editor for LP Magazine. She can be reached at 770-335-4891 or AmberV@LPportal.com.

Fundamentals

Game Changers in LP: Part 2 I

got some feedback on last edition’s list of “game changers.” Thanks for the material; I’m sure it will make it into a future column. I’m not going to recap that column, so check it out on the magazine website if you missed the hard copy. This month it’s all about the other team’s (relatively) new weapons. Remember, my point of reference is the mid-80s, a simpler time, before the Internet, cell phones, voicemail, tweets, Facebook, texting, or Google. Now, onto the bad guys’ game changers. Duct Tape and Aluminum Foil. I don’t know when booster devices became vogue, but I do know that with the introduction of EAS technology, defeat attempts weren’t far behind. There are really two dominant types of EAS in play in the U.S.—RF and AM. One is easy to beat; the other takes a lot more…material. Regardless, the bad guys figured it out and quickly responded. Cheap materials and a few hours of labor beat the thousands (dare I say millions) laid out in technology.

This Internet thing is a game changer. If you haven’t done so, spend an hour online getting lost in the world of amateur thieves. It’ll open your eyes. Baseball Caps and the Hoodie. Color cameras and DVRs only work when you get a good image. Old clothes lying around provide a great defense for the bad guys. Hey, they might have gotten lucky and not have had to steal them. So you’re thinking…baseball caps, hoodies, duct tape? Nothing revolutionary here. This feels like a scam column. Well, you’re right. I have tongue firmly planted in cheek. That’s because with a trip to the supermarket and closet, the bad guys are winning the “technology” battle. You want hi-tech? Okay, here goes. The Internet. The web has enabled crooks to share information and collaborate like never before, allowing theft techniques to trickle down from ORC to more casual thieves. I think professional thieves put a big dent in RFID before it even hit the market at item level. Jamming instructions were available online in 2002. Hackers had figured out how to use the open RFID platform to access a network in 2003. As soon as a new

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by Mike Marquis, CFI 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.

technology comes out, the thieves are working together to find a way to defeat it. YouTube. I love YouTube better than Google or Bing. Why? Instructional videos. You can either read about how to defeat EAS or watch an instructional video; just need to type in “remove security tag.” You’ll get a 17-second instructional video (700,000 views) or, better yet, get the email address to order the proper tool. A recent search for “EAS removal tool” had the top five sites viewed by more than 1,000,000 people and none of the email addresses went to authorized dealers. As an aside, kudos to the folks at Alpha. They try to chase down anyone selling tools to beat their products. Maybe it’s time for our other service providers to try the same. Search Engines. Google “best place to shoplift.” The first link is a three-page instructional guide. The third is a link to six pages of message-board fodder on the best way, and a bit further down, “how to shoplift like a champ.” Who knew there was a competition? Blogs and Message Boards. Why be a lonely thief when the anonymity of the Internet provides you solace and support for your endeavors? Heck, if you’re good enough, you can even start your own blog and become something of a hero to those more timid than you. I was always skeptical of the value of “the word on the street.” However, our friends at Google made me think otherwise. A search of “stores to steal from” provides advice, coaching, and interactive support on the when, how, and why not’s of the game. I used to like www.rotteneggsx.com, but social media has taken its toll there. You’ll find “The Right Way to Steal” (for informational purposes only, not to be undertaken) or, buried under “How to > Helpful guides > Mature audience,” a viewpoint from a former employee on how to best steal from their employer instead of buying. Curious if your business is there? Type in “steal” or “shoplift” in their search window, followed by your company’s name. Yep, this Internet thing is a game changer. If you haven’t done so, spend an hour online getting lost in the world of amateur thieves, both internal and external. It’ll open your eyes. Not making the list are cable cutters, cell phones, and eBay and other auction sites, not to mention all of those pesky distributors of duct tape and aluminum foil. I’m sure you’ve got an opinion (or a favorite website you track). I’d love to know about it. Next edition, I’ll share some feedback. |

LPportal.com

Loss Prevention, Auditing & sAfety ConferenCe 2011 April 11-14 • Gaylord Palms Resort & Convention Center • Orlando, FL

Asked to do more with less, loss prevention executives continue to add value to their companies’ bottom lines. RILA’s Loss Prevention, Auditing & Safety Conference is the only retail-specific LP conference that focuses on The Full Spectrum of LP. The conference will cover the most pressing issues facing LP in both general sessions and six breakout tracks: Leadership & Development, Workplace Safety, Investigations, Operational Audit, Strategy & Planning, and Technology & Innovation. RILA’s interactive sessions give you the opportunity to participate in discussions with leading experts and top retail executives.

opening Keynote

Bill Rhodes Chairman, President & Chief Executive Officer AutoZone, Inc.

The Full Spectrum of Loss Prevention

TiTle SponSor

PARTNERING WITH RETAILERS

Our commitment to curtailing the sale of stolen goods online is evidenced by our partnerships with both the retail and criminal justice communities. The industry has made monumental strides in dealing with today’s organized retail crime. However, when I look to the future, especially as a parent, a major question remains: “What, if anything, can we do to prevent today’s youthful shoplifting offenders from becoming tomorrow’s internal, ORC, online, and petty theft offenders?” In the past several years, police departments, prosecutors, and courts have had to pull back on the prosecution and handling of misdemeanor shoplifting due to state and local budget cuts. Today, even those juvenile offenders who are prosecuted may not be getting effective sanctions. In addition, a recent survey by the National Association for Shoplifting Prevention (NASP) has revealed a new trend in juvenile shoplifting—more youth are being asked to shoplift for others, stealing multiple items, and selling the goods they steal. With courts doing less and a new generation of tech-savvy kids stealing more, there is a real concern that without intervention, youth will come to believe they can shoplift from retailers with impunity and easily sell the stolen goods over the Internet. What is needed is a simple and practical way to address this generation’s misguided thinking about shoplifting and dispel the notion that selling goods via the Internet is an easy, anonymous way to make a quick buck. To that end, eBay has partnered with NASP in a national educational campaign. The partnership will provide parent information pamphlets to the families of one million youthful shoplifting offenders and launch a new website—“Say No to Shoplifting”—that will serve as a: ■ Source for information, education, and

programs for families affected by shoplifting, ■ Guide to both criminal and civil responsibilities and

obligations after a shoplifting incident, ■ Community resource for shoplifting

prevention education and information, ■ Tool to prevent repeat offenses, helping

youth put shoplifting behind them forever, and ■ Registration portal for parents to enroll their child in NASP’s

Youth Educational Shoplifting program (Y.E.S.).

by Paul Jones

The coordination with NASP’s Y.E.S. program is perhaps the most appealing component of the partnership. Y.E.S. has widespread credibility with prosecutors, courts, and law enforcement and is an established, proven shoplifting prevention program. In fact, the latest recidivism study on the Y.E.S. program was conducted in Seattle by the King County Partnership for Youth Justice. The four-year study found that the program is an “extraordinarily effective intervention” for reducing shoplifting and is effective in “reducing criminal behavior in general.”

Paul Jones is Global Director of Asset Protection. Contact him at pajones@ebay.com.

With courts doing less and a new generation of tech-savvy kids stealing more, there is a real concern that without intervention youth will come to believe they can shoplift from retailers with impunity.

Our partnership is rooted not only in the need to address changing trends in shoplifting, but to address the continued growth and evolution of shoplifting into full-scale organized retail crime, an ever-present challenge for the retail, online, and law enforcement communities. This program aims to change a juvenile’s attitude and behavior, correct their misguided thinking, and impede the progress of shoplifting at its most fundamental level.

Seizing Opportunity We all know that the retail loss prevention community is the first and often the only touch point with a juvenile shoplifter. As such, your involvement is key to this program, but your contribution is simple. Just provide the information to families by handing out the parent information pamphlets about the Y.E.S. program and other parental resources at the time of apprehension. I am excited about this new proactive program. Helping to keep our children on the correct path is a challenge we can all align around. For more information about NASP, visit www.shopliftingprevention.org.

feature

Overhauling Your Online Fraud Prevention Strategy

to Grow Revenues and Increase Customer Satisfaction By Phil Mead LP Magazine | march – april 2011

Online Fraud

raud is a challenging problem for the retail industry around the globe, and one that is only growing as fraudsters become more organized and sophisticated in their schemes. Having worked in anti-fraud segments of retail organizations for fifteen-plus years, the primary lesson I’ve learned is that information is a strong weapon for fighting back. In the United States the Merchant Risk Council (MRC) has been very successful in assisting companies in combating fraud through its various educational programs. Retailers in Europe can learn from others’ experiences with fraud, so we’re very excited about the recent expansion of the MRC in Europe, which will help facilitate this type of communication on this side of the Atlantic. [For more information on the MRC, visit www.merchantriskcouncil.org.]

The Company

Carphone Warehouse is Europe’s leading mobile communications retailer with more than 1,700 stores and annual sales of £3.5 million. Based in the U.K., the company also operates in nine other European markets, including Belgium, France, Germany, Ireland, the Netherlands, Portugal, Spain, Sweden, and Switzerland, under the brand name The Phone House. Carphone Warehouse Group is in a joint venture with Best Buy

march – april 2011

Europe Group and has a significant interest in Virgin Mobile France. The company offers customers impartial and expert advice in choosing from a wide array of products and service providers along with superior service. The company employs over 12,000 people in stores, support centers, call centers, online teams, and direct sales teams (telesales). We are very proud of our company’s strong commitment to customer satisfaction and its determination to stay a step ahead of the competition, which we believe have been key factors in our success and industry recognition.

Growth of Online Fraud

As is the case for many retailers, the biggest fraud challenge we face is online fraud. These types of crimes are very difficult to deal with because of their anonymous nature. In Europe the rate of online fraud has taken a big jump since “Chip and PIN,” as we call it in the U.K., became a requirement in 2005. Chip and PIN has replaced the traditional magnetic stripe on credit cards with smartcard technology, where credit and debit cards contain an embedded microchip and are authenticated using a personal identification number (PIN). When a customer wishes to pay for goods using this system, the card is placed into a PIN-pad terminal or a modified swipe-card reader, which accesses the chip on the

LPportal.com

Online Fraud card. Once the card has been verified as authentic, the customer enters a four-digit PIN, which is submitted to the chip on the smartcard. If the two match, the chip tells the terminal the PIN was correct; otherwise it informs it the PIN was incorrect.

Chip and PIN has helped reduce crime at point-of-sale locations and has been widely accepted by the consumer. But unfortunately, it has also driven fraudsters to telephone, Internet, and mail-order channels where there’s no credit card or signature for the merchant’s inspection. The retailer bears the entire cost should the transaction transpire to be fraudulent. Card-not-present (CNP) fraud is now a major problem, comprising more than half of all credit-card fraud. Other initiatives such as 3D Secure are being implemented to improve CNP security, but the jury is still out in regard to their overall effectiveness.

Initial Countermeasures

The web channel was a primary area of focus for me because of the fast-growing nature of CNP fraud. Carphone Warehouse had deployed “rule-based” screening technology for a number of years in order to catch fraudulent online purchases. These

technologies work by identifying suspicious behavior, such as multiple purchases of expensive mobile phones being delivered to the same address. Over time the company supplemented these checks with additional manual checks. This obviously leads to a delay in dispatching goods to the customer and an increased operational cost. Additionally, because manual checks are both time-consuming and labor-intensive, it isn’t a sustainable approach for an expanding business. With the evolution of national and international fraud rings, criminals have become very skilled at evading these systems and regularly test the relevant thresholds that are in place. Fraudsters are now constantly changing identities, delivery addresses, using different card details, and are spreading deliveries around the U.K. on a daily basis. The result is that it’s a difficult and time-consuming job to decipher between fraudulent purchases and legitimate ones. Carphone Warehouse tightened the rules to crack down on fraud. But in doing so, we found ourselves cancelling too many purchases from legitimate customers. It was very frustrating, because it meant in our effort to reject fraudulent purchases, we were also turning away sales revenues from customers whose transactions appeared suspect for a variety of reasons, such as they had changed addresses or were sending a gift to a friend.

The Economics of Fraud

This leads me to an issue that doesn’t get as much focus as it should—the economics of fraud. Many retailers track their cost of fraud by measuring chargebacks. They should also take into consideration…although some don’t…the cost of chargeback penalties and fees incurred from card issuers, as well as the cost of staffing and fraud prevention technology. Even more importantly, many companies completely ignore the cost of lost sales revenues from cancelling LP Magazine | march – april 2011

We read a lot about the growth in online fraud and the threat it represents to merchants. It is undeniably a potentially serious source of profit leakage, but it doesn’t have to be. I’m optimistic that technological breakthroughs and new strategies are going to help retailers win the ongoing battle against fraudsters and expand our revenue opportunities. 59

Online Fraud

Many retailers track their cost of fraud by measuring chargebacks. They should also take into consideration… although some don’t…the cost of chargeback penalties and fees incurred from card issuers, as well as the cost of staffing and fraud prevention technology. Even more importantly, many companies completely ignore the cost of lost sales revenues from cancelling perfectly good orders. 60

perfectly good orders. More difficult to put a value on, but equally important, is all the lost goodwill on the part of law-abiding customers whose buying habits innocently make them appear suspicious. We all know that the cost of acquiring and retaining customers through marketing, advertising, and loyalty programs is a major investment for a retailer. It simply doesn’t make sense to spend money to win customers only to turn them away or insult them by delaying, questioning, or cancelling their orders in the name of fraud prevention. Even when they don’t complain, they aren’t likely to return, and your marketing investment has gone down the drain.

A New Approach Needed

At Carphone Warehouse these challenges spurred us to seek a new approach to online fraud prevention. Our goals were to cut our company’s cost of fraud and ensure the very best shopping experience to each and every customer, thus maximizing revenue. We wanted to shift the emphasis away from “locking things down” in favor of statistical analysis and automation. Getting control of our loss prevention and fraud data was a must, so we could utilize it to identify abnormal patterns or suspicious activities in a much more targeted manner. About three years ago, when I was promoted to head the fraud and loss prevention department at Carphone Warehouse, the organization was very traditional in nature. The team consisted of approximately forty employees, fifteen of whom were field based, mostly with investigation backgrounds. One of my first priorities was to ensure that these employees had the necessary information to do their jobs. They were being sent out to conduct spot checks in our many retail locations. However, because they had inadequate hard march – april 2011

LPportal.com

information, they had to rely mostly on instinct for identifying problems. The team included two analysts whose job it was to support the field team by measuring and tracking data, including inventories, transactions, commissions, and others. However, the analysts had rather inflexible tools and were so understaffed that they didn’t stand much of a chance. In view of the above, I set about restructuring the department. We added several highly skilled analysts who were familiar with Carphone Warehouse systems and processes and removed a number of field-based roles to pay for these changes. We now have a total of twenty-three employees on our team, including specialists in inventory control, online security, payments, insurance claims, and security of physical retail locations, distribution, delivery, virtual mobile networks, management systems, and so forth. While the current recession has required some belt-tightening, we have chosen to maintain our analytical approach as we believe this is key in reducing crime and increasing profit. Unfortunately this has led to a significant reduction in field staff. We also spent several months analyzing new strategies, technologies, and solution providers available in the marketplace. In the end, Carphone Warehouse selected Accertify as the provider who met all of our needs. Accertify demonstrated a clear understanding of the issues involved in CNP fraud and has proactively designed key modules that we believed would enable us to meet our goals.

The Solution Implemented

Their Interceptas platform is designed from the merchant’s perspective to give us the control, customization, and comprehensive feature set we need to accurately separate fraud from good orders and stay a step ahead of fraudsters. It has played a key role in our new enterprise-wide fraud prevention strategies.

Online Fraud In our screening process, we now are accessing significantly more customer and transaction data. The additional data, and a more flexible fraud prevention software platform, allows us to deploy an unlimited number of business rules for more targeted screening. New rules were specifically tailored to Carphone Warehouse’s business and processes for maximum effectiveness. This provides more accurate screening results and reduces the volume of manual workarounds required. Not only are we better at identifying fraud, we are also reducing “false positives,” so legitimate orders aren’t mistakenly flagged as fraudulent. Automation has helped us streamline fraud prevention and improve productivity. Our platform now automatically scores, ranks, and prioritizes suspicious transactions, then queues and presents them to analysts for manual checks. The review process was simplified through the use of a comprehensive review “dashboard” that delivers all relevant data elements to analysts on a single screen and highlights the high-risk data. Analysts no longer waste time toggling back and forth among many screens of information. Carphone Warehouse has added the ability to link between known frauds and existing transactions so it can identify larger rings of fraudulent activity. And we have expanded our reporting abilities to assist our team in responding quickly to new fraud trends. Chargeback data is analyzed in a timely fashion in order to strengthen business rules and review processes. All this has enabled us to significantly reduce the manual labor involved in fraud prevention and speed the arrival of orders to our distribution center. These are two of our key objectives—increasing customer satisfaction while driving down costs. After going live with this new system in fall 2010, we significantly increased sales volume by 2.5 percent in the first six weeks while also cutting our fraud rate. This is the result of having deployed a more flexible and targeted screening approach to achieve a reduction in our order rejection rate. In addition, the manual efforts involved in fraud prevention have declined substantially. We’ve been able to redirect staffing resources to other customer service areas. Instead of manually checking orders, these employees are back in our call center proactively helping customers.

Recommendations to Others

Following are four tips I recommend to any retailer seeking to increase sales and conversions by updating its fraud prevention system: ■ Get control of your transaction data—Your platform should accept a wide variety of data in many formats. You should have the ability to identify good customers and repeat customers in order to keep their orders from getting caught in the fraud-screening process, and to optimize sales opportunities and increase conversions. ■ Flexibility is key—Make sure you have the ability to deploy very targeted screening strategies. You should also be able to customize and modify your system as your needs change and easily adapt to the many different rules and regulations involved in doing business both inside and outside the U.K. ■ Adopt a comprehensive strategy—Choose a solution that fully integrates the rules engine with manual review and chargeback management processes. Taking an end-to-end approach will close the gaps that fraudsters slip through, while saving your company time and money. ■ Future-proof your solution—Your system should be able to quickly incorporate emerging tools and strategies. You should be able to implement technologies and keep them updated without asking for help from your IT department. We read a lot about the growth in online fraud and the threat it represents to merchants. It is undeniably a potentially serious source of profit leakage, but it doesn’t have to be. I’m optimistic that technological breakthroughs and new strategies such as these are going to help retailers win the ongoing battle against fraudsters and expand our revenue opportunities. That is very good news indeed.

We learned a great deal in evaluating our fraud prevention processes, and one of the most useful lessons was to look at the bigger picture involved in fighting cybercrime. It’s not just about stopping fraud at any cost. It’s about assisting your business in retaining customers, improving service, and growing revenues. Customers should not be declined merely because their shopping patterns are different to those of others. LP Magazine | march – april 2011

PHIL MEAD is head of fraud and loss prevention for Carphone Warehouse based in the United Kingdom. He has fifteen years of retail LP experience, the past six with his current company. Prior to his current position, Mead was fraud manager at T-Mobile U.K. He can be reached via email at MeadP@cpwplc.com.

Associations in Action

The Need for Federal ORC Legislation Remains W

hile the new Congress brings many changes to Washington, one thing remains unchanged—the need for federal legislation to help combat organized retail crime (ORC). Loss prevention executives continue to be challenged by the increasingly sophisticated schemes used by organized theft groups to defraud retailers, evade detection, and maximize profits. Retailers continue to pour millions of dollars into deterrence, investigation, and prosecution strategies. These challenges linger as do the ongoing retailer investments despite the best efforts of online marketplaces, most notably eBay.

Federal ORC legislation is an essential component of a holistic approach to ORC. RILA and the CAORC remain committed to working with retailers, online marketplaces willing to dialogue, and elected officials to pass meaningful, comprehensive legislation that brings a long-term solution. Let me be clear. We acknowledge the progress eBay has made over the past year through its PROACT program. Those among RILA’s retail membership participating in PROACT are appreciative of their renewed partnership with eBay and are happy to be receiving more information and cooperation from eBay than in years past. However, to suggest that PROACT is the solution to the problem related to the online sale of stolen merchandise is shortsighted.

Holistic Approach

The reality is there is no one-stop solution to this problem. Rather, the solution requires a holistic approach

march – april 2011

by Lisa LaBruno 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.

that involves several key stakeholders and includes both prevention and enforcement components. ■ Retailers must remain vigilant in their efforts to deter theft from their facilities and supply chain. ■ Online marketplaces must develop methods for preventing offenders from selling stolen merchandise on their sites. ■ Law enforcement agencies must dedicate resources to investigating ORC. ■ Prosecutors must aggressively prosecute offenders and seek appropriate punishment. ■ Judges must impose harsh sentences that reflect the impact of ORC and deter others from engaging in similar criminal conduct. If one key stakeholder fails to do their part, the solution fails. Robust state and federal legislation is an important component of a holistic approach to ORC. The Coalition Against Organized Retail Crime (CAORC), which RILA chairs, has worked tirelessly to pursue federal legislation that focuses on prevention, because we simply cannot arrest our way out of ORC. And so, while the goals of the Organized Retail Theft Investigation and Prosecution Act, which passed the House of Representatives last Congress to supplement the tapped resources of law enforcement and prosecuting agencies, were commendable, it didn’t do enough to prevent ORC.

Why Federal Legislation

Some have asked why federal legislation focusing on prevention is necessary given the progress that has been made with eBay’s PROACT program. As robust as eBay’s PROACT program may be, it remains a voluntary program. Nothing legally compels eBay to operate PROACT, to put tools in place to prevent the sale of stolen product, to proactively identify suspicious auctions, or to cooperate with retailers in investigating the sale of stolen goods on their site. The fact is eBay could opt to shut down PROACT at any time and face no legal consequences. Additionally, while eBay has implemented some preventative tools to identify suspicious auctions on

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the front end, PROACT continues to be, in large part, a reactionary program. Indeed, much of its success is measured by the quality of closed cases. It seems every day we are reading about another ORC ring apprehended with the involvement of eBay. I recently read about a $1.2 million case that resulted in thirty-six arrests. Some would call that a success. I call that more prevention is needed. Federal legislation being pursued by the CAORC would seek to respond to these issues. Legislation would formalize partnerships between online marketplaces and retailers, legally compel online marketplaces to implement tools to prevent the sale of stolen goods on their site, require long-term and sustained cooperation from online marketplaces, and impose real, measurable consequences for noncompliance. To eBay’s credit, through PROACT, they have demonstrated a good faith effort to join retailers in the fight against ORC. What about other online marketplaces that haven’t done near enough or nothing at all to help stem the tide of ORC? Loss prevention executives have reported seeing an increase in the frequency with which stolen goods are being sold on online marketplaces other than eBay, none of which have a PROACT program. And, what about online marketplaces that aren’t operating today, but are the favored site of tomorrow’s ORC rings? Will these online marketplaces be good corporate citizens and invest money and resources into a voluntary prevention and response program? We can all scramble to figure out a solution when that time comes, or we can fight for federal legislation that provides a solution now. Federal ORC legislation is an essential component of a holistic approach to ORC. RILA and the CAORC remain committed to working with retailers, online marketplaces willing to dialogue, and elected officials to pass meaningful, comprehensive legislation that brings a long-term solution.

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Evidence-Based LP by Read Hayes, Ph.D., CPP

Environmental Criminology L oss prevention executives have a clear mission—to support their organization’s success by cost-effectively reducing crime and loss. Past columns have discussed how professionals like physicians use evidence to drive how they design and deliver preventive and therapeutic programs. Good science can focus and improve crime and loss control more precisely than benchmarking and small tests. Where does an LP manager start? What programs really work?

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. © 2010 Loss Prevention Research Council

Brantingham explain how offenders happen on or search for these desirable crime opportunities. Finally, Rutgers University’s Ronald Clarke provides insight into how offenders assess and make offending choices in specific environments. Criminal decisions and choices are like those of most people in that they are somewhat rational. Offenders consider potential benefits of stealing, potential risk of detection and punishment, and how much effort they would need to steal something.

Place-based vs. Offender-based Action

Situational Crime Prevention Techniques

Criminologists have long debated the best ways to reduce crime. Overwhelmingly most modern criminologists spend their time building and testing theories on reducing crime by reducing the likelihood an individual wants or needs to commit an offense. They concentrate on criminality rather than crime events. They study who is predisposed to offend and how to change their course. Criminologists’ discussions often revolve around nature versus nurture.

Adapted from Cornish and Clarke (2003:90)

Increase the Effort 1. Target harden 2. Control access to facilities 3. Screen exits 4. Deflect offenders 5. Control tools/weapons Increase the Risks 6. Extend guardianship 7. Assist natural surveillance 8. Reduce anonymity 9. Utilize place managers 10. Strengthen formal surveillance Reduce the Rewards 11. Conceal targets 12. Remove targets 13. Identify property 14. Disrupt markets 15. Deny benefits Reduce Provocations 16. Reduce frustrations and stress 17. Avoid disputes 18. Reduce emotional arousal 19. Neutralize peer pressure 20. Discourage imitation Remove Excuses 21. Set rules 22. Post instructions 23. Alert conscience 24. Asist compliance 25. Control drugs and alcohol

Reducing criminal propensity is valuable and laudable, but situational prevention can produce more immediate benefits…and retailers need immediate benefits. On the other hand, a small but growing number of criminologists are more interested in directly reducing crime events, rather than the disposition to offend. Reducing criminal propensity is valuable and laudable, but situational prevention can produce more immediate benefits…and retailers need immediate benefits. This group of scientists is dedicated to preventing crime by reducing crime opportunity. I belong to this group of “environmental criminologists.” Environmental criminology strives to prevent crime by altering crime opportunities. Offenders may have varying backgrounds and motivations, but Texas State University’s Marcus Felson describes how crime occurs when these likely offenders come into contact with relatively vulnerable and desirable targets. Simon Fraser University’s Paul and Patricia

march – april 2011

Situational Crime Prevention

Environmental criminological theory (how things really happen) and growing research evidence can definitely help

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retail LP executives become even more effective. Dr. Clarke has worked hard over the years to develop, and guide and motivate others to help develop a practical crime prevention toolset (see chart opposite). The key is called situational crime prevention (SCP). This SCP matrix describes twenty-five research-backed crime prevention techniques for practitioners like LP Magazine’s readers. SCP techniques are designed to make theft less rewarding, more difficult, and much riskier. The theory is aimed entirely at deterring offenders before and after they approach a store. SCP can guide any LP practitioner in devising, testing, and deploying their LP programs since the simple, evidence-based concepts are flexible, testable, and can be cost-effective.

Situational Crime Prevention Techniques

SCP contains many examples of existing retail LP techniques, including those that increase risks for offenders—EAS, lighting, product alarms, exception reporting, hotlines, awareness programs, customer service programs, selection-sound generating fixtures, and others. SCP examples that reduce potential rewards for offenders include benefit-denial tools like ink/dye tags, small clamps, and phone or gift cards that require post-purchase activation to use them. Finally, SCP techniques that increase theft efforts include locking fixtures, not carrying or taking products off of open sale, barriers, locks, and safes.

Bear in mind, all retail-focused SCP techniques have some supporting evidence, but most have little or poor evidence at this point. That is the industry and the Loss Prevention Research Council’s challenge—to better design and more rigorously test SCP techniques.

Focus, Focus

Another critical SCP point is pre-implementation analysis. SCP starts with the word “situational.” Crime and loss prevention efforts need to be designed or refined to address very specific problems. Rarely are two situations completely the same. Retail LP professionals need to conduct a thorough analysis of their problems. Carefully look at where the problems are clustered in place, time, and product and then select and tailor proposed solutions or treatments. Future columns will further discuss these concepts. The next step is to conduct some pilot research and development, then a larger, more rigorous field trial of the solution versus control to gain critical loss and sales data for return-on-investment projections. My advice is to use your personal expertise and experience, but to use even more science in diagnosing, testing, and treating current and emerging problems. This method isn’t easy, but desired results and success will follow. As always, I look forward to your insight, comments, and questions, and we’d love to someday work with you and our team. Please email me at rhayes@lpresearch.org.

If your business is

  

about doing business with restaurant and food service risk management professionals then the NFSSC Annual Conference is a must

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attend event for you. No other event allows you to target with such accuracy this

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segment of the multibillion dollar food service industry.

 LP Magazine | march – april 2011

Industry News

Emerging Cyber-Security Threats O

nce a year I try to leave the safety and comfort of conventional topics, like theft trends and anti-shoplifting countermeasures, to travel to the outer edge of the criminal universe—the invisible world of cyberspace. The catalyst this year is a list of cyber-security threats contained in a report entitled 2011 Threat Predictions, published by McAfee (www.mcafee.com) and some interesting blog comments made by Bob Sullivan, who covers Internet scams and consumer fraud for MSNBC (www.redtape. msnbc.com). Some of these threats have direct and serious implications for retailers and their customers. Others are just downright scary.

Exploiting Social Media

The use of abbreviated URLs on sites like Twitter makes it easy for cyber criminals to mask and direct users to malicious websites. Websites with shortened URLs are growing at the rate of 3,000 per minute, so McAfee expects to see a growing number used for spam, scamming, and other activities. Friend-finding sites (geolocation services), such as Facebook Places, Gowalla, and foursquare, are prime targets of cyber criminals who use the available personal information to craft targeted attacks on individuals. Malicious content disguised as personal messages or emails, ostensibly from “friends” found on social networking sites, are expected to increase exponentially. Retailers are beginning to exploit the social networking sites. Did you know that Victoria’s Secret has over 10 million Facebook friends, Starbuck’s has over 18 million, and Coca-Cola has about 20 million friends? It is relatively easy for hackers to commandeer personal information, and send out an email from a friend promising a chance for a free iPod or a discount coupon in the name of a favorite store.

Threats to Mobile Devices

Currently, about 50 percent of mobile phones in the U.S. are web-browser enabled. The advent of the iPhone and Android, with their open application environments, has created an opportunity for hackers. The most recent example is a story about new malware residing on game apps for the Android operating system, intended to collect personal information from those downloading the games. TVs, DVD players, iPads, and even some kitchen appliances are now comparably equipped. Analysts predict

march – april 2011

by Robert L. DiLonardo 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.

that about 50 million tablet PCs with Apple’s or Google’s operating system will be sold in 2011. Currently, the market for tablet-based antivirus software is virtually nonexistent.

Hacktivisim and Cyber Sabotage

The term hacktivisim is defined as “digital cultural jamming and electronic civil disobedience” or “politically motivated computer crime.” Before either definition is chiseled in stone, the legal fate of Julian Assange, the infamous WikiLeaks leader and Time magazine’s runner-up man of the year, must be established. The McAfee report predicts that hacktivisim will become more organized and strategic by incorporating social networks into the process. There were two major cyber sabotage events in 2010— Operation Aurora and Stuxnet. Both incidents made big news. Operation Aurora was the highly sophisticated attack on Google’s intellectual property, emanating from China. Google wasn’t the only target. Databases from twenty other large multinational companies were similarly breached. There is still some debate over whether or not the Chinese government had a hand in the exercise. The Stuxnet worm virus was aimed at computer systems that monitor and control industrial processes, including utilities using nuclear power. In November Iran acknowledged that the virus caused problems for a limited number of the country’s centrifuges. As of this writing, no one yet knows who created the virus, but the specialized knowledge required to write it is available only to a few organizations and governments. McAfee warns that companies of all sizes that have any involvement in national security or major global economic activities should expect to be under attack. Cyber attacks require defensive measures, and might actually provoke responses. The Pentagon is spending $150 million this fiscal year on a new command to lead cyber-war efforts, which are aimed principally at defending military computer networks or attacking those of the enemy. “The United States has powerful offensive capabilities in cyberspace,” says Herbert Lin, an analyst at the National Academies, which advises the government on science and technology issues. “The question is how they should be using them?” The German government recently announced that it would fund and build a National Cyber-Defense Center in 2011, and Britain announced a similar program. As of now, there has |

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been no Geneva Convention-type agreement to frame a set of rules of cyber warfare engagement. The United Nations has established the International Telecommunications Union with a cyber-arms treaty as its primary mission. The idea is to develop a code of conduct banning behavior opposed by all member countries.

Evasive Action

My early childhood was framed by frequent Civil Defense exercises at home and at school, advertisements advocating bomb shelters, and regular talk of a nuclear holocaust. I won’t be afraid if the retaliations in a cyber war are confined to armies of hackers slicing each other’s databases to cyber pieces. But, the breaching of Iran’s nuclear development program should raise everyone’s anxiety level high enough so that our IT security brethren take immediate evasive cyber action.

U.S. Cargo Theft Studies Identifies Two-Year Trends Import cargo volume at the nation’s major retail container ports has increased for the past fourteen consecutive months, evidence that the economic recovery is continuing. The Global Port Tracker, produced by the National Retail Federation and Hackett Associates, estimates in its most recent report that U.S. ports will handle 7.5 million twenty-foot standard intermodal containers of freight in the first half of 2011. The typical container has 1,170 cubic feet of space and can hold between eight and fourteen pallets of merchandise, depending upon the pallet dimensions. That’s a lot of apparel, iPads, or pharmaceuticals. This presents many questions: ■ How much of this stuff gets stolen in transit? ■ Are there any discernable theft trends or correlations? ■ Is there any information out there that will help us get a handle on the severity of the problem?

CargoNet Study

The property/casualty insurance risk industry has started to focus on U.S. cargo theft and has published a very interesting study that provides an analysis of more than 1,700 incidents occurring in 2009 and 2010. CargoNet, a cargo-theft prevention and recovery network, has collected and analyzed cargo-theft incident data beginning in January 2009. The study provides a wealth of specific and correlative information, including theft incident date, location, and time; cargo origin and destination; stolen commodity type; comparatives between 2009 and 2010; and trending data. The report can be downloaded for free at www.cargonet.com. Following are some of the highlights. Increased Incidents—The total number of theft incidents increased by 48 percent to 1,035 in 2010, compared to 700 in 2009. Unfortunately, the analysts are able to collect only about 60 percent of the loss-value data, due to the reluctance of cargo owners to disclose this information. Cargo at Rest Is Cargo at Risk—The analysis identified a weekend pattern of incidents taking place on Friday,

Saturday, Sunday, and Monday. The analysts believe that this phenomenon could be caused by common freight booking practices in which shipments are promised at the beginning of the week. The freight is loaded on trailers on Friday, but remains parked in terminal yards over the weekend. Long-distance cargo deliveries of more than 450 miles are more vulnerable to cargo theft because of the increased number of driver rest and refueling stops at unsecured truck stops or other locations along U.S. highways. Stolen Retail Merchandise—During 2010 there was a significant increase in retail activity, especially during late November. Of the eleven major commodities suffering major losses, five were considered retail-oriented and accounted for 47 percent of the theft incidents: ■ Electronics (17% of theft incidents), ■ Prepared foodstuffs and beverages (13%), ■ Apparel and accessories (10%), ■ Personal care and beauty (4%), and ■ Pharma (3%). There were a couple of interesting anomalies. Analysts acknowledged that consumer demand drives black-market supply. But, “the most-targeted commodity does not necessarily suffer the highest aggregate loss in terms of dollar value. For example, electronics were the number-one stolen item in 2010, but the dollar value of pharmaceuticals stolen was greater.” In the other example, loss-value is not positively related to the number of thefts, due to the wide variance in the value of a load. For example, a truck full of pharmaceuticals could be 50 times the value of the same size load of apparel. High-Cargo Concentrations—Cargo theft incidents are positively correlated with proximity to high cargo concentrations, such as ports. Three California container ports account for 50 percent of the cargo volume moving through the top ten ports in the country. It should be no surprise to find that California led the nation in cargo theft incidents with over 300 in 2010. Volume—Import volume is correlated to theft incidents. Greater cargo availability increases thieves’ success rate. This point is buttressed by the finding that cargo-theft incidents are also correlated to the retail inventory stocking cycles around major shopping periods.

FreightWatch Data

FreightWatch International USA (www.freightwatchintl.com) also tracks cargo freight incidents internationally. Unlike the CargoNet report, this data shows that the average value of stolen goods per load is about $475,000, which is down from a peak of $572,800 in 2009. Its data also shows that violence is involved in only about 2 percent of U.S. cargo thefts. In contrast 71 percent of Mexico’s incidents were violent. Mexico, Brazil, South Africa, the U.S., Russia, India, and the U.K. are at the greatest risk of cargo thefts. Echoing the data from CargoNet, the vast majority of U.S. incidents in the FreightWatch study occur while the cargo is at rest in truck stops, unsecured lots or terminals, public access parking lots, and roadside areas.

LP Magazine | march – april 2011

Calendar

MAGAZINE

New Webinar Register now!

Innovative Technology to Help Loss Prevention Professionals Protect Their Valued Assets from Internal Theft in Distribution Centers and Warehouses Attend Live:

Available on demand anytime after the live event

March 22 – 24, 2011 Merchant Risk Council e-Commerce Payments & Risk Conference Wynn Resort, Las Vegas, NV www.merchantriskcouncil.org April 11 – 14, 2011 Retail Industry Leaders Association LP, Auditing & Safety Conference 2011 Gaylord Palms Resort, Orlando, FL www.rila.org April 12 – 14, 2011 Federated Press 16th Workplace Investigations Metropolitan Hotel, Toronto, ON www.federatedpress.com

Thursday, March 31st, 2:00 p.m. EDT

Retailers, manufacturers, and logistics companies work hard to protect their assets from employee theft. The tremendous volumes of products flowing in and out of warehouses and distribution centers often place these companies in a vulnerable position as employee theft accounts for close to half of all inventory shrinkage. This webinar will provide attendees a detailed understanding of how this safe new technology works, and how it is designed to detect concealed metallic and non-metallic objects under clothing. Attendees will learn how to effectively implement this technology into current security processes or replace them altogether through shared customer success stories. Visit the magazine website at www.LPportal.com to register.

March 6 – 9, 2011 Food Marketing Institute 2011 Asset Protection Conference Buena Vista Palace Hotel & Spa Lake Buena Vista, FL www.fmi.org

April 14 – 16, 2011 International Organization of Black Security Executives (IOBSE) 2011 Spring Conference Hosted by Walmart Embassy Suites, Bentonville, AK www.iobse.com

Speakers Bob Daly Senior Vice President and Chief Technology Officer for Brijot Imaging Systems. Robert Dyke Security Consultant and Vice President for Worldwide Imaging and Detection.

May 11 – 13, 2011 International Anticounterfeiting Coalition 2011 Annual Spring Conference The St. Regis, San Francisco, CA www.iacc.org June 13 – 15, 2011 National Retail Federation 2011 LP Conference and EXPO Gaylord Texan Resort, Dallas, TX www.nrf.com August 7 – 10, 2011 National Food Service Security Council 32nd Annual Meeting Hyatt Grand Champions, Indian Wells, CA www.nfssconline.org

Sponsor

march – april 2011

April 28, 2011 Retail Council of New York State New York Organized Retail Crime Conference Empire State Plaza Convention Center Albany, NY www.retailcouncilnys.com

September 19 – 22, 2011 ASIS International 57th Annual Seminar and Exhibits Orange County Convention Center Orlando, FL www.asisonline.org

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People on the move

Marc Collazo was appointed Regional LP Manager for Advance America.

Priscilla Sandoval has been promoted to LP Manager for Kmart.

Scott Pickrel was appointed Regional LP Manager for AutoZone.

Osmany Benitez was appointed Market Investigator for Limited Brands.

Larry Martinez and Jacob Soha were named District LP Managers for Big Lots.

Adam Fewster was appointed to National Security and LP Manager for OfficeMax of Australia.

Steve Pace has been promoted to Regional LP Director for Bloomingdale’s. Ryan Roby was named AP Manager for Cabela’s. Paul Cogswell has been promoted to VP Corporate Security and Safety/CSO for Ceridian. Eryn Klimesh was appointed Manager LP Field Programs and Inventory for Claire’s. Josh Francis was named EBR Analyst, North America for Claire’s and ICING.

Lee Clouser and Jason Owens, CFI were named Regional LP Managers for RadioShack. Liz Benson, LPQ has been promoted to Manager, LP, and Retail Operations for RILA. Sandy Chandler, LPC was named Regional LP Director for Rite Aid. Marc Rojas was named Regional Director of LP, and John Peyton has been promoted to Senior Area LP Manager for Ross Stores.

Sean Galli, LPC was named Logistics LP Manager for CVS Caremark.

Rich Green was appointed Operations Manager, and Aaron Stamm was appointed District LP Manager for Sears Holdings.

Rick Crugnale was appointed District LP Manager for Dick’s Sporting Goods.

Kathy Farrell and Patricia Ishmael were appointed District LP Managers for Sephora.

Matthew Irwin was named Regional LP Manager for Dollar General.

Jennifer Bowman, LPC has been promoted to District AP Manager for Sports Authority.

Joe Ringer was appointed Director, AP, Risk Management, and Internal Audit for Goodwill.

Stein Mart has announced the following changes: Charlie Ferranti to Regional LP Director, Richard Gerasimchik to Area LP Manager, and Karen Greenway to Corporate Field Auditor.

Matthew Tracy was appointed Regional LP Manager for GUESS. Dan McVey was named AP Manager, and Michael Riva was named District Operations Manager for Home Depot. Marcus Smith, CFI was named Regional LP Manager for Jos. A. Bank.

Kevin Keyser was named AP Investigator for Target. Keith Bruno has been promoted to Manager Security for Tiffany & Co.

LP Magazine | march – april 2011

Mark Thompson was appointed AVP LP and Mike Vesci was appointed District LP Manager for T.J.Maxx. Kevin Taporausky was named AVP, LP Distribution for TJX Companies. Kevin Trimble, CFE has been promoted to Director of LP for T-Mobile. Ellen Bird was appointed AP Technology Analyst, and Chris Gillen has been promoted to Senior Director AP for Toys “R” Us. Christopher Lees has been promoted to Manager of Compliance Retail for Verizon. Mark Attucks was named Chief Financial Officer for Veterans Affairs. Jeremy Sutherburg was appointed District LP Supervisor for Walgreens. Walmart has announced the following changes: JayDee Gillam and Regi Philip to Market AP Managers and Michael Nuzzi to AP Coordinator. Jon Parrett was named Regional LP Manager for The Walking Company. Ryan Albright, LPQ was named Security Analyst for Wells Fargo. Vita Vaccaro was appointed Director of Operations for The Zellman Group.

Information for the People on the Move section is provided in part by The Loss Prevention Foundation, Loss Prevention Recruiters, and Jennings Executive Recruiting. Send information on promotions and new hires for this listing to peopleonthemove@LPportal.com.

Certification by Gene Smith

March Momentum I

t may not be the equivalent of the NCAA tournament, but March has been an exciting month for the Loss Prevention Foundation and an industry hungry for certification. It’s been clear throughout the beginning of 2011 that certification has continued to build on a groundswell of momentum. The most exciting part of this rapidly growing initiative is the difference it makes in the lives of loss prevention professionals. Consider the following examples.

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.

tuition-assistance program. This year they piloted a day of education in conjunction with their national LP meeting held in Orlando by blending the LPC content into two sessions. The first session was dedicated to personal development while the second session discussed building and leveraging partnerships.

It’s been clear throughout the beginning of 2011 that certification has continued to build on a groundswell of momentum.

Scholarship Winners

The LP professionals shown in the box below have made a commitment to advancing their careers through obtaining certification and have been awarded scholarships by Vector Security. The Foundation is very fortunate to have such a valuable partner in Vector Security. They administer and promote one of the most popular scholarship programs in the industry, all for the continued education of individual loss prevention practitioners. We applaud the Vector team for having the vision to help provide quality education to our profession through supporting the LPQualified and LPCertified certification programs.

These sessions, supported by the Foundation, as well as their conference counted toward CEUs for LPC-certified professionals. Foundation partners Bass Security, eBay, Security Resources, and LexisNexis also supported the Staples meeting by providing LPC scholarships.

Vector Security Scholarship Winners LPC Scholarships Ken Parsons, Dick’s Sporting Goods Keith Weiner Thaddeus Hugues, Fred Meyer Kathy Wood, Kohl’s John Watson, Lowe’s Companies Marcus Collins, Lowe’s Companies Martha Skokowski, Luxottica Retail Amy Stephens, Macy’s John Reid, Michaels Stores Brian Clark, Sears Tiffany O’Brien, Staples Louis Senecal, The Zellman Group Monty Whitlow Sal D’Amico, Walgreens Laura Guerry, Walmart

FMI Promotes Certification

The Food Marketing Institute (FMI) asset protection conference held in Orlando in March was the best FMI conference we have attended. Congratulations to Rhett Asher and his team for raising the bar in terms of quality education and valuable networking opportunities. For anyone in attendance, there was no doubt of FMI’s commitment for providing educational offerings through certification. FMI provided an LPC scholarship with fellow Foundation partners Stanley Security, eBay, InstaKey, and LexisNexis. The following individuals received scholarships at the conference: ■ Maureen Fuller, Big Y Foods ■ Ron Holliday, Giant Eagle ■ Tim Hopson, Hy-Vee ■ Lloyd Fry, Sobeys ■ Tim Bartkowiak, Spartan Stores ■ Betty Kraus, Schnucks

Staples National LP Meeting

Staples led the industry last year in becoming the first retailer to have the LPQ and LPC certifications approved under their

march – april 2011

LPportal.com

LPQ Scholarships Brad Johnson, Cabela’s Lucio Botello, CVS/ pharmacy Casey Alexander, Gordman’s Neil Jones, Lowe’s Companies Tyson Robertson, Marshalls Jose Mendoza, Michaels Stores Mike Otten, Panera Bread Deborah Giordano, Pep Boys Andrew Diamond, Publix Renaldo Johnson Tom Chason Kenneth Williams, Walmart Patrick Foy, J.D. Maurer & Associates Brandon Mathews, Sears Cameron Hess, Belk

If you’re smart enough to read this, you’re smart enough to get tested. Knowing your PSA (prostate-specific antigen) score can save your life. Each year more than 200,000 men in the U.S. find out they have prostate cancer. Early detection through an annual PSA blood test and prostate health screening can catch prostate cancer when treatment is nearly 100% successful. Be a man. Call your doctor and schedule an appointment today. Then tell your friends. The more men we reach, the more lives will be saved. And we can all say ‘Cheers!’ to that. Pints for Prostates. Reaching men through the universal language of beer. For more information visit: www.ustoo.org/pints Join our Facebook group and look for Pints for Prostates at a beer festival near you.

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ADVERTISERS ADT........................................................... 76 www.adtselectview.com Alpha.................................................. 33, 35 www.alphaworld.com/nanogate Axis Communications................................. 7 www.axis.com/retail Bass Security............................................ 29 www.bass-security.com Brijot Imaging Systems............................. 25 www.brijot.com CargoNet................................................... 38 www.cargonet.com CISA.......................................................... 30 www.certifiedinterviewer.com ClickIt Inc.................................................. 37 www.clickitinc.com Contact..................................................... 16 www.contactinc.com Corporate Safe Specialists........................ 26 www.remotecashcapture.net Detex........................................................ 27 www.detex.com Enabl-u Technologies................................ 40 www.enabl-u.com Evolution Robotics Retail.......................... 53 www.evoretail.com Gulfcoast Software Solutions...................... 3 www.gulfcoastsoftware.com i3International........................................... 49 www.i3international.com/lp InstaKey.................................................... 50 www.instakey.com Intelligent Loss Prevention........................ 15 www.intelligentlossprevention.com LexisNexis................................................ 39 www.lexisnexis.com/screening The Loss Prevention Foundation............... 42 www.losspreventionfoundation.org LPjobs.com............................................... 44 www.lpjobs.com Milestone.................................................. 20 www.milestonesys.com National Retail Federation......................... 51 www.nrf.com/lp11 NFSSC...................................................... 65 www.nfssconline.org OSAC........................................................ 41 www.osac.org Palmer, Reifler & Associates....................... 2 www.palmerreifler.com Pints for Prostrates................................... 71 www.ustoo.org/pints Protection 1.............................................. 47 www.protection1.com The Retail Equation..................................... 5 www.theretailequation.com RILA.......................................................... 55 www.rila.org/lp Security Resources................................... 75 www.securityresources.biz S-TRON..................................................... 63 www.s-tron.com Vector Security........................................... 9 www.vectorsecurity.com Verint........................................................ 23 www.verint.com/know-now WG Security Products.............................. 21 www.wgspi.com

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Vendor Sponsors

High Theft Solutions

Vendor Advisory board ADT Retail Solutions Kevin E. Lynch Executive Director

ClickIt Inc. Jim Paul Director of Sales

InstaKey Security Systems Cita Doyle Director of Sales & Marketing

Palmer, Reifler & Associates Jeff Welch Executive Director

Alpha Carlos Perez Director of Marketing

Corporate Safe Specialists Ed McGunn President/CEO

Kenstan Lock David G. Allen National Sales Representative

Security Resources, Inc. Kris Vece Business Development

Axis Communications Jackie Andersen Business Development Manager, Retail

Enabl-u Technologies Kevin McMenimen President/CEO

LexisNexis Joe Metro Strategic Sales Director

The Retail Equation Tom Rittman Vice President, Marketing

Evolution Robotics Colleen Lindsey Marketing

Milestone Hedgie Bartol Retail Sales Manager

WG Security Products Ed Wolfe Vice President, Business Development

Bass Security Services Joe Mignone Vice President Sales and Marketing

Gulfcoast Software Solutions Tim Lindblom Executive Vice President LP Magazine | march – april 2011

Parting Words

Spring Forward

Jim Lee Executive Editor

Associations. FMI, RILA, NRF, LPRC, LPF, NFSSC, IOBSE, Retail Canada—each of these associations is better today than in the past. Exceptional and committed loss prevention leadership is very apparent in each group. Calling out names of individuals who have pushed the LP agendas forward is not necessary; the list would be too long. Suffice it to say, loss prevention executives have worked very hard to bring value to each of these groups. Professional Certifications. Beginning with CFI and the work by Wicklander-Zulawski in this area, certifications have been a “game changer.” The creation of the Loss Prevention Foundation and the certification designations of LPQ and LPC continue to gain momentum and represent a remarkable effort by hundreds of loss prevention professionals. Diversity. One can just look at the numbers of diverse leadership today compared to 2001 and see big steps taken in recognizing women, African-American, Hispanic, and Asian professionals. This issue of the magazine features Monica Mullins, vice president of loss prevention and safety at Walmart (see page 31). Can there be a better testimonial to women leadership in LP? Colleges. In my opinion we have not made as much progress in this area as we could have, but we are better off today than ten years ago. And we are on the doorstep to really making a difference in the future. Several retailers are leading the way here and the associations and academics are more involved than ever. We have a great story to tell on the career opportunities in retail loss prevention and many colleges are starting to get it. This is a great time to be involved in retail loss prevention. We appreciate everyone who has supported the magazine over the past ten years who has allowed us to play a part in the industry. If this past ten years is any indication, the next decade will be just as exciting...if not more so.

his is a great time of the year. Just think of all the good things that happen each spring. For some the weather gets better, for some you have an hour in the daylight after work to spend outside, for some you get to begin executing new plans for the year, and for some it is just same old same old. Here at the magazine we have sounded off on the fact that we have been publishing for ten years. This is an important milestone for us, and we are proud and pleased of the achievement. We have so many to thank for supporting our efforts and over the next few issues we will do our best to say “thank you” publicly. We are trying to spring forward for our readership and provide an even better publication in the years to come. We hope you like the enhancements, and we welcome your input.

This is a great time to be involved in retail loss prevention. We appreciate everyone who has supported the magazine over the past ten years who has allowed us to play a part in the industry. If this past ten years is any indication, the next decade will be just as exciting...if not more so. In our January-February issue Mike Marquis wrote an exceptional column on “game changers” in loss prevention (see part 2 in this issue on page 54). Mike’s columns are always good to read and right on target. His article on game changers moved me to think of how loss prevention is different today than in 2001. Here are a few of my favorites over the past ten years. And I might add that, in my opinion, in no other ten-year period has there been such big steps in retail loss prevention. Sharing Information. Loss prevention professionals have access to more information than ever before to do their job—data share, online research, social networking, special online groups, not to mention, educational publications like LP Magazine. If you need information from external sources to do your job, you have it better today than any time in the past.

march – april 2011

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March - April 2011

Articles inside

PEOPLE ON THE MOVE

INTERVIEWING INTERROGATION

CERTIFICATION

Game Changers in LP: Part

EVIDENCE-BASED LP

INDUSTRY NEWS

PUBLISHER’S LETTER

PARTING WORDS