March - April 2018 by Loss Prevention Magazine

MARCH–APRIL 2018 | V17.2 LOSSPREVENTIONMEDIA.COM

LOSS PREVENTION MAGAZINE THE AUTHORITY ON ALL THINGS ASSET PROTECTION

ALL TOGETHER NOW

CAN LP HELP FORGE COLLABORATION TO FUEL RETAIL’S TECHNOLOGY REVOLUTION? THE THREE AMIGOS: EXEMPLIFYING THE TRUE MEANING OF SOLUTION PROVIDER PARTNER RFID AND RETAILING: THE EXPERIENCES OF TEN CASE-STUDY COMPANIES BRINGING TOGETHER TOP INDUSTRY LEADERS TO ADVANCE ASSET PROTECTION

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TABLE OF CONTENTS 6 EDITOR’S LETTER

Thank You and I Appreciate You By Jack Trlica

10 RETAIL SPONSORS 12 INTERVIEWING

Life Is Like a Circle: Part One By David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP

All Together Now

24 CERTIFICATION

Earning the Respect of Your Customers

Can LP help forge collaboration to fuel retail’s technology revolution?

Interview with Steve Hyle, LPC, AFA

By Garett Seivold, Contributing Writer

26 LPM EXCELLENCE

LPM “Magpie” Award: Applauding Excellence Featuring Fred Mullen and Kris Vece, LPQ

34 EVIDENCE-BASED LP

Offenders Adapt; So Must We By Read Hayes, PhD, CPP

36 SUPPLY CHAIN

The Fallout of Holiday Peak

The Three Amigos

By Glenn Master

46 STRATEGIES

Exemplifying the true meaning of solution provider partner

Using Video Surveillance to Audit Your Retail Business By Doug Montgomery

By James Lee, LPC, Executive Editor MARCH–APRIL 2018

50 FUTURE OF LP

LOSSPREVENTIONMEDIA.COM

Stop Worrying about the Retail Apocalypse and Focus on the Tsunami of E-commerce Returns By Tom Meehan, CFI

58 PERSPECTIVES

Loss Prevention Sales Strategies With Cheryl Blake, Johnny Custer, and Claudia Tuttle

RFID and Retailing

61 SOLUTIONS SHOWCASE

The experiences of ten case-study companies

- CONTROLTEK - Digilock - ThinkLP

By Emeritus Professor Adrian Beck, University of Leicester

67 LPM DIGITAL

The Excellent Life of Bob MacLea By Kelsey Seidler

68 PRODUCT SHOWCASE 70 CALENDAR 71 PEOPLE ON THE MOVE 72 ADVERTISERS 72 SUBSCRIPTION FORM 73 VENDOR SPONSORS 74 PARTING WORDS

RILA’s Asset Protection Leaders Council

Bringing together top industry leaders to advance asset protection

Don’t Miss the Chance By Jim Lee, LPC

By Jacque Brittain, LPC, Editorial Director

MARCH–APRIL 2018

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EDITOR’S LETTER

Thank You and I Appreciate You P erhaps because I am of a certain age, I must confess that the passing of contemporaries has a profound impact on me. Over the past few weeks and recent years, the loss prevention industry has lost several well-known—and well appreciated—members of our community on both sides of the Atlantic. In this issue of the magazine on pages 67 and 74, we acknowledge the passing of Bob MacLea, who retired in 2016 as senior vice president of loss prevention for TJX Companies after forty-one years with the company. Many of you knew Bob both as a quality LP executive as well as a superior human being. In the spring edition of LP Magazine Europe, there is a moving tribute to Ray Winter, group head of risk management at the Theo Paphitis Retail Group who died in January. I didn’t personally know Ray, but from the many anecdotes and remembrances expressed in that article, I was moved and wish I’d had the honor of knowing him. From the many, many comments from friends about these two gentlemen, it sounds as if they were cut from the same

cloth. If they didn’t know each other, I’m guessing that they would have found much in common had they met. Those of our advertisers over the years who worked with Bonnie Dodson, the East Coast ad representative for the first thirteen years of the magazine’s existence, may not know that she just lost her husband, David, at the early age of sixty-two to pancreatic cancer. Our hearts go out to Bonnie for her loss. I don’t know if our industry is different from others, but I do know that the retail security industry is known for the very close ties and friendships among LP executives on both the retail and vendor sides—even between professionals at competing companies. I noticed this back in the early 1990s when I first came into the loss prevention industry. Since then I’ve observed the mutual respect and friendships that are displayed at industry events and other occasions that bring LP professionals together. Along with these recent passings, I’ve also experienced the joy of seeing my younger son marry—a whole other set of emotions. I do not have experience with grandchildren

MARCH–APRIL 2018

but have observed friends who are giddy with joy over their childrens’ children. All these musings have led me to feel that certainly I—and I suspect many of you—have not often enough expressed appreciation and, yes, even love for those in our companies and throughout the industry who have a positive impact on our lives. In today’s #metoo environment, I realize this can be a touchy subject in the business world. However, I think it important to say “thank you” and “I appreciate you” to those in your organization and elsewhere in the industry who are important to us personally and professionally. Certainly, I know that I can do better. Whether you offer a hardy handshake or gentle hug, or you are more comfortable sending a handwritten note in the mail or (heaven forbid) picking up the phone, I think we as people first and business associates second would benefit greatly—as would the greater retail loss prevention community.

Jack Trlica Managing Editor

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EDITORIAL BOARD Erik Buttlar Vice President, Asset Protection, Best Buy

David Lund, LPC Vice President of Loss Prevention, DICK’S Sporting Goods

Jim Carr, CFI Senior Director, Global Asset Protection, Rent-A-Center

John Matas Vice President, Asset Protection, Investigations & ORC, Macy’s

Ray Cloud Senior Vice President, Loss Prevention, Ross Stores

Chris McDonald Senior Vice President, Loss Prevention, Compass Group NA

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

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

Charles Delgado, LPC Regional Vice President, Store Operations, Academy Sports Scott Draher, LPC Vice President, Loss Prevention, Safety, and Operations, Lowe’s Scott Glenn, LPC Chief Security Officer, Sears Holdings

Melissa Mitchell, CFI Director of Asset Protection and Retail Supply Chain, LifeWay Christian Stores Joe Schrauder Vice President, Asset Protection, Walmart Stores

LOSS PREVENTION MAGAZINE 700 Matthews Mint Hill Rd, Ste C Matthews, NC 28105 704-365-5226 office, 704-365-1026 fax MANAGING EDITOR Jack Trlica JackT@LPportal.com EXECUTIVE EDITOR James Lee, LPC JimL@LPportal.com EDITORIAL DIRECTOR Jacque Brittain, LPC JacB@LPportal.com MANAGING EDITOR, DIGITAL Kelsey Seidler KelseyS@LPportal.com CONTRIBUTING WRITERS Adrian Beck Read Hayes, PhD, CPP Tom Meehan, CFI Walter Palmer, CFI, CPP, CFE Colin Peacock Maurizio P. Scrofani, CCSP, LPC Garett Seivold Shane G. Sturman, CFI, CPP Bill Turner, LPC David E. Zulawski, CFI, CFE CHIEF OPERATING OFFICER Kevin McMenimen, LPC KevinM@LPportal.com

Tina Sellers, LPC Director of Asset Protection, Retail Business Services LLC, an Ahold-Delhaize Company

Barry Grant Chief Operating Officer, Photos Unlimited

Quinby Squire Vice President, Asset Analytics and Insights, CVS Health

Bill Heine Senior Director, Global Security, Brinker International

Mark Stinde, LPC Vice President, Asset Protection, 7-Eleven

Frank Johns, LPC Chairman, The Loss Prevention Foundation

Keith White, LPC Senior Vice President, Loss Prevention and Corporate Administration, Gap Inc.

Mike Lamb, LPC Vice President, Asset Protection, The Kroger Co.

Loss Prevention, LP Magazine, LP Magazine Europe, LPM, and LPM Online 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.

DIRECTOR OF CLIENT RELATIONS Lisa Carroll LisaC@LPportal.com DIRECTOR OF DIGITAL OPERATIONS John Selevitch JohnS@LPportal.com SPECIAL PROJECTS MANAGERS Justin Kemp, LPQ Karen Rondeau DESIGN & PRODUCTION SPARK Publications info@SPARKpublications.com CREATIVE DIRECTOR Larry Preslar ADVERTISING MANAGER Ben Skidmore 972-587-9064 office, 972-692-8138 fax BenS@LPportal.com SUBSCRIPTION SERVICES

NEW OR CHANGE OF ADDRESS LPMsubscription.com or circulation@LPportal.com POSTMASTER Send change of address forms to Loss Prevention Magazine P.O. Box 92558 Long Beach, CA 90809-2558 Loss Prevention aka LP Magazine aka LPM (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 LPMsubscription.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 circulation@LPportal.com. For questions about subscriptions, contact circulation@LPportal.com or call 888-881-5861. Periodicals postage paid at Matthews, NC, and additional mailing offices.

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INTERVIEWING

Life Is Like a Circle: Part One

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

ife is like a circle. What goes around comes around, and karma catches up with people. The recent uproar over sexual harassment allegations seemed like déjà vu to us, maybe because we are older than many of our readers. Thinking back to what was so familiar got us to thinking about the start of our business in 1982. The Equal Employment Opportunity Commission (EEOC) began focusing on sexual harassment in the mid-1970s arguing that it was unlawful to make employment decisions based on “unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature.” The EEOC ruled unwelcome sexual activity violated Title VII of the Civil Rights Act. After the EEOC finding, companies initiated training to deal with harassment. It was 1991 when the flood gates, much like today, really opened. Then, as now, a powerful man allegedly was making sexual comments to a less powerful subordinate. The issue revolved around then U.S. Supreme Court nominee Clarence Thomas as he was being considered for a position of justice in the highest court in the land. Anita Hill had worked for him in the US Department of Education and alleged that Thomas had constantly barraged her with pornography and discussions of sex acts. While Thomas was confirmed to the court, this became one of the most famous sexual harassment cases in the history of the United States. Hill’s testimony and the publicity surrounding it swelled the filing of sexual harassment complaints and resulted in numerous payouts from court settlements as well. It was during this time that we created interviews to deal with the specialized “he said she said” sexual harassment cases. In these cases there were generally no witnesses or corroborating evidence to support one side or the other. Many organizations struggled with these investigations as they tried to determine who was telling the truth. Compounding the problem were internal biases for the offender who often was a long-term valued associate who was important to the business. Since many of the offenders held important positions and provided a strong economic advantage for the organization, the companies chose to pay off the complainant while retaining the harasser. Unfortunately, these people rarely change their ways and only went on to sexually harass and intimidate others. Today in many organizations, the loss prevention function assists human resources in investigating allegations of sexual

MARCH–APRIL 2018

Zulawski and Sturman are executives in the investigative and training firm of Wicklander-Zulawski & Associates (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.

misconduct, bullying, and hostile workplace situations. These types of cases are very different from investigations of dishonest associates and require a different set of skills and interview tools. Where the investigation of theft may be accomplished by installing a video, examining inventory data, or looking at register media to establish the case, the sexual harassment allegations may require the interviewing of multiple people to establish a timeline and personal backgrounds or to retrieve memories of conversations or events. At the end of the investigation the ultimate decision of who is telling the truth might be based on the investigator’s assessment of the interviews conducted.

The first interview to be conducted has to be an in-depth conversation with the complainant. This is a critical conversation that will help establish the timeline of events, the context surrounding the events, and perhaps even the truthfulness of the allegations. Organizing the Investigation

The investigation can begin in many ways depending on how the outcry was received. Obviously, in some cases it would come from the victim, but it could also come from coworkers, anonymous sources, or relatives. The first complaint delivered to the company must be collected carefully and documented in terms of times and dates. Generally, it is best to obtain a statement from the “reporter” of the event detailing the allegations and the parties involved. The statement could be taken in written form or recorded to

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will provide a context for the upcoming interview with the victim, harasser, and other witnesses.

continued from page 12

preserve it in even more detail. If the incident is criminal in nature, such as a rape, the proper law enforcement authorities should be notified, and any evidence of the incident should be preserved and turned over to them. Depending on the parties involved in the incident, it is likely that human resources, legal, loss prevention, or an outside investigator will be assembled to handle the investigation. There may be issues relating to attorney-client privilege and the protection of documents that should be discussed at the onset of the investigation. Attorney-client privilege can be a complex process that requires the in-house or retained legal team to make a determination if this is an important consideration. Regardless of their decision, the investigation needs to be handled in a confidential and expedient manner to reach a resolution of the case.

The next thing to do is to select the order of the interviews and their location. Sometimes the preferred order of the interviews will have to be altered for any number of different reasons, but the interviews should be scheduled so that there is an appropriate time set aside by each of the participants. While there have been some labor rulings regarding asking people to keep the interview confidential, these types of cases are extremely sensitive and could have a devastating effect on the parties involved. So if there is any question regarding the legality of asking for confidentiality surrounding the interview, it should be discussed with your legal department. The first interview to be conducted has to be an in-depth conversation with the complainant. This is a critical conversation that will help establish the timeline of events, the context surrounding the events, and perhaps even the truthfulness of the allegations. In many of the sexual harassment interviews we conduct, we record our conversation with the complainant to clearly establish what he or she said about the incident and to capture related emotions. This interview is a time for the victim to talk without interruption from the investigator. It’s critical to establish the untainted story from the victim without any input from the investigator or his questions. To obtain the untainted story in its purest form, we begin with a set of instructions that set the stage for our expectation of what the witness or victim will do. These expectations help them construct the story and include many more details than they would otherwise include in this first telling. The investigator then expands the details using open-ended questions, such as “tell me more about that” or “you said he yelled at you; explain that to me.” It’s only at the end of the interview that closed-ended questions should be used to lock down specific details that were not clear during the previous attempts at expansion. A closed-end question is asked about a specific detail: “Did he have his jacket on at that time?” These questions provide only a limited amount of information compared to a narrative response by the individual to an open-ended question. Once the victim’s version of the events has been clearly established, it will be easier to determine exactly who needs to be interviewed and in what order they should be done. The investigator can also determine from the victim’s statements what other corroborating evidence might be available to substantiate his or her story. It may be useful to construct a timeline of the event or events to help illustrate the timing of the allegations. As additional interviews are conducted, these can be added to the timeline to further illustrate the overall context of the event, for example, if there was an outcry witness who was told immediately after an incident this could be critically important to the overall assessment of the parties’ truthfulness. In our next column we will continue with the development of a sexual harassment or workplace investigation.

It’s critical to establish the untainted story from the victim without any input from the investigator or his questions. In general, the second step is the preparation of a list of people who will need to be interviewed and potentially the ordering of those interviews. There may be some cases where the complainant will provide such compelling evidence that the need to interview others may become unnecessary. However, as a matter of providing due process for the harasser in an investigation, they still should be offered an opportunity to tell their side of the story before any decision on their continued employment is made. Lacking that compelling evidence, it is almost always going to be necessary to conduct a series of interviews with other employees who may have witnessed the events or heard the victim’s outcry. Next, based on the initial complaint, investigators should consider what evidence might be available to substantiate or disprove the complaint. It is often useful to identify and obtain these items of evidence before proceeding with any interviews. Evidence should be carefully cataloged and preserved separate from the working case file. The investigator should also establish background information on each of the persons to be interviewed, including their personality, performance, or other background information that might provide a context for their information. This background should also be conducted on the alleged harasser to establish the relationship between that individual and the complainant, plus any relevant documentation. The collection of this general information and any available evidence to support the initial complaint

MARCH–APRIL 2018

LOSSPREVENTIONMEDIA.COM

FEATURE

ALL TOGETHER NOW

CAN LP HELP FORGE COLLABORATION TO FUEL RETAIL’S TECHNOLOGY REVOLUTION? By Garett Seivold, Contributing Writer

ALL TOGETHER NOW

he giant course correction hitting retail now appears pointed squarely in one direction—toward technology. It was the sum and substance of presentations at the National Retail Federation’s (NRF) Big Show in New York in January. Walmart CEO Doug McMillon said the retailers that win the future will be those that realize they are tech firms as well as retail companies. The NRF’s senior vice president for retail strategy painted a picture of the retail store to be—with augmented reality, artificial intelligence, robotics, big data, and other tech tools—then noted that the future was two years away. Morning-after headlines reinforced the foremost conference takeaway, like the New York Times’ “At Retail’s Big Show, Technology

loss prevention participate? Or, better still, lead? First, LP organizations will need to be as tech savvy as any organization within the company, according to Scott Roubic, vice president of internal audit, asset protection, and real estate at JOANN Stores. “Innovation and use of technology is an absolute must,” advised Roubic. “AP departments across the retail industry are under resource pressure. I think there are very few where it’s not an issue, where it’s not a case of having to do more with less. And because of that, technology and innovation become even more important.” Second, the approach of LP toward innovation may need to change. Industry leaders who have shepherded successful technology projects aren’t saying that the rules of innovation have changed exactly,

“Certainly the breadth of the role has changed. We don’t have the funding to buy narrowly tailored solutions. It’s a situation where any one solution has to be addressing multiple issues.” — Scott Glenn, EJD, LPC, Sears

Takes Center Stage.” And so did its coverage: “It was a conference about shopping that looked more like an expo for tech, as if the electronics trade show CES had decamped from Las Vegas and moved to the Javits Center in Manhattan.” It seems increasingly clear what the great retail shakeout is boiling down to, but what impact does it have on asset protection? Retailers are on a mission to innovate. “Innovate or die,” they’re being told. So how can

but they’ve certainly tweaked. Select strategic elements, which you may have been able to skirt in the past, are now mandatory. Select skills, ones that were nice-to-haves in the past, are now central to success. Should-haves become musts. And it all starts with—and hinges upon—the LP innovation projects you push for.

Thinking Broadly

It may seem inconsonant advice, but to be a successful leader of LP MARCH–APRIL 2018

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innovation, you can’t focus on innovating LP. Your focus has to be on more-expansive opportunities, say industry leaders. “For those of us who set policy and strategic direction, Scott Roubic we’ve been forced into broader areas than just shrink and away from solutions focused on theft issues or other areas of narrow opportunity,” explained Scott Glenn, EJD, LPC, chief security officer at Sears. “Certainly the breadth of the role has changed. We don’t have the funding to buy narrowly tailored solutions. It’s a situation where any one solution has to be addressing multiple issues, and it’s why there are such gains in the area of analytics and predictive modeling and why firms like Agilence are getting a lot of traction—because those are solutions that solve multiple problems.” At Macy’s, Brian Goddard has innovation built into his job description. He is the retailer’s AP innovation and implementation manager, and Brian Goddard he views the LP innovation imperative similarly. “AP has to innovate to be relevant in today’s world, and that’s only possible if you maintain a holistic approach. If you are able to involve everyone, you’re more than likely going to be successful, much more so than if you’re going after something that is AP-specific. I believe that if it only benefits AP and there isn’t a wide scope of involvement, then your chances of sustained success are drastically reduced.” For one new LP department, a series of innovation projects was necessary in order to bring asset protection up to speed. With a blank slate acting as a catalyst, one of the first technologies it pursued was the 20/20 Retail™ data analytics platform from Agilence. The

ALL TOGETHER NOW technology would quickly provide the fledgling department a solid foundation, but that’s not why its veteran LP director chose it. “What I did when looking at investment in technology was to get with my company partners to make them aware of what we’re looking at and asking what they would be interested in seeing and caring about and considering in their world as we looked at technology,” he said. “The key is that the technology that you choose should be beneficial to your department but also to other departments. It has to have cross-functional value. You can look out for your own interest, but you have to have the interests of others in mind.” The strategy is important for several reasons. Most obviously, advocating technology that also has value for audit, or sales, or operations ultimately yields greater value for the company overall—a critical consideration in today’s challenging retail environment. More selfishly, when you’re utilizing a technology that is used by others, you don’t face the same pressures to justify the technology down the road, explained the department’s director. Agilence’s technology serves the asset protection function, but it is also a companywide tool. “So I don’t even have to address it when working on budgets,” he noted. The opportunities are out there, say LP innovators: cross-functional tools that can enable opportunities for asset protection and improve sales forecasting, planogram compliance, in-store execution of marketing strategy, the efficiency of field managers, stock assurance, and labor scheduling to reduce employee turnover—to identify just a sampling. For Scott Roubic, taking a broad approach to innovation comes naturally. It derives from his experience on the finance side of the retail business and is facilitated by his diverse portfolio of responsibilities at JOANN, which includes all fraud-related programs, including point-of-sale, ecommerce, and corporate fraud programs, as well as the internal audit and asset protection

functions. Roubic echoed the opinion that LP innovation today must look beyond the LP function, and he added that doing so will indicate when a good investment for LP might be a bad investment for the company. “Not all technology makes sense, or it may be cost-prohibitive,” said Roubic. “It would be nice to have it all, but we have to act within the framework of our

the system you’re proposing fits in the grand scheme. You can’t come in and suggest something that works for you but not the larger organization, or it’s going to be Scott Glenn a non-starter.”

To successfully innovate today, LP leaders repeatedly emphasized the importance of reciprocity in relationships—forging a two-way bridge between LP and its business partners, between corporate planners and field operators, and between the future and the past. companies. We need to understand our business model and that a technology that might fit a company like Best Buy may not fit our business model.” At times, a retailer’s business model may restrict LP innovation, but bending to that reality is part of being a successful company business leader and not just an advocate for a narrow function of the business. For example, JOANN doesn’t employ EAS technology, something that Roubic suspects might come as a surprise to new additions to his team, but he says it’s never made good business sense for their particular operations. “You need to understand your business model and accept it and innovate with it in mind,” he advised. Sears Holdings’ Scott Glenn has similar advice. AP/LP leaders need to propose real solutions to real problems that fit a retailer’s broader strategic plan. “You have to understand how LP MAGAZINE

MARCH–APRIL 2018

Being committed to cross-functional collaboration is important in developing and implementing technology projects, just as it is in choosing which technologies to go after. “Well before we deploy, we get everyone board. We include our business partners in meetings, so they can interact with the top three vendors,” explained the director of asset protection for a discount retailer. Securing support up front greases the implementation process, he suggested. For example, they went from contract to deployment of a retail analytics platform, which typically takes months, in less than six weeks. “One of the main reasons that happened was my partnership with IT because they recognized that after we got this on board it was going to save them a ton of time by being able to get reports from the field. Since it was in

ALL TOGETHER NOW

How Strong Is LP Collaboration across the Retail Enterprise?* Level of communication, coordination, and strategic alignment of objectives Weak 1

Strong 5

Top Management

4.25

Operations

3.75

Internal Audit

3.88

Business Units

3.38

Marketing

2.88

Health and Safety

4.75

4.06

Logistics

2.75

Purchasing

2.63

Facilities Management

4.25

Communications

4.25

Human Resources

4.50

*Opinion of senior security executives at retail companies Scale: 1 - Extremely weak or non-existent communication, coordination, alignment of objectives 3 - Moderate level of communication, coordination, alignment of objectives 5 - Extremely strong level of communication, coordination, alignment of objectives Source: SDR/LPM survey The US Security Industry: Size and Scope, Insights, Trends and Data, 2014–2017 for ASIS International and the Institute of Finance & Management

their best interest, they were eager to support the roll out.” While the objective is a collective approach to retail innovation, data suggests that IT, LP, and other departments have a ways to go before they are on the same page. In a 2015 retail survey by IHL Group, a global research and advisory firm, the differences in perspectives on technology among retail department heads was stark. In the survey, 50 percent of LP executives said their exception-based reporting technology was up to date, while only 19 percent of IT executives and 29 percent of executives in other departments held the same opinion. And when asked if they’d be using CCTV cameras for traffic counting in the next eighteen months, 60 percent of LP executives said yes, compared to 37 percent of IT professionals in IT and just 14 percent of executives in other retail departments. In a survey by LP Magazine and Security Director’s Report, loss prevention executives

suggested that some internal strategic relationships are strong, but others are not (see figure above).

A Two-Way Street

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“Oftentimes, leaders in AP don’t involve their peers until after the fact, and then you’re looking at modifications,” the director observed. “And that’s when you can upset some of your business partners, especially when the failure to involve others costs them time and effort.” He believes it’s mandatory for asset protection leaders today to transform LP innovation into companywide initiatives and that it’s something that should drive projects from the start. LP innovation also hinges on being able to leverage asset protection value from partners’ technologies. “You can’t afford to miss it if there is some sort of innovation that is being used by store operations that can be of use to AP,” said Roubic. “You want to put yourself in a position so that you’ll be exposed to that idea, so you can think, ‘Is there an AP use here?’” At JOANN, for example, AP has taken a system typically used by other retailers to alert store associates to long dwell times at changing rooms

ALL TOGETHER NOW and deployed it in high-shrink areas of high-shrink stores. So potential thieves who linger in aisles before stealing are instead greeted by staff asking to help them. “It’s been a great tool for us. It relates to the basic point that the best shrink deterrent is good customer service,” said Roubic. “The point is that it started as an operations tool, and we’ve turned it into a successful tool for theft prevention, and that’s because we got involved at the forefront. And as it continues to develop, it has the potential to be leveraged by marketing and other business partners.” Although it can be a challenge to initiate, cross-functional collaboration—once established—will typically reinforce itself. “The more you’re seen as taking a holistic approach, the more others are likely to connect with you on their initiatives and for you to be involved in their projects from a shrink perspective,” explained one LP director. “Because I involve my peers in our initiatives, they all involve me in theirs.’” AP has a large degree of responsibility for innovation at Macy’s, and innovation shouldn’t only be the focus of top AP executives, according to Brian Goddard. He has more than two decades in AP, many at the store level, and thinks store personnel are valuable assets in a corporate AP department’s pursuit of innovation. “[Innovation] doesn’t have to start at the highest level and trickle down. I personally came up with ideas at the store level, innovations involving expense reduction and better information sharing, and had the mindset that I wanted to see those tools trickle up.” So it makes sense that a significant focus of Goddard’s corporate position now is to go out in the field to collect those store-level ideas to help drive strategic AP innovation companywide. “I ask merchants and operations managers what they want to see, what we can do to make it happen, and how different tools relate to customer service,” he said. “It’s important to stay in close touch with our AP partners in the field—and also our non-AP partners in the field. Some of our best ideas and achievements have come to fruition from non-AP partners. The more partnerships you secure and the more they embrace the technology and understand what it can do for them, the more likely your projects are to be successful.” Store-level training is another part of Goddard’s field outreach, which he sees as a critical, final piece in AP innovation projects. “You have to coach on what these innovations are,” said Goddard. His outreach to stores includes going to marketing and sales managers and piquing their interest with use-case scenarios: What if I could tell you the average time the last ten customers had to wait in line was six minutes? What if I told you that you that you can get a text the next time that waits exceed three minutes? What if you knew which was your busiest door during the busiest time of day? “And it’s much the same with the operations piece, where we’ll go to them and say, ‘What if you could see what’s going on in all your stores and provide you a live view of loading docks?’” This is incredibly powerful information, and the better you can paint that picture, the better position AP is continued on page 20 LP MAGAZINE

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going to be in when being considered in projects from other functions, according to Goddard. To Goddard, innovation isn’t limited to finding and implementing new technology tools—it’s about getting stores to use them. “A lot of our technology we haven’t been using for very long, so [stores] are still evolving in their understanding of the value of it,” he explained. “We can roll out something fantastic, and it is crucial we ensure our success by continuously training to these new technologies while soliciting ideas from our end users. It must be user friendly, and we must overcome challenges along the way and push the envelope with our end users and solutions providers alike.” Outreach can also help reduce duplication of effort or reduce store costs. For example, one vendor said it’s not uncommon for store merchandising managers to hire an outside company to test the effectiveness of an endcap or a display, even though they already have a camera that could do it for them.

so, the AP department had a “significant and immediate impact” by rooting out team member abuse of coupons and, more significantly, by identifying and addressing training and systemic gaps that were contributing to lost revenue. Despite improved utilization, Roubic thinks they still have a ways to go before they’re extracting full value from the capabilities of their exception-based reporting system. “My point is that when you’re looking forward and thinking about innovation, you also need to look back at what you have and to be sure that you leverage your existing tools as best you can,” said Roubic. “This is increasingly important in an environment where resources may be at a minimum and capital investment may not be at the level you need, yet you are still expected to drive improvement.” At Sears Holdings, that has resulted in new missions for asset protection. Its team is taking its investigative mindset and problem-solving skills and applying it to loyalty programs and other areas of sales-reducing activity. “It may not show

“I have always maintained that we need to understand what’s available. We need to own that. I don’t necessarily expect an IT partner to throw new things across my desk.” – Scott Roubic, JOANN

Finally, Roubic suggested a third way in which LP innovation needs to be a two-way street—by looking not just at the future but also at the past. “A couple of years ago one of our field AP pros asked, ‘Why aren’t we looking at patterns in discounts and coupons?’ We use them a lot, so we started using our exception-based reporting system to dig into trends,” explained Roubic. By doing

up as shrink, but it’s just as impactful to the profitability of the company,” said Scott Glenn. “We were highlighting this with our loyalty team and across the enterprise, so they said, ‘Okay, you have the visibility. You have the skills. Go ahead and knock out $50 million a year for us.’” Glenn’s team readily accepted the challenge. “It was a natural transition for us. At the end of the day, we are here to stop profit MARCH–APRIL 2018

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drain. In the past it was just more narrowly focused around other metrics, but it’s the same approach. So we just embraced the opportunity to codify it and make it part of our accountability. Margin loss and other profit drains are now more of a mantra for us compared to traditional shrink, fraud, and safety.”

Positioning for Success

In a recent study, Profit Protection: New Ways to Combat Shrinkage by the IE Foundation and Ernst & Young, researchers noted that opportunity can fall into the gap between functional silos. “We found that in many firms neither IT managers nor shrinkage managers were aware of the latest developments in software for pattern recognition that can identify potential sources of shrinkage,” the report concluded. Scott Roubic said his team at JOANN avoids any such problem by accepting full responsibility for keeping abreast of the latest technology opportunities. “I have always maintained that we need to understand what’s available. We need to own that. I don’t necessarily expect an IT partner to throw new things across my desk,” he said. “And while you need to know your business model and to limit your recommendations to technology that fits it, you still need to know everything. Something that might not be the right fit for your business today may fit your business model tomorrow. Businesses change rapidly. If you don’t take on the responsibility, to me, you’re putting yourself in a tough position.” But how do you stay on the cutting edge of technology? Although organizational structures and other intractable issues can restrict an LP executive’s options in this regard, it’s worthwhile to consider what successful LP innovators are saying keeps them poised to exploit advances in technology. Scott Glenn gives credit to the addition of technology expertise to the AP team. “I’ve tried to structure our team differently. We’ve hired statisticians, data modelers, and systems people, so we can look for different opportunities,” said Glenn. He also thinks that the LP industry could better utilize technology

ALL TOGETHER NOW departments as a point of intersection for innovation. “If we talked more often with our IT partners and forged more cohesion in that relationship, we would more easily see that many of our solutions have applications across the larger business.” As a member of JOANN’s IT steering committee, Scott Roubic is particularly well positioned to take advantage. “I’m hearing about all the projects that are going forward, so I can think about those projects and about how my organization might be able to leverage them.” Similarly, his position on the audit team, which has a hand in controlling shrink in distribution centers, helped him secure tools for his team from the company’s upcoming new warehouse management system. Finally, his role on a company committee focused on store operations ensures that no new technology goes into stores without his team knowing about it. “Everything has to get approval through operations, and through that partnership, we’re sure

that we don’t miss anything in terms of leveraging it for AP.” Macy’s Goddard also credits greater collaboration with IT as helping to drive AP’s accelerating technology innovation. “We have worked closely with IT for many years. With the greater use of innovation involving networked devices, IT and AP are continuing to grow together, and our partnership has never been more important,” he said. “Both teams have worked to obtain a greater understanding of everyone’s needs. As a result, the relationship has really blossomed and is a big reason for our innovation.” LP leaders were unanimous in recommending a range of other actions: reading industry publications, sending team members to industry conferences, collaborating creatively with vendor partners, and cultivating industry relationships to stay current on technology use cases, including leadership positions on industry advisory councils and conference

committees. LP innovators also offered the following pieces of wisdom: ■■ It’s important to remember that you can’t get anything if you don’t ask for it. ■■ Don’t be afraid to experiment. ■■ Be able to recite the priorities of other departments. ■■ Appreciate that the best projects don’t always start out that way. You may need to make adjustments, improvements. Innovation projects require nurturing. ■■ Areas of innovation that are particularly valuable to the company are ones that improve its agility, enhance customer experience, and help it to better understand data. ■■ Get ideas from industry counterparts, but carefully calibrate their success to fit your operations. ■■ If you put customers at the center of your strategic innovation thinking, then you’re never going to lose—and it drives synergy and closer partnerships with those outside the asset protection silo that you need.

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ALL TOGETHER NOW cultivate a slightly different perception of LP executives. “I think the important thing is to be seen as a member of business leadership who happens to be in AP, as an effective leader and not just the person leading AP.” Scott Glenn thinks it’s not yet clear how retailers will organize themselves to avoid the disconnects that still exist around technology innovation but believes the path forward for LP leader is clear.

Spend time up front to customize new technology to best fit your wide range of business needs; vendors are more than willing these days to work with you. ■■ Focus on “pain points” for innovation that works. ■■ Innovation should take aim at both dynamic capabilities (which are generally forward-looking) and ordinary capabilities (which are oriented toward the execution of current operations). ■■ Be willing to give up ownership of a technology or a project. Don’t let the fear of giving up ownership dissuade you from collaboration. ■■

“[Innovation] doesn’t have to start at the highest level and trickle down. I personally came up with ideas at the store level, innovations involving expense reduction and better information sharing, and had the mindset that I wanted to see those tools trickle up.”

Reshaping the LP Professional?

Soon after assuming responsibility for asset protection, Scott Roubic started to wonder if he had sized up the industry wrong. “I was a numbers guy and accustomed to leveraging technology. And I was thrown by the approach in LP that seemed very boots-on-the-ground focused. More than anything, I was struggling because we didn’t make good use of the data that was out there, and we were lacking the tools and systems to do it. So I started to wonder, ‘Is this not the right place for these tools and approaches?’” His view changed after a conference keynote where an industry leader pushed his peers to attack innovation in just the way Roubic had thought it should be—by thinking more broadly than the store floor—and to make full use of technology and data at its fingertips. “That’s when I realized that I was thinking along the right lines, and our innovation at JOANN since has followed that path.” It’s logical, as retail reinvents itself, for the role of LP—and the skills of the practitioners who lead it—to change. Uniformly, today’s industry leaders in innovation think technology will take center stage in that transformation. “It’s already underway and is only going to intensify,” said one. “To be honest, if you’re not staying on top of the latest and greatest, I don’t know how you can survive in the industry.” More broadly, he suggested that the industry should

but if you’ve got a good team beneath you that knows the day to day, then it may behoove some companies to bring in someone with a tech background to move them forward, especially companies that are higher tech and need to leverage big data.” Whichever way retailers evolve their structures to encourage innovation—or if they don’t—LP leaders have the ability to help lead the effort. “I think there is more

– Brian Goddard, Macy’s

“Today’s AP/LP executive has to be much more data-driven and analytical,” he said, “and exploit that knowledge and their curiosity to pursue things that are going to provide ROI across the enterprise.” Glenn suspects that we may see continued transformation in retail organization structures as companies try to maximize strategic cooperation, for example by having more department heads reporting into the chief information officer function and greater use of task forces to formalize collaboration. Roubic wonders, several years from now, if LP departments won’t look substantially different than they do today. “I might be taking it too far, but I’m someone with a finance background that is now leading AP, and I could see someone with a technical background stepping into the leading role in certain companies,” he said. “I don’t want to minimize the AP field,

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onus on them today to stay aware of the market, and most of them do a good job of that in LP, better than some other functions,” said Hedgie Bartol, business development manager for retail at Axis Communications. “They allocate time to go to trade shows to learn and take the time to learn from vendors and from their industry counterparts. Some of the other functions don’t. A lot of them will say they’re not tech savvy. But many are way more tech savvy than they let on.” GARETT SEIVOLD is a journalist who has covered corporate security for nearly twenty years. He has been recognized for outstanding writing, investigative reporting, and instructional journalism. He has authored dozens of survey-based research reports and best-practice manuals on security-related topics. Seivold can be reached at GarettS@LPportal.com.

CERTIFICATION Interview with Steve Hyle, LPC

Earning the Respect of Your Customers

Hyle is vice president, director of national accounts for AFA Protective Systems. He joined AFA in 1997 after starting his career in retail store operations followed by ten years working in various corporate roles in loss prevention. He earned his LPC certification in November 2014 and today serves on the Loss Prevention Foundation board of directors.

Why did you decide to pursue certification?

understand and embrace your customer’s challenges before you can provide meaningful solutions to protect assets and people and solve problems. This includes challenges surrounding risk management, store design, life safety, and more. The course brings focus to and facilitates awareness of the challenges in the retail environment and most importantly provides the tools needed to succeed.

To become a more knowledgeable and respected leader in my industry and profession. Having spent the initial thirteen years of my career working in retail operations and loss prevention, it was important for me to legitimize the integrity of my knowledge through certification. Having the privilege to work for a highly respected solution provider with over 140 years of proven performance, certification provided me the valuable know how to strengthen my business skills, better understand the business challenges of our retail customers, and improve my overall professional competency.

If you could offer one key takeaway to someone currently considering getting certified, what would it be?

Was the course what you expected? It exceeded my expectations in most every respect. It provided comprehensive, in-depth study across all disciplines within the profession and also provided me with valuable lessons to succeed in business and strengthen the quality of my business relationships.

Tell us more about the process of going through the course and taking the exam. Initially, I set a goal to complete the study within eleven to twelve months. I committed to set aside several uninterrupted hours each week to immerse myself into each course module. This proved to be a sensible approach given the vast volume of content and my desire to absorb as much information as possible. I found the information to be highly engaging and informative—so much so that on many occasions I found myself exceeding my planned study targets and moved forward through the subject matter at an accelerated pace.

What information within the course helped you the most or was most eye opening? I found the section on mentoring to be highly relevant and impactful to my role as a solution provider. Each and every day, we all have the ability to positively influence the lives of others. Taking the time to develop your skills and knowledge demonstrates a passion for your craft that is visible to others. Knowledge shared unselfishly not only can positively impact the lives of others but also is personally fulfilling and provides a profound sense of accomplishment.

Don’t squander the opportunity to immerse yourself in the course content. Like any self-development exercise, what you get out of it is directly proportional to the effort you put into it.

How has going through the certification process influenced the way you approach your job? It absolutely has made me a better leader, team member, and solution provider. I think differently about my approach to the business and more thoughtfully about challenges and risks facing the retail loss prevention practitioner.

How would you compare certification to other educational courses you have taken? It is one of the most impactful and beneficial courses of study I have experienced. This is a must for those who wish to develop not only in their LP career but also in business itself.

Do you think getting certified will help make someone a better LP professional? Absolutely. It provides a road map to understanding best practices, carefully considering all aspects of a situation, and making good, sound decisions.

Has certification changed your expectations of loss prevention as a career, for yourself and for others? As a solution provider with a rich history of proven competency and performance, certification helps underscore our commitment to excellence in our profession.

Would you recommend certification to others? Why? What benefits have you seen from taking the course? Throughout the profession, there is a clear and heightened level of respect given for the personal sacrifice made to earn this certification. As a solution provider, you must first be willing to

MARCH–APRIL 2018

Yes, for the following reasons—to show respect for the profession and its mission to protect people and assets, to show respect for your business, and most importantly, to earn respect for yourself. LOSSPREVENTIONMEDIA.COM

Our Success Starts with Our Partners

Is there anything else that you would like to share regarding the learning experience? Reflecting back upon my years in college, I recall those times when I was fortunate enough to enroll in a class that thoroughly captivated my attention and provided a meaningful and rewarding learning experience. Reflecting back upon the LPC course material, I found it not only consistently engaging but also thoroughly beneficial in helping me become a better practitioner in my profession.

DOCTORATE LEVEL PARTNERS

Newly Certified

Following are individuals who recently earned their certifications.

Recent LPC Recipients Adam Acosta, LPC, TJX Casey Alexander, LPC, DICK’s Sporting Goods Lucio Amicci, LPC, Sears Holdings Shawn Bradley, LPC, Lowe’s Jenny Byers, LPC, Stage Stores Miranda Collins, LPC, PETCO Animal Supplies Sherry Cramer, LPC, Levi Strauss and Company David Cuva, LPC, DICK’s Sporting Goods Ka imaka Eskildson, LPC, Navy Exchange Service Command (NEXCOM) Nicholas Ferris, LPC, Rite Aid Douglas Fessenden, LPC, Vector Security Jessika Fields, LPC, Stage Stores Amye Goady, LPC, Stage Stores Frank Gunning, III, LPC, DICK’s Sporting Goods Bryan Halbur, LPC, AFA Protective Systems Juan Interiano, LPC, DICK’s Sporting Goods Michael Jackson, LPC, DICK’s Sporting Goods Jennifer Keisler, LPC, DICK’s Sporting Goods Michael Mazze, LPC, DICK’s Sporting Goods Joshua Meins, LPC, DICK’s Sporting Goods Sean Odell, LPC, Sears Holdings Stephanie Ojeda, LPC, Walmart Stores Emery Orozco, CFI LPC, Rite Aid R. Bryant Price, LPC, Gabriel Brothers Ruben Quinonez, LPC, DICK’s Sporting Goods Erin Reynolds, LPC, PETCO Animal Supplies Donald Satterfield, LPC, The Home Depot Steven Smith, LPC, ULTA Beauty Joseph Trance, II LPC, Stanley Convergent Security Solutions Dennis Wamsley, LPC, Publix Super Markets Jason Winder, LPC, Amazon.com

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Professional development is key to a fulfilling career. Visit www.LossPreventionFoundation.org to find out more.

Recent LPQ Recipients Jeffrey Comstock, LPQ, Southern Imperial Nathan Dowling, LPQ, Buffalo Run Casino Matthew Evans, LPQ, Seattle Goodwill Erin Koons, LPQ, Walmart Stores Danielle Palentino-Dederick, LPQ, lululemon Susan Richter, LPQ, AmRest Steffen Steudte, LPQ, Sears Holding Jeffrey Tungol, LPQ, Walmart Stores

Educating an industry one leader at a time. LP MAGAZINE

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LPM EXCELLENCE

LPM “Magpie” Awards: Applauding Excellence

The LPM “Magpie” Awards offer a means to celebrate industry accomplishments on an ongoing basis, recognizing the loss prevention professionals, teams, solution providers, law enforcement partners, and others that demonstrate a stellar contribution to the profession. The ability to influence change is a product of drive, creativity, and determination, but

it also requires a unique ability to create a shared vision that others will understand, respect, support, and pursue. Each of the following recipients reflects that standard of excellence, representing the quality and spirit of leadership that makes a difference in our lives, our people, and our programs. Please join us in celebrating the accomplishments of our latest honorees.

Excellence in Leadership

Excellence in Partnerships

Fred Mullen began his career as a security officer for Marshalls distribution center in 1978, forging his own career path and taking on positions with increasing responsibility ever since. He was promoted to vice president, director of LP for HomeGoods stores in 2004, assuming additional responsibility in 2017 with the addition of Homesense, TJX Companies’ newest home furnishings business. “It’s important that every LP industry leader support their teams with standards for excellence, embracing the true value of the LP role,” said Mullen. “First, we must have personal integrity, building the confidence and trust necessary for relationships and the ability to lead others. A leader must also be an effective motivator who carefully listens, pays attention to details, and prepares others with information, feedback, and constructive criticism—if you can’t teach and motivate, you can’t lead. Finally, a true leader must have the courage to speak up and be heard, influencing others to make the right decisions.” Mullen also feels that young leaders shouldn’t be afraid to take “intelligent risks.” While leaders may manage and engage their teams in different ways, it’s important that every leader learns from mentors and others along the way, shaping the characteristics that fit who they are to fashion their own leadership success. “Be resilient and don’t let mistakes or failures stop you from achieving big results,” he said. “Learn from your mistakes and make the necessary changes to achieve success. Don’t be afraid or resistant to change. Loss prevention is evolving every day. Embrace the enormous capabilities offered through technology and information resources, and manage change as necessary to help all of us successfully move forward.”

Kris Vece has been a security and investigations industry professional since 2004 and joined Protos Security in 2015. With a staff of seven client account managers under her direction, she is responsible for all aspects of sales and client relations at Protos. Through relationships cultivated over the years and a dedicated focus on excellence, Vece has earned a reputation as an outstanding partner and industry expert. She is an active member of the Loss Prevention Foundation, International Association of Interviewers (IAI), and the New Jersey Food Council. She has continued to show her dedication to the industry by completing her LPQualified certification and is currently enrolled in the LPCertified certification program. “When building business partnerships, I feel that the most important trait that a solution provider can possess is honesty,” said Vece. “Honesty is critical to building trust with people. Without trust there is no true relationship and no gateway to genuine solutions. You have to listen to what people are saying and together arrive at solutions that are authentic and amicable for everyone. “However, if you really want to build successful relationships with your business partners, you really need to educate yourself about the industry you work in—and then get involved. Contributing to the loss prevention industry and taking the opportunity to participate in a meaningful way lets people know that you care. Never sell yourself short on what you are capable of doing. I have seen so many young people do extraordinary things in the loss prevention industry. It makes me very proud to belong to this elite group of individuals.”

Fred Mullen, Vice President/Director of Loss Prevention, HomeGoods/Homesense, TJX Companies

Kris Vece, LPQ, Director of Client Relations, Protos Security

Nominate Your Peers at Excellence@LPportal.com We want this to be your program. Those of you working as LP practitioners witness these exceptional performances on a regular and ongoing basis, and we strongly encourage you to provide us with nominees for each of the award categories. We encourage creative nominations and want the program to cast a positive light on the many tremendous contributions of the loss prevention community. Nominations can be submitted via email to excellence@LPportal.com. 26

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FEATURE

The Three

AMIGOS EXEMPLIFYING THE TRUE MEANING OF SOLUTION PROVIDER PARTNER By James Lee, LPC, Executive Editor

INTERVIEW EDITOR: Tell us what your current role and responsibilities are. GILLETTE: I am currently vice president of retail sales for ADT/Protection 1, where I am responsible for retail national account sales. I first started in the industry in 1983 working for Bob Oberosler and Bob McCort at Hecht’s Department Store as a store-level LP associate. I joined Sensormatic Electronics Corporation in 1984 and have worked in this industry my entire career. Over the years, I have held a variety of sales positions starting as a sales rep, moving on to sales management roles including managing director of Asia Pacific operations and vice president of retail national accounts for Sensormatic. I was also part of the Vector Security team for two years before joining Protection 1 in 2010, which then became a part of the ADT team in 2016. GRADY: I’m approaching my thirty-fifth year with Vector Security. During that time, I have served in many capacities, including sales, sales management, general management, and corporate marketing and support. Currently, I’m responsible for leading the Vector Security Networks national sales and CRM effort. Vector Security Networks is the business line within Vector Security that provides single-source solutions for physical security and managed network services. LYNCH: Currently, I am the executive director of business development for Johnson Controls Retail Loss Prevention Division in North America. I am on the board of directors of the Loss Prevention Foundation, and I am the company’s representative on the vendor advisory board of LP Magazine. I started in 1984 with Sensormatic. We now operate as Tyco Retail Solutions, which is owned by Johnson Controls. EDITOR: Talk about the LP executive when you began in this business, their priorities and mission, and how it is different—or the same—today. GILLETTE: I think the mission has basically remained the same throughout

the years, helping retailers control their losses and improve their profits. What has changed is the technology and tools that help LP executives bring greater value to their organizations. Back in the day for the most part, LP wasn’t directly part of the executive-level discussions. Today, the LP executives are an integral part of the overall business. GRADY: Years ago, the average LP executive concentrated and focused almost exclusively on shrink, physical security, and safety. Today, the risks have changed, and LP professionals are addressing issues and challenges that span the entire organization. Physical security threats, terrorism, and the loss of proprietary information are high-level risks that are beginning to fall under the LP area of responsibility. They are interfacing much more with other teams, such as IT and marketing, within their organizations to become more effective. When I meet with LP executives today, I feel they have a much better sense of the overall business and can identify what is driving their success, and how they can contribute to the bottom line. LYNCH: When I started in the business, the customer’s title was security director. These individuals were typically retired state policemen or retired FBI agents whose job performance was predicated on how many shoplifters they apprehended. If you see how the title has changed, it reflects a change in the skill set needed to be successful in the retail landscape today. Asset protection vice presidents are now valued contributors in the executive suite. The best LP executives are as concerned about sales and operations as they are about shrinkage reduction. These men and women are return-on-investment business people. EDITOR: Have you changed how you do your job from yesterday to today? GILLETTE: No, my job is, and will continue to be, helping our customers meet and beat the challenges they face through innovative technology. I have also focused on forging strong MARCH–APRIL 2018

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relationships with the LP executives and maintaining those relationships through the years. GRADY: Since the majority of my career has been in sales and sales leadership, I would have to say that my concentration, past and present, is driving my team to create new business opportunities and grow market share. My leadership style has most certainly changed as I continue to work on developing my ability to lead and manage multiple generations of team members, all with different values and needs. LYNCH: Today’s vendors that sell to LP departments need to be more tech savvy and solutions-oriented than ever before. The days of making your quota selling EAS tags is over. The way the customer is buying today is based on an expanded understanding of loss. For example, online purchases with in-store pickup now dictate that salespeople need to be up to speed on data analytics, RFID inventory, and more sophisticated video solutions. The constant pressure to reduce costs means the sales person must understand self-checkout, mobile POS, and more. All these new areas bring new challenges to loss prevention executives. They are challenging their vendor partners to get creative on how to combat these avenues of loss. EDITOR: What do you respect most about today’s LP leaders? GILLETTE: Unlike a lot of industries, our LP executives come from within the industry. Most started out in store-level positions and have worked their way up to executives based on their track record, experience, and knowledge. I respect and admire that attribute in our industry. GRADY: Without a doubt, I most respect their ability to develop teams that are cross-functional and engaged in multiple aspects of the business. From day one working in the retail space, I have always been impressed

INTERVIEW with LP leaders’ team building and developmental skills and strategies. They are exceptional head coaches and team managers. LYNCH: The best LP executives aren’t afraid to step out and try new things. Bob Oberosler using facial recognition, Mike Lamb installing electronic public view monitors in creative ways, and Mark Stinde deploying ClickIt’s Virtual Line Up are great examples of thinking outside the box. In addition, they all evaluate projects based on research, pilot programs, and dashboards.

EDITOR: What troubles you about some of the leaders today? GRADY: The slow pace of adapting or adjusting to changes in technology. We work in an environment that is networked together, including all the components and devices LP relies on to mitigate risk and protect people and property. LP leaders must get more in sync with the functionality, benefits, and risks of living on the network. They need to develop relationships with their IT teams and have a seat at the table when the CIO or CTO are building a prevention strategy.

Unlike a lot of industries, our LP executives come from within the industry. Most started out in store-level positions and have worked their way up to executives based on their track record, experience, and knowledge. I respect and admire that attribute in our industry. – Rex Gillette

LP MAGAZINE

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LYNCH: I think today’s leaders are doing the best they can. The challenge is that they don’t have the time to really analyze and test solutions. And of course, there is constant budget pressure. Sometimes they leave analysis up to procurement, who doesn’t understand the full value chain. I like to think a strong vendor partner goes “beyond the RFP” for customers we know well. We use our relationship to call out totally new areas of value and savings. I am troubled if time and other pressures mean that our team can’t come to the table with real, integrated solutions, instead of just an RFP bid. EDITOR: What do you want the buyer or LP executive to believe about you and your company? GILLETTE: In May of 2016, ADT was purchased by Apollo Global Management and merged with Protection 1. Protection 1’s CEO Tim Whall was named CEO of the combined organization bringing his passion for customer service to the company at a national scale. In less than two years, the company has worked hard to redefine itself and adopt Protection 1’s mission of delivering world-class customer service to our clients. We have brought personal, high-touch customer service to ADT at an unmatched nationwide scale. Here are a few examples. In most cases, we now offer same-day or next-day service and show up when we say we are going to show up. We offer our exclusive Tech Tracker service that lets our customers know when their service technician will arrive, his or her qualifications, and even a picture of the technician. We have unplugged our automated phone system—people answer our customer calls. We offer dedicated teams in our National Account Operations Center that work together managing every aspect of our national account and enterprise customers’ accounts, from installation and service to monitoring alarm activity and billing. And we now offer dedicated security-only network design, installation, and monitoring along with a host of cyber-security solutions.

INTERVIEW GRADY: We are a company with strong character and a culture of innovation and leadership. We value our employees and our customers. We can adapt to change and are financially stable. As a one-source solution for managed network services and physical security, Vector Security Networks is a provider who understands your business and can create and integrate the right mix of solutions. This value that we bring becomes increasingly important as LP continues to work cross-functionally within the business.

a national company, but remain focused on personalized, prompt service. LYNCH: It should be about trust. When things go south in the field, you don’t want to have to put out an APB for your vendor. Good salespeople look at the signing of a deal as the start of the hard work, not the end of it. EDITOR: Give us a story that may be humorous or unique in your

career in retail dealing with the LP executive. GRADY: I’ve been around for a while, so I’ve been fortunate to spend quality time with many LP executives. Most of the memorable humor surfaced after the dinner hour at an industry conference when a small group of execs and vendors would get together and unwind and tell stories and laugh all night. What a great group of characters…you know who you are!

LYNCH: I want the LP executive to know that I have his or her back. I invented a term that I call the “commutative property of credibility.” This is the notion that if you maintain your “personal credibility” with the customer, then the company you represent will have credibility. I was profoundly affected by the scene in Miracle on 34th Street where the Santa Claus tells the child to go across the street to buy a better made product at a lower price. I can’t tell you the number of times I have done this in my career. I took a page from Ernest and Julio Gallo and made the comment to customers: “We will sell no system until it’s time.” If it doesn’t work, take it back, and you maintain your credibility with the customer. EDITOR: If it is not always about price, what should it be about? GILLETTE: It should always start with customer service and understanding the true needs of the clients and offering leading-edge technologies to meet those needs. If you can meet the needs of your customers with a product or service they need, not just what a company has to sell, then often decisions based solely on price become less prevalent. GRADY: Value and reputation. As I mentioned earlier, our value is in our ability to act as a single-source solution for managed network services and physical security. We deliver white-glove professional services through a single point of contact. We have the strength of

Without a doubt, I most respect LP executives ability to develop teams that are cross-functional and engaged in multiple aspects of the business. From day one working in the retail space, I have always been impressed with LP leaders’ team building and developmental skills and strategies. They are exceptional head coaches and team managers. – Mike Grady, LPC MARCH–APRIL 2018

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INTERVIEW LYNCH: As a young salesman, I had Marshalls as an account. You, Mr. Lee, had just taken over as the VP of loss prevention with a tremendous reputation coming from the Broadway Stores on the West Coast. You had bought a brand-new Cadillac Mark Seven when you arrived. Maybe the third time I came to the headquarters, you asked me if I played golf. I said “Yes.” You said, “Do you have your clubs.” I said “Yes.” You said, “Well, let’s go play golf.” I was so excited that you had asked me to play golf, when I followed you out of the parking lot, I plowed right into the back of your new Cadillac. I was totally mortified and thought my career was over. All you did was get out of the car, look at me and shake your head, and never said another word about it. I knew then and there we would become great friends. EDITOR: Had you not been in this career, what might you have chosen to do?

GILLETTE: I started my career in this industry, and it has been a long and fulfilling one, so I really haven’t thought about doing anything different. GRADY: I’ve always toyed with going to law school and becoming a lawyer. I even took the LSAT. I can hang with the best of them—debate, deliberate, and banter—so I think I could have been a decent litigator. LYNCH: I would have been a naval officer. I was programmed to have that career. I did it for six years. When I found that people actually shot at you, I figured I could find a better job with better pay. EDITOR: You three have known each other for years. Tell us the real story about the other two. GILLETTE: I have had the privilege of working with both Mike and Kevin over the years and am glad to call them both friends. Both are well-respected players in the industry and have made many contributions over the years. As for

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Kevin, he is one of the best story tellers out there and is always around to give you a good laugh. GRADY: Early when I talked about a great group of characters, Kevin and Rex were usually among the characters. Both of these gentlemen are true professionals and effective contributors to our industry. I consider them both good friends. LYNCH: Rex Gillette and Mike Grady are two of the finest guys I’ve met, not just in the business but also in my life. Their empathy for the people they lead and their credibility in the marketplace is unparalleled. I worked with and for Rex for the better part of twenty years. He is one “cool customer.” Rex is a competitor who plays well under pressure. He is a family man and remembers where he came from. Mike has been a friend of mine since the 1980s. He has always been an ethical, fierce competitor.

Learn - Improve - Succeed

Connected software, hardware, consumables and services. Transforming data into actionable insights that drive retailer success.

LP MAGAZINE

MARCH–APRIL 2018

INTERVIEW He is a true leader in every sense of the word. Mike is the definitive “elegant gentleman.” EDITOR: Have you had mentors in the business, and what did you take from them? GILLETTE: I have been fortunate to have had many mentors throughout my career. As I mentioned before, Bob Oberosler and Bob McCort at Hecht’s helped me when I first started in the

industry and gave me a perspective on what it means to be in LP from a retailers’ point of view. Industry veteran Jack Brown hired me at Sensormatic and taught me the ropes from the supplier side. Henry Wurtele was instrumental in coaching me into sales management positions, and Ron Premuroso guided me when I worked in Asia teaching me to how to run a P&L. Fast forward to today and Bob Dale continues to help me advance my career.

GRADY: I have had many mentors in this business over the past years and each has taught me many valuable lessons. The one common message I have taken from each is to not promise what you can’t deliver. LYNCH: If I look at the landscape of people that I have trusted to get where I am today, there are quite a few—Bobby Dale, Jeff Bean, Ed Foley—all have trusted in me and given me sage advice. I think the person who I have had as a customer at Marshalls, worked with at The Network and beside at the LP Foundation is you! Jim Lee is a “Father Confessor” to the best minds in retail loss prevention. Whenever I have a pressing business dilemma or a life decision, you’re on speed dial. I thank you for being there. EDITOR: If you could offer one piece of advice to industry professionals, what would it be? GILLETTE: Do your job with honesty, integrity, and never forget to focus on your customers.

The best LP executives aren’t afraid to step out and try new things. Bob Oberosler using facial recognition, Mike Lamb installing electronic public view monitors in creative ways, and Mark Stinde deploying ClickIt’s Virtual Line Up are great examples of thinking outside the box. In addition, they all evaluate projects based on research, pilot programs, and dashboards. – Kevin Lynch, LPC 32

MARCH–APRIL 2018

GRADY: I would say get involved in our industry. There are a variety of groups that offer valuable opportunities for continuing education and staying abreast of the industry in general. The LP industry is continually evolving, and in order to be successful, you need to stay relevant. Industry organizations are a great way to do that, while forming lasting relationships with peers. LYNCH: Live every day as if it’s your last because one day you’re going to be right! EDITOR: Mike and Kevin, you were both founding members of the Loss Prevention Foundation. What has that meant to you? GRADY: I have benefited a great deal from serving on the board of LPF from the start. I continue to respect and be inspired by those individuals

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INTERVIEW who invest their time to study and prepare for the exams in an effort to strengthen their knowledge and develop their skills. Their dedication will continue to make a difference in the LP profession.

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LYNCH: I never thought I would be in this industry for this long. I have met great people, and it has provided financial security for my family. The foundation is a way of giving back and providing a venue for furthering the retail loss prevention profession. The foundation provides a way for individuals to be successful through the certification process. I was proud to be the first solution provider to acquire an LPC. I am honored to have that designation after my name on my business card. EDITOR: Mike, you are highly respected for your leadership in establishing a scholarship program for young people to obtain certification. Talk about that initiative. GRADY: This year marks Vector Security’s tenth anniversary of the LPF scholarship program. The program was designed to reward and assist qualified individuals who otherwise may be hindered by the costs associated with obtaining this certification. We are proud to celebrate this successful and ongoing partnership with the Loss Prevention Foundation and value the contributions loss prevention professionals make to this industry. EDITOR: Rex, not many know that your father was one of the founding members of Sensormatic. Talk about growing up in this business. GILLETTE: As a teenager, I had summer jobs working in the Sensormatic distribution centers. Ron Assaf founded Sensormatic, and my father was an integral part of the team in the early days of establishing the company that would define an industry and has served so many over the past fifty years.

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EDITOR: Kevin, some may know that you are a Naval Academy graduate. Talk about what that has meant to you. LYNCH: The best decision I made in my life was asking Kathy to be my wife. The second best was attending the Naval Academy. It is a great place to be “from”; however, going through it was no picnic. I learned about the tenets of leadership, teamwork, and ethical behavior. The friends I made there are friends for life. I learned about playing under pressure. It was the most competitive environment I have ever been in.

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EDITOR: Gentlemen, thank you for sharing your insights for our readers, and thank you for the long service you have given our industry all the while demonstrating the ultimate professionalism that exemplifies the true meaning of being a “partner” and a “solution provider.” LP MAGAZINE

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MARCH–APRIL 2018

EVIDENCE-BASED

Offenders Adapt; So Must We W

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. © 2018 Loss Prevention Research Council

hoa, what’s that?! No way. That’s a reaction we want from would-be offenders when thinking about initiating a crime attempt on our property. We’re often told to adjust, adapt, and overcome as we grow up. Life comes at us fast and from a lot of angles. So part of our hardwiring is adaptation. And humans aren’t alone in this ability. Bacteria, tumors, and viruses all rapidly acclimate to changing environments and threats. Some criminal offenders, of course, do the same.

their own adventures. Remember that our human brains are wired to constantly try to predict what ifs, and our job is to help bad actors make better choices. So by slightly altering signage, positioning, and visual and aural cues, for example, we can keep most offenders a little off-balance and reduce crime attempts.

Precision Action

Featured LPRC Research

In this column I frequently stress how asset protection strategies and their components should be tightly focused on the dynamics of the problem. A crime or loss problem should be well defined: who, what, when, where, why, and how specific theft, fraud, or violence crimes are being conducted is critical information. The steps most criminals must take to accomplish their offenses are our aiming points. Our countermeasures should be designed to deter, disrupt, or lead to detention at each step: during the ideation, initiation, and progression of a crime. And a good diagnosis helps us generate better outcomes by shaping precise countermeasures this way. We make their contemplated offense appear to be too difficult, too risky, or not worth it. And the earlier we can deter or disrupt them the better.

Keep It Fresh

But unfortunately, this focused process is not a one-time, fire-and-forget exercise. Offenders adapt, and so should our precision LP/AP efforts. Asset protection is both a process and (hopefully) a result. And since offenders adjust, so should our focused treatments. We know from extensive research that criminals quickly or over time assess your intent and capability to defend your people or places and respond accordingly. They may not get it right, sometimes not even close, but what they (not we) perceive is what they act on. So we need to keep this in mind—we must aim ahead of the target, so to speak. Consider how a given solution or solution set might make breach burglary (for example) harder, riskier, or less rewarding for an offender—at each offending step. Also consider how we will help them notice, recognize, and respect these treatments in the five zones of influence and, finally, how we will change these tactics up as their effectiveness inevitably decreases. Offenders adapt mostly because of what they’ve heard, like “nobody watches the cameras there” or “they don’t ever stop anybody.” But they also evolve these adaptive resistance mechanisms or perceptions on their own, during

by Read Hayes, PhD, CPP

MARCH–APRIL 2018

Employee theft is a major problem for many employers in the United States, accounting for the two highest percentages of retail shrinkage according to the 2016 National Retail Security Survey. To mitigate this problem, many retailers in the US deploy bag search policies at their facilities to deter employee theft and to catch perpetrators engaged in theft from the company. While some organizations maintain bag search policies, others conduct bag searches on an as-needed basis. This report explores the proportion of retailers who conduct bag searches, facilities where the search is conducted, the main drive behind a search, and the items that are being searched. Twenty-one leading US retailers participated in this study, although three survey responses were withdrawn due to incomplete answers. QUESTION 1: Does your organization have an employee/associate package check policy? Two-thirds of the retailers who participated in this study stated that their organizations have an employee package check policy, while one-third of the respondents claimed that they do not currently have such policy. Answer Choices

Responses

Percentage

Yes

66.67%

33.33%

Total

QUESTION 2: Where do you implement employee/associate package Check policy? (Check all that apply.) Of the twelve participating retailers with an employee package check policy, two of them have the policy in all facilities, five of them have the policy in stores and distribution centers, four of them have the policy in stores only, and only one of them has the policy in distribution centers only. None of the participating retailers have the policy in their offices.

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Answers Choices

Responses

Percentage

8.33%

Stores Only

33.33%

Offices Only

0.00%

All facilities

16.67%

41.67%

Distribution Centers Only

Stores and Distribution Centers Total

QUESTION 3: What may be searched? Of the twelve retailers with employee package check policy, about 42 percent of them always conduct bag searches, 33 percent of them conduct random checks, and 17 percent of them conduct bag searches only in stores with high shrinkage. All others conduct searches based on facilities. Answer Choices

Responses

Percentage

For cause only

0.00%

Random check

33.33%

All are always checked

41.67%

Other (please specify)

25.00%

Total

Support LP Education by Participating in the

12 Other (please specify)

High shrink program stores only

100% search at distribution center, random and for cause in retail

Only in high-shrink locations

Sponsored by the Loss Prevention Foundation, this annual golf tournament takes place this year at Bear Creek Golf Club in Dallas preceding the NRF PROTECT conference June 11–13. Open to all retailers and solution providers, the “Swing for Certification” event will raise money to fund scholarships for LP professionals who want to advance their careers through obtaining their LPQ or LPC certifications. Proceeds will also benefit industry charities, including the Loss Prevention Benevolent Fund and the USS Foundation, the legacy event sponsor. For more information Exclusive Platinum and to sign up to play or Sponsor co-sponsor the event, visit Additional sponsorship levels available SwingForCertification.org.

QUESTION 4: What triggers a search? The primary trigger of a search is purse/backpacks/other bags, and purchases might be a trigger for some retailers. Responses

Percentage

Purchases only

Answer Choices

8.33%

Purses/Backpacks/Other bags

83.33%

Body pat down if needed

0.00%

Other (please specify)

8.33%

Total

12 Other (please specify)

“Swing for Certification” Golf Tournament at NRF PROTECT June 10

Any except pat down

QUESTION 5: Please provide any additional comments you believe are important. Responses 1

Purchases, parcels, and handbags are included in the random checks, and all associates are checked a minimum number of times weekly.

Employee package checks should be conducted while on the clock to comply with the state time and labor laws.

Stores that are a part of our high-shrink program only. Inspections are done on the clock and at the point of sale versus the front door.

We also require coats to be off at exit, and they are “patted down” for concealed merchandise.

Recommended Reading

Crime and Everyday Life (fifth edition) by criminologists Marcus Felson and Mary Eckert is published by Sage Publications. This iconic book uses very practical examples to explain the dynamics of crime, along with common sense anti-crime suggestions. LP MAGAZINE

MARCH–APRIL 2018

SUPPLY CHAIN

The Fallout of Holiday Peak

By Glenn Master Master is a recognized industry expert with over twenty years of experience in loss prevention and security management. He has worked both domestically and internationally specializing in supply chain, transportation, and logistics. Master has held both executive and management positions with companies such as Newgistics, Office Depot, Henry Schein, and Motorola. He is the cofounder and current board director of the International Supply Chain Protection Organization (ISCPO). He is also employed at Texas Christian University as an adjunct professor, teaching undergraduate courses in criminal justice, security, and loss prevention management. He can be reached at GMaster@newgistics.com.

s we all are well aware, the holiday shopping season seems to be starting earlier with each passing year. It was October 21 when I saw the first commercial advertising for the 2017 holiday season. To my surprise, however, I didn’t see many stories this year about people camping out for a week in the parking lot of a store waiting for the best Black Friday deals. There could be any number of reasons for this, but what we do know for sure is that retailers are now providing more options to consumers earlier in the shopping season than in previous years. While holiday shopping patterns in retail stores is something we may all notice, there are other areas within the business that may not be as visible to the customer but are just as impactful on the business. The one thing that I have witnessed firsthand is how this new strategy is affecting the supply chain. “Peak,” as it is referred to, is the time leading up to Christmas when holiday order volume increases dramatically. That’s roughly fourteen weeks of what is now becoming pure chaos for logistics providers.

The most common areas where loss occurs during peak are during the morning launch of drivers. This is when the terminal has the most amount of freight on the floor and the least amount of management oversight. The official numbers for the 2017 peak season have yet to be tallied, but based on projections, this is going to be a record season for retail, with a large percentage being attributed to online sales. While overall this may be good for business, this is nonetheless having a profound impact on the domestic supply chain because the infrastructure supporting all these parcels simply cannot keep up with the volume of products being shipped. Here are three key areas where the industry is failing to keep up with the changes in holiday shopping habits and some basic steps that can be taken to solve this growing problem.

Volume Projections: It’s a Guessing Game

Most retailers have analytic models that produce estimated volume projections to determine the number of orders that will

MARCH–APRIL 2018

be passing through the supply-chain network. This information is passed on to contracted transportation providers, allowing them to plan for the staffing models necessary to handle the anticipated product volume. Despite all the computer analytics being used, the one thing that cannot be easily forecasted is how online ordering can be affected by the unpredictability of human behavior. This is especially true from Thanksgiving Day through Cyber Monday. In talking with my loss prevention peers in both retail and transportation, consumer sentiment was grossly underestimated going into the 2017 holiday season. So regardless of the current political atmosphere, the Federal Reserve raising interest rates, or the potential that North Korea may launch a nuclear bomb, US consumers were ready to spend money this holiday season. This buying atmosphere creates both a positive and negative scenario for businesses in the supply chain. The obvious positive result is an increase in revenue. However, a less-than-ideal result follows when unplanned volume cripples the infrastructure that moves parcels along the supply chain. This would be the equivalent of a dam breaking fifty miles upriver with all the towns downriver flooded as a result—except the flood comes in the form of packages. To avoid this type of catastrophe from occurring again, retailers must do a better job of preparing for a potential spike in online sales and projecting product volumes in real time. This may be challenging since most of these online orders are being placed during the Thanksgiving holiday when the majority of corporate America is out of the office. One solution would be to have retailers streamline the flow of information to logistics providers by providing daily volume-trend monitoring that is communicated immediately to transportation providers.

Transportation, Bottlenecks, and a Tangled Infrastructure

The majority of retailers that do business online don’t have their own transportation infrastructure. This means they have to contract out transportation companies to move freight. One of the most costly services in business is transportation. Therefore, most companies will look for the most cost-effective way to move that box from the warehouse to the client. This cost will vary greatly depending on several factors, which include: ■■ The time it takes to deliver the package,

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Portable

The distance the package has to travel, and The method of delivery. Typically, the more convenient the process is for the customer, the higher the transportation cost will be for the retailer. As a result, most companies will look for a balanced approach that will satisfy both the customer expectation and the costs associated with transporting the order. What this means is that everyone is ultimately contracting with everyone else, and parcels can easily transit multiple companies before reaching your doorstep. With each touch point is an exposure to a parcel being lost or stolen. It is difficult to investigate losses in this network when volumes are normal. Add 50 percent or greater volume in a very short time span, and investigating loss becomes nearly impossible. Some of the contributing factors to this loss include lack of management oversight, misshipped packages, and theft that is camouflaged due to operational failures. It is critical for transportation providers to be able to plan and manage this volume appropriately. The most common areas where loss occurs during peak are during the morning launch of drivers. This is when the terminal has the most amount of freight on the floor and the least amount of management oversight. Transportation managers should also focus on conducting spot audits of drivers prior to them launching. This will not only keep the drivers honest but also allow management to find misloaded packages that occurred by mistake. ■■ ■■

Prevention

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A Tight Labor Market

The labor market in the supply chain has increasingly become very tight. If you look at any major fulfillment or distribution company, everyone is fighting for the same contracted employee. This becomes a booming industry for staffing agencies but also poses a challenge for them on finding suitable people to fill open positions. To try and gain an edge, we are now seeing companies during peak season reducing or even eliminating their applicant screening process to get employees in the door. This may result in your contracted labor having criminal backgrounds, financial issues, or drug problems. In years past, jokes would be made in the loss prevention community that staffing agencies are resorting to hiring people on the steps of county jails after they bond out from a weekend incarceration. In recent times, these types of jokes are becoming more of a reality. Reducing or eliminating the background check process can have major impacts on your organization resulting in lower productivity rates, criminal activity within your operation, and a greater likelihood of theft.

The Future

People say there are no guarantees in life. I tend to disagree as it relates e-commerce. The trend has been and will continue to be unprecedented growth. This growth brings numerous challenges to an infrastructure that was not designed to move millions of packages in a short time period such as peak. Without substantial investment and planning, peak season in 2018 will be just as challenging for industries that are tasked with getting that holiday gift to the consumer. LP MAGAZINE

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LPM-online.com

Introducing LPM Online An All-Digital Magazine with All-New Content

LPM Online is an all-new magazine experience. LPM Online publishes every other month on even-numbered months in between our print editions. The inaugural edition went live in August. You can view it and our current edition on the LPM Online tab on our website, LossPreventionMedia. com, or by entering LPM-online.com in your browser. The exciting feature of LPM Online is how we can use dynamic elements in both the articles and advertising—things like embedded videos, podcasts, and animations that will bring the information alive. Plus, it is optimized to view on smartphones, tablets, and desktop computers.

To receive notice of all editions of LPM Online, you need to be a digital subscriber of LPM. It’s free and gives you access to all our digital content, including our extensive website, print magazine archives, special reports, and much more. If you are not a subscriber, use the SUBSCRIBE NOW link on our website. If you are a solution provider and want to reach the loss prevention audience with a medium that allows you to demo your technology, show a corporate video, or otherwise showcase your products and services, contact our advertising manager Ben Skidmore at BenS@LPportal.com.

LPM Online—A Dynamic Magazine for LP Professionals

FEATURE

RFID AND RETAILING THE EXPERIENCES OF TEN CASE-STUDY COMPANIES By Emeritus Professor Adrian Beck

RFID AND RETAILING

The outlook now appears to be changing fast for RFID, and what has been seen in the past few years is a much more enlightened, less evangelistic, and more realistic approach to how RFID may be able to play a role within retailing.

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ince the term radio frequency identification (RFID) came into common usage within the retail environment, around the end of the 1990s, it has in many respects been an idea driven more by hope and hype than practical realization. For retailers it promised a world where supply chains would become fully transparent, with all products identifiable in real time, bringing an end to oversupply and out-of-stocks—the ultimate optimization tool, allowing retailers to truly deliver “just in time” supply chains tailored precisely to the needs of their customers. In addition, RFID offered other “game changing” benefits such as the end of traditional checkouts and associated queuing for the consumer—products would automatically “checkout” as they left the store with the consumer’s credit card being billed accordingly. (Sound familiar?) Within the realm of loss prevention, the RFID “revolution” offered much promise, with shop theft becoming a thing of the past as thieves would be automatically identified as they tried to leave the store without paying. Similarly, problems such as returns fraud would be eliminated as the previous ambiguity around whether a particular item had actually been purchased would no longer exist—the product would “tell” the retailer its current status (bought or not bought). Back in the early 2000s it seemed RFID was going to totally transform the retail world—indeed, it was described by one of its earliest advocates in the following glowing terms: “as significant a technology as certainly the Internet and possibly the invention of the computer itself.” If we skip forward seventeen years, then it becomes very quickly apparent that RFID, as yet, cannot be remotely put in the same category as the Internet in terms of its impact

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upon the world or more specifically retailing. Arguably, it is a technology that has seriously struggled to match up to the hype heaped upon it at the end of the 1990s and into the early 2000s. It continually floundered on the rocks of physics and economics, with the “Faraday Cage” in many

MARCH–APRIL 2018

respects proving to be the prison “cell” from which RFID has struggled to escape. As such, many of those long in the tooth in retailing have become familiar with the sentence that starts, “In the next five years RFID will….” However, the outlook now appears to be changing fast for RFID, and what has been seen in the past few years is a much more enlightened, less evangelistic, and more realistic approach to how RFID may be able to play a role within retailing, one that recognizes its limitations and plays to its identifiable strengths. The technology has also had the opportunity to gradually mature, away from the spotlight of unrealistic expectations, and begin to show how it can be used to help retailers resolve some of their ongoing and growing concerns. This can be seen particularly in parts of retailing that do not have a concentration of products largely made up of metals and viscous fluids, which have traditionally proved highly challenging for RFID to cope with. Retailers focused on apparel and footwear in particular have begun to use this technology to help them manage their supply chains more efficiently, utilising RFID’s capacity to bring transparency and ease of audit into the retail space. As pressures within retailing concerning competition and growing consumer demands for greater and more accurate availability have increased (particularly with the growth of omni-channel), then some companies have begun to invest in RFID to help them respond. While we are still some way from RFID becoming “bigger than the Internet,” it would seem that a more gradual and incremental introduction into retailing is underway, one that recognizes its weaknesses but at the same time is beginning to take

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RFID AND RETAILING

advantage of developments in the technology. It is within this context that GS1 and the ECR Community Shrinkage and On-shelf Availability Group commissioned a piece of research to better understand about how this technology is now being used and what lessons can be drawn from its development, its implementation, and its impact on retail businesses. Based upon the detailed experiences of ten companies that have invested in RFID, the study set out to answer the following questions: ■■ What is the business context within which some retailers decide to invest in RFID? ■■ How do these companies begin their RFID journey? ■■ What steps do they follow when undertaking a trial? ■■ In what ways do they measure the impact of RFID, and what have they found? ■■ How do they begin to roll it out to the rest of the business? ■■ How have they dealt with the key challenge of integration? ■■ What role, if any, can RFID play in managing loss prevention? ■■ What lessons have these companies learned on their RFID journeys? ■■ How might they be planning to use this technology in the future? This research adopted a case-study methodology with data being collected via requests for various types of quantitative data relating to the use and performance of RFID, together with primarily face-to-face interviews with company representatives from the following companies: Adidas, C&A, Decathlon, lululemon, Jack Wills, John Lewis, MARC O’POLO, Marks & Spencer, River Island, and Tesco. Collectively, these companies have total sales in the region of €94 billion a year and purchase at least 1.87 billion RFID tags a year, equivalent to the use of about sixty tags per second.

As with any research, there are limitations in what can be achieved and presented. While this research attempted to offer an independent and critical review of the use of RFID in the retail sector, the case-study selection process needs to be taken into account when reviewing the

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RFID was viewed as a key driver in developing the capacity to deliver a profitable omni-channel consumer experience—in effect the organizational “glue” that will hold together much of the architecture of twenty-first century retailing. LP MAGAZINE

findings. Because of the chosen selection criteria and the challenge of obtaining retailer support, no companies are represented that have trialled RFID and decided against rolling it out—the views of these types of companies are absent from this research. In addition, there are some companies that have adopted a different approach to using RFID than those represented in this research, namely using a hard tag variant applied either at the point of manufacture or later in the supply chain. While one of these companies was approached to take part in the research, they declined, so it is not possible to include their experiences and views of using RFID. As such, it is important to recognize that the general approach adopted by these ten companies is not necessarily representative of all retail companies that are now using RFID.

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Presented below are the headline results from the research. For a more detailed review of the findings, a free report is available (details of how to receive this can be found at the end of the article). The Business Context for Investment Driving Sales. The primary goal of investing in RFID was to deliver improvements in inventory visibility and accuracy, which in turn would grow sales. Optimizing Stock Holding. Respondents also recognized the potential of RFID to enable them to optimize their stock holdings, reducing capital outlay and improving staff productivity. Fewer Markdowns. Most case-study companies regarded RFID as a key tool in helping to reduce the amount of stock they offered at discounted prices. Helping to Drive Innovation and Business Efficiencies. RFID was

RFID AND RETAILING

frequently viewed as part of a broader organizational change project focused on putting enabling technologies in place to drive transformational change to achieve future success. Recognising the Omni-channel Imperative. This technology was viewed as a key driver in developing the capacity to deliver a profitable omni-channel consumer experience—in effect the organizational “glue” that will hold together much of the architecture of twenty-first century retailing. Measures of Success Increase in Sales. Seven of the ten case studies shared data showing a sales improvement in the range of 1.5 to 5.5 percent. For SKUs identified as being out-of-stock by RFID systems, the growth was even higher. Based upon this data, the ten companies taking part in the study may have realized an RFID-driven sales uplift of between €1.4 and €5.2 billion. Improved Inventory Accuracy. Companies typically had an improvement from 65–75 percent to 93–99 percent. Stock Availability. Some of the companies taking part were now finding SKU availability in the high 90 percent region. Reduced Stock Holding. One-half of the case-study companies shared data on this measure, indicating a stock reduction of between 2 and 13 percent. Lower Stock Loss. One company suggested that their shrinkage losses had been reduced by 15 percent. Reduced Staff Costs. One company had measured a saving equivalent to 4 percent of their store staffing costs, which if rolled out across the case-study companies would be in the region of €378 million. Return on Investment. All ten companies were unequivocal in their assertion that the ROI had been

All ten companies were unequivocal in their assertion that the ROI had been achieved, and based upon their trial experiences, further rollout across the business was fully justified and embraced by the rest of the business, often with considerable enthusiasm and optimism.

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achieved, and based upon their trial experiences, further rollout across the business was fully justified and embraced by the rest of the business,

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often with considerable enthusiasm and optimism. Learning Lessons Role of Senior Management. The role of the senior management team in both the initiation and subsequent delivery of the RFID project was seen as paramount—without their active support and recognition of the financial imperative, virtually none of the projects would have been initiated. Choosing a Business Leader. The RFID project leader was typically the person who had responsibility for on-shelf availability/stock integrity, regardless of where they were located within the business hierarchy. Engaging the Business. Respondents to this research clearly articulated the importance of working hard at getting cross-functional buy-in—RFID projects have long tentacles embracing most retail functions. Understanding Your Business Context. Many respondents considered this one of their biggest challenges—understanding how RFID will impact the business. Undertaking detailed process mapping and recognizing how products move through the supply chain was considered key, as was assessing the impact the physical environment might have on the functionality of the technology and how it would integrate (or not) with legacy systems. Challenges of Integration. By far and away the biggest headache these companies faced as they progressed on their RFID journey was the thorny issue of integration with legacy retail systems. A number felt they had not planned sufficiently well on how to resolve this issue and counseled future adopters not only to take integration seriously but also to think very early on in the process the extent to which they

RFID AND RETAILING

want new and existing data systems to communicate. Seeking External Help. Virtually all of the companies taking part in this research had sought some degree of external advice as they began their RFID journeys. RFID consultancies, technology providers, other retailers, and organizations developing common standards such as GS1 were used. Choosing RFID Technologies. Most companies had adopted a circumspect, modest, and highly price-conscious approach to the selection and use of their RFID technologies—the mantra of “keep it simple and highly focused” was very apparent. Tag Reliability. No companies had any concerns about the reliability of their chosen tags; a more prescient issue was ensuring the tag remained attached and

its position on the product was optimized. Choice of Readers. By far and away the predominate reader technology used was handhelds provided to store staff. Relatively few companies were utilizing any form of transition readers (to track product moving between different parts of the supply chain), integrated point-of-sale readers, or exit-detection readers. As yet, none had committed to using in-store overhead readers beyond some ongoing store trials. Avoid Tagging in Store. All ten companies taking part in this research had opted for a long-term strategy that involved the RFID tags being applied at the point of manufacture. Standards Matter. While case-study companies varied in the degree to which they were sensitized to the importance of

adopting RFID-based standards, all agreed that without them, it would be more difficult to innovate and evolve in the future. Standards were highlighted as being key in reducing confusion in the supply chain and avoiding getting locked into any particular provider. Undertaking Trials. All companies had undertaken a combination of proof of concept trials (does the technology work?), pilot trials (how will RFID operate in our particular environment?), and development trials (how can we evolve our RFID system?). A number of companies urged caution in the speed with which pilot trials in particular were undertaken, to ensure that the full impact of the introduction of the technology could be fully understood across a range of different environments. Measuring Impact. Ultimately, RFID is an intervention used to

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RFID AND RETAILING

enable the business to be more successful in meeting its core objectives of being a sustainably profitable retailer. In and of itself, an RFID system is little more than a combination of technologies that provide the user with actionable data. Most case-study companies had relatively few key performance indicators (KPIs) they wished to achieve, with an improvement in sales being the most prominent. But it is important to understand how any chosen KPI will be delivered, including identifying the organizational drivers and mechanisms that will enable them to be achieved and how they will be measured. Rolling Out RFID. All companies had committed to rolling out their RFID programs—a ringing endorsement for how valuable it was considered to be to their businesses. As with the pilot trials, some companies counseled caution concerning the speed of roll out, citing numerous difficulties they had faced by moving too quickly. Of particular importance was timing—avoiding peak times in the retail calendar and investing in high-quality and sustainable training for retail store staff. Loss Prevention and RFID. Few of the companies regarded their RFID systems as effective tools to actively reduce stock loss, particularly malicious forms of loss such as shoplifting. Primarily this was because the tags being used (swing tags and stickers) were very easy to remove, and current exit readers were viewed as being relatively unreliable. However, some were using RFID data to better understand which products would benefit from additional security, as well as helping in the evaluation of store trials of stock loss interventions. For one retailer, an indirect benefit of store staff having more time to be on the shop floor

Respondents to this research clearly articulated the importance of working hard at getting cross-functional buy-in—RFID projects have long tentacles embracing most retail functions.

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(because RFID had reduced the time other tasks had taken) was that they could increasingly act as a visible deterrent to prospective shop thieves. Remember That RFID Is a Journey. Case-study companies were keen to remind prospective users that RFID systems are not plug-and-forget technologies—they require ongoing commitment to ensure they remain fit for purpose and capable of

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delivering the KPIs originally required by the business to justify any recurring investment. Keeping It Simple. The final piece of advice many offered was to keep any planned RFID project simple—do not make it overcomplicated, and remember that RFID merely provides data; if you do nothing with it, then it is destined to fail.

RFID in Retailing

As stated at the beginning of this article, RFID has been on a long journey within retailing, frequently failing to live up to the hype heaped upon it by those keen to see it develop. But this research has shown that in an appropriate retail environment and by adopting an approach founded upon focused pragmatism driven by financial probity, it is a technology now capable of delivering real benefits to the retail community and its customers. It is perhaps now time to stop asking the question, “Where will RFID be in five years?”

To get a free copy of the full report and further information about the research, contact Professor Adrian Beck at bna@lc.ac.uk.

Emeritus Professor ADRIAN BECK spent his academic career in the criminology department at the University of Leicester in the UK where he focused on retail crime and shrinkage issues. He currently is an academic advisor and researcher for organization’s like the ECR Community’s Shrinkage and On-shelf Availability Group and the Retail Industry Leaders Association. Beck is a frequent speaker at conferences worldwide and a contributor to both LP Magazine’s US and Europe publications. He can be reached at bna@le.ac.uk.

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STRATEGIES

Using Video Surveillance to Audit Your Retail Business T

By Doug Montgomery

Montgomery is manager of customer return on investment (ROI) with March Networks. He has more than thirty-five years of experience working with a variety of clients, including international corporations and franchise units spanning the restaurant, convenience store, and retail banking sectors. Prior to joining March Networks, he ran a successful consulting company specializing in improving business operations and loss prevention through the use of remote access cameras.

hroughout my career, I’ve seen some outrageous behavior captured on surveillance video. From performance and productivity issues—like employees showing up late and doing personal things on business time—to outright theft, I’ve seen it all. As an owner or manager at any level, it’s disheartening to think of what can go on in your organization when you are not there. You do your best to set high standards, but you can’t be there 24/7 to monitor what’s taking place. Most employees do a good job and can be trusted, so it’s even more disappointing when a few people prove otherwise. It is for this reason that many organizations are leveraging video data to conduct regular operations audits. By reviewing snapshots of video throughout the day, they’re able to get a more complete view of how their business is running. Video-based operations audits have helped many businesses increase return on investment (ROI) and boost sales, revenues, and profit by finding theft and fraud they didn’t know existed. Video audits also enable organizations to uncover operational, compliance, and employee performance issues, which if left unchecked can impact their ability to successfully provide services and maintain their reputation.

Whatever your requirements, it’s important to identify that wish list up front and make sure that your preferred solution is flexible enough to meet those needs. In my view, video is the best method of acquiring this information since it captures activity that would otherwise go unseen. Video allows organizations to see operations as their customers or clients do, unfiltered and the way it occurs when no authority figure is present. For organizations interested in auditing their operations with video, there are several options available. Some video surveillance companies offer operational audits as a managed service, where

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they review the video for you based on a list of key performance indicators (KPIs). Others outsource the service to a third party, while still others offer user-friendly video management software tools that allow organizations to manage the audits in-house. Below are a few things to consider before making your selection.

Establish Your Objectives

First, identify what your organization wants to achieve with an operations audit. Do you only want to see exception-based reports with corresponding video, or are you also interested in health and safety issues, the quality of your customer service, and how your employees are performing? Organizations may want to consider a solution that, in addition to supporting audits, integrates point-of-sale (POS) transaction data with video analytics like queue length monitoring, people counting, or dwell time to help assess speed of service or conversion rates and measure promotional success and other behaviors. Whatever your requirements, it’s important to identify that wish list up front and make sure that your preferred solution is flexible enough to meet those needs.

Cover All Areas of Your Business

Theft and loss can occur throughout your organization, so make sure your audit covers all areas of your business and can quickly alert you to signs of trouble. Retail organizations can benefit from a solution that integrates video with POS transaction data to support advanced loss prevention investigation capabilities. Owners and managers will also appreciate the ability to set up custom screenshots, so they can see at a glance what’s happening in their locations and even create alarms and alerts so that they are notified when, for example, a backdoor opens at 3 a.m. The most sophisticated thieves won’t leave an obvious trail. They will cover their tracks by using alternate methods like stealing a key to open a cash drawer or sneaking merchandise out your back door after business hours. Leveraging the video system you already have in place for physical security provides you with a convenient and cost-effective way to keep an eye on your assets.

Consider Who Will Be Viewing the Video

If your organization doesn’t have the resources to review operational audits, you can always opt for a managed service continued on page 48

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Staying Current with Your Audit: Getting Smart about Smartphone Use

to have this done for you. However, you know your business best, so take the time to ensure that the person managing the process knows what to look for. If a third-party auditor is just checking off a list of your ten predefined KPIs, they may miss other important issues. For example, if you are a quick-service restaurant or fast-casual restaurant, an auditor focused solely on cash handling might miss the equally important fact that an employee is cross-contaminating food. It’s essential to ensure that your auditor truly understands your operation and what constitutes good performance and good service. Otherwise, the process is much less valuable to you. One of my recommendations is to have a top performer within your organization view the video in parallel with your external auditor a few times to evaluate it based on your standards.

Successful retailers continually tweak their product lines, customer service, and advertising strategies to keep up with trends and remain competitive. They are also quick to adopt technological innovations that help them reach customers more effectively or improve operations. But many companies overlook the impact that simple technologies, such as smartphones, may have on security. Consider these three, real-life examples of how smartphone use is contributing to retail losses. Perfect Timing for a Theft. Using their smartphone, an employee can easily alert criminal partners when the ideal situation exists to commit a robbery. Maybe the manager has just opened the safe to make a night deposit, for example, or has just closed the store or restaurant for the evening. All the employee needs to do is text an outside accomplice to alert them to the ideal opportunity for a robbery. Would You Like (Free!) Fries with That? Another smartphone strategy involves friends or accomplices texting an employee to ask for freebies to be included in their order. This is common in a quick-service restaurant environment, especially at the drive-through window, and is also seen in retail rental operations and houseware deliveries. It can snowball into a major problem if the retailer doesn’t act quickly. As one employee continues to get away with it, others will be more likely to adopt a similar practice with their friends. Special Orders on the Side. Theft can also occur when a cashier doesn’t ring in the entire transaction contents using the main point-ofsale (POS) register system, but instead uses a smartphone to tally up the cost and collect payment from the customer. This type of theft occurs most often at the end of the night when an employee is closing down a register. This theft is not detectable using exceptions and transaction-based reporting methods. In this case, managers will need to rely on their video surveillance to prove a crime took place. Updated policies around smartphone usage combined with effective video surveillance helps retailers ensure that their policies are being followed, so the opportunity to commit these crimes never arises. If a theft does occur, video evidence can help you better understand the circumstances that led to the crime and help you take steps to prevent similar incidents in the future.

There’s no point conducting an operations audit if the images are blurry and it’s not possible to see what is taking place in the video. Make sure the solution you select offers clear, high-definition video with the level of detail required for investigations and a successful litigation defense, if needed. I can tell you from experience that it makes all the difference. I know of one organization that was facing litigation after a customer slipped and fell inside their premises. The injured person claimed that the fall was due to a wet floor, but their allegation was disproven once investigators reviewed the recorded surveillance video. Because the images were clear, investigators were able to zoom in and see that the customer was wearing flip-flops and had tripped because of her footwear, not because of a wet floor. By considering the above points, you and your organization will be better equipped to decide which type of operations audit best suits your needs. Remember to do your research, ask questions, and request a live demonstration of the solution.

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FUTURE OF LPVIEWPOINT ACADEMIC By Tom Meehan, CFI

Stop Worrying about the Retail Apocalypse and Focus on the Tsunami of E-commerce Returns

n the July–August 2017 issue of this magazine, I wrote an article titled “Brick-and-Mortar Is Not Dead; Amazon Just Proved It.” That statement continues to hold true. But when I read business publications or mingle at industry events, I still notice a lot of doom and gloom about the supposed retail apocalypse of store closing, tighter margins, and staff cutbacks. This fear of and focus on the threat from online retailers, like Amazon, might be distracting brick-and-mortar retailers from a different kind of a threat coming from within. Ponder this—the average return rate at physical retail locations is between 3 and 9 percent, whereas for online retailers it is between 12 and 30 percent. Let me take a wild guess: your organization either has an online channel or plans to build one soon. Do you see what’s coming your loss prevention team’s way?

As the e-commerce percent of sales grows in your organization, so will the refund problem

How Big Is the Return Problem for Brick-and-Mortar Retailers?

Over the years, traditional chains have created generous return policies with the intent of providing outstanding customer service. Some even had no limits on returns—a customer could return anything, anytime. This led to abuses, which accelerated when MARCH–APRIL 2018

traditional retailers also started having online presences. As a result, in the past three years we saw more and more retailers starting to restrict returns. But restrictive return policies discourage honest shoppers, so this now becomes a balancing act. As it turns out, a lot of your customers’ shopping habits are directly related to your return policy. There is a significant marketing advantage to be able to say, “We trust our customers, so we will take anything back.” This helps sales. At the same time, this kind of policy may influence the customer to buy several sizes to try at home. This increases returns and your costs. Some retailers who have both physical and online presences have introduced restocking fees on just online returns. But restocking fees do not encourage good customers to shop again. In a recent survey, almost 80 percent of shoppers said if the return process is simple, they will buy again—meaning that if it isn’t, they won’t. No doubt, the balancing act is becoming more and more challenging.

Implement a Returns Management Process

Amazon is clearly concerned about returns, as evidenced by its recent announcement of a partnership with Kohl’s. This should come as no surprise since returns are one area where e-commerce-only retailers might be at a disadvantage. They sell the product at a lower margin because, in theory, they have lower overhead. A returned item might eat up more than the margin, causing a loss. If the overall return rate is between 12 and 30 percent, as it appears to be in e-commerce, you can see the scale of the problem. Online retailers have another disadvantage from the logistics standpoint. They have to absorb the cost of shipping the item back to the facility, sorting, and repacking, and endure a higher chance of damage. Plus there is a delayed reintroduction of the product back to the inventory if it isn’t damaged. On top of all this, if the process is even slightly inconvenient, customers are just a click away from hundreds of other places to shop.

Meehan is the chief strategy officer and chief information security officer for CONTROLTEK. Previously he was director of technology and investigations with Bloomingdale’s, where he was responsible for physical security, investigations, systems, and data analytics. He currently serves as the chair of the Loss Prevention Research Council’s innovations working group. Prior to his thirteen-year tenure at Bloomingdale’s, he worked for Home Depot in loss prevention, and has had various technology, loss prevention, and operational roles at several other companies. He can be reached at tom.meehan@controltekusa.com.

It helps to have some sort of a returns management process. There are a few third-party resources that can help you manage your returns by using advanced data analytics and systems. What we must not forget is the fraud aspect of online returns. “Almost 10 percent of online returns are fraud,” according to Tom Rittman, vice president of marketing at Appriss Retail. If you think of how difficult it is to manage a fraudulent return problem in a brick-and-mortar environment, imagine how difficult it will be when you start having to deal with a flood of online returns. Policy alone is not the answer. History and data show that restrictive policies can discourage more good customers than bad ones. However, using advanced analytics and data to make returns decisions has proven effective in reducing customer friction. Imagine a world where you could identify a fraudulent refund or abusive customer behavior with over 95 percent accuracy. This can be done today with the right technology. Not to mention, the right analytics suite can also take all the other data points in your store and combine them with your return data to help you build a better customer model. This is where it might be worthwhile to focus some attention and energy. As the e-commerce percent of sales grows in your organization, so will the refund problem. Instead of worrying about the “retail apocalypse,” refocus on this. The percentage of returns is one advantage you currently have over the likes of Amazon. By preempting the spike in return fraud at your organization, you can keep that one advantage and stay competitive. LOSSPREVENTIONMEDIA.COM

FEATURE

RILA’S ASSET PROTECTION LEADERS COUNCIL BRINGING TOGETHER TOP INDUSTRY LEADERS TO ADVANCE ASSET PROTECTION By Jacque Brittain, LPC, Editorial Director

RILA’S ASSET PROTECTION LEADERS COUNCIL

n an industry as dynamic as retail, asset protection leaders have long been faced with the daunting task of keeping pace with the changing landscape of the industry. This has never been more true than it is today. Safeguarding company assets is no longer synonymous with simply catching shoplifters and requires a much more holistic approach to addressing retail loss. In a global marketplace, asset protection leaders must be global thinkers. Our needs, our challenges, and our responsibilities are multidimensional. This is an age where omni-channel retailing is reshaping the way that we do business, and asset protection leaders must rethink their approach to enhancing the profitability of the retail enterprise if they want to survive. However, that doesn’t mean that we have to face the world on our own. We often talk about standing on the shoulders of those who came before us. But today it’s just as important that we stand beside those who share our interests and our passions, finding common ground to overcome our greatest business challenges. RILA’s Asset Protection Leaders Council does just that. “When we bring together the top thought leaders in asset protection from the most progressive retailers in the world and establish a mindset of achieving Lisa LaBruno shared goals, good things are going to happen,” said Lisa LaBruno, senior vice president of retail operations for the Retail Industry Leaders Association (RILA). “That’s why we launched the Asset Protection Leaders Council (APLC) six years ago. Our asset protection leaders are making a difference. By working together, we’re solving the most pressing challenges facing the industry.” Competition drives the retail engine. But when we look under

the hood, we often find that it’s the sum of many different parts that keeps things running smoothly. Occasionally, we learn that some of those parts may come from sources that we didn’t expect. There are certain areas where we shouldn’t compete with each other, and by working together we can all benefit through these innovative solutions. “This is a transformative time in retail,” said LaBruno. “Retailers are competing for every sale, and our asset protection leaders must be true business partners. The trick is to identify areas within asset protection that are noncompetitive and ripe for collaboration. The APLC seizes those opportunities to solve common problems together for the benefit of the entire industry.”

Bringing Leaders to the Table

“The Asset Protection Leaders Council is designed to pull together retail leaders to Paul Jaeckle address critical issues facing the asset protection industry in real time,” said Paul Jaeckle, LPC, vice president of asset protection at Meijer Stores and chair of the APLC. “Our approach and what we accomplish is really representative of what’s happening in the asset protection space collectively. It was created as a forum for the leaders to have collaborative discussions about the different things that are happening in the industry but

without the competitive element that exists in other areas of retail.” By focusing on research, industry-wide initiatives, benchmarking, networking, and other projects and programs that support asset protection, the APLC is finding creative ways to approach current issues and emerging trends. Just as importantly, the APLC is providing a platform to review and discuss those issues most important to the industry and a voice to get things done. There have been discussions regarding what’s going on in the digital space. Crisis management and active-shooter situations have been deliberated. Throughout last fall’s hurricane season, the APLC discussed the top challenges facing retail organizations, shared effective solutions, and collaborated with the Federal Emergency Management Agency (FEMA) to get communities back on their feet. By identifying these industry-wide initiatives, they’re driving innovative solutions that support the asset protection agenda. “We’ve identified common ground that’s good for everyone to talk about,” said LaBruno. “But it’s the participants’ commitment to collaboration that makes all the difference. We’re only as good as the asset protection leaders who participate.” The APLC is fortunate to have participation from solution provider sponsors Intel Corporation, Profitect, and Zebra Technologies. These companies are leading the way through their support, and their thought leadership contributes to the overall success of the APLC.

“This is a transformative time in retail. Retailers are competing for every sale, and our asset protection leaders must be true business partners. The trick is to identify areas within asset protection that are noncompetitive and ripe for collaboration.” – Lisa Bruno, Retail Industry Leaders Association MARCH–APRIL 2018

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RILA’S ASSET PROTECTION LEADERS COUNCIL

“The Asset Protection Leaders Council is designed to pull together retail leaders to address critical issues facing the asset protection industry in real time. Our approach and what we accomplish is really representative of what’s happening in the asset protection space collectively.” – Paul Jaeckle, LPC, Meijer Stores

The Power of Information

Much of the work that comes out of the APLC is used for educational purposes. By bringing together retailers from specialty, big-box, grocery, and other retail platforms to share ideas, considerable information is gathered that can be used to publish research documents, white papers, benchmarking surveys, and other resources. There may be forums that will be pulled together or surveys generated to get a better understanding of what’s really happening in the industry and how people are reacting to specific trends. This also allows the individual leader to gain a better perspective of how their particular position compares to where the industry is headed, how to identify some of the trends that impact their business, and how to respond as a department to best support the needs of the business.

“As an industry leader involved in the process, completing the surveys and taking part in these initiatives gives you access to that information based on your participation,” said Jaeckle. “For example, if a white paper is generated based upon one of the APLC initiatives, the research that’s compiled will be provided back to you once a report is generated. That offers those participating a tremendous benefit. There have been several research documents that I’ve taken full advantage of to help modify or improve the way that we’re approaching things in my business. “But it also provides a valuable resource to educate my executive leadership on what’s happening in our business. It offers a degree of independence under the sponsorship of RILA to further advise and educate executive leadership, providing additional information and focus on these important business topics under

RILA’s Asset Protection Leaders Council often tour retailer locations to see implementation of technologies or strategies as shown in this tour of REI’s flagship store near Seattle. LP MAGAZINE

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RILA’S ASSET PROTECTION LEADERS COUNCIL the guidance of a reliable source and a credible platform.” Some of the most compelling work by the APLC is the result of a robust research agenda. Over the past three years, the APLC has teamed up with renowned academic researchers to study emerging and pressing challenges facing AP organizations. Recent projects include the following four topics. Total Retail Loss. In partnership with Professor Adrian Beck of the University of Leicester in the United Kingdom, this research looks at how the retail industry understands the nature and extent of all the potential types of retail losses while developing a new definition of loss that’s a better fit for the contemporary retail landscape. This groundbreaking model is intended to help better understand the impact of current and future retail risks while making more informed choices about the utilization of increasingly scarce resources. For asset protection professionals, it provides a unique opportunity to build upon the critical role they can play in becoming true agents of change within the retail setting. Opportunities and Challenges for Engaging Merchants in the Protection of Retail Assets. Overall, tremendous opportunity exists to improve merchant engagement in asset protection. In cooperation with the University of Chicago Booth School of Business, this project highlights successful initiatives by various retailers to engage retail buyers and improve cooperative efforts between asset protection teams and merchant groups. By providing clear guidance to help ensure retail merchants are educated regarding their role in shrink prevention, we can garner the commitment and attention necessary to work collectively and improve performance. Mobile Point-of-Sale and Loss Prevention. In cooperation with the University of Arkansas, this study on mobile technology in the retail store brings together the industry’s leading retailers, consumer product manufacturers, and solution providers

to examine the potential risks of technological innovation and explore possible methods for mitigating risk. The study assesses the technological capabilities, retail store attributes, and customer attitudes and beliefs with respect to mobile point-of-sale, as well as precisely how the mobile innovation disrupts the transaction processes around which loss prevention is currently designed. Self-Scan Technologies. In collaboration with the ECR Community Shrinkage and On-shelf Availability in Europe, the APLC kicked off the new year by once again partnering with Professor Beck to examine the impact of self-scan technologies on retail losses. Building upon Beck’s previous

type of system while offering a clearer understanding of how this might impact retail loss.

Similar Issues, Different Perspectives

For many years the loss prevention and asset protection community has benefitted from the outstanding work provided by the Loss Prevention Research Council (LPRC), which has conducted more than 120 real-world loss prevention research projects for retailers and our retail business partners. While both provide valuable information to the industry and may take on similar subjects, the APLC uses different methods and approaches the issues from a different perspective. “I’m active in both the APLC and the LPRC programs, and both are tremendous operations,” said Jaeckle. “They are both trying to solve critical shrink problems with the way that they’re approaching these issues, but it isn’t competitive. This is why I think you see a lot of companies participating in both. They’re both tremendous

Over the course of several months leading up to the Nashville meeting, RILA’s (R)Tech AP Working Group vetted start-up companies to identify game-changing technology they wanted to know more about. The top five were given the unprecedented opportunity to pitch their technology to several “sharks” (AP leaders) and the broader audience. work on the topic and the APLC’s collaboration with the University of Arkansas, the research aims to help current and future self-scan users to better understand what these risks are and how they can be best managed moving forward to ensure they play a positive role in profit enhancement and an enjoyable experience for retail consumers. This research will further help retailers understand how the risks posed by self-scan systems can vary by MARCH–APRIL 2018

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organizations that are just looking at issues from a different perspective.” The objectives of the APLC are defined based on the thoughts and needs of the individual retail leaders. There’s discussion amongst the individual leaders regarding the different topics, with decisions made based upon a collective approach to the subject at hand. For example, approximately fifty asset protection pyramid heads

RILA’S ASSET PROTECTION LEADERS COUNCIL participated in last fall’s APLC meeting in Nashville. During the meetings, eight different retailers hosted store visits, providing insight into their top asset protection challenges and their approach to solving those issues. Afterward, the group brainstormed on those experiences—what they liked, what they would do differently, best practices, and methods to mitigate the problems faced. This allowed the entire group to benefit from the ideas and opinions of the collective team, creating a win-win for the hosts as well as all the participants. “It’s really interesting to take part in these conversations because you’re able to hear how the individual retail leaders respond to the situation, the solutions that we come up with collectively, and the productive approaches that we learn about based on our conversations,” said Jaeckle. “Each retailer can then bring that back to their own program to determine how and whether it can benefit them.”

Setting Things in Motion

Each year at the annual RILA Asset Protection Conference the APLC will gather to frame out what the emphasis is going to be for the next year. The process begins by looking at all the research gathered over the previous year, reviewing what was accomplished and identifying priorities that should be pursued moving forward based on those results. This will include a thorough recap that involves each of the retailers that participated in those studies. Other initiatives may involve scheduling APLC visits to different markets and different types of retailers, opening doors for each leader to experience the nuances and challenges of different or unfamiliar retail environments, different stages of program maturity and development, and different or unique retail cultures. For example, in 2017 APLC visited a retailer with a new and growing asset protection department. Collectively, the

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participants were able to review many of the different aspects of the culture and the program, offer feedback on what was seen, and make suggestions that could potentially help support this growing department. Another visit featured the opportunity to tour a fulfillment center environment. With the expansion of omni-channel retailing, leaders were provided with an idea of what an asset protection department faces when working more intimately with the digital customer. “For retailers now looking to get into the digital space, it was really eye opening to see how the loss prevention department operates,” said Jaeckle. “Some of the things that we take for granted—like how to protect the brand, how to interact with the customers, and how you’re protecting your assets—can be much different in the digital space.” The various challenges and opportunities currently facing the

RILA’S ASSET PROTECTION LEADERS COUNCIL industry will then be discussed, expanding the conversation to forge a comprehensive plan that will set the tone for the upcoming year. This helps keep all members focused on the spectrum of issues currently facing the asset protection professional and the topics most relevant in today’s retail setting.

Nashville Shark Tank

indicating whether they were willing to enter into a pilot with the start-up. “In this particular environment, it was probably one of the best ways to make the presentations for all involved,” said Jaeckle. “Even those who watched from the audience were highly engaged, seeing the same value for their companies as what the sharks were experiencing. It was something completely new and different and

The recent event in Nashville took full advantage of the exceptional turnout, with an innovative approach to addressing retail shrink issues. “Bringing retailers together to look at new-wave ideas and innovation to help mitigate against loss is an exciting task in itself, but we also wanted to have a little bit of fun with it,” said

How to Get Involved

The Shark Tank format proved to be both fun and productive, presenting asset protection leaders with a mechanism for thinking outside of the traditional box by taking a cutting-edge approach to solutions under the spirit of entrepreneurialism. It also provided the opportunity to help influence a start-up company by making suggestions on how to put it all together. Jaeckle. “So we decided to use the Shark Tank format.” Over the course of several months leading up to the Nashville meeting, RILA’s (R)Tech AP Working Group—comprised of retail executives responsible for identifying cutting-edge technology solutions that mitigate total retail loss—vetted start-up companies to identify game-changing technology they wanted to know more about. The group reached consensus on the top five start-ups to invite to Nashville. Each start-up was given the unprecedented opportunity to pitch their technology to several “sharks” (AP leaders) and the broader audience. The sharks challenged each start-up, asking pressing questions about the technology and its application to retail AP. Each pitch ended with the sharks

“The Shark Tank format provided a broad approach to opportunities in our business, but not in the sense that a provider was pitching something that was essentially off the shelf,” said Jaeckle. “This allowed us to essentially outline where we’re experiencing risk in our companies, looking at those issues under a genuine spirit of collaboration. It provided the cooperation between the start-ups in the retailers as well, collectively reviewing everything as a team.”

something that hasn’t been approached this way in the industry.” The exercise proved to be both fun and productive, presenting asset protection leaders with a mechanism for thinking outside of the traditional box by taking a cutting-edge approach to solutions under the spirit of entrepreneurialism. It also provided the opportunity to help influence a start-up company by making suggestions on how to put it all together. For the start-up companies trying to get a foot in the door, it also helped provide real-time feedback on some of the things that they’re trying to accomplish, facing criticisms and feedback on how they can better customize their products and help solve some of the problems that retailers are confronted with. MARCH–APRIL 2018

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Change may be inevitable, but positive and meaningful change is typically the product of cooperation, flexibility, creativity, effort, and thought leadership. Nodding in agreement or pointing a finger in the right direction isn’t leading and isn’t enough to influence change. If we truly want to make a difference, our first step is to get involved. RILA’s Annual Retail Asset Protection Conference is April 29 to May 2 in Orlando. The Asset Protection Leaders Council will meet on Sunday, April 29, from 2:30 to 5 p.m. While membership in the APLC is limited to asset protection pyramid heads from RILA member companies, all retail asset protection pyramid heads are invited to attend this meeting even if your company is not a RILA member. Those who have an interest and any solution providers who are interested in sponsoring the APLC should contact Lisa LaBruno at lisa.labruno@rila.org.

JACQUE BRITTAIN, LPC, is editorial director for LP Magazine. Prior to joining the magazine, he was director of learning design and certification for Learn It Solutions, where he helped coordinate and write the online coursework for the Loss Prevention Foundation’s LPC and LPQ certifications. Earlier in his career, Brittain was vice president of operations for one of the largest executive recruiting firms in the LP industry. He can be reached at JacB@LPportal.com.

As the premier event for retail asset protection executives, the Retail Asset Protection Conference offers powerful insights, extensive networking and in-depth content on topics that matter most to retailers.

Explore what the AP Revolution means for you at www.RILA.org/AP.

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PERSPECTIVES By Jacque Brittain, LPC

Loss Prevention Sales Strategies What do solution providers think we should be looking for in a sales partner?

inding the right solution provider that best fits your product needs is something that must reach well beyond the latest gadget or technology offered on the market. Today, decision makers must venture beyond those that simply sell a particular product or service, serving as true solution providers that work hand-in-hand with our loss prevention teams to tackle the latest industry challenges. But what does it take to be a true solution provider? How do these partners go about building their teams, approaching their business partners, and establishing the foundation for real and lasting solutions—and relationships—with their loss prevention partners? For perspective and input we turned to executive leadership from three leading companies to discuss some common themes.

Cheryl Blake VP of Business Development Verisk Retail

Johnny Custer Chief Implementation Officer Spark Resultants

Claudia Tuttle Marketing Manager Accuride International

What would you consider the most important factor that separates one solution provider from the next?

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customer’s short- and long-term goals. You also identify challenges that they need to overcome, such as budget, IT resources, future program roll-outs, and so forth. Sitting on the same side of the table and understanding these things allows you to provide long-term value to the retailer. CUSTER: I have had the pleasure and good fortune of working with hundreds of retail solution providers in my career, both as a vendor and a retail practitioner. Just about all have been made up of great people making an honest effort to add value to our industry. There are, however, a few that stand out to me because of one particular trait or ability—one I try to emulate in my dealings with my own company—the ability to say “no” when it’s appropriate. We all want to make the current or prospective client happy. We want to project our company and wares in the best light possible. So saying “no” during a sales call or follow up meeting may not feel like a good idea. But there’s nothing wrong with saying no. This allows for realistic expectations to be created, along with reducing the opportunities for disappointing the client down the road. It’s almost cliché at this point, but it really is better to under-promise and over-deliver, especially in a “small” community like retail where everyone knows everyone and reviews on your solution are just a click or a phone call away. TUTTLE: I think assurance is the most important factor in any loss prevention solution. A provider must do more than deliver a product. A provider must deliver peace of mind to a client. That client must have confidence that his or her business is secure without negatively affecting customers or staff.

What would you consider to be the greatest value that a solution provider can bring to their loss prevention customers?

CUSTER: This is a great question, and the answer is really quite simple. A solution provider should be able to provide their client with the ability to measurably impact the bottom line of their company. Loss prevention has a singular purpose—prevent losses to the P&L. For decades we have measured LP impact through the number of cases produced, accidents avoided, or “shrinkage” goals met (or missed), but rarely are LP teams able to quantify the direct impact of their everyday interactions and coaching sessions, and their ability to influence the bottom line of each location served. Regardless of what type of solution provider we are

BLAKE: “Business partner” may be an overused term, but a solution provider who can be a true partner becomes so much more than a provider of things. Too often the fact that one party is selling to another creates an adversarial situation where each side is focusing on their own win. Trust never enters into the equation. In a partnership where each party is actively engaged in creating mutual success, that game-playing can be avoided, and the teams can concentrate on achieving the best solution. Partnering with your customer means ongoing collaboration. You work together to understand the

Brittain is editorial director for LP Magazine. Prior to joining the magazine, he was director of learning design and certification for Learn It Solutions, where he helped coordinate and write the online coursework for the Loss Prevention Foundation’s LPC and LPQ certifications. Earlier in his career, Brittain was vice president of operations for one of the largest executive recruiting firms in the LP industry. He can be reached at JacB@LPportal.com.

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Failing to listen to complaints can be even worse. It can be simple to fix an issue and even feel like you’re the hero. But if you don’t listen and try to understand the underlying cause, the relationship is at jeopardy. CUSTER: I think that fear of challenging the status-quo or traditional loss prevention values has somewhat impeded our industry’s evolution for years. I have interacted with many solution providers that would rather downgrade or limit the potential of their offerings in order to appease customers that may sometimes seem to be very set in their ways. As this is being read, every solution provider sales team is probably yelling at me: “That’s called making a sale. You give the customer what they want!” And of course, this is correct, in theory. But I feel it’s also contingent upon solution providers to provide some thought leadership on where a customer might make some adjustments and not be afraid to share that with our LP partners—when appropriate. After all, we typically have access to the latest, greatest technological gadgets, and we arguably have more interaction with other retailers, LP teams, and vendors, to learn and share how others are evolving and adapting. So why not offer new insight or politely challenge aging methodologies?

discussing, how are you (the solution provider) going to help me (the LP customer) directly influence the top and/or bottom line of my P&L? With my company, this is done through regular reporting and continuously analyzed feedback. But it doesn’t even have to be that complex. More and more, the LP customer just needs the ability to quantify and demonstrate how they helped to put a specific dollar amount, basis point, or other measurable back to the P&L. TUTTLE: The greatest value a provider can offer is to deliver security without compromise to design, operational efficiency, and customer satisfaction. Loss prevention shouldn’t inhibit white-glove service. That’s a major draw for our company and the products we provide. We offer a solution that speeds up authorized access while securing the products we protect, accomplishing all this without altering the design of the fixtures or the products being secured. Put another way, our solutions should protect the merchandise, save time, and reduce hassle that can impact the customer experience. BLAKE: It’s hard for anyone to keep up-to-date with every aspect of our rapidly changing environment. Solution providers bring a wealth of information and as such can be a trusted source of information and advice. As experts in their specific field, they can help the retailer understand new technology and processes. Since many solution providers have added former loss prevention practitioners to their teams, their real-world experience coupled with their product knowledge can offer fresh perspectives to the retailer. I take great pride in the fact that our team is repeatedly approached by retailers for our opinion or insight on projects they’re working on, even where there’s no direct relationship to our products and services.

What qualities do you feel are the most important to look for in an individual when looking to build your sales team?

BLAKE: Establishing partnerships with our customers has always been the primary focus of our business model. In fact, one of our corporate operating priorities for 2018 is customer intimacy—getting close to our customers through dialogue and interaction, listening to what they have to say, and learning how we can improve. I look for individuals who can directly contribute to this dynamic. We look for team members who can build relationships, not solely focus on the transactional side of sales. Experience working in or with retail is critical but not limited to just the loss prevention vertical since our loss prevention customers interact with all aspects of the business. It’s important that our sales team is adding value, so the individual needs the ability to look at the big picture and provide industry insight. CUSTER: “Pleasant persistence” is always an excellent quality in a salesperson. That is the ability to stay on a lead without being overly annoying or coming off needy. But this is an obvious choice. I prefer to look for either real field LP or operations experience or, at the very least, a fundamental understanding of what it’s like to work in the trenches of retail. This allows the salesperson to customize their message in order to demonstrate the practical application of our offerings to the potential client while staying empathetic to any roadblocks or pitfalls that that may be present. TUTTLE: I see three qualities as essential. A sales team must be informative, relatable, and approachable. Those three qualities are an unbeatable combination.

What do you feel is the most common mistake that solution providers make when dealing with their customers?

TUTTLE: Too often providers make the critical mistake of not listening to their customers. Every solution provider owes it to their customers to pay attention to his or her needs and respond accordingly, working together to design and implement the best and most effective solutions in ways that are meaningful and productive. This adds real value to both the customer and the solution provider and defines the meaning of true partnership. BLAKE: Without a doubt, it’s failing to listen—both to what the customer is actually saying and to how they’re saying it. When you walk into a meeting, positive that you already know what the retailer needs, you often fail to hear anything that is counter to your beliefs. When you have your own agenda that you’re determined to get through, you blind yourself to signs that the customer has tuned you out. In both cases, the customer feels that they’re being talked at, not collaborated with. There’s no partnership. You’ve lost the opportunity to understand what the customer needs from you.

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SOLUTIONS SHOWCASE CONTROLTEK

Building a Culture of First Time Right

ho has the time to do the same job twice? That’s right—no one. This rather simple insight lead the leadership of CONTROLTEK to make “First Time Right” the cornerstone of their business. “We believe that it’s no longer enough to do the job right for the customer—everyone expects that,” said Dave Hardeman, the company’s director of client solutions delivery. “To truly deliver value, we have to save every minute of a client’s time possible, which lead us to the concept of First Time Right. It started in our installations team and spread quickly through the rest of the company. With this approach, we were able to not just delight our customers but also improve internal efficiencies, drive our costs down, and pass the Dave Hardeman savings to our clients.”

First Time Right in Action

According to Hardeman, the concept is pretty easy to understand but trickier to implement. “The focus for installers used to be to get to the job site, install the system according to specifications, and call it the day. But this is a fire-ready-aim approach. We start by asking the client what First Time Right means for them—how they envision a successful rollout of their new systems. And it can be surprising how different answers can be. We then write the plan and define key performance indicators (KPIs) together with the client.” For one retail chain, Hardeman explained, the focus was on the aesthetics. The new RFID systems were expected to work as promised, of course, but the number one priority was that they had to blend in with the store’s overall look. “So in addition to working with the retailer’s LP team, we also engaged their merchant team. We brought in a designer to work on the project with us and shared the drawings and concepts with the merchants to make sure that what we were doing was in line with their brand guidelines. The result was a very happy merchant team and a very happy LP team—two groups of people with different goals.” At the same time, CONTROLTEK was preparing a large EAS systems rollout with another retailer that had a very different philosophy. “Their focus,” said Hardeman, “was on visual deterrence, so it was almost the opposite from the other retailer. This client wanted to maximize the visibility of the solutions we were installing, so our team members with LP backgrounds worked directly with the client’s LP team to develop guidelines and schematics of

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how the finished installation should look.” This project was a smashing success too. “If we treated these two projects the same, we would not have had happy clients. In our minds the installations would have been completed as promised if the systems worked, but in the clients’ minds they would have been a failure if their additional requirements were not met.”

The Unintended Benefits

Steve Sell, CONTROLTEK’s vice president of global sales and marketing, saw wider benefits of this approach. “Dave and his team saved our clients tens of thousands of dollars in unnecessary service visits through their First Time Right focus. This made a tremendous positive impact in our client relationships, so it only Steve Sell made sense to make First Time Right a strategic initiative across our entire organization.” Sell explained that each team was asked to define its own metrics around First Time Right. Employees were

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SOLUTIONS SHOWCASE CONTROLTEK encouraged to apply critical thinking about their daily tasks, come up with ideas, and discuss them among themselves. “The results were dramatic. Our operations department, for example, reworked their order processing workflows to focus on getting every order right the first time, on time. This reduced the need to ship overnight by 47 percent, driving our shipping costs down. Our finance team retooled the policies for booking travel and introduced new apps that significantly reduced our travel costs. Perhaps my favorite First Time Right initiative was the one that had to do with email—we asked employees that instead of automatically hitting the ‘reply all’ button, they take a moment to think about who really needs to read the email. With this we reduced internal emails by almost 30 percent, saving immeasurable time in lost productivity.” According to Sell, spreading the culture of First Time Right had a transformational impact on the whole company. “Better internal efficiencies made us an operationally excellent organization from top to bottom, and we put ownership of that mission in the hands of every employee.”

A Viral Concept?

To keep the client in the loop and allow for real-time feedback, CONTROLTEK developed a proprietary technology that provides full transparency of the project to the customer. According to Hardeman, this also resulted in clients developing new best practices based on the First Time Right approach. “One client asked us to play an active part in their regional training. We developed a video-based training program, allowing personnel to become certified in the use of the new shrink management system, and improved the in-store compliance as the result. With another client we developed a training module to prepare store associates for the arrival of our technicians. This resulted in a drastic reduction of miscommunication and second visits. We even had an instance where our finance team got together with the client’s to set up the invoice process so that it works for both organizations.” For Hardeman, First Time Right is ultimately about delivering results. “C.S. Lewis once said, ‘The future is something which everyone reaches at the rate of sixty minutes an hour, whatever he does and whoever he is.’ At the very core of First Time Right at CONTROLTEK is the quest to dedicate each of our minutes to listening with intent, planning with purpose, and delivering uniformly and consistently with integrity—every time. In doing so, our next minutes will not be consumed with correcting mistakes. Instead, they will be open for us to focus on presenting our very best in products and support services to our clientele.”

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CONTROLTEK’s Mechanisms for Ensuring First Time Right Delivery ■■

Professional CAD designs and drawings that provide details to meet the requirements for approved placement of technology solutions

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Customized packaging and delivery options to significantly reduce lost or delayed product shipments

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Audit process formats that offer a consistent data tracking and measurement approach

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Scope of work frameworks designed to enhance the services of third-party vendors working with or near CONTROLTEK products

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Network mapping and secure interface management reference documentation that respect the connectivity safety concerns of information services

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Video tutorials designed to enrich the understanding of CONTROLTEK products and their overall purpose

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SOLUTIONS SHOWCASE DIGILOCK

Creating a “Culture” of Loss Prevention to Reduce Shrinkage

olicies and operations may be the foundation of a loss prevention strategy, but it takes significant cultural change, input from all levels of employees, and a collective effort on behalf of all departments to ultimately have a positive effect on reducing shrinkage. No single employee or department can combat this on their own. The first step toward fostering a culture of loss prevention in the retail environment is to develop a strategic, multifaceted approach whose foundation is a system of values shared by facility management, operations, visual merchandising, and loss prevention. By establishing and encouraging a shared culture, each department can work toward its individual goals while sustaining the larger goal of reducing shrinkage. For example, by increasing employee presence near high-value items that are easily concealable but also most profitable when displayed near store entrances, employees can better monitor for theft while providing enhanced customer service. Setting the scene for employees and customers when they enter the store will let both parties know that the establishment takes theft seriously.

Get in the “Zone”

“Zones of influence” is a well-known concept in loss prevention that refers to the various areas that are implicated in loss prevention strategies. Extending from the asset itself and its immediate surroundings to the exterior of the store, public spaces, and even the home environment, these zones reflect the varying degrees to which measures can be implemented to achieve a comprehensive and effective loss prevention model. Increased situational awareness, closely monitored employee activity, and specifically tailored responses to events in each zone can help to foster a holistic culture of loss prevention.

Tools of the Trade

Generally speaking, solutions address loss prevention efforts by doing one or more of the following: ■■ Increasing effort or the physical difficulty associated with stealing (such as bolted down or encased product). ■■ Increasing risk or the odds of being caught (such as alarms or products that make a noise to alert an associate or that capture an image).

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■■ Decreasing

reward (such as when the removal process damages or marks the item or an item is prevented from being activated until purchased). Installing or upgrading to electronic locks on casegoods displaying CRAVED (concealable, removable, available, valued, enjoyable, and disposable) merchandise increases both the effort associated with theft and the risk of being caught. In addition to mitigating the efforts of potential thieves, electronic locks offer flexible and easy management. Some electronic locks, such as Numeris by Digilock, also have added features, such as the capacity to conduct audit trails. In the case of internal theft, this feature allows loss prevention to identify the last employee or manager who accessed the merchandise.

A Proactive Approach

While reactive solutions such as these can be effective, a comprehensive loss prevention program should also incorporate proactive measures. One example of a proactive solution is a locker bank located in an employee break room. When a new employee takes a tour of an establishment, it is important to create a memorable first impression for that new hire. This conveys that the company cares about employees and their needs and also provides employees with a sense of pride in their company. Providing employees with a secure location for their belongings reduces opportunity for potential employee-on-employee theft and ensures that employees are not distracted while on the floor. Customizations to the lockers, such as electronic locks or clear polycarbonate doors, may also deter employees from hiding stolen merchandise in their lockers and can be useful for managers needing to conduct visual audits of their employees’ lockers. For more information on how LockUp lockers can enhance loss prevention efforts in retail establishments, visit lockup.com.

No Better Time than Now

With nearly $50 billion lost to shrinkage every year and customer expectations changing constantly, retailers must find innovative ways to reduce shrink without affecting customer experience and impacting sales growth. Attempting to eradicate theft altogether may be an insurmountable task, but fostering a holistic culture of loss prevention encourages all levels of employees and departments to take part in the prevention of shrinkage.

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SOLUTIONS SHOWCASE THINKLP

The Beauty of Full Automation with ThinkLP

ounded in 1964 as a single store in New Orleans, Sally Beauty Holdings has grown to more than 5,000 stores worldwide with over 4,200 locations and fifteen distribution centers throughout the US, Canada, and Puerto Rico. Sally Beauty is a leading international specialty retailer and distributor of professional beauty products that offers more than 7,000 products and is a first choice for cosmetologists and consumers in markets served. Late in 2013, Mike Povendo, then vice president of loss prevention at Sally Beauty, realized that the in-house LP tool was no longer solving the needs of the department and began looking for an alternative solution. Sally Beauty required a unified system that could track incidents, investigations, and audit functions, and in 2014, ThinkLP was selected as the cloud-based solution provider because it was a flexible, modern, and mobile platform that also met stringent data security and privacy requirements. Since implementation, Sally Beauty has expanded the platform into one central source of loss prevention information. Povendo retired from Sally Beauty this year knowing that ThinkLP is a solution that will allow the team to continue being successful. The large number of locations that Sally Beauty’s LP team is responsible for presented a challenge to the team with just sixteen field LP team members covering over 4,200 store locations. Starting with case management, incident management, and auditing, ThinkLP was selected as the platform to help automate Sally Beauty’s LP department. Sally Beauty was able to realize virtually an immediate return on investment (ROI) simply by automating all areas of existing loss prevention activities. The LP team was able to reduce office time by more than 25 percent, which translates into more time in the field to work on troubled areas rather than spending countless hours producing reports, sending emails, and following up on activities. Jim Mires, current vice president of loss prevention at Sally Beauty, has seen first-hand the power of ThinkLP: “In the two months that I’ve had the opportunity to work with ThinkLP, I have come to realize that this is one of the first tools an LP department should implement. The platform not only supports LP but also builds a link with other departments within your organization.” With the resounding success that Sally Beauty was able to realize during the initial implementation, the next step was to identify other opportunities to employ the platform. Subsequently, Sally Beauty has now employed ThinkLP to

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automate inventory over/short management, budgeting, expenses, metrics, check requests, expected credit loss (ECL) reporting, restitution, organized retail crime investigations, code compliance, key requests, monthly reporting, dashboards, and LP service requests, among other uses. With all this information in a centralized system, Sally Beauty now has one-tap access to real-time store profiles. Shortly after implementation, the LP service request process was identified as an area that could provide significant time optimization. Sally Beauty utilized ThinkLP to streamline LP service requests received from stores along with corporate approvals and external vendor integration with full vendor-payment processing to match expense budgeting for real-time spend metrics. This automation has allowed the team to streamline internal and external communication, closely monitor and optimize expenditures, and service stores faster. Sally Beauty is looking forward to continued use of ThinkLP as features and products continue to improve and expand. “ThinkLP had a huge impact when we first implemented, but we have grown our use of the tool over time and continue to realize added ROI every step of the way!” said Julie Lawson, Sally Beauty senior loss prevention manager of systems and transactions. ThinkLP is not just about providing loss prevention and safety automation tools to companies like Sally Beauty; ThinkLP is also your lifelong partner in making an impact on your bottom line. Reach out to ThinkLP via email at info@thinklp.com or call 888-767-3141 to see how ThinkLP can help you succeed with awesome loss prevention software.

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JUNE 11-13, 2018

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The Excellent Life of Bob MacLea

Kelsey Seidler Seidler is managing editor, digital. She manages the magazine’s digital channels that includes multiple daily e-newsletters featuring original content and breaking news as well as pushing content to various social media platforms. Seidler recently earned her master’s degree in technology and communications through the University of North Carolina’s School of Media and Journalism. She can be reached at KelseyS@LPportal.com.

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Long-Time Industry Icon Bob MacLea Passes at Age Seventy-Five By Jack Trlica

Bob MacLea, one of the retail industry’s longest tenured and most respected loss prevention executives, lost his battle with cancer March 1. Beginning his career as a security officer in 1975 with Marshalls Department Stores, MacLea steadily rose through the TJX corporation ultimately retiring as senior vice president of loss prevention in October 2016 Bob MacLea after forty-one years. Asked why he worked as long as he did, MacLea reportedly said, “I’ve always been told that when you retire, you should do something you love. I love my job and can’t think of anything I’d rather do. So why should I even think about leaving?” News of MacLea’s passing prompted a chorus of emails, text messages, and phone calls between the many men and women touched by MacLea, who was known as much for his compassion for people as his competency as a retail security practitioner. One of his direct reports at TJX explained that he coined the phrase “relationships before tasks” to describe his philosophy for building the loss prevention mindset both inside the LP organization and throughout the TJX culture. His focus on people was recognized in LP Magazine’s first Magpie excellence awards in the January–February 2017 print edition when he was the first Excellence in Community Service recipient. The article noted, “He has always believed you must be involved with both your community and your profession, and he has lived up to that belief. Over the years MacLea has also given of himself to philanthropy, supporting many charitable initiatives such as the Youth Business Institute, Minority Suppliers, the NAACP, Lazarus House, Big Brothers Big Sisters, and Making Strides Against Breast Cancer.” MacLea was also an active proponent of advancing the loss prevention profession as he served in various organizations across LP MAGAZINE

the industry, including the board of directors, executive committee, and audit committee for the Loss Prevention Foundation; the loss prevention advisory council for the National Retail Federation; the editorial board of LP Magazine; and the Loss Prevention Research Council, of which he was a founding member. Many individuals throughout the loss prevention profession have expressed their heartbreak at MacLea’s passing. Perhaps his close friend and former colleague Jim Lee, LPC, executive editor of LP Magazine, summed up the feelings best when he wrote, “Bob felt very fortunate in what he had achieved in business and family, and he wanted to share and give back. I feel very fortunate that I knew this exceptional man. He enriched my life and was an example to follow for everyone he touched.…Much has been chronicled about his accomplishments in work and family. I am so happy I did not miss the chance to tell him how much I loved him and how much he meant to others and me. Eternal thanks to you, Bob.” (See page 74.)

Now Amazon Doesn’t Care if You “Accidentally” Shoplift By Bill Turner, LPC

Got your attention, right? After five years of development and fourteen months of testing, Amazon opened a new, cashierless Amazon Go grocery/convenience store in downtown Seattle on January 22. There is no waiting in checkout lines because there are no lines—and no cashiers. In order to shop, customers must download the Amazon Go app on their cell phones, connect it to their Amazon accounts, and choose a payment method. A QR code is generated, and the customer scans it at a station located at the front of the store. Once the customer is scanned in, multiple sensors and cameras throughout the store track items that the customer takes off the shelf. All prices are posted on the shelf. Items selected are automatically charged to the customer when they leave the store. Amazon has described the technologies in the store as “computer vision, sensor fusion, and deep learning.” The system not only tracks people in the store but also associates the customer with what they buy. Accuracy is critical to be sure the system identifies the right customer selecting the right product. It could be tough to do in a very crowded environment, but so far, it seems to be working. All the data collected allows Amazon to figure out what products are bought at what time and what is the optimum location of the product in the store. There is much speculation as to whether or not Amazon will migrate this system to Whole Foods. And Amazon may be first, but they are not alone. Walmart is rumored to be working on a similar concept. The industry is abuzz. MARCH–APRIL 2018

PRODUCT SHOWCASE But wait. What does loss prevention look like in a cashierless environment? An honest customer has to download an app and “sign in” at a station, so they can shop and be charged for their purchases. What if they “shop” and don’t sign in? Amazon Go Vice President Gianna Peurini told CNBC, “Accidental shoplifting happens so rarely that we didn’t even bother building in a feature for customers to tell us it happened.” The fact that there isn’t even a feature to tell Amazon something has been taken is interesting. It says that the company is so confident in its system that it hasn’t developed protocols to safeguard against missing items. In addition, Amazon apparently isn’t distinguishing between those customers who “accidentally” steal and those who are definitely trying to steal. It appears that Amazon is counting on the fact that the majority of customers are honest, and huge sales more than make up for some losses. With all of the cameras and sensors in the store, all but the boldest of shoplifters may be deterred. But then again, what about organized retail crime? With one test store, maybe it’s not a huge concern. What happens if the concept explodes and becomes a model for shopping in the future? Who knows? To that point, it will be interesting to see how the public adopts this concept and how profitable it is for Amazon. After all, ten years ago it was predicted that self-checkout stations would “revolutionize” retail. Many studies have shown that self-checkout has not been all it was cracked up to be in terms of shrink, throughput, and labor savings. Instead of expanding the technology, a lot of retailers have bypassed the concept entirely, and others are removing systems already installed. Not to mention, with Amazon’s new concept, there is always the fear of “Big Brother” watching our every move. Time will tell for Amazon Go. It should be interesting.

The ALTO Approach to Managing Retail Theft Earns “Historic” Win in Albertson’s Shoplifting Case

In what one former prosecutor termed “historic,” a habitual shoplifter who was set to be arraigned on a misdemeanor continued on page 70

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continued from page 68

March 13–15, 2018 Jewelers’ Security Alliance 40th Annual Security Seminar Las Vegas, NV jewelerssecurity.org March 18–21, 2018 Shoptalk 2018 The Venetian, Las Vegas, NV shoptalk.com March 19–22, 2018 Merchant Risk Council MRC Vegas 2018 Aria Resort and Casino Las Vegas, NV merchantriskcouncil.org March 22, 2018 Cyber Security Summit Hyatt Regency, Denver, CO cybersummitusa.com April 10–13, 2018 ISC West International Security Conference and Exposition Sands Expo, Las Vegas, NV iscwest.com April 24–26, 2018 International Organization of Black Security Executives 2018 Spring Conference JCPenney Headquarters Plano, TX iobse.org April 29–May 2, 2018 Retail Industry Leaders Association Asset Protection Conference Gaylord Palms Resort Orlando, FL rila.org May 15, 2018 Cyber Security Summit Ritz-Carlton, Dallas, TX cybersummitusa.com June 5, 2018 Cyber Security Summit Westin Copley Place, Boston, MA cybersummitusa.com June 10, 2018 Loss Prevention Foundation “Swing for Certification” Golf Tournament Bear Creek Golf Club, Dallas, TX swingforcertification.org June 11–13, 2018 National Retail Federation NRF Protect Gaylord Texan, Dallas nrfprotect.com

petty theft charge had his bail increased from $5,000 to $50,000 based on information provided to the Los Angeles city attorney’s office by ALTO US, a risk management technology company that provides retailers an innovative approach to stopping retail theft repeat offenders. On October 25, 2017, Justin Riles was stopped by undercover loss prevention agents for allegedly shoplifting multiple items of shampoo and toothpaste at an Albertsons grocery store on Crenshaw Boulevard in Los Angeles. Riles was booked by police and released on $5,000 bail. The ALTO Alliance legal team supporting Albertsons researched Riles’ lengthy retail theft background and compiled an extensive case report that was presented to Los Angeles Deputy City Attorney Keith de la Rosa. When Riles’ arraignment hearing was held on November 17 in Los Angeles Superior Court before Judge Christopher K. Liu, the defendant did not show up, but the ALTO team did. The team, consisting of an attorney, paralegal, and regional operations director, were in court as “friends of the victim”—an almost unprecedented action for a misdemeanor shoplifting case. Based on the ALTO research and their presence in court, the deputy city attorney asked for and received the significant bail increase on the shoplifting charge as well as an increase to $26,000 for each of two outstanding warrants on Riles. “I have seen victim representatives in cases involving large sums of restitution but never on a petty theft case where the victim was asking for relief from the incessant pain caused by a recidivist defendant,” said Loren M. Naiman, retired career prosecutor with the Los Angeles County District Attorney’s Office and member of the advisory board for ALTO US. “This is a first for the rights of retail victims and a first in the pushback against unanticipated negative consequences caused by the passage in 2014 of California’s Proposition 47.” “We are extremely pleased and encouraged by the progress ALTO has made in our efforts to identify and prosecute the habitual offender,” said Kathleen A. Smith, CFI, vice president of asset protection for Albertsons-Safeway.

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“Removing this type of negative element from our stores, creating a safer environment for our customers and associates, and increasing sales is exactly why we partnered with ALTO.” Karl Langhorst, CPP, CFI, executive vice president for ALTO US, said, “This is an excellent example of how retailers can provide the additional intelligence needed to assist our criminal justice system to hold recidivist retail theft offenders accountable. ALTO Alliance provides retailers, law enforcement, and prosecutors a state-of-the-art technology solution, supported by concierge-level service, that bridges the offender information gap to ensure justice is served.”

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