May - June 2011 by Loss Prevention Magazine

THE VOICE OF LOSS PREVENTION LPportal.com | V10.3 May – June 2011

MAGAZINE

The Evolution of Data Sharing in Retail’s Battle against ORC THE CAREER JOURNEY OF JCPENNEY’S STAN WELCH LEVERAGING VIDEO ANALYTICS THROUGHOUT THE ORGANIZATION BE A GREAT WORKPLACE CITIZEN

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Contents

17 The Evolution of Data Sharing in Retail’s Battle with ORC The next generation of LERPnet.

By Jack Trlica, Editor and Publisher

PUBLISHER’S LETTER April Anniversaries By Jack Trlica

ON THE WEB

RETAIL SPONSORS

LOOKING BACK Ten Years of LP Magazine

14 INTERVIEWING History of Interrogation According to W-Z: The Past By David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP

29 The Winding Road from Store Detective to VP The career journey of JCPenney’s Stan Welch.

Events LP Magazine Hosts 10-Year Anniversary Event

Certification Is It Your Obligation to Get Certified? By Gene Smith

By James Lee, Executive Editor

62 Fundamentals Feedback from the Dark Side By Mike Marquis, CFI

41 Leveraging Video Analytics throughout the Organization

EVIDENCE-BASED LP Research Fundamentals By Read Hayes, Ph.D., CPP

INDUSTRY NEWS - RFID Gains Traction in Apparel Market - Chinese Retailers Losing Billions; Shift Loses to Suppliers By Robert L. DiLonardo

PEOPLE ON THE MOVE

ADVERTISER DIRECTORY

VENDOR SPONSORS

PARTING WORDS Rambles from My Calendar By Jim Lee

Deploying DVRs inside one Canadian specialty retailer. By Jen Richard, West 49

53 Be a Great Workplace Citizen Adapting your company’s culture and values for personal success.

By Bruce Tulgan, RainmakerThinking

May – June 2011

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

April Anniversaries

EDITOR AND PUBLISHER Jack Trlica JackT@LPportal.com

pril is a great month for me both personally and professionally. Twenty-eight years ago in April I married my best friend and very special lady, Cindy. Ten years ago in April, I committed to another relationship with Jim Lee, and we began work on a very special project—LossPrevention magazine. This April Cindy joined me and a hundred loss prevention industry executives and spouses to celebrate the 10-year anniversary of the magazine in one of the prettiest locales in North Carolina, if not the country—Asheville’s Grove Park Inn. Ask anyone who attended, and I’m confident they will urge you to visit this unique, historic hotel and resort if you ever have the chance. Normally in April, we host a meeting of our editorial and vendor advisory boards, usually joined by the LP Foundation board of directors, to discuss the state of the magazine and brainstorm ideas for articles and new directions for the magazine. Because of how proud we are of our first ten years of publishing, we decided to hold this year’s meeting in a location that would lend itself, not only to business, but also some fun and entertainment. I wish we could have invited everyone who contributed to the success we’ve enjoyed these past ten years as well as the LP professionals who have read the magazine and, hopefully, bettered their careers because of it. That would have been some party…one that would have filled an NFL stadium. Instead, we hosted a small group of key industry executives who manage some of the largest and most successful loss prevention organizations in the country and some of the most important service and product suppliers to our industry. We are fortunate that these busy, hard-working individuals are willing to offer their time and insights to contribute to the direction of the magazine. As Jim and I repeated numerous times to those attendees, without their support, this magazine would not have been possible. We certainly appreciate their efforts, and you, our readers, are the primary benefactors because their support allows us to put this magazine into your hands six times a year. At the risk of appearing overly mushy, let me publically express my gratitude to everyone who was able to attend our celebration as well as to those who were unable to attend due to scheduling conflicts and, in some cases, tornadoes. Thank you from myself, my good friend and partner, Jim, and all the terrific men and women who work with us on this very special project we now call LP Magazine. For more details about this meeting, please see pages 26 – 27 and visit our website to see both photos and videos from the event.

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

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

CIRCULATION MANAGER Kelly Durham, LPQ KellyD@LPportal.com NEW OR CHANGE OF ADDRESS www.myLPmag.com POSTMASTER Send change of address forms to Loss Prevention Magazine P.O. Box 1088 Lowell, MA 01853

Jack Trlica Editor and Publisher

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

May – June 2011

LPportal.com

LP Magazine (USPS 000-710) is published bimonthly by Loss Prevention Magazine, Inc., 700 Matthews Mint Hill Rd, Ste C, Matthews, NC 28105. Print subscriptions are available free to qualified loss prevention and associated professionals in the U.S. and Canada at www.myLPmag.com. The publisher reserves the right to determine qualification standards. International print subscriptions are available for $99 per year payable in U.S. funds at www.LPportal.com. For questions about subscriptions, contact circulation@LPportal.com. Periodicals postage paid at Matthews, NC, and additional mailing offices.

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ON THE WEB

Editorial Board

New Weekly e-Newsletter for the Retail LP Professional

Leo Anguiano Vice President, Loss Prevention & Risk Management, Central Parking Corp.

Starting in May, the magazine has launched a newly redesigned e-newsletter with a more frequent distribution schedule. Now going out weekly, the newsletter offers: ■ C urrent loss prevention, retail, and technology news, ■ O riginal content from magazine staff and contributors, ■ P eople on the move listings, ■ H elpful links, ■ C alendar of events, and ■ A little fun to brighten your week. If you are not receiving our e-newsletter, visit the website at www.LPportal.com and click on the icon shown here to sign up. If you would like to contribute to the newsletter or have any comments, contact us at newsletter@LPportal.com.

Jim Carr, CFI Director, Loss Prevention, Rent-A-Center Ken Cornish Vice President, Retail Operations, The Kroger Co. Daniel Doyle, CFI Vice President, Loss Prevention & HR Administration, Bealls Patti Felz Vice President, Loss Prevention, Polo Ralph Lauren Barry Grant Senior Vice President, Operations & Loss Prevention, CPI Corp

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Benefits of an Open Architecture: Lowe’s Companies’ View on IP Video Standards Live Broadcast 2:00 p.m. EDT, June 23 In a world of better, faster, and more cost-effective products and technologies, retailers are inundated with choices. If you are considering new technology products for your retail business, you must ensure those products are interoperable with your existing infrastructure and guarantee minimal to no disruption as your business scales. This educational webinar will speak to how an open architecture of IP video standards saves time and money and positively impacts your operation’s bottom line. Attend this webinar to gain: ■ Insight to what an open standard means and its benefits. ■ O NVIF, an industry alliance that is gaining momentum as the defacto standard. ■ I dentifying tangible and measurable opportunities to improve operational efficiency and business flexibility. ■ R eal examples of lower total cost of ownership (TCO) and improved return on investment (ROI). ■ A bility to scale into new markets, while ensuring interoperability.

May – June 2011

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

Frank Johns Chairman, The Loss Prevention Foundation

Bill Titus Vice President, Loss Prevention, Sears Holdings

Gary Johnson Vice President, Loss Prevention, Vitamin Shoppe

Bill Turner Senior Director, Retail Operations, Cole Haan

Paul Jones Senior Director, Asset Protection, eBay

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

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

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

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

Bob MacLea Senior Vice President, Loss Prevention, TJX

Sponsored by

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

Bill Heine Senior Director, Global Security, Brinker International

Mike Lamb Vice President, Asset Protection, The Home Depot

Featured Speakers Brian Morrison, Lowe’s Companies Steve Surfaro, Axis Communications Jackie Andersen, Axis Communications

Chris McDonald Senior Director, Loss Prevention, Dollar General

LPportal.com

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

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May – June 2011

LPportal.com

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

LOOKING BACK ON 10 YEARS OF LP MAGAZINE “I think the loss prevention executive of the future absolutely needs to be in touch with the safety of the associates. A component of our role will continue to be, ‘How do we read the landscape to ensure that we have the right protection of the associates?’” – Paul Jones, Limited Brands

“I really want RILA to be known as an organization who cares about all of the industry components, not just the retailers.” – Sandy Kennedy, RILA

What we are attempting to do is add to the tools and practices that will not only move CVS/pharmacy, but the entire retail loss prevention industry forward in stopping loss. By aggressively protecting our brand through enforcement of our trademark rights, we combat the spread of counterfeit Tiffany & Co. merchandise, enhance the value of the product we make, and protect the integrity of our retail stores worldwide and of tiffany.com.

March-April

May-June •LP-MayJune 04 FINAL 2.

4/10/04

3:27 AM

Page 1

May – June 2004 LossPreventionMagazine.com

V3.3

POS EXCEPTION REPORTING

2004

Loss prevention is not about technology and about catching people doing the wrong thing. It’s about preventing loss, or eliminating an environment where people feel it’s right to do wrong.

January-February

An important component in the development of an interviewer is providing the intellectual understanding of the interview process selected. Too often interviewers are allowed to observe an interview and, while they see and hear what is being said, they lack an understanding of why it is being done in that way.

BI-LO rolls out biometric cashchecking system.

The Benefits and ROI

INTERVIEW WITH PAUL JONES | PARTNERING WITH LAW ENFORCEMENT TO COMBAT ORC PROFILE OF THE PARADIES SHOPS | MEASURING INTERVIEWER PERFORMANCE

Mark Zuckerberg launches Facebook.

Trademark Enforcement by John Pollard and David McGowan Interview with Jeff Richardson, Pathmark Stores Changing the Rules of the Game by Paul Stone Fitness Balance at Home and on the Road by Hedgie Bartol A Generational Shift Is Revolutionizing the Workplace by Bruce Tulgan May – June 2011

Target mandates RFID tags on pallets and cases.

Interview with Sandy Kennedy, RILA Retooling the LP Strategy at Home Depot by Marvin Ellison Procurement Fraud: Buyer Beware by Matthew Giese Product Protection— Beyond EAS by Jon Roberts and Judy Hughes Biometric Technology by William Rogers

LPportal.com

Ronald Reagan dies.

The Benefits and ROI of POS Exception Reporting by Walter Palmer Interview with Paul Jones, Limited Brands Partnering with Law Enforcement to Combat ORC by Nelson Harrah LP Takes Flight in Airport Shops Nationwide Monitoring and Measuring Interviewer Performance by Dave Zulawski and Brett Ward

2004

With our new auditing solution, we are developing a clearer, more detailed understanding of how well our LP policies and procedures are working and where we need to do a better job. “The people that I have seen over my career that have been good LP executives or good HR executives have the ability to be strong on one hand, but compassionate on the other. You can’t let people confuse kindness for weakness.” – Dan Doyle, Bealls

July-August

September-October

Red Sox win World Series.

Core Competencies That Drive Success at Saks Fifth Avenue by Tom Matthews Interview with Dan Doyle, Bealls Recruiting LP and Safety Professionals at Lowe’s by Rob Forney Taking Auditing to the Next Level at Staples by Robert McGrath and Wayne Jacobson LP Hotlines Are Heating Up by Ralph Childs and Ed Stamper

Homeland security has entered our post-9/11 lexicon, but homeland insecurity remains the abiding reality. With the exception of airports, much of what is critical to our way of life remains unprotected. The measures we have been cobbling together are hardly fit to deter amateur thieves, vandals, and hackers, never mind determined terrorists.

November-December

George W. Bush defeats John Kerry for President.

Interview with Stephen Flynn on Homeland Security An Important Proactive Component of Effective Disaster Readiness by David Ferguson Seven Steps to Implementing a Workplace Violence Crisis Response Plan by Barry Nixon ORC Gangs Targeting Optical Goods by Liz Martinez How GUESS? Turned LP into a Mission-Critical Business Operation by Michael Stugrin

Indian Ocean tsunami kills 230,000.

Interview with Sandy Katz, Talbots What Will It Take to Secure Our Global Supply Chain? by Kelby Woodard Understanding the Impact of RFID on Retail by Walter Palmer 2005 Technology Review LP Professionals Embrace Crisis Leadership by Stephanie Nora and Ray Thompson

LP Magazine | May – June 2011

The organization should develop a crisis communication plan, because the number one rule of business continuity is, “If you can’t communicate, you can’t recover.”

The security industry in general and the loss prevention industry in particular must play a more vocal role, utilizing our expertise toward the goal of developing a more comprehensive approach to securing the global supply chain.

“There is a natural synergy between loss prevention and internal audit in that both are focused on ensuring the most profitable operation possible within the constraints and operating style of the company.” – Sandy Katz, Talbots

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

History of Interrogation According to W-Z: The Past W

e were asked to discuss the history of interrogation at a conference along with its present situation and possible implications for the future. When we originally began thinking about this project, we thought it might be as simple as doing a book report relating the facts as compiled by some prestigious historian. Unfortunately, we could not find a book like this. Our search did uncover one text called The History of Interrogation, which seemed to be the answer to our prayers. With great anticipation we explored the pages that listed interrogations throughout the ages. None of the listed interrogations contained any of the questioning techniques employed by our ancestors. However, the final sentence of many of the descriptions of the interrogations contained the words “hanged,” “drawn,” and “quartered.” It seems our ancestors were nothing if not thorough. Since we have neither a degree in history nor the academic qualifications to produce a definitive history of interrogation, you will have to be satisfied with the history of interrogation according to W-Z. What we hope to do here is to follow some threads of history and weave them into a story of how we got to today’s strategies and techniques. Fortunately, we have been part of much of the recent history of interrogation.

afraid, because I was naked; and I hid myself.” When God then asks Adam if he had eaten of the tree of the knowledge of good and evil, Adam responds that his wife had told him to. The resolution of this case was probably easier than most, since according to the Bible, Adam and Eve were the only possible suspects. However, if we examine this first interrogation, several things become evident.

It is clear that our ancestors recognized there were behavioral changes associated with attempts at deception, and they devised a variety of means to identify and test an individual’s truthfulness. First, there is a change in the behavior of Adam and Eve—they now recognize that they are naked and hide themselves from God. When we think about our experiences in today’s interviews, we often see changes in the individual’s verbal and physical behavior because of their fear of detection. Second, we see the first evidence of a rationalization as Adam blames Eve for initiating the eating of the apple. Here Adam shifts the blame to Eve, offering an excuse to God for the reason he partook of the apple. It seems rationalization is an integral part of human nature. We might also take another example from the biblical record and the wisdom of King Solomon. The book of Kings reports the following account of a case that was brought before King Solomon’s court in Jerusalem.

In the Beginning…Literally

The earliest interrogation we could locate seemed to revolve around the theft of an apple. On the surface it would seem harmless, but apparently had major implications for the human race if one reads the biblical record. The story of Adam and Eve as told in the Bible’s book of Genesis 3.8–12 relates the serpent’s temptation of Eve to eat an apple from the forbidden tree. Adam and Eve hide themselves from God’s presence after eating the apple. God calls to Adam “Where art thou?” and Adam responds “I heard thy voice in the garden, and I was

May – June 2011

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

LPportal.com

Two women came to King Solomon and stood before him. One woman [1] said: “My Lord, this woman and I dwell in the same house. She arose during the night and took my son from my side while I was asleep, and lay him in her bosom, and her dead son she laid in my bosom.” The other woman [2] replied: “It is not so! My son is the live one and your son is the dead one!” The first woman [1] responded: “It is not so! Your son is the dead one and my son is the living one!” The King Solomon said: “This woman [2] claims ‘My son is the live one and your son is the dead one,’ and this woman [1] claims ‘Your son is the dead one and my son is the living one!’” King Solomon said, “Cut the living child in two, and give half to one and half to the other.” The woman [2] turned to the King, because her compassion was aroused for her son, and said: “Please my Lord, give her the living child and do not kill it!” The King spoke “Give her [2] the living child, and do not kill it, for she is his mother!” This may be the first example of statement analysis. King Solomon had been given great wisdom by God, and he used it here in the analysis of the two women statements. “This woman [2] claims ‘My son is the live one and your son is the dead one,’ and this woman [1] claims ‘Your son is the dead one and my son is the living one!’” The positioning of the words “my son” is important in analyzing this statement. Woman 2 places what is most important to her at the beginning of the sentence while woman 1 abdicates the child to the end of the sentence. Further evidence of her love for the child is contained in the final statement of the woman where she wishes to preserve the child’s life, rather than have the baby killed. This example probably is also the first written example of a bluff (killing the child) during an interrogation. The deceitful woman gave herself away with her cruelty encouraging the King to sever the child, thus further providing convincing proof to the onlookers of her lie.

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Other Early Techniques

Using the fact that we experience physiological changes when there is a fear of the action, our ancestors recognized an advantage that they could use to resolve questions of truthfulness. One of the physiological observations that were made concerned the dryness of the mouth that occurred when someone was deceptive. In China circa 1000 BC, individuals were told to place uncooked rice in their mouths and hold it while they were questioned. The truthful individual whose mouth contained saliva would spit out wet globular pieces of rice while the deceptive individuals would spit out dry rice kernels. Here the physiological response to the fear of detection causes the deceptive individual’s mouth to dry as a result of the natural diuretic response to increased stress. In India around 500 BC, they made use of the sacred donkey as a means of detecting deception. A donkey was

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containing sharp spikes that pressed into the body from all directions, each was designed to cause excruciating pain over a long period of time. The interrogator’s perfected many of their designs during the Spanish and Medieval Inquisitions carried out by the Church to identify heretics. Scholars vary on the number of people killed using these devices during the inquisitions, but place it between 40,000 and 100,000 people killed. In 1692 the Salem witch trials began in the United States. These trials resulted in the hanging of nineteen men and women accused of being witches. Some said that witches could be identified by being bound and thrown into water. If they came to the surface and floated they were a witch, however if they drowned they were innocent. The Salem witch trials are one of the first uses of taking a deposition and preserving a court record of legal proceedings we could find in the United States. The defendants and witnesses testimony was transcribed and became a permanent record of the interrogation. It was only in the fall of 1692 that the court refused to allow testimony relating to apparitions supposedly observed by witnesses. These apparitions were the basis of testimony that convicted many of the people in the spring when the witch trials began. From these observations, it is clear that our ancestors recognized there were behavioral changes associated with attempts at deception, and they devised a variety of means to identify and test an individual’s truthfulness. In our next column we will begin to identify the origins of today’s techniques and forecast where interviewing may be in the coming years.

placed in a tent and the suspects were told the donkey was sacred and had a direct link to God. Each of the suspects was told to enter the tent and pull on the donkey’s tail. When the guilty party pulled on the tail, the donkey would bray and identify the person responsible for the crime. The innocent subjects entered the tent and pulled on the donkey’s tail knowing that God would exonerate them of the crime. However, the guilty individual, fearing detection, did not pull on the tail and left the tent. The priest then examined each of the suspect’s hands. Unbeknownst to the suspects, the priest had coated the donkey’s tail with lamp black (soot) so the suspect without soot on his hands was identified as the guilty party. Here, our ancestors recognized individuals’ change of behavior as a result of their fear of detection. Supposedly in Africa, suspects were asked to pass an ostrich egg to one another and if one dropped it he was the guilty party. The physiological basis of this test was probably the idea that the more nervous individual would be more likely to drop the egg because of their fear of detection. In addition, they would likely be more distracted handling the egg, increasing the probability of damaging it. During the Middle Ages people turned to torture and humiliation to extract confessions and punish the transgressors. The torturers constructed unbelievably terrible devices to cause pain to extract a confession from the unwilling. From the rack, which stretched the secured legs and arms by pulling in opposite directions, to the Iron Maiden, which confined the individual inside a tube

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Cover feature

The Evolution of

data sharing in Retail’s Battle Against ORC By Jack Trlica, Editor and Publisher

LP Magazine | May – June 2011

LERPNET2.0

“By strengthening LERPnet and enhancing its functionality, retailers and law enforcement can leverage recent technological advances to further protect our stores, our brands, our employees, and, most importantly, our customers.” Lisa LaBruno, Vice President of Loss Prevention and Legal Affairs, RILA 18

ver the past decade, much has changed in loss prevention. As we look back at the transformation that has occurred…even to this magazine…we see a history of evolution in process and technology as well as an evolution in criminal activity. Ten years ago we didn’t hear much about “organized retail crime.” Now, ORC is a common acronym in the industry as it is increasingly in the popular press. Sure, ten years ago ORC existed, but LP professionals didn’t classify it that way. More often it was discussed as a type of “professional shoplifter.” However, both then and now, retailers have banded together in a variety of ways to try to prevent these and other losses. Ten years ago retailers would get together in geographic pockets, behind closed doors, and share information via spreadsheets and photos. They created a network of fax machines and call lists to share information and “be on the lookout” for certain persons or types of crime. Over the years we began to put definition to these terms, identify these organized groups, and expand on these regional efforts combining forces as an industry to combat the criminal element.

The First Steps of Data Sharing

Part of this evolution included the creation of a national database for sharing information on retail crime. The Law Enforcement Retail Partnership Network (LERPnet) is a secure national database for the reporting of retail theft and serious incidents that allows retailers to share information with each other and with law enforcement. The concept of LERPnet was a recent evolution in the process and technology available within the field of loss prevention. The days of closed-door regional meetings and May – June 2011

LPportal.com

fax alerts had evolved to several broader, industry-wide electronic database initiatives, capitalizing on the technology available to retailers in collecting and sharing information. Over the past decade the retail associations had each launched and supported separate initiatives. The Retail Industry Leaders Association’s (RILA) InfoShare and the National Retail Federation’s (NRF) REALPIN data-sharing initiatives were ultimately brought together to create one central, national data share called LERPnet. The concept was strong and the need even stronger, but the technology and capabilities of LERPnet struggled to keep up with the advancements in available technology as well as the needs of the retailers. The associations recognized the concept was still solid, but needed to expand on the technology platform. Working with the FBI, the associations, including the Food Marketing Institute (FMI), banded together to support taking LERPnet in a new direction with a new technology platform designed with features and functionality to support the specific needs of this initiative. The evolution in the underlying technology designed to take this very important initiative to the next level is called LERPnet2.0.

The Four Ds of Data Sharing

There is a science to the art of data sharing and there are elements required in order to ensure success. These elements are the four Ds of data sharing—direction, definition, data, and diagnostics. Direction. In order for this type of initiative to be successful, it is imperative that it is driven by representatives in the industry and addresses the specific needs of the industry. It requires the direction of an active advisory board consisting primarily of

LERPNET2.0 retailers who represent a proper cross-section of the industry. While consideration for law enforcement is also very important…after all this is the “law enforcement” retail partnership network…the needs of the retailers must come first. The role of the advisory board is to provide input on overall functionality of the system, developments, and enhancements needed in the technology, and most importantly, provide direction in the second D, which is definition. The retailers also determine the role of law enforcement and the level of access law enforcement has to the data within the system. Maintaining this control and this hierarchy is critical to successful data share. Definition. Terms must be properly defined within the database and users must be presented with consistent data. This requires creating defined terms such as “What is organized retail crime?” “What is a robbery?” and, more specifically, “What is an armed robbery?” versus “What is an attempted robbery?” One of the key points of failure in the past data-share initiative was not having the terms well defined. An important differentiator is these term definitions are not mandatory for each retailer to adopt within their organization. Instead, they are to define the terms as they will be represented within the application. This means the terms defined within each

KEY_002_Final_Outlines.indd 1

business are less relevant than how the group agrees to define terms within LERPnet2.0. To support this differentiation, the technology needs to be able to adjust the data from the retailer to make sure the information submitted into the system is placed in the right buckets in order for subscribers to search and view the data appropriately. Data. For data to be effective it must first build critical mass. Retailer participation is of the utmost importance. Without the data, there is no sharing. As data comes into the system, it must match its definition and find its proper place in the database. In addition, the data must be broadened to ensure this initiative is not solely dedicated to organized retail crime, but also includes critical incidents like robbery, burglary, arson, vandalism, pharmacy theft, and other events that impact retailers, create loss, and jeopardize the safety of retail employees and customers. Diagnostics. It may be cheating here a little with this D, as the word “diagnostics” represents so many other terms, such as analytics, reporting, link-analysis, alerting, and so forth. However, all of these functions tie into the “diagnostic” engine necessary to drive a successful data

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share. It is not enough to simply have a repository of data that can be searched to find historical results or collective totals. The purpose of the data share is to identify patterns, trends in the data, and to create alerts and notify retailers of suspicious activity or evolving trends in their area of business in order to help them better prepare and better respond to events on or around their property and protect their brand.

Same Name, Different Engine

“LERPnet has demonstrated the potential for retailers and law enforcement to identify and respond to a variety of theft patterns while making connections between events not easily identified by a single retailer. LERPnet2.0 will allow retailers and law enforcement to fully realize this potential.” Rhett Asher, Vice President of Industry Relations, FMI 20

LERPnet2.0 incorporates the four Ds and provides new structure to this evolution in data sharing. While the brand “LERPnet” has been preserved, the technology behind it has changed completely, and the process to support it has been enhanced to ensure proper representation across the industry segments in the data submitted and in the terms defined. Advancement in this initiative is represented by the changes in technology, in process, and in resources that are all necessary and required for success. The technology utilized for LERPnet2.0 is based on the data-sharing platform created by ISO Crime Analytics and utilized for a variety of similar such data shares across different industries and across the globe. ISO Crime Analytics also manages several other successful data shares and has launched a variety of such projects, including initiatives for the American Banking Association, known as the “ABA Bank Capture Data Share;” with the Retail Council of Canada’s “RCC LP DataShare;” and other similar projects in the United Kingdom and Europe. Additional data-share projects also exist in the hospitality industry as well as in transportation and supply chain. Similar to the LERPnet2.0 project, the ABA Bank Capture May – June 2011

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System most closely mirrors the process and the overall objective of this initiative. The ABA program is driven by an advisory board consisting of the senior vice presidents and directors of security for more than twenty major U.S. banks who, despite being competitors in business, have come together and work together to combat common threats against their industry. The ABA Bank Capture System collects information from the banks regarding robberies and burglaries and ATM crime, and provides advanced analytics for the banks to research criminal activity. In addition a mirror system has been provided to the FBI for access and use by agents and by law enforcement in investigating and resolving bank robberies and other crimes. With a soft launch announced only months ago and the hard launch pending on June 1, the system already has participation with representation of nearly 40 percent of the U.S. banking industry with nearly 40,000 bank locations represented in the database out of the estimated 100,000 total in the U.S. market. This initiative has already proven successful in several cases and is an excellent representation of the success of the direction, definition, data, and diagnostics required for success. In addition, the inclusion of law enforcement has proven quite valuable in laying a path for LERPnet2.0 to follow the same partnership not only with federal law enforcement, but as it will be made available through LEO.gov for access by state and local law enforcement in the near future.

Process Changes to Ensure Success

The process changes implemented for LERPnet2.0 include the creation of a solid advisory board consisting of twenty-plus retailers as well as one representative from each of the supporting associations—FMI, RILA, and NRF. Law enforcement

LERPNET2.0 will also continue to be represented on the advisory board with participation by the FBI and may later expand to include other representatives from key state and local jurisdictions or other agencies. While the system will launch utilizing the data structure from the original LERPnet system, the first order of business for the advisory board will be to craft the definition in terms required to ensure proper representation of data within LERPnet2.0. This board will be responsible for determining those definitions and for carving the past for success of this initiative. The final key differentiator for successive LERPnet2.0 is in its resources. ISO Crime Analytics is a unit of Verisk Analytics, a global leader in risk assessment and data analytics. ISO and Verisk share a solid history of successful data-share initiatives in the insurance industry and both have a strong financial foundation. Recognizing the importance and significance of this initiative to the retail industry, they have committed the resources to ensure the success of this project. These include development resources to ensure the technology meets not only the initial, but ongoing needs of the advisory board and the subscriber membership. It also includes the technical resources to provide technical support maintenance and training for use of the system. An online training resource has been created to

launch with the system that will provide both initial and ongoing training support to help ensure interaction with the system is smooth and questions are answered quickly. Finally, a data analyst will be dedicated to the data-share project to provide an additional resource for retailers and law enforcement to help dig into the data and surface patterns, trends, and identify activity and work with retailers directly to assist in developing investigations and getting to resolution.

Key Benefits of the System

The success of LERPnet2.0 is not based solely on the number of organized retail crime investigations that are resolved, but will include a variety of incidents and will offer a number of key benefits to the retail industry. With LERPnet2.0, as with the other data shares created and managed by ISO Crime Analytics, subscriber companies not only leverage the data for industry comparison and analysis, but it provides benefit to their organization through information that supports a variety of needs: ■ The timely and effective reaction to incidents. Reaction may be measured in response by an individual retailer, in collaboration between a group of retailers, and or in cooperation with law enforcement. continued on page 22

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“We’ve built a strong alliance with retailers, and we’re building on a strong platform while applying the lessons that we’ve all learned in the last five years to strengthen the message to criminals—we will not tolerate your behavior, and we will stop you.” Joe LaRocca, Vice President of Loss Prevention, NRF 22

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roactively prepare for and/or P prevent future events. With the advanced intelligence gained from identifying patterns or trends in activity within the system or in receipt of system alerts, retailers may proactively prepare their staffs, allocate resources, or take other necessary action to prepare for criminal activity at their locations. Track incidents regardless of location or jurisdiction. While there are several regional data-sharing initiatives between retailers and law enforcement, crime activity is not limited to these regions. Oftentimes identifying the patterns and trends that are happening nationally lends greater insight into what is happening within a specific area or region. In addition law enforcement often does not have the capacity to identify or otherwise share information across jurisdictions. LERPnet2.0, however, is designed to cross those borders and help facilitate the communication and collaboration necessary to combat these crimes. Benchmark against the industry. LERPnet2.0 provides reporting capabilities to identify trends and activity across the industry and compare those trends against activity within each specific retailer, allowing retailers to identify how they measure up against the activity happening across industry. Enhance your security or LP strategy. With information gained from access to the LERPnet2.0 system, retailers can use the intelligence from within their own business as well as industry intelligence to change or enhance their loss prevention strategy. Better allocate and budget for resources to help prevent loss. Identifying patterns in loss, geographic areas of concern, and the effectiveness of security countermeasures allows retailers

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to better allocate resources to their locations and to better prepare for and budget capital for additional resources necessary as identified by the information learned from the system. ■ Prepare and train staff to prevent events or with response to incidents. Whether as a reaction to an increase in a particular type of crime within their locations or in the area surrounding their locations, retailers can implement either a reactive or proactive training strategy to better educate and train staff on proper response to an event that has happened or might happen, or as necessary to prevent an event from happening. ■ Prevent injury and loss of life. We certainly don’t like to think of it, and even more so don’t like to talk about it, but oftentimes these types of serious incidents can result in harm to either our employees or our customers. If the shared knowledge of criminal activity increasing in a particular area or if the steps taken to prevent such activity prevent the loss of life or injury, then this initiative is a true success. ■ Protect profitability. While one of the key driving factors that underlies most of these benefits, one of the true goals is to protect profitability of each organization. ■ Reduce overall liability. Another overall benefit that is laced throughout many of the points made here is in the reduction in liability to the retailer gained through this process. ■ Protect the brand image. When it comes down to it, brand protection is the bottom line to all these benefits. Retailers want to ensure no harm comes to the brand image, thereby protecting the liability, profitability, and integrity of the company.

Enhancements in LERPnet2.0

The LERPnet2.0 system will include a number of enhancements and additional features and functionality

LERPNET2.0 different from the original LERPnet system. Many features are simply native to the technology provided, but all have been echoed as necessary in order to best support this initiative and make it a success. Among the system capabilities are the following: ■ Easy data entry and import from case management systems. It is imperative that the data-entry process for LERPnet2.0 be as seamless as possible and retailers do not have a double-entry process. The technical team behind LERPnet2.0 will work with existing case management companies and with individual retailers, in order to provide the data specifications necessary to transmit data from existing systems into LERPnet2.0. ■ Comprehensive search tools. With the data is only one place, it isn’t as effective unless there are comprehensive search tools and capabilities to look at the data in a way that the results can be actionable. LERPnet2.0 will include full-text search capabilities on all fields within the system and may have future capabilities for searching attachments where possible. ■ Dynamic link analysis. For searching potentially related records, patterns, and trends in the data and geographically, the link analysis tools provided will assist retailers with identifying relationships within the data between events that are occurring in the industry.

ommunication and collaboration tools. Central to the C success of the data share, these tools allow retailers to work together and to communicate and work with law enforcement. ■ Dynamic report display and geo-spatial mapping capabilities. Essentially absent from the original LERPnet system, reports and maps are at the core of LERPnet2.0 providing a defined user dashboard with access to common reports that also provides drill-down capabilities to properly analyze summary-level details. Mapping will provide geographic view in patterns of activity as well as individual case analysis identifying location of theft as well as nearby fencing, flea market, and other black-market operations where lost merchandise may be recovered. ■ LERPnet alerts and notifications. LERPnet alerts provide information regarding activity reported to the system, details on updates to ongoing investigations, and notification of new or related activity. ■ Online training and support. LERPnet2.0 will be provided with an online training and support facility capable of offering instruction and education on system use and operation for initial training and for ongoing questions. ■

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In addition, sharing information across industries could also bring significant benefit. While under the control of ISO, crime analytics patterns have already been identified in relationships between reductions in bank robbery activity in specific geographic regions contrasting to increases in retail robbery activity in the same areas. This type of comparison has never been possible until now. In the past, the data was not available, let alone collected in such a way that it could be viewed collectively across industries. Imagine the next evolution in data sharing not just among retail loss prevention, but among loss prevention and security across communities where patterns may be analyzed for activity increasing across a variety of segments, including banking, hospitality, retail, and more. Where retailers might not only look at a map of activity of retail theft, but with the click of a button, layer in hospitality and banking crimes, and perhaps even more local criminal activity for a true picture of liability, exposure, and risk. All of these are well within reach. However, in order to get there, we have to start today to focus, as an industry, on support for LERPnet2.0.

The Future of Data Sharing

While LERPnet2.0 will move the retail industry data-share initiative for retail theft and loss to the next level, it doesn’t stop there. Just as the criminal element will continue to find new ways to steal from retailers, the future will bring additional technological capabilities and changes in process to continue to adapt to retailers’ needs. In addition to changes in technology, there are other possible opportunities on the horizon to further enhance the value and the return on investment to the retailers. Specific opportunities include expanding and tracking other types of loss, such as shrink and inventory results as well as safety and accident claims, or to share information across industries. As an example in the area of safety, retailers often face common threats from individuals attempting to stage accidents or injuries allegedly resulting from retailer negligence. Sharing this information and these fraudulent claims could result in significant savings.

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May – June 2011

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10-Year Anniversary

LP Magazine Hosts 10-Year Anniversary Event

he beautiful North Carolina mountains were the backdrop for 100 industry executives and their spouses who gathered for LP Magazine’s annual editorial board meeting as well as to celebrate the magazine’s 10-year anniversary. The event was held April 27 – 29 at the historic Grove Park Inn Resort and Spa in Asheville.

LP Foundation Board Meeting

The event began on Wednesday with a meeting of the Loss Prevention Foundation’s board of directors. The board discussed a number of important topics, including Vector Security’s successful scholarship program, expanding certification internationally, and promoting LPQ certification to college graduates. Five new executives were also added to the Foundation board, including Lee Bland of Stage Stores; David George, CFI, LPC, of Harris Teeter; Jeffrey Levitt from Panera Bread; Bill Napier, LPC, of Cabela’s; and Kevin Wolfe with Big Lots.

webinars and the industry’s first virtual trade show, the magazine recently launched a ■ T otally redesigned website (LPportal.com), ■ S elect podcasts of feature articles and columns, ■ L inkedIn group called LP Central, ■ F acebook page called LP Voices, ■ T witter page @LPmag, ■ Y ouTube channel LossPreventionTV, and ■ Redesigned weekly e-newsletters. The majority of the day was spent discussing magazine editorial direction and topics. Numerous executives made short presentations to attendees on specific topics for consideration for feature articles. Individuals making presentations included Ken Amos, Walgreens; David George, Harris Teeter; Monica Mullins, Walmart; Claude Verville, Lowe’s; Al Voels, KPMG; Rhett Asher, FMI; Kevin McMenimen, Enabl-u; Maurizio Scrofani, CargoNet; Robert Oberosler, Rite Aid; Bill Titus, Sears Holdings; Frank Johns, LP Foundation; Gary Johnson, Vitamin Shoppe; Leo Anguiano, Central Parking; and Lisa LaBruno, RILA. Highlights of the many topics discussed included ■ D eveloping cross-functional internal relationships, ■ F acial-recognition technology, ■ D ata sharing, ■ M anaging acquisitions and mergers, ■ E mployee safety programs, ■ T alent development, and ■ C ollege recruiting for LP positions. Throughout the day Jim Lee, LP Magazine’s executive editor, presented gifts to a number of attendees, including ■ T hose who have been with the same retailer for ten or more years, ■ O riginal members of the vendor advisory board, ■ M ost frequent attendance at editorial board meeting during the past ten years, ■ A ssociation partners, and ■ M ost appearances in the “People on the Move” section. The business meeting ended with a fun-filled contest of “LP Family Feud” with six teams competing to correctly answer loss

Magazine Editorial Board Meeting

Attendees in the day-long business meeting Thursday included members of the magazine’s editorial and vendor advisory boards, Foundation board members, and invited guests representing retail sponsors and editorial contributors to the magazine. The magazine’s editor and publisher, Jack Trlica, began the day by reviewing the magazine’s newly launched digital channels. Building on the past two years of hosting numerous successful

A golf tournament was held in conjunction with the 10-year anniversary event. The winning team included (left to right) Carlos Perez, Alpha; Justin Kemp, Contact Inc.; Mike Marquis, TJX; and Ken Martin, Palmer Reifler & Associates.

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prevention trivia questions drawn from the past ten years. The activity was quite humorous and extremely well received thanks, in part, to ADT’s Kevin Lynch, who acted as the game-show host. During the day, attendee spouses visited Asheville’s Biltmore House, toured shopping and historic sites, or enjoyed the Grove Park Inn’s world-class spa facilities.

Banquet and Special Recognition

A banquet was held Thursday night for all attendees and spouses. The evening began with a cocktail hour held on a covered outdoor terrace overlooking the city of Asheville with sunset coloring the surrounding mountains. A slide show of photos and quotes from dozens of individuals who appeared in the magazine over the past ten years played throughout dinner. Video excerpts of the afternoon LP Family Feud game were also shown. At the conclusion of dinner, a 14-minute video depicting the founding of the magazine and reviewing the past ten years was presented by Walter Palmer of PCG Solutions, who produced the documentary. The video featured interviews with magazine principals and staff as well as key advertisers who have supported the magazine. To view the video, visit the video page at www. LPportal.com. The evening concluded with Lee and Trlica presenting special recognition to select individuals. Those receiving awards included ■ 1 0-year contributors—columnists Wicklander-Zulawski, Bob DiLonardo, and Richard Hollinger; cofounder and contributing editor Walter Palmer; creative director and graphic designer Fabi Preslar; and advertising manager Bonnie Dodson. ■ O riginal editorial board members— Bob MacLea, Bob Serenson, Paul Jones, Claude Verville, and Steve Forgette. ■ C ompanies who have advertised in all issues of the magazine—ADT and Enabl-u Technologies. A golf tournament was held the following morning to conclude the event.

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Event Attendees and Sponsors

The magazine extends its appreciation to all those who attended the event as well as all the retailers and advertisers who have supported the magazine the past ten years. “We have been fortunate to have had tremendous support from key retail LP executives throughout these past ten years,” said Lee. “Without their endorsement as well as the financial support of the many solution providers who have advertised over the years, the magazine could not have had the success we have enjoyed for ten years.” Special thanks goes out to those companies who sponsored the anniversary event—Axis Communications, Bass Security, ClickIt, Enabl-u, InstaKey, LERPnet, LexisNexis, LPjobs, OfficeMax, Palmer Reifler, Security Resources, The Retail Equation, and WG Security.

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LP Magazine | May – June 2011

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Interview

The Winding Road from Store Detective Career Journey to VP The of JCPenney’s By James Lee, Executive Editor

Stan Welch LP Magazine | May – June 2011

Interview

EDITOR’S NOTE: Stan Welch is vice president of loss prevention for JCPenney. Prior to joining the company in 2007, Welch held a wide-range of positions with a number of major retailers. He is also active in the industry as chair of the Retail Industry Leaders Association (RILA) loss prevention committee, a member of the editorial board for LP Magazine, and a member of the board of directors for the Loss Prevention Foundation. EDITOR: You have a big job with a big company. I want to examine your journey from getting started in loss prevention to where you are today. WELCH: When I graduated from Eastern Illinois University in May 1987 as a political science major with a minor in sociology, I wanted to get into law enforcement. I applied with the FBI, took a state police test, and also applied with the University of Illinois police. I joined Carson Pirie Scott in June of ‘87 as a store detective. At the time I was also working full-time for the University of Illinois campus parking. When my job ended with campus parking in August, I became full time at Carson’s. I was also asked to supervise the fitting room associates. I was promoted to LP manager in March of 1988.

When I compare candidates today, I look at the experience in their backgrounds. Do they have a college degree? What type of results did they have at their past jobs? Do they have any certifications? Are they certified interviewers? Have they taken the LPQ or LPC? It’s important to me to see if they are still learning and gaining knowledge. That’s the kind of individual I look for. May – June 2011

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EDITOR: Tell us what kind of training you were given during that first year in loss prevention. WELCH: My training was minimal. When I interviewed, they offered me the job on the spot and took me to the loss prevention office. They opened up the desk drawer and handed me a badge and set of handcuffs. The first time I caught a shoplifter, I didn’t know what paperwork needed to be filled out and had to call another store to walk me through it over the phone. During that phone call I learned there was a training class. I ended up going through a two-day training class in Chicago for store detectives and learned the LP guidelines and expectations. Basically I was on my own to learn processes, operations in the store, and how to detect theft. It was about self-educating and learning on the job. EDITOR: What was the next step in your career? WELCH: About the time I became the LP Manager at Carson Pirie Scott, I met Beth, who is now my wife. We decided we wanted to live in a bigger city, so we looked for opportunities in St. Louis. We both interviewed with Famous Barr. They offered me a position in Peoria, Illinois. Because it was more money and was the kind of progression to another company that I hoped would eventually get me to St. Louis, I took that job. I joined Famous Barr in the summer of 1988 and was the LP manager at that location for about a year. EDITOR: Where did Beth end up? WELCH: Beth was given the opportunity to go to Cincinnati, Ohio, with Lazarus Department Stores. Her career took off in Cincinnati. She was promoted and took on more responsibility in their downtown store. We decided to get married in 1989. Because her career was going so well and there was more opportunity in Cincinnati, I interviewed and joined Lazarus as an LP manager in their Kenwood Towne Centre store. About eighteen months later, I was promoted

Interview to the downtown location as manager of investigations and training. I was approached by my former regional LP manager at Lazarus about a position at Marshalls right after I was promoted. Because Lazarus was in Chapter 11, we decided I should take the opportunity at Marshalls. So, I joined Marshalls in 1991 as the regional investigations manager in Chicago. EDITOR: Stop right there. You changed companies two or three times in a fairly short time. Why do you think a young Stan Welch could interview with other companies and get hired? WELCH: Looking back, I would say it was being confident and having the track record of results to speak about. I had driven strong results, whether it was safety, shrink, people development, or theft results. I’ve always believed that there’s a recipe for success; one that you can duplicate over and over again. EDITOR: What’s your recipe for success? WELCH: It starts with your team and putting the right person in place. The other key ingredients include

awareness programs, impactful shrink and safety action plans, merchandise protection strategy, theft identification and investigation, and operational excellence in stores. When you have operational breakdowns, it is important that you know how to fix them and what the dollar value is worth to the company. EDITOR: How valuable do you think your college degree was, and how much value do you place on a college degree when you are recruiting people to JCPenney? WELCH: I would say my college degree definitely helped. When I compare candidates today, I look at the experience in their backgrounds. Do they have a college degree? What type of results did they have at their past jobs? Do they have any certifications? Are they certified interviewers? Have they taken the LPQ or LPC? It’s important to me to see if they are still learning and gaining knowledge. That’s the kind of individual I look for. EDITOR: Getting back to Marshalls, where did your career go at that point?

WELCH: As I mentioned, I started out as a regional investigations manager in Chicago. When the company reorganized, I was asked to take over a new, larger region in Dallas-Fort Worth. That region covered ten states. It was a much bigger job with five investigators reporting to me. I was also asked to be a certified interview instructor for Marshalls. It was an innovative program that Marshalls began with Wicklander-Zulawski. I became one of fourteen who went through instructor certification training and began training all of Marshall’s investigators across the country. EDITOR: Even though you had great success at Marshalls, you were attracted to another company. WELCH: Marshalls went through another reorganization and closed the regional office in Dallas. My job changed to senior investigator. There was also a change at the VP level of the LP organization. All of the change made me feel like my career was in a bit of limbo. I was approached by Rod Holm, who I had worked for at Marshalls.

You can’t get overly concerned about titles. Sometimes taking an opportunity that may be perceived as a lesser position gives you different experiences and exposure to different issues that will help you grow in your career and as a leader. LP Magazine | May – June 2011

Interview He had joined Target as a group asset protection team leader [GAPTL]. He contacted me and told me about the company and job opportunities. In 1995 I joined Target as a district asset protection team leader [DAPTL]. They trained me for six months and then put me in Houston. I was promoted in December 1997 to the group position that covered Houston, Atlanta, and the Carolinas with 85 stores. In 2001 there was a major reorganization in the LP organization that eliminated my GAPTL position. I was offered two options. I could either go to the home office in Minneapolis to be the manager of market investigations, or I could move into operations as a store manager in Houston. I decided to move to Minneapolis and spent a year organizing and structuring market investigations with the manager of national investigations. We put that program in place and centralized it. EDITOR: Let me stop you again. You made a decision that a lot of people have difficulty with. You took a step back in your career in order to take a step forward. That’s not easy to do. Talk about that. WELCH: You can’t get overly concerned about titles. Sometimes taking an opportunity that may be perceived as a lesser position gives you different experiences and exposure to different issues that will help you grow in your career and as a leader. EDITOR: You rose to what level at Target before your career took another turn? WELCH: I was a DAPTL, GAPTL, manager of market investigations, and manager of LP operations. Finally, when Target was having difficulty finding GAPTLs, I was asked to move back into a group position managing both the Minneapolis and Kansas City markets. In 2002 I took over two groups with about 153 stores and did that until 2004.

I enjoy collaborating with my peers on how we can make the LP industry better. We want to make an impact in individuals’ lives who are coming up through the LP ranks. Some of the programs that have been put in place, like the Foundation’s LPQ and LPC, allow college students and those already in retail to gain knowledge that will help them in their development.

EDITOR: What happened in 2004? WELCH: I was recruited to Sears to be the director of shortage control. EDITOR: That was another big change in your career. Were you ready to take on that big responsibility at Sears? WELCH: It was a bit of a new challenge because I’d never owned the inventory process side of the business. As director of shortage control, I had both merchandise protection and the shortage control function, which involved putting together the inventory instructions, and my team did the shrink analysis. It started out as a relatively small position, but within a year, we merged with Kmart, and it grew into running all of the operations for the loss prevention division. I had three directors reporting to me who managed shortage control, technology, merchandise protection, food safety, and safety. EDITOR: How long were you at Sears before JCPenney came calling? WELCH: I was at Sears about two years when my mentor called to continued on page 34

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SHOPLIFTER? OR SHOPPER?

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Interview WELCH: When I joined, I spent time in the stores. I learned the process of how they flow merchandise from the dock all the way to folding clothes. I spent time with the loss prevention team. Basically, my first ninety days all I did was listen, observe, and learn. I was able to set priorities based on my observations. The first thing I reviewed was the loss prevention structure, and I developed a proposal for some changes. I worked with my executive vice president of stores and we added three directors to the organization. We put in a director of shortage control. We added a director of investigations with market investigation teams in New York and L.A. I organized the home office so I had a director of operations/safety and a director of supply chain. By the second half of 2007, we had a structure where people understood their roles. At that point we turned to the programs and processes we needed to put in place. For example, we changed our apprehension guidelines to improve the safety of our LP teams. We also improved our shrink focus at the store level by adding processes, reporting, and new technology like EAS and CCTV. Once we had these in place we began to focus on people development and put programs in place for our future potential leaders.

continued from page 32

tell me that JCPenney was looking for a vice president of loss prevention. At that time, we were just coming through the transition with Kmart, and I didn’t want to leave my responsibilities. My mentor called me a couple of more times and told me that I really needed to talk to the JCPenney recruiter. I went through series of interviews and joined JCPenney in January 2007. EDITOR: So, at this point you had held several different jobs with no less than five different companies. Sometimes people think that that’s a negative on their resume. Obviously, JCPenney didn’t see that as a negative. WELCH: I had some great experiences in several positions. Those experiences are what got me ready for each new position. Working for multiple companies, you learn a lot of different aspects of the business and how to lead those operations. I think they saw that all of my different experiences would benefit JCPenney. EDITOR: When you arrived at JCPenney, what were some of the priorities that you put in place to brand the organization the way you wanted to move forward?

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Interview EDITOR: I know that professional development is a major priority for you at JCPenney. How does that work? WELCH: We have two developmental programs in loss prevention. One program focuses on loss prevention managers and supervisors in stores or supply chain. The other program is focused on DLPM and home office managers. The candidates go through an assessment process that consists of interviews, presentations, and group exercise, depending on the program. We work with our human resource partners during the selection process. Our goal is to strengthen their leadership skills and abilities. EDITOR: What types of positions have these people moved into? WELCH: We’ve had people promoted from DLPM positions into home office positions. We’ve also had individuals promoted from senior loss prevention manager/supervisor positions to DLPM and market investigators. EDITOR: What percentage of your positions is filled by internal promotions versus outside hires? WELCH: It’s roughly fifty-fifty. EDITOR: Let’s turn to some of your initiatives that are driving your shrink results. One is your merchandise-protection program. Talk about the value of putting in a structured merchandise-protection program. WELCH: It is huge because it takes a collective team effort, with finance, retail operations, merchandise teams, and supply chain. When I joined JCPenney, they already had best-in-class execution of tagging merchandise. We tag at the logistics facility before it ever gets to a store, which is a good best practice. The piece that we worked on was identifying merchandise that we saw with risk and protecting it before we put it in our stores to prevent shrink. We also use public-view monitors in high-shrink areas.

We’ve had success in recruiting individuals in our entry-level positions as loss prevention officers while they’re still in college. Getting them into an entry-level position while they’re in school allows them to gain experience and see if they like it. Then, when they graduate, they have that experience and can interview for a loss prevention supervisor position. LP Magazine | May – June 2011

We have EAS systems in approximately 500 stores today and continue to add EAS systems to drive profitability. We’re constantly analyzing the best places to put LP resources and technology to get the best ROI for our organization. CCTV is the other piece on the merchandise-protection strategy. We’re making sure we have systems in the right stores and camera coverage on the high-shrink items. EDITOR: Are your merchandise-protection standards different in different stores? WELCH: No, the merchandise-protection standards are consistent across the stores. We also look at different levels of risk in our stores by item and improve the protection on those items. EDITOR: Over the last several years, the issue of organized retail crime [ORC] has received a lot of notoriety. Is that an issue you are dealing with? WELCH: As I mentioned earlier, when we restructured the LP organization, we put into place two market investigation teams. We have since added a market investigator in San Francisco and a team in Chicago.

Interview University, who interned with us. My team has also been doing college recruiting trips to a variety of colleges over the last couple of years. We’ve had success in recruiting individuals in our entry-level positions as loss prevention officers while they’re still in college. Getting them into an entry-level position while they’re in school allows them to gain experience and see if they like it. Then, when they graduate, they have that experience and can interview for a loss prevention supervisor position.

The teams investigate organized theft and fraud impacting our stores and supply chain. They have been very successful resolving several burglary thefts, refund theft groups, and closing fence operations. I attribute the success to the communication and partnership between the market investigation teams and store LP teams. EDITOR: Do you work with other retailers and associations in your ORC program? WELCH: The teams work with different retailers and task forces across the U.S. They also are involved with RILA and NRF to talk about ORC and present case studies. We’re all after bad guys, and being able to share and communicate that information makes everybody successful in resolving investigations.

EDITOR: You are representing JCPenney on a number of industry association committees and boards. Talk about the importance you place on that involvement? WELCH: I enjoy collaborating with my peers on how we can make the LP industry better. We want to make an impact in individuals’ lives who are coming up through the LP ranks. Some of the programs that have been put in place, like the Foundation’s LPQ and LPC, allow college students and those already in retail to gain knowledge that will help them in their development.

EDITOR: I want to circle back to our earlier discussion of you graduating college and wanting to get into law enforcement, but ending up in loss prevention. Since you’ve been at JCPenney, you have put in place a college recruitment program for loss prevention people. Would you speak to what you’ve done, and what have been some of the results? WELCH: This past summer, we had two individuals, one from Sam Houston State and one from Northern Michigan

EDITOR: Thank you, Stan. I really think your career is an inspiration to any young person getting into our industry.

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May – June 2011

LPportal.com

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“I’m certified. Here’s why.” Anthony ‘Tony’ Cavaliere, LPC Territory Loss Prevention Manager Sears Holdings

Many professions require a single, necessary certification process to prove expertise in that particular field. Until recently in the field of loss prevention, we lacked that universally-accepted benchmark certification process.

When I researched the LPC, I was intrigued by the broad array of subjects that were covered. It’s a legitimate, in-depth review of all areas of loss prevention. The coursework was expansive, and areas that I have had little or

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

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

no experience with were explained in intricate detail. I was also amazed to see the widespread support and acknowledgement the LPC garnered. From retailers to grocers to vendors, it seems the entire loss prevention

universe has been involved. I fully believe the LPC and LPQ will be the future benchmark for our industry that had simply not existed before. That’s why I felt I needed to be a part of it and why I’m proud to have “LPC” behind my name. www.losspreventionfoundation.org

PARTNERING WITH RETAILERS

Note from Paul Jones, LPC: At the FMI conference in March, I heard an interesting presentation made by David George from Harris Teeter who frames a piece of the organized retail crime equation that has been missing from our national dialogue. David shares his perspective in this month’s column. If you’re like me, you are exhausted from hearing all the bad news regarding organized retail crime (ORC). Sure, we hear about large arrests made on ORC rings, but we all know that as soon as one ring is dismantled, the power vacuum sucks in the next in line to open up shop in its place. I can’t help but think we aren’t making the level of progress that we have all hoped. Recently, an article in the April 4th Star Tribune stated, “While retailers spend $12 billion a year to battle organized retail crime, thieves pilfer $15 billion to $30 billion annually, a huge blow to businesses and, ultimately, their customers.” According to this source, it’s official—we are losing the war against ORC. This is perplexing given that our profession has never had more resources available to it than it does today. We have vendor partners who have diligently sought to acquire, develop, and improve upon technologies to help us do our jobs more efficiently. We continue to invest in state-of-the-art equipment and technology, specialized personnel for undercover operations, training seminars, books, meetings, and committees. We are even seeing legislation enacted all across the country that addresses ORC, thanks to the lobbying efforts of LP professionals. Armed with these resources, we have collectively taken up arms, mounted our horses, and staged an all-out assault on criminals who use Internet sites, flea markets, cleaning houses, warehouses, and even illegitimate brick-and-mortar storefronts to move the stolen goods. All of this with one objective in mind—stopping professional thieves from removing mass quantities of merchandise from our stores. With all of these deployed resources, how can we still be losing this war on ORC? I submit to you that while we are all focused on preventing our merchandise from leaving through the front doors of our respective castles of commerce, we never once considered what was coming in through our back doors. Could it be that we have been hitting the bullseye of the wrong target?

Economics of ORC Before we answer this question, let’s first consider the “economics of ORC.” We all understand that boosters are part of a complex business enterprise. But even though these are illegitimate businesses, they still operate under the same indiscriminate economic principle of supply and demand. No retailer or wholesaler can stock their shelves with merchandise no one wants and expect to be

by David E. George, CFI, LPC

successful. Similarly, no retailer or wholesaler can sell merchandise they don’t have. Said differently, the supply of a product and the demand for that same product must have a synchronized relationship in order for an enterprise to profitably function. So how does supply and demand play a role in our fight against ORC? If we as loss prevention professionals were asked where stolen merchandise was being sold, the majority of us might tend to say Internet sites, flea markets, and a whole host of other locations. And why not? Every ORC ring that has ever been conquered has been identified as using one or more of these venues. However what if we, as retailers, are unknowingly purchasing the very merchandise that was stolen from our shelves just a few weeks earlier? What if we are actually causing the “demand” needed for the supply-and-demand principle to work? Consider for a moment what is David George is vice occurring right under our noses. Boosters president of asset steal our merchandise and sell it to a protection for Harris Teeter Supermarkets, Inc. fence. The fence cleans and organizes the cache into two categories—pristine and damaged. The damaged, or marked, merchandise goes to the all-too-familiar flea markets and Internet sites, but the pristine items are sent up the chain where they eventually land in a repack operation. Once there, our stolen merchandise is packed in boxes labeled with the same quality names of the manufacturers with whom we do business. Consumer-created demand Retailer supplies the demand

Wholesaler (“legitimate” broker) sells to retailer

ORC Are we to blame?

Boosters steal from retailer and sell to fence

Fence sells to illegitimate brokers

Illegitimate broker sells to wholesaler

The stolen merchandise, now packed neatly into branded boxes, is sent to wholesalers. Some wholesalers may be aware the merchandise is suspect and others may not, but either way they have plausible deniability. These wholesalers accept this merchandise into their inventory waiting for a buyer to place an order. If that buyer happens to be a broker representing your company, then your company just created the demand for more merchandise to be stolen. The chart above will help demonstrate this point. continued on page 51

Feature

Leveraging Video Analytics

Throughout the Organization By Jen Richard LP Magazine | may – June 2011

Video Analytics

hen I first joined West 49, I was tasked with building a resource protection (RP) department from the ground up right out of the gate. In the first year I started pulling together an RP team that would provide support to the stores and established the core department functions (see box below). Among the many issues that needed attention, following were some of the key initiatives we started with: ■ Development of an RP reporting deck with our IT department, ■ Launch of a whistleblower-type hotline in collaboration with human resources, ■ Update of the company policy-and-procedure manual, ■ Establishment of basic prevention training to be incorporated into the new-hire induction program, ■ Launch of a store audit and target store program for high-risk locations, and ■ Building a case for DVR installations in stores across the country. While all of these initiatives were important, deployment of DVRs was one of the most important and is the primary focus of this article.

Establishing ROI

In the first year I was given capital to deploy five DVR installations. This doesn’t sound like much, but it was my opportunity to show our company’s senior management the tremendous benefits of this technology. After the first year, leveraging the system for internal investigations, having the public-view monitors as a shoplifting deterrent, and showing how dramatically the shrink results had improved got me a few more installations approved for the second year. Another successful year proved the return on investment (ROI), and it was at this point that I gained full buy-in from top executives, which meant DVRs were incorporated as a “standard” in the construction model for every future new store, relocation, and renovation. This was a big win, and I was able to get continued funding for DVR deployment in the high-risk, target store locations. We rallied the stores to wage war against their shrink. We gave them a specific store strategy each year, and it has worked. In 2010 we achieved the lowest shrink result in over seven years that is 36 percent lower than the reported average for the men’s and women’s apparel segments.

West 49 Resource Protection Department Core Functions Training—Target store program; e-learning series on external theft, internal theft, and shrink management; WebEx-hosted employee training workshops; newsletters; recognition-rewards program; store audits; integrity shopping program. Investigation—Theft; refund fraud; discount abuse; misuse of petty cash; cash over or short; missing deposits; gift-card fraud; payroll fraud; sweethearting. Use of DVRs—Internal investigations; shoplifting and organized groups; video audit of bag check; fitting room control; customer service. Compliance—Store policy-and-procedure compliance; execution of store operational controls; ensuring legislative and legal compliance; privacy legislation; stewardship programs; PCI compliance. Store Services—Supporting stores with incidents that are reported; handling requests for RP systems and equipment; electronic article tagging systems; digital video recorders; fire inspections and prevention; alarm updates; keys; coordination of security requirements for new stores, relocations, and expansions.

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Now our challenge is to maintain these results, and we are digging in our heels by maintaining the controls, training, audits, and processes that got us to this point. It’s been a challenge to get our shrink to an acceptable level because at West 49, we employ the highest risk demographic for internal theft. We do experience a high degree of collusion, sweethearting, and product theft by dishonest employees. To combat this, my goal has been to attain a level of investigational resources that includes exception reporting and DVR analytics integrated with our POS. I am hoping to achieve this strategic goal within the next year.

Adding Analytics

Between 2009 and 2010 the company upgraded the merchandising and POS system to JDA software. This change triggered a shift in our organization because JDA immediately enhanced our data visibility and allowed us to optimize our business processes. The merchandise and planning side of our business was able to manage inventory more effectively and run more effective promotions. It was like the light was switched on for a lot of people, and we experienced a culture shift where information in real time became king. JDA created an opportunity for cross-functional teams to work together, and the value in that is truly appreciated. We have been working together to maximize every opportunity. Interdepartmental collaboration is key. You must build a business case that demonstrates ROI beyond the LP benefits. Any time technology spending can be leveraged for multiple areas of the business it gets attention and support. My best tip for anyone trying to achieve buy-in for the technology you wish to implement is to provide an overview of the key business benefits to a wider audience. Provide operations, marketing and advertising, IT, and merchandise planning executives with specific examples that clearly demonstrate how the system can be used to impact sales, gross margin, and operational controls. Having the kind of headspace the new POS system provided meant the timing was right for our company to leverage video analytics. I knew that DVR systems went way beyond the benefits for theft

Video Analytics prevention and investigation; that the system could provide valuable business insights to our organization. The goal became to update our DVRs to include video analytics with the help of my vendor-partner i3 International. When Bill Prentice from Checkpoint and Vy Hoang and Brent Humphrey from i3 International joined me to introduce the capabilities of DVR analytics to these other areas of the business, we didn’t talk about the LP benefits. Instead, LP was more like a footnote in that conversation. We discussed the sorts of business information that these other business areas would be most interested in. Targeting the benefits of this system for multiple departments helps get the buy-in from executives, and also helps elevate the perception of LP within the organization by showing that LP is a business operations group that gives information that provides valuable insight into the business and helps make the company more profitable. Thirty-seven of our 134 stores currently have DVR systems, twenty of which are i3 systems. We are in the process of converting the remaining seventeen stores to i3 DVRs

and will update all existing locations to include the i3 analytics software. We know that this initial investment will bring both immediate and long-term cross-functional benefits that will help us drive and improve our top-line sales. Following this initial rollout and update, every future store DVR implementation in new, relocated, renovated, and target store locations will include the analytics.

Traffic counters and analytics alone do not increase sales. The information provided by DVR analytics must drive strategic actions that result in increased sales.

LP Magazine | may – June 2011

Key Business Benefits of Video Analytics

There are a number of important benefits that will be derived throughout the organization from implementing DVR analytics. Following are some of the highlights by business area. Store Operations. In the short term, we will focus on the traffic-conversion aspect of DVR analytics. It’s our initial focus because it is the quickest win as it is easy to support operations with the implementation and a clear ROI will be simple to calculate (see sidebar “Applying Traffic Counting Analytics” on page 46). continued on page 44

Video Analytics continued from page 43

In the long term and with POS integration, we have the opportunity to leverage the DVR analytics as a multi-dimensional retail tool (MDRT). I have borrowed this term from my colleague and friend, Andrew Buchanan at Mark’s Work Wearhouse. It’s been a great way to convey DVR benefits to all of the department silos within our retail team. People Counting. Store operations will be able to leverage people count aspect of video analytics for traffic-conversion data. The data will help to identify, confirm, and improve what we know about proper sales floor coverage and employee productivity. A new metric will be added to our arsenal of sales KPIs thanks to this tool, which will enable the store operations team to drive sales and maximize their payroll budgets. Today, we know sales for each store, but we have no idea how many customers came in and did not make a purchase. With traffic conversion we can challenge store performance levels and make necessary changes to improve sales-conversion percentages. One of the primary benefits of the analytics software is that it is smart

West 49 Inc. is a leading Canadian multi-banner specialty retailer of apparel, footwear, accessories, and equipment related to skateboarding, snowboarding, and surfing, as well as the music industry. The company’s stores, which are primarily mall-based, carry a variety of high-performance, premium brand name, and private-label products that fulfill the lifestyle needs of identified target markets, primarily active tweens and teens. West 49 Inc. is a division of Billabong International Ltd and operates under the banners West 49, Billabong, Amnesia, Arsenic, and D-Tox.

May – June 2011

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enough to know the difference between harmless motion, such as a poster swaying, and threatening motions, such as a person approaching a secure area. From a traffic-counting standpoint, it will distinguish the direction of human movement, which allows us to have a clean customer traffic count of those who entered our store, without falsely including the exit of the customer to our count, which can happen with traditional beam-sensor technology. We can also use video to demonstrate the service behavior that works versus the behavior that shows opportunity for improvement. For days where conversion is low, we can spot-check customer service and provide JPEG photos or video segments to demonstrate that ■ S ervice was great, but the product didn’t compel the customer to buy today or ■ S ervice was not optimal and therefore impacted the customer’s shopping experience at our store. These real store examples can make a huge impact on building associate continued on page 46

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Video Analytics continued from page 44

training, customer awareness, and positive selling behaviors. Dwell Time. With the POS integration, operations can leverage human recognition aspect of video analytics to assess customer dwell time and sales conversion by department. For example, in our shoe department if we confirm the number of customers visiting that section, how long the customers linger, and compare that to our shoe sales at the register, then we can confirm if our conversion rate was good, or if adding better sales coverage in the department would help increase shoe department sales at the register. In another example, we could leverage dwell-time information to determine how long customers had to wait in line before they were cashed out. We can also tie the DVR traffic information into our updated time-and-attendance system. Once the HR system update is completed, we will have the ability to layer traffic count into its scheduling function. The traffic conversion data can help to define the store schedule, even to the level of identifying which departments require a focused coverage based on the dwell-time information. Marketing and Advertising. In the short term, marketing and advertising will be able to leverage people count aspect of video analytics to confirm if their campaigns resulted in a lift in foot traffic. Marketing and advertising wants to confirm if there was a spike in traffic and/or sales after an advertisement is run to determine whether or not a particular marketing campaign pays off. They are also interested in using basic traffic conversions to determine if television, radio, or billboard campaigns had any impact on the volume of customer traffic to a specific region or during a specific time period. Today, they can only rely on sales data to confirm if their campaign was a success. However, sales results alone are not a true or complete measurement for their success. They may have successfully increased foot traffic to the location, however, there may not have been a significant sales lift because allocation levels were poor or customer service was poor. continued on page 48

Applying Traffic Counting Analytics There are three key components in traffic intelligence: 1. The number of customers who visit the store (TRAFFIC) x 2. The number who buy (CONVERSION RATIO) x 3. The amount of money they spend (AVERAGE TRANSACTION VALUE). If looking for a total sales increase, one of these components must increase. We cannot change what we cannot measure, so leveraging traffic-count data means we can accurately measure what components increased and the size of the opportunity. Traffic counters and analytics alone do not increase sales. The information provided by DVR analytics must drive strategic actions that result in increased sales. Our store operations group plans to take actions such as: ■ I ncorporating the traffic-conversion data into the daily store sales reports to district managers, ■ I ncluding the data into weekly store calls and executive summaries, ■ T ying traffic conversion KPIs into monthly management bonus program, and ■ A ddressing poor conversion results and leveraging DVR footage to identify performance issues at the specific time a dip in conversion occurred, such as observing employees tasking rather than approaching customers. Full Year Traffic Transactions Conversion APT Sales Current 203,148 37,176 18.3% $61.74 $2,295,061 Strategy 203,148 41,239 20.3% $61.74 $2,545,887 Difference 4,063 +2.0% +$250,826 In the one-store example above, 2 percent conversion lift means the potential top-line sales increase at this location is $250,826. That’s a potential 10.9 percent increase in sales. From a traffic-conversion standpoint, this works out to be approximately seven more customers serviced per day. To determine the net gain for this store location, we must take the gross profit increase to the bottom line and subtract the total incremental costs. The incremental costs would include: ■ A dditional payroll due to sales increase, ■ I ncentive payouts ($ for MAX payouts), ■ C ost of stock (% GM), and ■ C ost of DVR program for the location. Starting out with thirty-seven of our stores, we’ve estimated our potential net gain from this strategy to be $3.1 million in the first year of deployment. In a worse-case scenario, where we were only able to achieve a 1 percent lift in traffic conversion, it would still represent a $1.2 million net gain for our company. That’s an amazing prospect when you consider this value is coming from DVR technology that is traditionally considered “loss prevention technology.” It totally changes the kind of value that loss prevention can bring to the entire organization. To me, it’s a no-brainer that this approach, with this technology, is a win-win. May – June 2011

LPportal.com

POS INTEGRATION

The New Way to Look at Security Video

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

2011 NRF Loss Prevention BOOTH # 409

rsary e v i Ann

Follow i³ International Group on linkedin.com

Go to www.i3international.com/LP for case study downloads, or call us at 1.866.840.0004

Foreman Adverts_Jan_09:Layout 1

1/12/09

4:15 PM

Page 1

Video Analytics David J. Foreman, RPh., ND

Herbal Pharmacist The

®®

Coping with

Allergies

According to the Asthma and Allergy Foundation of America website (www.aafa.org), “an estimated 50 million Americans suffer allergies” (1 in 6 Americans). In the past, most people linked allergies to the change in certain seasons. For many, though, allergies are a year-round problem. The usual triggers are foods, dust mite particles, animal dander, pollen, mold and yeast. Exposure can lead to symptoms such as coughing, sneezing, runny nose, wheezing, asthma and sinusitis. Until you can eliminate the culprit(s) that trigger your allergy symptoms, I suggest you use supplements to help fight your allergy woes. The top supplement on my list is the herb Butterbur. Rosmarinic acid is another supplement on the rise for allergy sufferers. This compound is found in rosemary, basil, sage and mint. An extract of Rosmarinic acid may begin to help in as few as 3 days. Life Extension’s Butterbur Allergy combines butterbur and Rosmarinic acid to give you a 1-2 punch. Another favorite is the herb Nettle (leaf). Be certain the product you purchase is the leaf and not the root. The root is great for prostate health, but won’t help your allergy symptoms at all.

continued from page 46

These factors are a concern to our business, but the lift in traffic to the store tells us that the marketing campaign was actually a success. In the long term and with POS integration to our DVR software, marketing and advertising could leverage human recognition aspect of video analytics to assess customer dwell time and sales conversion by department. This would enable them to confirm that their marketing campaign did impact customer traffic and flow to the area of promotional focus within the store and that the customers shopping in those areas converted to additional sales at the register. Merchandising and Planning. In the long term, planning and visual merchandising groups will be able to leverage human recognition aspect of video analytics to see where customers are going in the store and how long they are staying in at fixtures, tables, and specific areas of the store. They can use dwell-time analytics to guide higher margin goods to the fixtures or areas of the store where customers spend the majority of their time. This benefit will take longer to coordinate and establish parameters for reporting so that decisions to remerchandise can be made quickly to impact sales. What may be the end result is a proven footprint of fixture placement for high-margin goods in our stores. This could potentially influence the type of visual displays we create, confirm if hanging or folding product is more effective in getting customers to linger longer, and identify what is attracting them to the area. If we aren’t converting in certain areas, we can determine the reason why, such as price point, sizes, color options, customer service, or other issues. Resource Protection. In the short term, video analytics will allow us to identify and investigate issues quickly, which will greatly increase our recoveries and reduce ongoing loss. Another benefit is the ability to detect possible training deficiencies before the mistakes get out of hand. We will use the missing-object capabilities of DVR analytics on our high-ticket items, such as watches, sunglasses, and headphones. Because our environment is tricky, this object-removal feature will take some time to develop. In the long term and with POS integration to our DVR software, our resource protection organization can also leverage human recognition to set up specific areas for heat-mapping detection, which flags transactions where the customer is not present. We will also be able to leverage POS text overlay to help identify issues with employee collusion, such as free-bagging, where more product is passed off to an accomplice than is rung through the register. This type of theft is a huge risk in our retail environment, which we do not currently have the ability to identify unless we have the benefit of a witness to tip us off on the activity. JEN RICHARD is an accomplished executive with twenty years of retail management experience in loss prevention and store operations. Since 2006 she has held the role of director of resource protection at West 49 Inc. based in Burlington, Ontario, where she has been responsible for the development and execution of the organization’s corporate loss prevention strategy and programs. Ms. Richard can be reached at 905-336-1936 or jrichard@west49.com

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May – June 2011

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LP Certification

Is It Your Obligation to Get Certified? R

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

“If you are a true leader and truly committed to this industry, then it should not be a question as to whether or not you should get certified. Rather, you should recognize that it is your obligation to get certified. Are you going to lead by example and be a true leader? Or are you going to jump on the wagon only when you have to, and simply follow the crowd?”

ecently I had the pleasure of attending the LP Magazine 10-year anniversary celebration [see page 26]. What a walk down memory lane! I couldn’t help but wonder what it would be like if we had no professional magazine. Many of us can remember a time when we had no magazine; no LPRC; no exception reporting, EAS, or video analytics; no LPQ, LPC, or CFI certifications. Isn’t it great to have these wonderful resources that add such value to our industry? Congratulations to Jack Trlica, Jim Lee, and the entire magazine staff for a great celebration, and for providing us with such a wonderful resource. It has clearly helped to elevate our professional perception in so many ways. Just think of the many wonderful articles and the wealth of information that has been shared over the past ten years, providing us all with such tremendous learning opportunities. Just think how many throughout the retail industry have gained valuable insights from an article they’ve read. And the best part of it all—it’s free to LP professionals due to the generous support of our solution providers, who fully fund the magazine through their ads and assistance. Thanks to all of those who offer their resources and support. We are very appreciative of the efforts…and the result. At this celebration event, it was extremely inspirational to hear so many industry leaders referencing professional development, and how important they feel that the LPQ and LPC certifications are in contributing to those efforts. In one specific presentation, the

vice president of loss prevention for a major retailer expressed how much value he found upon completing the LPC himself. He told everyone how impressed he was with the quality of the content and that after completing the LPC, he approached his human resources group to add the LPQ and LPC to his job descriptions and job postings as a preferred requirement. He then took his

New LP Certified Professionals Congratulations to the most recent LP professionals to earn their LPQ and LPC certifications. Shawn Abernathy, LPC Jeremy Bailey, LPC Jerry Bell, LPQ Timothy Boyle, LPQ Jason Byers, LPQ William Carleson, LPQ Jarid Catalano, LPQ Dave Cheema, LPQ Raifield Clark, LPQ Tyler Davis, LPC Cris Drugan, LPQ

Carmen Dubose, LPC Philip Dutto, LPQ Jeffrey Feldman, LPC John Gallemore, LPC Steven Garcia, LPQ Mark Gaudette, LPC Dennis Gibbons, LPC Gary Grimes, LPC Laura Guerry, LPQ Susan Hakes, LPC Kelly Ann Heuer, LPQ Jeff Hill, LPC James Hiscock, LPC James Jardine, LPC Jean Johnson, LPQ Paul Jones, LPC May – June 2011

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Karla Leitgeb, LPC Robert Padovano, LPQ Joseph Palinkas, LPC Karl S. Pellegrino, LPQ Jason Scheel, LPQ James Simpson, LPC Jesse Sincler, LPC Norman Smaligo, LPQ Andrew Spears, LPC Donald Tarney, LPC Damon Trite, LPC Justin Voss, LPC Crystal Ward, LPQ Wesley Webber, LPC Kevin Wells, LPQ

efforts a step further by having LPC and LPQ approved under tuition reimbursement assistance for his department. I guess he thought it was worthwhile. What do you think? This same vice president then expressed his strong belief that there shouldn’t be a question as to if LP leaders should get certified, but rather when they should get certified. He referenced the endless challenge that we have all faced with trying to improve the professional perception of our industry. His challenge to all of those listening: “If you are a true leader and truly committed to this industry, then it should not be a question as to whether or not you should get certified. Rather, you should recognize that it is your obligation to get certified. Are you going to lead by example and be a true leader? Or are you going to jump on the wagon only when you have to, and simply follow the crowd?”

New Foundation Board Members

The following individuals have accepted nominations and have been approved to serve on the Foundation’s board of directors: ■ Lee Bland, Director of Loss Prevention, Stage Stores ■ David George, CFI, LPC, Vice President of Asset Protection, Harris Teeter ■ Jeffrey S. Levitt, Senior Manager Asset Protection, Panera Bread ■ William Napier, LPC, Senior Manager Corporate Asset Protection, Cabela’s ■ Kevin R. Wolfe, Vice President of Loss Prevention, Big Lots Stores

PARTNERING WITH RETAILERS continued from page 40

Anti-ORC Buying Program The only way to stop ORC is to stop the demand. As loss prevention professionals, we have a duty to build an anti-ORC buying program for our organizations. Here are suggestions for approaching this challenge: Step 1—Meet with your executives and explain how buying stolen product creates demand for more stolen product. Step 2—Get a commitment that your company will not purchase stolen product, which may entail revamping incentive structure for buyers. Step 3—Communicate expectations to suppliers by establishing procedures for violations and sending vendors detailed letters. Step 4—Create a “right to audit” clause in all supplier contracts that allows unannounced visits to supply warehouses. Step 5—Audit for compliance by inspecting lot numbers after you receive product. If retailers only purchased merchandise from legitimate suppliers, then wholesalers will be forced to stop buying stolen product. If the illegitimate sources lose the customers to whom they’ve been selling stolen product, then the stolen merchandise will no longer have value. We will always be fighting the sale of stolen merchandise at flea markets and the like, but if we all ban together and build an effective anti-ORC buying program for our respective organizations, the losses will drastically decrease to such a level that we can finally use our progress and resources on more profitable challenges.

LP Magazine | may – June 2011

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feature

Be a

Great Workplace

Citizen LP Magazine | may – June 2011

By Bruce Tulgan

Great Workplace Citizen organization. For example, if you are a dedicated anarchist, then you shouldn’t be working for the IRS. If you refuse to wear a uniform, then you shouldn’t be a police officer. If you don’t believe in eating meat, then you shouldn’t work at a steakhouse. Don’t get me wrong, I’m not suggesting that you embrace and adopt an organization’s values and culture as your own if you don’t agree with them. I’m only suggesting that if you can’t get in sync, then you should be planning your exit. By the way, although every organization is different, when it comes to being a good workplace citizenship there are some solid standards of conduct by which you can almost never go wrong. To wit: ■ Be on time or a little bit early. ■ Don’t take long breaks. ■ Don’t leave early, and even stay a little late sometimes. ■ Under-promise and over-deliver. ■ Don’t badmouth others and try not to speak of others unless they are present. ■ Keep your word. ■ Keep confidences. ■ Be an accurate source of information. ■ Don’t keep other people waiting. ■ Overdress, rather than under-dress. ■ Practice old-fashioned good manners, such as saying “please,” “thank you,” “you’re welcome,” “excuse me,” “I’m sorry,” and if appropriate, addressing people by “mister,” “miss,” “doctor,” “professor,” and so on.

EDITOR’S NOTE: The following article is based on Bruce Tulgan’s best-selling book, It’s Okay to Manage Your Boss (Wiley/Jossey-Bass, 2010).

very workplace is different. One of the most impressive organizations I’ve ever worked with is a restaurant chain that has an enterprise-wide rule: “Closed Sundays!” Since this restaurant chain functions as a franchise, where each restaurant operation has an ownership stake in the revenues of his or her restaurant, the “Closed Sundays!” policy means every restaurant operator loses one-seventh of the restaurant’s potential revenue every week…probably more because it’s a weekend. Of course, when they sign on, the restaurant operators agree to that sacrifice. As one leader on the corporate side of the organization told me, “That’s just who we are. That’s our identity. It’s central to our values. If you don’t like that we are closed Sundays, there are probably going to be a lot of other things about us that you don’t like either.” In fact, the entire culture of this organization is wrapped around a set of traditional, conservative values. Indeed, it would be very difficult to succeed in this organization if you didn’t share those values. Not because they would discriminate against you. Rather, you just wouldn’t fit in or feel comfortable there. It would be like taking a vow of poverty and then going to work at Goldman Sachs. Why would anyone do that? What does this mean for you? First, it means you need to know what matters to you on a deep level. Know what

If you are out of sync with the culture and values of your organization, you will have a very hard time succeeding in that organization. Factors Beyond Your Control

you believe. Know what you can’t support or can’t stand for. Second, you need to understand the culture and values of your organization. If you are feeling out of place at work, perhaps a values disconnect might be responsible. In many organizations, the values and culture are not so obvious and generally are composed of two elements: ■ The written rules—the mission statement, code of conduct, rules, and regulations, and ■ The unwritten rules—the unspoken rules that dictate “how things get done around here.” Once you identify the culture and values, make sure you can get on board and become a good workplace citizen. Ask yourself, “Will I feel good, or at least feel comfortable, contributing to this workplace? Can I succeed here?” If you are out of sync with the culture and values of your organization, you will have a very hard time succeeding in that

May – June 2011

Of course, sometimes it’s easier to say than to do. You want to be a good workplace citizen, right? But sometimes there are factors beyond your control at work, and sometimes they are factors that make it harder to be the good workplace citizen you want to be. Right? There are so many factors beyond your control at work. I’ve done hundreds of focus groups with people to find out what gets in the way of their success at work. Predictably, nine out of ten responses are factors that are totally beyond the control of the individual: ■ Company policies, rules, regulations, culture, and standard operating procedures. ■ The way things “have always been done around here.” ■ Too much work and not enough time. |

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oo many low priority activities that take away from more T important tasks and responsibilities. ■ Conflict between and among employees, which creates a stressful negative mood. ■ Limited resources that don’t adequately provide the people, material, and tools needed to do the job. ■ No clear chain of command in the organization. ■ Answering to too many different people. ■ Multiple bosses who have different standards of performance and conduct, and conflicting understanding of the rules and policies and of what takes priority. ■ Bosses who yell and scream and make things difficult. ■ Managers who don’t make time for one-on-one discussions, make expectations clear, keep track of performance, or give honest, constructive feedback. Blame, blame, blame. Don’t get me wrong. These are all real challenges that get in the way of your success at work. There is only one problem—when you focus your attention on factors outside your own control, you are by definition powerless. If you want to be powerful, then you need to focus on the one factor you can always control—you. You have limited time, but you can gain control enough of your time to take charge of yourself every day. You can play an active role in managing your part of your relationship with every boss. You can make sure you understand what is expected of you, what your concrete goals are, and what guidelines and schedule you need to follow. You can get your hands on necessary resources or work around a resource gap. You can keep track of your own performance and make work a rewarding experience for yourself even if you can’t get the pay and work conditions you’d really like. Ultimately, you can decide how you are going to operate with every single person at work, from the most interesting and highly-engaged coworker to the loudest, meanest jerk. How? ■

First, Figure Out Where You Fit in Your Organization

No matter who you are, what you want to achieve, or how you want to behave, your role in any work situation is determined in large part by factors that have nothing to do with you. Every situation has a context that limits possibilities and limits the scope of your potential role. To get a handle on the factors that determine your work situation and role, you need to ask yourself: ■ Where am I or what is this workplace like? ■ What is going on here or what is the mission of the group? ■ Who are these people or what role does each person play in the organization? ■ Why are they here or what is at stake for each person in the group? ■ How are they accustomed to doing things here or what is the “standard operating procedure” of this organization? continued on page 56

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LP Magazine | may – June 2011

Great Workplace Citizen a time, he stays focused and blinks as little as possible. During a ten-hour mission, there might only be a handful of incidents for which the Airman would actually need to take notice and take action. I asked the young Airman if it’s sometimes hard to stay alert on the job. “Sir, I don’t have a choice,” he responded. “The difference between me giving 99 or 110 percent could be the difference between life or death for me, for people on the ground, and for my crew.” The crew numbered thirteen. Each person played a narrow focused role and was critical to the safety and effective operation of the airplane and its mission. And every single one of them knew that they had no choice but to give 110 percent all the time, because the work of every single role is a life-or-death matter. For your sake, I hope that every move you make at work is not a life-or-death matter. Still, if you want to succeed, you would do well to follow that young Airman’s example. No matter how narrow or mundane or lowly or repetitive you

continued from page 55

Once you get a handle on the context of your work situation, next you have to ask yourself where you fit in this context. ■ Why are you here? ■ What is at stake for you? ■ When did you get here? ■ What is your appropriate role in relation to the other people in the group? ■ What is your appropriate role in relation to the mission? ■ What expectations and hopes are reasonable for you to have? Once you really understand your role in any work context, then your number one responsibility is to play that role to the absolute best of your ability. That means, contribute your very best, and put in more time and effort no matter how lowly, mundane, or repetitive your tasks and responsibilities might seem in relation to the overall mission of your organization.

When you focus your attention on factors outside your own control, you are by definition powerless. If you want to be powerful, then you need to focus on the one factor you can always control—you. Second, Bring Your Best Self to Work Every Day

might find your current role, play that role to the max. If you really want to grow, you need to bring your very best effort and very best attitude to work every day.

Attitude matters…a lot. Effort, too, matters…a lot. Let me give you an example why attitude and effort count for so much. Over the years, I’ve been honored to work with many fine people throughout the branches of the United States Armed Forces. Recently, I spent time with the crew of an important military aircraft. One of the crew members’ duties in missions, which last as long as ten hours, is to lay face down in a window facing the ground in order to provide visual confirmation of the aircraft’s electronic surveillance of the ground below. “Basically I just lie down there with my eyes wide open and focused,” the young Airman told me. “We have very advanced systems on the plane, but I am the eyeballs. I need to provide visual [confirmation] to make sure we don’t fire on any [friendly forces] or civilians. But I also am watching for muzzle flares that might indicate enemy forces.” Of critical importance, this young Airman is also looking for enemy fire directed at the plane. “When we are fired on, we only have a few seconds to detect that and take countermeasures to protect the plane,” he said. As I talked with this young Airman, I couldn’t help but compare him with the many people who have complained to me that their jobs are lowly or mundane or repetitive. For hours at

May – June 2011

Theories That May Or May Not Work

There are a lot of theories out there about how to be your best at work. Let me take a quick look at the leading ideas. Play to your strengths at work—Working primarily on tasks and responsibilities that you enjoy and are particularly good at is great advice and would surely take some of the stress out of work. The only problem is that most of us don’t have the luxury to mostly do work that we enjoy and are good at. The real challenge is, how do you keep doing good work day after day…and feel good about it…when the work is not necessarily work that you enjoy or excel at? Balance your time at work with free time—Resting, recovering, relaxing, and rejuvenating is also great advice. But the problem is that most of us simply don’t have enough time to do everything we need to do each day, at and outside of work. The real challenge is, how do you stay focused and energetic when you barely have time to think, much less rest? Work with people you like and respect—Avoiding people you find “toxic” and sticking to those who you enjoy working continued on page 58

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Great Workplace Citizen continued from page 56

Being at your best and bringing your best attitude to work also means being high quality, high integrity, and adaptable. You are what you write, say, create, and do. No matter how grand your intentions or how generous and kind you may be as a person, others will know you by your words, actions, and creations. Be high-quality—Always hold yourself to a high standard. Then go for it. Don’t let yourself be paralyzed by the myth of 100 percent. Most people can accomplish 98 percent of almost any undertaking quickly and efficiently. If you ask me, 98 percent is the highest standard of quality attainable by human beings. I’m not saying that avoidable errors should be excused. The 2 percent I am talking about is the central character in the myth proliferated by procrastinators and failure-phobes (the myth is that they get nothing done because they are actually perfectionists). That 2 percent is so intangible, that it’s just not worth agonizing over for even five minutes. So, hold yourself to the highest standard attainable (98 percent) and go for it. Be full of integrity—If your boss wants you to lie, cheat, steal, or harm others, don’t do it. Quit if necessary. Blow the whistle if you think it’s appropriate. No matter what, don’t get involved in unethical dealings. It’s not worth any price. Be honest and honest people will gravitate toward you. But, let’s face it, that’s the easy part. I mean, how much effort is required to reject downright dishonesty and corruption? Real integrity requires proactive behavior. It requires breaking

with is great advice. The only problem is that very few people can choose their coworkers, subordinates, bosses, vendors, and customers. You work with the people you work with. The challenge is, how do you maintain your equilibrium and equanimity when you have to deal with so many people whom you probably would not choose as your colleagues? Work in a workspace that is comfortable and in a location that you enjoy—If only! Again, the real challenge is, how do you stay upbeat and strong if you are physically uncomfortable at work and stuck in a location that is not your preference? Leave your non-work issues at the door when you arrive at work—As good advice as that may be, it’s just not realistic. If things are adrift in your life outside of work, then you will be distracted by those concerns, whether you are at work or at home. Sometimes you need to attend to your outside life from work, just as you sometimes need to attend to work matters from home. The boundaries between work and not-work are no longer very clear in today’s always connected 24-7 world. The problem with these theories is that, if you are like most people, you probably struggle some days. You feel tired or your morale might be dampened. Before you can do your best every day at your job, you need to be at your best. That means you need to take good care of yourself both inside and outside of work.

your back to deliver when people are counting on you; helping others, even when nobody is there to give you credit; intervening when others are being treated unfairly; and speaking out loud for unpopular causes (if you believe in them). Be adaptable—People who are too attached to the way things are have a hard time learning new skills, performing new tasks, doing old tasks in new ways, working with new machines, new managers, new coworkers, new customers, new rules, or no rules. Usually, the greatest difficulty for such people is the uncertainty—not knowing what’s just around the corner. Don’t be one of these people. Learn to love change. Master today’s changes and tomorrow’s uncertainty

There are three elements that you need to take care of to stay healthy. In my seminars, I sometimes walk participants through the following reality check. I call it the “best-self reality check.” ■ Are you taking good care of your mind? What are the main sources of input for your mind right now? How can you expose your mind to a greater variety of input? ■ Are you taking good care of your body? When do you sleep? What do you eat and drink? How do you exercise? ■ Are you taking good care of your spirits? Do you know what you believe? What is your purpose? What is your attitude? How can you improve your attitude?

continued on page 60

May – June 2011

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Great Workplace Citizen continued from page 58

People with good interpersonal skills and who are conscientious in their interactions with others are much more successful. How do you develop “good interpersonal skills” and “conscientious interactions?” Here are a few tips. Approach every relationship by staying focused on what you have to offer the other person—First, define the value you want to add…now or within a reasonable period of time…in this relationship. Until you define the value you are willing and able to add in any situation, it will be impossible to sell that value to anyone else. Be a model of trust—Take personal responsibility for everything you say and do, hold yourself accountable, and never make excuses when you make a mistake. If you make a mistake, just apologize and make every effort to fix it. Remove your ego—Don’t take yourself too seriously, but always take your commitments and responsibilities seriously. Extend personal vulnerability, but never undermine your own credibility. Listen carefully—Never interrupt or let your mind wander when others are speaking. Stay focused on what the other person is saying. When it’s your turn, ask open-ended questions first and respond directly only after you are confident you understand what the other person is saying or his or her point of view. Empathize—Always try to imagine yourself in the other person’s position. Ask yourself what thoughts and feelings you might have if you were in their place. Then behave in a way and say the kinds of things that you would appreciate hearing under the same circumstances. Exhibit respect and kindness—Take courtesy the extra mile. If you think the other person is pressed for time, be brief. If you think something might be wrong, ask if there is anything you can do to help (but don’t be pushy). Never share observations that might be insulting and never hesitate to share a compliment. Speak up and make yourself understood—If you don’t say what’s on your mind, you’ll have no chance of connecting with people, getting them to share your interests, influencing their thoughts, or persuading them to do things your way. Of course, sometimes it helps to take a quiet moment and clarify, for yourself, what really is on your mind. If it’s something that ought to be shared, take an extra moment to think about the most effective words and actions to get your message across. Be a motivator—Visualize positive results. Be enthusiastic and share your positive vision. Never speak of a problem unless you have thought of at least one potential solution. Celebrate the success of others—Always give people credit for their achievements, no matter how small. And go out of your way to catch people doing things right.

because things are going to keep changing, faster and faster, with or without you. Bringing your best self to work means being one of the few people who is willing to do whatever is needed, whenever it’s needed, whether it is something you already know how to do or not, whether it is supposed to be “your job” or not, whether it is something you love to do or something you are going to have to just tolerate for a few weeks or months. Often in my seminars, I use the example of a small software company I’ve worked with, which gained some notoriety in the late 1990s for its “no-jerks” policy. Meant to capture some of the intangibles of interpersonal relationships, the policy prohibited employees from “acting like a jerk.” What usually ensues in my seminars is a lively discussion about what it means to “act like a jerk” at work. Most seminar participants agree that it’s pretty easy to know when somebody else is acting like a jerk—we know it when we see it. The real challenge is figuring out when you are the one acting like a jerk. How do you know? You know you are acting like a jerk at work if you: ■ Approach relationships from the vantage point of what you want or need from others, rather than what you have to offer the other person. ■ Blame others and make excuses when things go wrong, rather than focus on the role you played in creating the problem and on what you can do to contribute to the solution. ■ Take yourself seriously, but don’t always take your obligations seriously. ■ Tease and make fun of others or call them names. ■ Interrupt when others are speaking or don’t pay close attention when others are speaking. ■ Make negative personal observations about individuals. ■ Hold strong opinions about the work product of another individual, but never articulate your thoughts in a constructive manner. ■ Focus on the negative aspects of situations without volunteering to help make things better. ■ Denying, stealing, or begrudging credit for the success of others. ■ Lose your temper or raise your voice, even if you are only “talking to yourself.” If you find yourself doing any of these things, well, now you know—you might be acting like a jerk at work. If you act like a jerk at work, it’s going to hold you back. Mark my words. If that’s you, knock it off. BRUCE TULGAN is an adviser to business leaders all over the world and a sought-after speaker and seminar leader. He is the founder of RainmakerThinking, Inc., a management training firm. Tulgan is the author of the classic Managing Generation X as well as the best-seller It’s Okay to be the Boss, and many other books. He has written

May – June 2011

pieces for numerous publications, including The New York Times, USA Today, The Harvard Business Review, as well as LP Magazine. Tulgan can be reached by email at brucet@rainmakerthinking.com. His free weekly workplace video is available at www.rainmakerthinking.com.

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LP Magazine | may – June 2011

Fundamentals

Feedback from the Dark Side I

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

promised some feedback from the last couple of columns on “Game Changers.” First out of the box are two from service providers…edited for space reasons. (You know how wordy the dark side can be.)

original request if we dismissed the suit. To settle, he must provide the following: 1. A complete list of all products he is currently selling or has sold in the past three years. 2. A complete list of all Checkpoint Systems products, including, but not limited to, all Alpha S3 HandKeys. 3. A complete list of all customers, including complete addresses and contact information, to whom he has made sales of the Blackjack 360 or any other product designed or intended to circumvent Checkpoint’s products. 4. All sales and financial information relating to the Blackjack 360 and all products marketed, designed, or intended to circumvent Checkpoint’s products. 5. A complete list of all pending sales. 6. A complete list of vendors who supplied the Blackjack 360 products, all products marketed, designed, or intended to circumvent Checkpoint’s products and any Checkpoint products. 7. Confirmation that he will take down each of his websites that offer sale of the disputed merchandise. 8. A copy of his book, Shoplifting, Loss Prevention, and Merchants: The New Generation, autographed. 9. Confirmation that he will ship to us all of the infringing merchandise. ■ O nce we receive the complete list of “customers,” we will be sending cease-and-desist letters to all of them, with a brief summary of what happened with Mr. Radford and the penalties they may face if they persist trying to shoplift. ■ A lpha will continue trying to engage the different industry associations, like NRF, RILA, and FMI, to help us fight this growing issue. However, Alpha as an industry vendor partner has limited influence with them. To have any impact, we need the engagement and support of large retailers to help us take on the fight. Please be assured we take this issue very seriously and will continue taking proactive steps to eliminate its impact as quickly as possible. Carlos E. Perez, Alpha

Mike, I’m sure every vendor of a product category that you did not list in your January-February 2011 article is already emailing you! I know the success of exception-reporting tools. And I have a brother who designs DVR systems, so I hear and see their benefits first hand. However, I have never seen a truly measurable revenue impact and ROI like return authorization. Using predictive analytics to distinguish and deter fraudulent or abusive shoppers from performing returns is an offensive-minded LP strategy. But it also allows a retailer to be more customer friendly at the return counter, while still protecting against fraud and mitigating the risk of such a customer experience strategy. I hope there is a place in future articles for return authorization to make the cut. Tom Rittman, The Retail Equation Tom, here’s the cut. I know whether it be small-box specialty or larger formats, refund percentages and shrink results tend to go hand in hand. Mike, Here’s an update on our progress regarding theshopliftingstore.com and our efforts to limit their claims and sale of shoplifting devices. Although the website notes that all products sold are “novelties,” we find a clear intention to aiding and abetting shoplifting. We first encountered Castleton Enterprises last August 2009 through our efforts trying to limit the sale of Alpha S3 keys on different Internet websites. The emergence of theshopliftingstore. com, with links to theblackjack360.com site, in addition to the common denominator of “Castleton Enterprises, Inc.” as the copyright owner of the website, indicates that the same individual is back. Following are some of the initiatives we took: ■ T he website heavily promotes The Shoplifting Book. Through the book’s registration we were able to determine the author. ■ O n January 27, 2010, we served suit for a number of offenses. On January 28, we were contacted to fully comply with our

May – June 2011

Carlos, please provide updates. I’m happy to provide the forum. It looks like Alpha has set a standard by which all of our partners should engage the bad guys. NRF, RILA, and FMI board members—I’m calling you out to engage in the fight. This focus seems like a no-brainer. |

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Solutions Showcase

Palmer, Reifler & Associates

The Need to Modernize Civil Recovery Statutes

By Marisa C. McIntyre, J.D. Marisa C. McIntyre is an associate attorney at Palmer, Reifler & Associates, P.A. where she represents clients in structuring and negotiating settlements, in mediation, and in small-claims court. She received her bachelor’s degree in English from Furman University and her juris doctor from the University of Louisville Louis D. Brandeis School of Law. McIntyre is licensed to practice law in Florida.

ver the years, states have come to recognize the exorbitant monetary losses that retailers suffer due to incidents of theft. One by one, states have enacted statutes allowing the retailer to request civil statutory damages and/or a civil penalty from shoplifters in addition to any restitution that may be owed. These civil statutes, which were initially enacted to help the retailer defray the financial impact of shrink, partially offset the retailer’s security expenses, and deter repeat offenses, have evolved into an important way for retailers to recoup some of their losses from theft and, in turn, help to keep prices down for the honest consumer.

Changes in Favor of Retailers

In recent years several states have amended these statutes in favor of the retailer, allowing for a greater recovery against the shoplifter. For example, in 2009 the Washington State Senate realized the statute had remained unchanged since its establishment in 1975, a time when the dollar went a lot further. The Senate pointed out that $250 in 1975 was equivalent to $954 in 2007, therefore, the monetary amount that was considered a sufficient recovery in 1975 was no longer sufficient in the 21st century. As a result, Washington’s maximum civil penalty request…provided that the retail price of the merchandise is at the

statutory maximum…was increased from $1,200 to $3,500 in addition to any restitution.1 Maryland also revised its statute in 2001 when the state House and Senate voted in favor of the amended bill with overwhelming support, 138–0 in the House and 47–0 in the Senate. While calculation of the civil penalty remained at two times the retail value, the maximum allowable recovery was raised from $500 to $1,000 in addition to any restitution request.2 Similarly, in 2006 in response to the rising costs of loss prevention, merchandise, and court proceedings, the Retail Merchants Association requested a bill to raise the maximum allowable request in New Hampshire, which had remained unchanged since 1992. The state House and Senate voted in favor of amending the statute, increasing the maximum allowable request from $200 to $400 plus any restitution.3 In 2010 the statute was changed again and “shoplifting” was replaced with “willful concealment,” the distinction being that in New Hampshire the act of willful concealment occurs within the boundary of the merchant’s premises while the act of shoplifting occurs outside that boundary.4 While willful concealment had been previously referred to in the statute, deleting shoplifting reinforced the retailer’s right to make a civil damages request not only once a shoplifter has exited with unpurchased merchandise, but when he or she conceals unpurchased merchandise before or without exiting.

Changes that Disfavor Retailers

Not all recent amendments have favored the retailer, however. There have also been some amendments that have negatively impacted the retailer’s request. The latest was in North Dakota, which amended its statute to only allow a civil request for restitution and/or statutory damages upon completion of the criminal matter. Now, in North Dakota if the police are called at the time of the incident and charges are pressed, no civil requests can be made until the criminal matter is resolved. This differs from the majority of other statutes that state that a conviction or plea of guilty to the offense of theft is not a prerequisite to the bringing of a civil action.

1 2

S. 6167, 61st Leg., Reg. Sess. (Wash. 2009) S. 265, 2001 Leg., 415th Sess. (Md. 2001)

3 4

H.R. 1361, 159th Gen. Ct., 2d. yr. Sess. (N.H. 2006) State v. Thiel, N.H. 462 (2010).

LP Magazine | may – June 2011

Solutions Showcase

Palmer, Reifler & Associates for retailers to work together in requesting that each state’s legislature revisit the civil theft statutes, amending them to allow a greater recovery against those that are the root cause of the loss. We recommend that retailers unite to lobby for increased demand amounts where appropriate and to expand the scope of the civil theft statutes to include theft of cash, time-card fraud, gift-card fraud, and other forms of employee theft. Recent amendments benefitting the retailer have been overwhelmingly supported and, just as the Retail Merchants Association in New Hampshire demonstrated, a request can go a long way in helping to grant retailers the utmost protections that the law can afford.

Additionally, in 2009 the Arkansas statute was changed to apply only to adults, eliminating any juvenile or parental liability. In 2006 Rhode Island, in a perplexing move, eliminated the availability to demand a civil penalty until a lawsuit has been filed. For these reasons it is vital for retailers to lobby each state’s legislature to stress the importance of these statutes and their value to the retail industry in helping to recoup a portion of the losses resulting from theft.

Lobbying State Legislatures

While some statutes have been amended in favor of the retailer, other amendments have disfavored the retailer and many statutes have not been amended at all. It is important

Civil Recovery and Brand Protection Sound risk management is an essential ingredient of loss prevention. This is certainly the case when applying state civil statutes in the pursuit of losses caused by theft offenders, whether employees or shoplifters. Commonly known as “civil recovery,” it is no less than the practice of civil law. As in all matters of law, it is wise to seek quality legal representation. The law office of Palmer, Reifler & Associates, P.A. is a full-service law firm with a focus on civil recovery law. We believe sound risk management in civil recovery is defined as quality legal resources applied to sound processes and practices. For over twenty years Palmer, Reifler & Associates has developed and refined our signature attorney-supervised recovery process. Early on, this meant working with the Federal Trade Commission, state attorneys general, and state bar associations to coordinate legislative requirements and proper civil recovery procedures. In 1994 this meant successfully arguing a civil case, Shorts v Palmer, that became a landmark case in establishing important rights and protections for retailers and other victims of theft.

Legal Involvement with Clients

Today, this body of work has culminated into the ability to provide

our clients with a high level of legal assurances and a low level of associated risk. While not an exhaustive list, the following are just some examples of the important involvement of our legal staff in the civil recovery process. ■ High level of attorney involvement in the recovery process, with every aspect of recovery directly managed by attorneys. ■ When requested, a timely, thorough, and accurate case review process by our legal staff, prior to civil recovery demands being sent. ■ Tracking daily shifts and changes in the ever-evolving legal landscape that may impact civil recovery statutory law and case precedent, as managed by our director of legal compliance. ■ Provide on-going sound legal counsel to our clients regarding state civil recovery statutes and best practices in all fifty states. ■ Pursue a policy of comprehensive engagement with opposing parties, their parents, legal guardians, and/or attorneys, when applicable, throughout the case life cycle. Each and every theft offender that writes our office receives a response in writing by a member of our legal staff.

May – June 2011

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dapt our civil recovery process A to unique statutory circumstances, client needs and culture, and particular risk management model requirements. ■ Leverage technology for the highest level of case data capture, attorney follow-up, case notation, document capture/storage, and opposing party communication. ■ Provide our clients with civil litigation services, filing law suits on their behalf against theft offenders. Practically speaking, this level of applied legal resources provides a high degree of assurance that the right statutes are being applied to the right cases, which are being pursued in the correct way with absolute consistency. Without this level of assurance, your civil recovery program is exposed to litigation risk. ■

Protect Your Brand

In matters of civil recovery law, insist on a quality, experienced law firm focused on civil recovery law to represent your company. Settling for anything less is less than sound risk management.

Don’t Hire Monsters

Hire Winners Instead

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

Evidence-Based LP by Read Hayes, Ph.D., CPP Dr. Hayes is director of the Loss Prevention Research Council and coordinator of the Loss Prevention Research Team at the University of Florida. He can be reached at 321-303-6193 or via email at rhayes@lpresearch.org. © 2011 Loss Prevention Research Council

Research Fundamentals T

There can also be two types of data—qualitative and quantitative. We usually call data quantitative if it is in numerical

his column is dedicated to supporting all LP professionals. Hopefully sharing research findings, crime-prevention concepts, and research methods helps all of us get better at getting adequate budgets, as well as understanding and preventing crime. In the last column we discussed how LP experts can use situational crime-prevention concepts or theory to design and improve crime and loss control impact. This column is more about how research works and how to use it to get better.

form and qualitative if not. Photographs, videos, and sound recordings can be considered qualitative data. A very important research concept is the unit of analysis. The unit of analysis is key since we want to explain variance between members of the unit of analysis in a study such as: ■ I ndividuals (employees, offenders), ■ P laces (stores, DCs), ■ G roups (managers, customers, districts), and ■ I nteractions (crime-prevention treatments, loss levels, sales levels).

The Language of Research

Research is a lot like any topic, you should know the science jargon. We then take on some of the major issues in research like what questions are we trying to answer, and what’s the best way to answer key questions. So, we turn to some important terms like variable, hypothesis, data, and unit of analysis. Two terms, theoretical and empirical, actually work together with theoretical meaning developing, exploring, or testing how something really operates. Empirical means actual observed and measured perceptions of that something. Most research blends these two terms by comparing how our theories about how the world operates with our actual observations of its operation. Most crime prevention research is probabilistic, or based on probabilities. The inferences we make in research have probabilities associated with them, which is why statistics are so important in our research since they allow us to estimate probabilities for the situations we study. Another critical term is causal, meaning much of our research describes relationships or opinions, but most of our randomized controlled trials and cross-sectional predictive analytics explore relationships between a certain theft-reduction countermeasure and the observed loss level. Most of us have heard there can be a difference between a correlational relationship and a causal relationship. With so much at stake in LP like serious injuries, loss of reputation, and heavy financial losses, most research should help identify crime and loss causes. We can’t do a lot of research unless we discuss variables. A variable is any entity that can take on different values. A hypothesis is a specific statement of prediction or relationship. It describes what we expect will happen in our study. Not all studies have hypotheses. Sometimes a study is designed to be exploratory in order to later develop hypotheses.

May – June 2011

Deductive and Inductive Thinking

In logic we often refer to the two broad methods of reasoning as the deductive and inductive approaches. Deductive reasoning works from the more general to the more specific. Sometimes this is informally called a “top-down” approach. We might begin with thinking up a theory about our topic of interest. We then narrow that down into more specific hypotheses that we can test. We narrow down even further when we collect observations to address the hypotheses. This ultimately leads us to be able to test the hypotheses with specific data—a confirmation (or not) of our original theories. Inductive reasoning works the other way, moving from specific observations to broader generalizations and theories. Informally, we sometimes call this a “bottom-up” approach. In inductive reasoning, we begin with specific observations and measures, begin to detect patterns and regularities, formulate some tentative hypotheses that we can explore, and finally end up developing some general conclusions or theories.

Making a Difference

As mentioned last issue, you should carefully diagnose your specific problem and then adjust the proposed solutions. Your research should include hypothesizing about what, who, when, where, why, how much, and how the problem is occurring. Then collect incident, interview, survey, and experimental data to support, adjust, or not support what you thought. Good research should help your team much better understand loss dynamics, how well or not crime-prevention treatments work, and provide clear descriptions for senior executives as they decide whether to fund your LP programs.

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Industry News

RFID Gains Traction in Apparel Market A

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

case, or item. UPCglobal actually manages and allocates all of these numbers. The ultimate goal is to get every manufacturer to utilize the EPC number system, so that incompatibility issues can be avoided. In late November 2010 retailers and merchandise manufacturers belonging to the Voluntary Interindustry Commerce Solutions (www.vics.org) began to design RFID deployment guidelines, much like the group has accomplished for apparel hangers and the placement of EAS tags.

fter several years of inertia, item-level radio frequency identification (RFID) is emerging from the proof-of-concept and pilot stages, and is gaining adoption momentum all over the world. Thanks to a concerted effort by intrepid reader, tag, and software manufacturers, plus trade organizations, retailers, and academia, there has been a wide array of successful retailer-driven RFID tagging initiatives. Encouraged by more accurate readers, less expensive and better performing RFID tags, and statistically relevant results, the apparel market is poised to be among the first broad merchandise categories to establish a complete, integrated, and somewhat standardized methodology for improving the overall performance of its biggest asset—merchandise inventory. RFID Journal (www.rfidjournal.com) released a comprehensive guide for apparel manufacturers this spring, entitled “How to RFID-tag Apparel, and How to Benefit Internally.” In addition to the latest information on RFID technology, and instructions on nuts-and-bolts issues, such as tagging options, the document contains a wealth of information on the types of RFID deployments in the apparel space, including a number of case studies. Following are highlights from a retail loss prevention perspective.

Performance of Readers, Tags, and Software

Anyone who has followed the evolution of RFID is aware that the highest level of detection performance and tag-reading accuracy is an absolute requirement in a successful deployment. In the early days, technology providers were unable to provide the appropriate level of performance at an acceptable cost. The first generation tags were orientation-sensitive, and susceptible to signal shielding by water and certain metals. So, they were insufficiently sensitive to detect the signal emitted by the reader. Both issues have been addressed by the new EPC generation 2 tags made with the latest chips made by Impinj or NXP. Now that tag manufacturers are beginning to sell larger quantities of tags, the per-unit cost is dropping to levels that will enhance the opportunity to earn a meaningful return on investment. As of this writing, tag costs have fallen about 40 percent over the past eighteen months, as low as 8 cents each, depending upon volume and tag form factor.

Standards

The industry has coalesced around a set of standards jointly developed under the auspices of GS1, an international not-for-profit association “dedicated to the design and implementation of global standards and solutions to improve the efficiency and visibility of supply and demand chains globally and across all sectors.” Perhaps the most contentious debate revolved around the establishment of a standard frequency range between 856 MHz and 956MHz, in the ultrahigh frequency (UHF) portion of the spectrum. EPCglobal, a subsidiary of GS1, developed a standard numbering system for passive (non-battery powered) UHF tags, called the electronic product code (EPC). An EPC is a unique serial number encoded to an RFID tag that allows end users to identify and track pallets, cases, and items. Like a barcode, it identifies the item’s manufacturer and product class. Unlike a barcode, it also contains an extra set of digits that uniquely identifies the actual pallet,

May – June 2011

Case Studies

In addition to a large number of articles and case studies, the report highlights a recent University of Arkansas study that listed sixty unique business cases for the use of RFID in the supply chain, as identified by apparel manufacturers. Researchers from the university’s Information Technology Research Institute determined that the cases fell into three broad categories—quality management, inventory management, and inbound/outbound (movements of merchandise or data either from a physical location or as a result of the item’s |

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change of ownership within the supply chain).

Impact as a Security Device

At least two companies have unveiled “RFID as EAS” systems that include detection devices, adhesive labels, and reusable plastic tags containing RFID inlays, and smart detachers that can utilize the intelligence built into the tags to identify items. The report chronicles three upcoming pilots involving two Canadian and one United Kingdom retailers. In one case the system will be used only for counting EAS tag removals via the smart detacher and matching information to sales data. In the other two cases retailers will also track the data from the garment to which the RFID tag is attached. Mobile readers will be used to take inventory and capture data when an item moves from one place in the store to another, such as from the back room to the selling floor.

Wave of the Future? Finally

Unquestionably, global commercialization of RFID is rising rapidly, and item-level tagging is becoming an established practice. The list of new users contains not only many of the largest names in global retail, but also smaller, innovative merchandise manufacturers and retailers who see that RFID can improve their efficiency and better serve their customers. A recent survey by the Aberdeen Group found that 57 percent of polled retailers are using or plan to deploy RFID at the item level. There is every reason to think that RFID is “over the hump” and will be a much bigger part of the future of inventory management.

Chinese Retailers Losing Billions; Shift Loses to Suppliers Businesses in China suffered losses of 128.4 billion yuan ($19.78 billion U.S.) in 2010 and industry experts said that suppliers and consumers will end up footing some of the bill.

MAGAZINE

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Benefits of an Open Architecture: Lowe’s Companies’ View on IP Video Standards Attend Live: Thursday, June 23 2:00 p.m. EDT

Available on demand anytime after the live event In a world of better, faster and more cost-effective technologies, retailers are inundated with choices. If you are considering new technology products for your retail business, you must ensure those products are interoperable with your existing infrastructure and guarantee minimal to no disruption as your business scales. This educational webinar will speak to how an open architecture of IP video standards saves time, money and positively impacts your operation’s bottom line. Attend this webinar to gain: n Insight to what an open standard means and its benefits. n ONVIF, an industry alliance that is gaining momentum as the defacto standard. n Identifying tangible and measurable opportunities to improve operational efficiency and business flexibility. n Real examples of lower total cost of ownership (TCO) and improved return on investment (ROI). n Ability to scale into new markets, while ensuring interoperability.

Speakers Brian Morrison Director of LP Operations, Lowe’s Companies Steve Surfaro Business Development Manager, Industry Liaison, Axis Communications Jackie Andersen Retail Business Development Manager, Axis Communications

May - June 2011

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EVIdENCE-BASEd LP

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