May - June 2017 by Loss Prevention Magazine

MAY–JUNE 2017 | V16.3 LOSSPREVENTIONMEDIA.COM

LOSS PREVENTION MAGAZINE THE AUTHORITY ON ALL THINGS ASSET PROTECTION

CASHING IN ON SECURITY

FINDING NEW SOLUTIONS TO AN OLD PROBLEM BUILDING A SUPPLY-CHAIN AP TEAM FROM TEE TO GREEN AT HOME DEPOT HOW EMPLOYERS CAN PREPARE NOW FOR THE GREAT GENERATIONAL SHIFT AN UPDATE ON MAJOR SUBJECTS AFFECTING RETAIL LOSS PREVENTION

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TABLE OF CONTENTS 6 EDITOR’S LETTER

Great Customer Experience Is More than a Buzzword

By Jack Trlica

10 RETAIL SPONSORS 12 INTERVIEWING

Cashing in on Security

Implicit or Explicit—Why Do It at All? By David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP

Retailers are using new strategies to secure cash and reduce management costs

26 SUPPLY CHAIN

Supply-Chain Focus Should Be “Left of Boom”

By Garett Seivold, Contributing Writer

By Maurizio P. Scrofani, CCSP, LPC

36 FUTURE OF LP

When Ordinary Things Get Smart By Tom Meehan, CFI

Building a Supply-Chain AP Team from Tee to Green

38 BENCHMARKING

Emerging Technologies

By Adrian Beck, Walter Palmer, and Colin Peacock

48 LPM EXCELLENCE

LPM “Magpie” Award: Applauding Excellence

A conversation with Mike Combs of The Home Depot

50 CERTIFICATION

De-escalation Training Program Addresses Disruptive Behaviors

By James Lee, LPC, Executive Editor

By Gene Smith, LPC

52 EVIDENCE-BASED LP Information Dominance

By Read Hayes, PhD, CPP

65 SOLUTIONS SHOWCASE

- Checkpoint - 7PSolutions - Nedap - Southern Imperial - The Zellman Group

The Great Generational Shift

70 LPM DIGITAL

How employers can prepare in 2017 for the changes in retail associates

A New Chapter in Retail By Jacque Brittain, LPC, and Kelsey Seidler

By Bruce Tulgan, RainmakerThinking

74 CALENDAR 76 PRODUCT SHOWCASE 78 PEOPLE ON THE MOVE 80 ADVERTISERS 80 SUBSCRIPTION FORM 81 VENDOR SPONSORS 82 PARTING WORDS

An Update on Major Subjects Affecting Retail LP

Change Isn’t Just Something You Carry in Your Pocket

How ORC, RFID, and other issues will change loss prevention

By Jim Lee, LPC

By Bill Turner, LPC, Contributing Writer

MAY–JUNE 2017

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EDITOR’S LETTER

Great Customer Experience Is More than a Buzzword F

or the past several years “customer experience” has been one of the most talked about topics in retail. Seminar after seminar at the past two National Retail Federation’s Big Show conferences have focused on this subject and how important creating a great customer experience is to the success of brick-and-mortar as well as e-commerce retailing in today’s omni-channel world. Much of the customer experience is dependent on a well-oiled supply chain. Because of the growth of omni-channel retailing, loss prevention and asset protection organizations have placed much more attention on securing and streamlining their companies’ supply-chain networks. Here at the magazine, we recognize the importance of our supply-chain LP professionals and have increased our editorial on the subject. For the past year, we have published a column on supply chain (page 24) written by one of the industry’s most accomplished supply-chain executives, Maurizio Scrofani, CCSP, LPC. In this issue for the first time, we have interviewed a director of asset protection for global supply chain—Mike Combs of The Home Depot (see page 27). Even for our readers who are on the corporate or store side, you need to understand the logistics world and how it impacts what you do. Plus, there are growing opportunities to expand your careers in the supply-chain world. I want to share a personal story that ties into both the customer experience and supply-chain topics. My wife and I own a second home in Manzanillo, Mexico, where we spend six to eight weeks a year. In fact, I’m writing this column from my Manzanillo office. No, there’s not a

margarita in my hand on the beach. But I can see the Pacific Ocean from my window and have access to the beach, mountains, and excellent food and beverages after work hours. We’ve owned our home since 2008 and have spent each year outfitting our home with both essentials and extras to make our home away from home personalized to our tastes. Much of what we’ve added could be found locally, or as local as Guadalajara, which is a three-hour drive from Manzanillo. Other things we have brought with us on the airplane in what we jokingly refer to as “body bags” filled with merchandise from our favorite retailers in the US. One of the items we’ve looked for in Mexico that surprisingly we’ve not been able to find is dinnerware. Like I’m sure many of you have, we both grew up with Fiesta® dinnerware. Maybe because it’s a US-based manufacturer, we could not find it or anything similar to it locally. Buying it in the US and shipping it to Manzanillo seemed like a daunting and expensive option. That is until I mentioned it to Maurizio, who told me that while the head of supply-chain AP at Macy’s, they had set up a system for shipping to over a hundred countries worldwide. Fortunately for us, Fiesta is a brand that Macy’s carries. On the Friday before leaving for our current stay, we visited a Charlotte Macy’s store to look at what they carried. Then we went online to place our order. The process was straightforward by simply clicking on the “shipping to” link at the top of the website and putting in our Manzanillo address. Everything else was basically the same.

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Because we are staying this trip for six weeks, we hoped that the lengthy delivery times for most shipments from the US to Mexico would allow us to receive the goods before we returned to the US. The prompt notice we received from Borderfree, a global shipping partner for Macy’s and other major retailers, said that our shipment would go out in “five to ten days.” We thought, “Okay, that’s not bad, but how long will it take to arrive?” We flew out two days later and arrived late Sunday. Monday morning I had an email saying that our shipment would arrive on Friday. Really? Well, it didn’t arrive on Friday; it arrived on Thursday after another notice alerted us to the earlier arrival time. One week after placing the order, we unpacked three large boxes with absolutely nothing damaged. As you might imagine, we were delighted—the result of a great customer experience made possible by an excellent supply-chain platform. I’m sure that months of work and thousands of man-hours by a team of retail professionals—including the asset protection team—resulted in Macy’s efficient e-commerce supply-chain solution. The only downside I can offer is that now that we know there is a viable means for ordering products for delivery in Mexico, our bank account will likely suffer. In the meantime, I’ll raise a cold margarita in a toast to Macy’s on the beach later this evening.

Jack Trlica Managing Editor

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

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

Ray Cloud Senior Vice President, Loss Prevention, Ross Stores

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

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

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

Charles Delgado, LPC Regional Vice President, Store Operations, Academy Sports Scott Draher, LPC Vice President, Loss Prevention, Safety, and Operations, Lowe’s Scott Glenn, LPC Chief Security Officer, Sears Holdings Tim Gorman Divisional Vice President, Loss Prevention, Asset Protection, and Business Continuity, Walgreens Barry Grant Chief Operating Officer, Canadian Images

Randy Meadows Senior Vice President, Loss Prevention, Kohl’s Melissa Mitchell, CFI Director of Asset Protection and Retail Supply Chain, LifeWay Christian Stores Dan Provost, LPC Vice President, Global Loss Prevention, Staples Tina Sellers, LPC Director of Loss Prevention, Retail Business Services LLC, an Ahold-Delhaize Company Mark Stinde, LPC Vice President, Asset Protection, 7-Eleven

Bill Heine Senior Director, Global Security, Brinker International

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

Frank Johns, LPC Chairman, The Loss Prevention Foundation

Robert Vranek Vice President, Loss Prevention, Belk

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

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

Loss Prevention, LP Magazine, LP Magazine Europe, and LPM 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 2017

LOSS PREVENTION MAGAZINE 700 Matthews Mint Hill Rd, Ste C Matthews, NC 28105 704-365-5226 office, 704-365-1026 fax MANAGING EDITOR Jack Trlica JackT@LPportal.com EXECUTIVE EDITOR James Lee, LPC JimL@LPportal.com EDITORIAL DIRECTOR, DIGITAL Jacque Brittain, LPC JacB@LPportal.com MANAGING EDITOR, DIGITAL Kelsey Seidler KelseyS@LPportal.com CONTRIBUTING WRITERS Adrian Beck Read Hayes, PhD, CPP Tom Meehan, CFI Walter Palmer, CFI, CPP, CFE Colin Peacock Maurizio P. Scrofani, CCSP, LPC Garett Seivold Gene Smith, LPC Shane G. Sturman, CFI, CPP Bill Turner, LPC David E. Zulawski, CFI, CFE CHIEF OPERATING OFFICER Kevin McMenimen, LPC KevinM@LPportal.com DIRECTOR OF DIGITAL OPERATIONS John Selevitch JohnS@LPportal.com SPECIAL PROJECTS MANAGERS Kat Houston, LPQ Justin Kemp, LPQ Karen Rondeau DESIGN & PRODUCTION SPARK Publications info@SPARKpublications.com CREATIVE DIRECTOR Larry Preslar ADVERTISING MANAGER Ben Skidmore 972-587-9064 office, 972-692-8138 fax BenS@LPportal.com SUBSCRIPTION SERVICES

NEW OR CHANGE OF ADDRESS myLPmag.com POSTMASTER Send change of address forms to Loss Prevention Magazine P.O. Box 92558 Long Beach, CA 90809-2558 Loss Prevention aka LP Magazine aka LPM (USPS 000-710) is published bimonthly by Loss Prevention Magazine, Inc., 700 Matthews Mint Hill Rd, Ste C, Matthews, NC 28105. Print subscriptions are available free to qualified loss prevention and associated professionals in the U.S. and Canada at LPMsubscription.com. The publisher reserves the right to determine qualification standards. International print subscriptions are available for $99 per year payable in U.S. funds at circulation@LPportal.com. For questions about subscriptions, contact circulation@LPportal.com or call 888-881-5861. Periodicals postage paid at Matthews, NC, and additional mailing offices.

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INTERVIEWING

Implicit or Explicit—Why Do It at All? W e have all dealt with and perhaps made threats and promises in our everyday lives. “You kids cut it out. Don’t make me stop this car!” “If you don’t finish what’s on your plates there will be no dessert.” “When you’ve cleaned your room we’ll go for ice cream.” “If you’re good Santa will bring you presents.” But the world of threats and promises applied to the interview can compromise the voluntariness of the confession and admissions made by a subject. This is more likely to be challenged in a criminal setting where the state is playing an adversarial role with the subject who is being afforded constitutional protections against government actions. But the voluntariness of the confession can also be challenged in civil proceedings when statements are obtained through the interviewer’s use of threats and promises.

Voluntariness

Originally, to determine if the confession was to be excluded from evidence, the courts looked at the trustworthiness of the confession, which was the common law method of viewing admissibility. However, it was the 1936 Brown v. State of Mississippi decision that applied the US Constitution’s Fourteenth Amendment “due process of law” clause to state actions to reverse three Mississippi convictions. In Brown, three black men were repeatedly beaten, hung, and whipped to elicit confessions to the murder of a white farmer. The three were ultimately convicted primarily based on their coerced confessions and sentenced to be executed by the state of Mississippi. The Supreme Court of the State of Mississippi upheld the conviction on technical grounds having to do with the timing of the defendants’ objections to evidence. The defendants appealed to the United States Supreme Court, which had never before overturned or reviewed a state confession case. In this case, the defendants’ attorneys argued that the protections of the US Constitution should be applied to the states allowing defendants the right against self-incrimination and due process. The Fourteenth Amendment prevents states from depriving “any person of life, liberty, or property, without due process of law.” This allowed the federal government to review confessions at the state level that were obtained as a result of torture or coercive means. Brown ultimately led to the “totality of circumstances” view of a confession’s admissibility, which is the current standard used by the criminal courts to determine whether the confession is voluntary.

MAY–JUNE 2017

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

Zulawski and Sturman are executives in the investigative and training firm of Wicklander-Zulawski & Associates (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. © 2017 Wicklander-Zulawski & Associates, Inc.

For a totality of circumstances view of the confession, the court considers the defendant’s age, education, intelligence level, and mental state. In addition, the court considers the length of the suspect’s detention, the style of interrogation, and whether the individual was given his Miranda warnings. Whether the individual had suffered any physical abuse, deprivation of food or sleep, and even if the individual was under the influence of alcohol or narcotics are also now considered before making a decision about the voluntariness of the confession. The totality of circumstances standard used by the court is also applied to an investigator’s use of threats and promises to determine if the confession is voluntary. In general, the totality of circumstances standard for examining whether a confession is voluntary is confined to state actions where the investigators are law enforcement officers or where a citizen is acting as an agent of the police. If a company investigator conducts an interview at the behest of police, he will likely be acting as an agent of the police, and his words during the interrogation will be viewed along with the circumstances surrounding the conversation to determine if an admission is voluntary.

Threats and Promises

Confessions can be judged involuntary if they are obtained as a result of threats or promises made during the interview. The threat or promise could be explicit, where the investigator clearly states something, or implicit, where the threat or promise is merely hinted. Confessions can also be judged involuntary if they are obtained as a result of explicit threats or promises made to the person. Some examples include: ■ Tell the truth, and you can keep your job. ■ Get this cleared up, and we won’t prosecute. ■ Get this cleared up, or we will turn this over to the police. ■ Don’t make us take this to the authorities. ■ We’d like to handle this within the company. ■ If you don’t get this cleared up, we will take your kids from you. ■ We’d hate to arrest your wife too. ■ You can’t leave until we get this straightened out. ■ If you don’t confess, then we’ll have to arrest your wife and bring her here from your son’s hospital room.

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continued on page 14

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onfess, or we’ll call the police. But if you confess, we can get C you free counseling and treatment. ■ You can spend years in prison unless you tell the truth. ■ Even though you are a juvenile, you could get the death penalty. ■ If you don’t tell us what happened, we’ll charge your sixteen-year-old son as an adult, and he’ll be sent to prison. ■ Any information you give us will remain confidential. Your wife will never find out. ■ Just tell us the truth, and you can go back to work. ■ You’ll never get another job if we fire you. ■ We’ll get you medical treatment after you’ve done the right thing. ■ We’ll make sure you get deported back home where they know how to deal with people like you. ■ If you ever want another job, you’d better tell me the truth. ■ This is where you will spend the rest of your life on death row. ■ Here’s a picture of the cell where you will be staying for many years. ■

im·plic·it: implied though not plainly expressed: comments seen as implicit criticism of the policies. synonyms: implied, hinted at, suggested, insinuated, unspoken, unexpressed, undeclared, unstated, tacit, unacknowledged, taken for granted, inherent, latent, underlying, inbuilt, incorporated; understood, inferred, deducible. The real question—why would you use threats and promises during an interview? When these implicit or explicit threats are made, they highlight and focus the individual’s attention on his basic fears of confessing. This generally increases an individual’s resistance to cooperate. Most people are hesitant to confess because they are afraid of jail, loss of reputation, losing their means of making a living, or retribution. Many times the subject has not even considered the possibility of what may happen after confessing, and now the interviewer has brought it to the surface. We strongly urge you to stay away from making any threats or promises during the interview as they may compromise the voluntariness of the confession or its admissibility.

MAY–JUNE 2017

Confessions Obtained by Private Citizens

Unlike law enforcement officers who are agents of the government, private citizens have limited rights to arrest and question under common law. Confessions made to private citizens are more likely to be judged under common law rule of the confession’s trustworthiness, rather than the “totality of circumstances” used to determine voluntariness and admissibility in criminal law. This question was addressed in Pappaconstantinou v. State. The defendant signed a statement admitting to theft from his employer during an interview with company investigators. The court determined the statement must be viewed not on voluntariness grounds, but rather on whether the confession was or was not trustworthy or reliable. To this point, the US Supreme Court has not addressed whether a confession obtained by a private citizen could be suppressed on constitutional grounds. However, they have clearly addressed situations where a private citizen is acting as an agent of the police. In situations where a private person is assisting in an investigation with law enforcement, the citizen must follow the rules of the public sector in terms of Miranda warnings and the voluntariness

ex·plic·it: stated clearly and in detail, leaving no room for confusion or doubt: the speaker’s intentions were not made explicit. synonyms: clear, plain, straightforward, crystal clear, easily understandable, precise, exact, specific, unequivocal, unambiguous, detailed, comprehensive. of the statement. Miranda warnings are to regulate police conduct, and every decision relating to Miranda has concluded there must be government involvement in the case to trigger its application. So it is important to determine under the totality of circumstances how the police may have interacted or directed the private citizen to assist in the investigation. Regardless of whether the police are involved, we believe threats and promises should be avoided since the voluntariness and truthfulness of the confession is critical in the search for truth in an investigation. The confession should be substantiated to support a conclusion the statement is trustworthy and reliable. An interviewer who resorts to threats and promises diminishes his professionalism and potentially endangers the case resolution.

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FEATURE

CASHING IN ON SECURITY

FINDING NEW SOLUTIONS TO AN OLD PROBLEM By Garett Seivold, Contributing Writer

CASHING IN ON SECURITY

t is possible for cash to be an afterthought. Shoppers are using it less, and it doesn’t command attention like new mobile payment methods do. It’s not disappearing, but it’s not changing either. It’s stable and consistent, but maybe a bit anachronistic. Threats to cash, too, aren’t much different than they’ve been in the past. And while it may not seem to follow, that very constancy of cash can be problematic—if stability leads to overlooking opportunity. Byron Smith, corporate asset protection manager for 7-Eleven, suggests that even if cash and risks are unchanging, a retailer’s processes and technology for Byron Smith managing cash must evolve. “I don’t believe the risks have changed much. It’s still cash handling, with the central risks being robbery and employee theft and the need to control that. But that does not mean that cash management is something that can be taken care of and be done with,” he warned. “It needs to evolve.” For one reason, it remains an area of opportunity. “It is an important piece that loss prevention and asset protection should be looking at,” said Gary Smith, LPC, senior director for asset protection

at Walmart. “It’s still an area where you can make a quantifiable difference in the expense piece.” 7-Eleven and Walmart loss prevention have used store education and new technology in a two-prong attack on the risks to cash—and have done it with an eye on achievable and applicable business benefits that new cash management systems offer. It’s perhaps a good model for LP executives as they try to navigate an issue that can be accompanied by a lot of noise—from predictions of the death of cash to heady promises from manufacturers. Protecting cash is not a new challenge, and it’s pretty straightforward, but there is a lot in it for LP to unpack. What can new technology do? What can you get from it? How do you know if it’s worth the expense? What questions should LP be asking?

Cash Is Dead, Long Live Cash

The amount of cash that customers use directly impacts the utility and return on investment of different cash management devices. And maybe, if cash is falling out of favor, it makes little sense to spend more for a technology upgrade. Many retailers report cash transactions are decreasing with a rise in debit and credit card use. Additionally, there is the

prospect of a shift to mobile payment options like Google Wallet, Apple Pay, Venmo, and other novel cashless pay schemes. The result? When you read that some retailers in Denmark will be phasing out acceptance of cash this year, it’s easy to think you’re getting a glimpse of the future. In self-reporting surveys, the American public says they use cash less often. Other surveys find they increasingly have a preference for debit cards and mobile payment apps. A 2016 Gallup survey found that 24 percent of people report making all or most of their purchases with cash, a fairly sizable drop from 36 percent five years earlier. And 62 percent of consumers say mobile payments make for a better buying experience, according to a study by Oxford Economics. But preferences, attitudes, and actual behavior don’t always move in lockstep. In one 2016 study, published in Applied Economics, researchers found that old habits die hard. “We show that changing payment patterns is a challenging task; even when consumers have fallen in love with a new payment instrument, they find it hard to divorce from their old payment instrument,” the research concluded. “We find a discrepancy between how consumers prefer to pay and how they actually pay,” with the “habit of paying cash [playing] a

Share of Transaction Number by Payment Instrument* *Of all consumer retail transactions including bill payments Cash

Check

Credit

32%

2015

Debit

21%

40%

2012

10%

20%

30%

Electronic

40%

27%

17%

50%

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11%

25%

60%

Source: Federal Reserve Bank of San Francisco, 2016

Other

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70%

80%

90%

100%

CASHING IN ON SECURITY Cash

Check

Credit

Debit

Other

100%

22%

80%

33%

42%

37%

33%

38%

21%

17%

32%

12% 60%

21% 40%

39%

62% 42%

20%

19% te

99 00 $1

gr ea

99 $2

99 $2 to 0 $1

significant role explaining the presence of a gap.” And the same Oxford study that found consumers are enamored with mobile payment also found that 70 percent also worry about its security and the privacy of their personal details, with 55 percent perceiving mobile wallets as less secure than their physical counterparts. For now, these security concerns are keeping adoption of mobile payments in check. A “state of cash” study released in November 2016 by the Federal Reserve Bank of San Francisco demonstrates just how resilient cash is proving to be. The report acknowledges that cash has a declining share of total retail payments, but concludes that cash nonetheless continues to be the most frequently used consumer payment instrument, is widely used in a variety of circumstances, and dominates small-value transactions. Furthermore, the continuing growth of currency in circulation points to cash’s significance, according to the study. As more retailers expand their acceptance of different payment options, incentivize electronic payment, and transition to digital sales, one would expect to see further erosion in cash’s dominance as a payment instrument. But those declines are likely to be both modest and gradual. Evidence includes the fact that the current level of dominance cash enjoys is not because store merchants refuse to accept card payments. “Consumers are using cash for small-value transactions out of convenience, not merchant-specific pressures,” according to the Federal Reserve study. And even if there is a decreasing trend in the preference for cash payments across groups of customers, a retailer experiencing an increase in its number of customers or an increase in the average value of cash transactions will see an increase in the cash volumes it handles. In such a scenario, a retailer that maintains an outdated cash handling system will see employee costs rise for processing cash and for administrative tasks related to tracking cash flow. Convenient, anonymous, trusted, tangible, ubiquitous—it’s easy to see why the habit of paying cash persists and why it may take generations for new payment options to supplant it. Retail cash payments

Source: Federal Reserve Bank of San Francisco, 2016

as a percentage of purchases are falling and may continue to see a marginal decline, but cash is not going away anytime soon. While it’s increasingly necessary for businesses to accept additional forms of payment, retailers will also need to effectively manage costs and risks associated with cash payments for decades to come.

Where Are We?

It’s estimated that one-third of the 1.5 million retailers in the US aren’t ripe for investing in new cash handling technology—they’re simply too small or don’t have the revenue to see any benefit from an investment. However, that leaves legions of retailers that can—should they be convinced of the value—upgrade their current cash management process. The low end of this available market, which represents about another one-third of retailers, is fairly mature, with simple cash control devices penetrating about 75 LP MAGAZINE | MAY–JUNE 2017

to 80 percent of the workable market for such solutions, according to a 2017 study by the ATM Industry Association, Retail Cash Management. But at retailers with some level of automation, which have the size, level of profitability, or mind-set to potentially automate aspects of cash management, there is significant room for growth. Penetration of the smart-safe workable market, which could be as much as 30 percent of the total retail space, is only at about 13 percent. And there are only 3,000 to 3,500 cash recyclers active in the US retail market space out of a serviceable market for recyclers of approximately 150,000 retailers, or just 10 to 12 percent penetration of the potential market for cash recyclers in retail. The new research study concludes, “With the introduction and expansion of continued on page 18

CASHING IN ON SECURITY continued from page 17

smart safes in the mid to late 1990s, and with the growth of the market over time, as well as the expansion of cash management to the fully automated recycler products, the retail market is poised for an explosive growth in products, solutions, services, and support in automated cash management.” Potential for growth indicates opportunity—but also a complicated marketplace. Solutions range from entry-level systems to completely closed point-of-sale (POS) cash handling solutions in which cashiers have no access to cash at all to solutions that integrate back- and front-office solutions with those used by banks and cash-transit companies. There are traditional smart safes and newer cash recyclers, which include a bin for coin deposits in addition to a note recycler that provides retailers with access to in-store cash from which they can make withdrawals after it is validated and credited to their account. Associates can use recycler units to fill their registers, cashiers can trade large bills for smaller ones, and smaller bills are recycled back into operating cash inventory, reducing the need for change orders and providing an audit trail for each transaction. It’s a maze of options, and at the risk of being distracted by cat videos, YouTube provides useful tutorials on the range of choices and a chance to watch units in action. Retail case studies offered up by major vendors in the field offer additional insight into specific projects undertaken by retailers, quick-serve restaurants, and others. Critically, it’s important for LP to educate themselves about solutions while not looking for the “one right” answer. “A retail strategy is actually the first determinant of how you should manage your cash,” advised Mike Keenan, CPP, CFI, LPC, an industry veteran who has led LP at Macy’s, Ross, and Gap during his distinguished career. Risks, Mike Keenan, resources, cash intake, and a host of other CPP, CFI, LPC factors are also determinants. “Different retailers will need different solutions,” Keenan noted.

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In Search of Value

Cash demand forecasting is an important part of a decision on investing in cash handling systems; so, too, is a complete accounting of current cash handling activities and their associated costs. While both areas may exceed the boundary of LP, executives should be aware of them—and the full scope of the financial and business impacts of cash management—to be a full partner in a retailer’s drive for profitability—today’s higher mandate for LP. “It’s the direction of the industry, where we need to be expanding that value and changing what a project sponsor brings to the table,” explained John Van Slingerland, vice president John Van of business development at G4S Retail Slingerland

Call (800) 342-3033 ext. 3001 today, or email info@fireking.com.

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CASHING IN ON SECURITY

Retail cash payments as a percentage of purchases are falling and may continue to see a marginal decline, but cash is not going away anytime soon. While it’s increasingly necessary for businesses to accept additional forms of payment, retailers will also need to effectively manage costs and risks associated with cash payments for decades to come Solutions, a provider of end-to-end retail cash management solutions. It’s also why providers such as G4S have invested heavily in educating LP on cash management beyond the impact on risk. “In general, folks in LP and AP are being asked to do more. Moreover, they want to be asked to participate in the strategic part of the business,” he said. “It’s about supporting them as they go to their business partners with more benefits than

just securing cash and a provisional credit at the end of the day. It’s also about other benefits that put them in a position to help drive consistency in the business.” What are some of those other benefits? Broadly, a retailer that adopts a more efficient cash handling organization reduces the costs of cash management, may increase levels of customer service, and benefits from a more transparent monitoring of cash payment flows. To

maximize the effectiveness of a cash handling solution, experts say a retailer should examine the whole cash cycle and effectively involve all stakeholders, including LP, operations, finance, store owners and managers, banks, and cash-in-transit companies. On the business side, when a retailer can get a near real-time picture of its cash assets, it can make use of that working capital, make better business decisions, reduce bank fees and risk, and improve compliance. And as interest rates climb, the value to retailers of having nearly real-time access to cash deposits increases. And it’s not just LP and finance that can make use of the data that today’s solutions can generate. Marketing can use the intelligence to make a correlation between an advertising campaign or sale and cash intake, for example. Different technologies and features yield different value. Cash counting machines, for example, reduce errors and cash drawer counting to under a minute. Utilizing a cash recycling machine also saves a retailer from

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CASHING IN ON SECURITY

Walmart’s Win-Win Walmart undertook an overhaul of its cash handling in 2016, including rolling out Revolution cash recyclers chainwide after testing the technology at its Neighborhood Market store formats. That testing was critical to the retailer’s project success, according to Walmart’s Gary Smith—not just to assess the technology, but also to understand the business impact. “We did a lot of testing to see how the solutions would allow us to simplify, and we wanted to make sure we knew all the appropriate steps needed to align all the areas of the business with the technology as well as with the workings of the Gary Smith, LPC store,” said Smith. The tests were successful, not only for confirming the benefits that they could expect but also for establishing roles, responsibilities, and controls for managing cash from cradle to grave. Smith said it’s important to gain absolute clarity on “who owns what piece.” Asset protection played an important role in the project. To help it succeed, it was particularly beneficial to establish a team within AP strictly dedicated to driving the cash management initiative, according

depositing costs, automates the counting process, and makes it easier to track the reconciliation process. The benefits of smart-safe technology are broadly known—they sort cash and automatically credit accounts—but enhanced business intelligence from them is expanding their value. Cutting costs associated with maintenance and service is one example. Connected cash systems can continually perform health checks, issue status reports, and permit remote troubleshooting. And updating permissions, such as adding or deleting authorized users, can be made at the central repository. Configuration changes can be pushed out to 1,000 stores at once. “For larger retailers there is significant administrative burden associated with profile management and having technicians go out and do local updates. Now that it’s cloud-based, all of that can be done remotely,” Jim Poteet

explained Jim Poteet, executive vice president at FireKing. If a retailer is experiencing high cash shortages in its stores, advanced cash management technology can be particularly beneficial, according to Keenan. By improving accountability and control, the technology can reduce actual cash losses, enhancing the ROI equation. Time saving has been a major driver of business value for 7-Eleven from its investments in automated cash handling technology. “It has allowed for agreements that we don’t have to separate bills. The stores can take entire bundles as they are fed, rather than sorting, and that saves the stores time,” said Smith. “And with integration at POS, we can identify employees and to whom the machine dispenses change if they need more in the till. That level of intelligence has improved the time spent managing cash at shift changes and at start and end of day.” That can bring a retailer substantial value. Administration accounts for 72 percent of cash handling costs, according to data from Gunnebo, a provider of cash handling solutions. The average time spent on till MAY–JUNE 2017

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reconciliation during shift changes is nearly fifteen minutes, and even more is spent on manual consolidation in cash offices for each checkout. Replenishing tills, reporting, safe reconciliations, cash transport preparation, ordering change, and other administrative tasks that technology can automate consume additional time. Indeed, retailers in case studies most frequently cite time saving as a primary source of payback for automated cash handling technology. For example, Tony Lawson, director of asset protection for Goodwill of Southeast Wisconsin and its sixty-four locations, estimates his organization is saving two to four hours per day by switching from counting all cash by hand to use of a Tellermate intelligent cash counter with an integrated keypad and printer. Schnuck Markets, Panda Express, and Rack Room Shoes tell similar stories of saving money by eliminating manual money handling. By conducting a pilot study in which time spent managing cash is measured pre- and post-implementation of cash handling continued on page 22

CASHING IN ON SECURITY to Smith. “Our transition to cash recyclers has been a success story for how it has impacted our business, and a lot has come from having a team within AP to align with functional teams, such as treasury, logistics, and the other innovators that own the process from a device standpoint.” Ashley Greehey, senior manager for asset protection, heads up that AP team at Walmart, which she said was very hands-on during the roll out, including going out to stores in the field to conduct training with managers and associates. While the cash recyclers themselves are fairly easy to Ashley Greehey interact with, the training piece was important to coordinate roles, make people comfortable, transition some senior associates into new duties, and to lay the foundation for realizing the benefits from the technology, she suggested. And they have realized benefits, including ones cited above related to the automation of previously manual labor-intensive activities. “With the recycling of the money, we keep lower amounts of cash and are not having to send out large deposits and change orders, so we’re reducing our carrier costs,” said Greehey. Labor benefits have also been realized by

simplifying processes and helping associates move to the sales floor with customers quicker. “Cashiers go into the office at the start of their shift, log on, and check out their own tills. And when they’re done, they bring it back in.” And bill validators replace previously labor-intensive work performed by associates, she added. The most surprising upside, said Greehey, has been the intelligence piece, which has cut the time needed to perform a variety of LP activities even more than they had expected. Although it doesn’t give them access to cash, LP associates enroll with the cash recyclers in order to have access to information that helps them conduct research and generate any number of needed reports, facilitated by the fact that every transaction is uniquely identified. Walmart is also experiencing fewer cash shortages, from both fewer mistakes and less theft. The devices cut theft and loss by identifying counterfeit notes, increasing accountability, reducing cash handling, and simply by their presence. “We’ve somewhat gotten the feeling that the cash recycler is, by itself, a deterrent,” said Smith. “The other piece is that we’ve obviously minimized the risk, as less cash translates into less opportunity for robbery—and that to me is a win-win,” said Smith. “The business wins in gaining more productive hours in the store, and security also wins.”

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CASHING IN ON SECURITY continued from page 20

technology, it’s possible for a retailer to make an assessment of the potential ROI from this aspect of automation. It’s an important step for all retailers to take because the value from faster cash handling will vary, according to Mike Keenan. While use of cash recyclers helped one major retailer eliminate thousands of back-office jobs in 2017, those types of major savings aren’t a sure thing. “Cash counting machines help people be more efficient and increase accuracy, but the value you’ll get from that depends on the business environment.” Keenan explained that if a store has personnel who just handle cash, there is an opportunity to reduce headcount, which would translate into significant savings. “But so many retailers have moved to lean payroll models that they may just have a manager responsible for handling the cash.” And although automation could allow a manager to increase his or her productivity, that is a substantially more squishy value-add than trimming payroll. Keenan believes that LP executives need to take a judicious approach in general. “Today’s cash management solutions are very creative, and they have lot of bells and whistles. They may sound good, but you have to thoroughly examine them—what will the ROI truly be?” He noted that for a retailer looking at purchasing units for thousands of locations, it’s far from a guarantee that the payback period will be quick enough to make for a winning business case. “So an important part of looking at cash solutions is to be extremely clear on exactly what the unit or solution is going to bring you.” To that end, retailers should be wary of taking a siloed approach to examining cash handling solutions. As for LP, experts we talked to suggested that they should educate themselves on the broad business benefits of advanced cash management solutions—such as achieving working capital benefits by getting cash more quickly into accounts—as well as measure and communicate the security risks and benefits associated with different cash handling options.

Reducing Risk

Advanced cash management units like cash recyclers reduce risk by limiting

By conducting a pilot study in which time spent managing cash is measured pre- and post-implementation of cash handling technology, it’s possible for a retailer to make an assessment of the potential ROI from this aspect of automation. cash handling. Keenan cautions against advocating for devices solely on that basis, however, and suggests there are often less expensive ways to achieve equal security benefits. To combat internal theft at several retailers he served, for example, Keenan employed a dual-compartment cash-drop safe to reduce the risk of internal theft in the cash office. “It provided a solid reduction in cash theft as people on the inside realized that access was limited to working cash, and it was a relatively inexpensive solution,” said Keenan. More advanced solutions may offer additional benefits—and may be worth the investment—but the most appropriate solution needs to be in sync with the business and depends on the day-to-day realities of a retailer, he cautioned. In terms of expanding security value, safes really began to make strides around 2005, according to FireKing’s Jim Poteet. That’s when safes moved beyond mechanical enhancements like bill reading and currency tabulation into “more ones and zeros functionality” with the ability to transmit out information. In the last few years, connected safes made another significant leap forward. “That’s when cloud-based really started to expand,” said Poteet. “The information still goes out to a central repository, but we can now drive information back to the safe to conduct diagnostics and design proactive business rules to trigger alerts.” Among others, connected safes today can trigger a text, email, or phone call to appropriate personnel if deposits are not made when they are supposed to be; the amount of safe drops violate established business rules; a safe door is left open; someone logs into the system after hours; cash is removed on a day or time when it shouldn’t be; a cash cassette is almost full; or a site alarm is activated. The visibility of cash transaction detail, such as who accessed a safe, when, and MAY–JUNE 2017

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what they did—within seconds—helps reduce bank deposit discrepancies and cash shrinkage. It also helps LP identify trends, such as a store that habitually fails to do its 3:00 p.m. drop or a cashier that doesn’t do the required number of drops per day. “The more data you collect centrally, the easier it is to trend and see patterns and conduct remote research before going out to a store,” and is a vast improvement over cash management systems that only provide LP with an occasional report of past activity, said Poteet. At 7-Eleven, Byron Smith has seen the use of smart safes alongside their integration with point-of-sale systems put the squeeze on dishonest store associates. In such systems, information from POS and information from smart safes coalesce in the sales reconciliation system. “I think it has closed the loop around cash,” said Smith. “There are simply not a lot of avenues where the dishonest employee can now go. They have very few opportunities to steal where we don’t see their cash handling,” he said. Visibility facilitates another time-saving value of cash acceptance safes—eliminating cash shrinkage that necessitates an investigation. In a survey by Tellermate, 64 percent of respondents agreed that cash management technology reduces the time spent investigating losses. Some benefits are hard to quantify but can be substantial nonetheless. For example, Abercrombie & Fitch installed Tidel Series 4 System connected smart safes in 475 stores and credits them with enhancing employee safety by removing the need for them take cash deposits to a bank. Joseph Verber, former senior manager of loss prevention at Yum Brands and current CEO of Profit Solutions Plus, says that continued on page 24

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CASHING IN ON SECURITY continued from page 22

safety is an important aspect of cost analysis, alongside the cost of preventing crime, violence prevention, workers compensation, and cash loss reductions. “Smart safes save lives first and foremost,” said Verber. Verber, who designed and used smart-safe solutions for Taco Bell, warns that the process of implementation is vital to realizing promised Joseph Verber benefits. “Roll out can be extremely tedious but very important for operators. Installing smart safes needs special consideration, such as space, size, access to power, proximity to cash, and keeping the safe and area dry from liquids. And operations needs to accept the presence of smart safes and be given the training to use them properly.” In terms of features, 7-Eleven’s Smith says he’s been pleased with the speed and functionality of the counterfeit bill readers incorporated into units at POS from Tidel. Cashiers feed larger bills directly into the units and “the machine either accepts a bill or scoots it back out,” said Smith. “It removes having to have a pen at the cash register.” Partners at 7-Eleven Taiwan are testing what could be the future—completely closed systems in which customers feed money and get back change from the units themselves, removing customer-facing staff completely from money–handling duties. It’s all part of an ongoing process of examining cash handling opportunities that Smith credits with keeping 7-Eleven on the cutting edge. “I think meeting your needs depends a lot on the relationship you have with a vendor who will work with you, who will help you develop the features you need and design some prototypes on your behalf, who is willing to invest some in research and development for you, and who is actively engaged in the relationship,” said Smith. Several LP pros cited customization of connected cash management solutions as a primary value driver. For example, an LP director might want to establish a rule to never allow a $20 bill in the till, in which case the POS can remind a cashier to put the bill in the safe when they say they need change for a $20. Or an LP director may want notification when a till amount exceeds a pre-set limit and the ability for the POS to prompt a cashier to deposit a specific amount of money to reduce the amount below the till threshold. Finally, the data collection and reports that today’s connected cash solutions generate may help transform LP. Rather than getting a handful of data points on a weekly or monthly basis, LP can manage using real-time data—and proactively manage risk.

GARETT SEIVOLD is a journalist who has been covering corporate security for industry professionals for eighteen years. Since 1998, he has served as the principal writer and editor of Security Director’s Report, a monthly publication highlighting trends and best practices in corporate security management. Seivold has been recognized by several organizations for outstanding writing, investigative reporting, and instructional journalism. He has authored dozens of survey-based research reports and best-practice manuals on security-related topics. Seivold can be reached at GarettS@LPportal.com.

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SUPPLY CHAIN

Supply-Chain Focus Should Be “Left of Boom”

upply-chain asset protection (SCAP) in business has traditionally been reactive instead of proactive. SCAP teams are often housed in headquarters or a regional hub and called upon to investigate incidents and deal with the outcomes. That means the “protection” side of the role isn’t aggressively fulfilled, and the process becomes one of mopping up a mess. The management team may learn something in the aftermath, but collectively the group grows frustrated, and the time-consuming work lacks strategic direction. Members of the military use the powerful term “left of boom” to describe all events that lead up to an explosion. Left of boom is where one can have a positive effect—gathering intel, training the team, and putting systems in place that make the explosion less likely. Everything to the right of that boom deals with consequences and clean up—securing the area, treating the injured, repairing the infrastructure, and raising morale again.

Left of boom is where one can have a positive effect. Everything to the right of that boom deals with consequences and clean up. In retail, far too many loss prevention teams talk about events left of boom but actually and unwillingly function a right-of-boom operation. Being left of boom means being proactive and having the correct resources—the “protection” part of a SCAP team is active. Being right of boom can be brand tarnishing. As an industry, we need to move camp. We need to pick up all our equipment and ideas and move them to the left of the boom. It will generate better results and improve morale. And don’t underestimate the power of morale. Stopping an event from happening is far more satisfying than dealing with the mess after it has happened and sometimes getting a trophy for clean-up work.

MAY–JUNE 2017

By Maurizio P. Scrofani, CCSP, LPC Scrofani is a well-known supply-chain asset protection professional with over twenty-five years’ experience in retail and manufacturing. He is a prolific writer and frequent speaker at regional and national conferences. Scrofani is a consultant and general partner with MPS Ventures. He was recently named vice president of supply chain security and intelligence for ALTO US. Scrofani can be reached at maurizio@mpsconsultants.com.

We can do many things to get left of boom. We need to consider our roles not just in the companies we work for, but also in the processes that happen in and to our role. SCAP is an integral part of any modern retailer, but it also has a function that lies slightly outside the normal day-to-day running of a store. Being proactive here allows the loss prevention team the opportunity to make a lasting difference to the operation. A retailer that doesn’t get a loss problem under control has a real problem. It bites into profit margins and pushes them closer to the brink. But a proactive asset protection strategy changes all of that. The timeline of events that precede a boom are vitally important. Below is what it could look like.

Obtain Capital

The first step on the path to preventing that boom is getting the money you need to perform your operations successfully, which isn’t always easy in a retail environment. Sometimes costs are under heavy control. So you need to do your homework. Know the resources you will require and have them costed thoroughly. Look to the more innovative, hands-off ways of effective loss prevention. You may end up proposing a cost saving or future cost avoidance instead of requesting an increased budget. Finding innovative ways to use your budget will help you build a proposal that works for you and the company as a whole. Have a defined strategy from the outset to make sure you get the most from the whole process. Think about new ways of doing things, such as: ■ Using WiFi, RFID, Bluetooth, and GPS to track products through your systems. ■ Developing a thorough supply-chain risk-management strategy. ■ Employing feature recognition to address negative event creators as well as to promote a better service experience.

Develop Team Skillsets and Design Your Organization

Once you have the budget, you need to set up your organization. You are now in a position to make your plans. Look at how you might do things differently to create better continued on page 28

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continued from page 26

outcomes. You may have to start from scratch in many areas to define an operation that will be effective and fit for purpose. Assess the skills of your existing team and align them with your new way of working to see how they match up. You will need the right players in the right places as well as the correct structure. As you develop these ideas further, you will be able to communicate new roles or new expectations for the team you have and look to recruitment or training to fill any gaps you have identified.

Plan and Execute the Specific Event

Gather Intel and Provide Resources

If your organization has been gathering information for some time, then this is the point to put that data to use. If you haven’t been gathering intel, then now is the time to start. The more information you have, the more effective you can be. You want to know the answer to questions such as: ■ Where is our product being lost? ■ What procedures do we already have in place? ■ Are they fit for purpose? ■ What would be a more proactive way of dealing with this? As you pull together the intel that will allow you to operate left of boom, then you can determine and allocate resources. For example, if you decide feature recognition will create positive change and get you left of boom, then look at the different options available to you and procure the one that works best with your company and customer base. An ideal feature-recognition software system will have uses for various departments.

Design Your Attack Plan

This is where the planning stops and implementation begins—time to put all you have decided into practice. For example, if you have chosen RFID as an effective tool to manage the supply chain of products, then the tags need to be sent to the right locations, attached properly, and monitored. Assessing tools and compliance to the program you have implemented is a necessary part of the process. Reporting a successful new strategy ensures the asset MAY–JUNE 2017

Master the Devices Needed

Buying the latest devices to operate effectively and protect your assets is all well and good. But you and your team need to master those devices to use them most effectively. A comprehensive training program (with the solution provider in the room) is the best way to ensure understanding and effectiveness. If you promote a culture within your team that you want to operate left of boom as much as possible, then they will come with you on this journey. Having the most motivated team with the best tools available and delivering the training and support to maximize the effect of these tools will give the best results. “Culture eats strategy for breakfast” has become a cliché because there is so much truth running right through this statement.

Being left of boom means being proactive and having the correct resources—the “protection” part of a SCAP team is active. Being right of boom can be brand tarnishing.

protection team retains backing from those who hold the purse strings. The attack plan can be to deal with the overall supply-chain asset protection issues in the organization (those that you identified earlier in the process) or to look at a specific event. With supply-chain enterprise criminality being a major threat to the retail industry, intel can uncover a specific attack on your brand or modus operandi. This puts you in the perfect position to deal with these brand-altering events.

If your strategy (and culture) is geared toward preventing one specific event, then you are now in the best place to deliver the results you planned. Your organization will be ready, your plans will be in place, your team will be ready, and you can affect the best plan possible to deal with that specific event. You will be amazed at how many booms you can stop or minimize.

The Boom

This is where, in a normal timeline of events, the boom will happen. The efforts that you have gone to before this point will make one of three things happen: ■ You will delay the boom. There will be longer periods in between these events happening. ■ You will lessen the force of the boom. An event may still happen but not on the scale of how it was before. ■ You will actually stop the boom from happening. Sometimes you don’t even know if this has happened until shortage numbers come in and success is plain to see. In any industry, there are issues to be solved. But waiting for them to happen and dealing with the consequences doesn’t feel like much of a strategy. Everything that happens on the right of the boom is “business as usual,” and some may even go as far as calling it unproductive. But learning from an event—a boom—and managing the outcomes can be a part of this valuable process. Add in constant monitoring and any revision to your process, and you have a culture of success and a strategy that continually improves. LOSSPREVENTIONMEDIA.COM

INTERVIEW

UILDING A B SUPPLY-CHAIN AP TEAM FROM TEE TO GREEN

A CONVERSATION WITH MIKE COMBS OF THE HOME DEPOT By James Lee, LPC, Executive Editor

BUILDING A SUPPLY-CHAIN AP TEAM EDITOR’S NOTE: Mike Combs is director of asset protection, global supply chain at The Home Depot. Prior to assuming this role in 2008, he was director of loss prevention for AutoZone for six years and held various LP positions with Macy’s for eight years. Combs earned a master of science degree from Eastern Kentucky University in 1990. He is active with the Loss Prevention Research Council, including chairing its supply-chain working group, and is on the board of advisors for CargoNet. EDITOR: To start out, Mike, share something about yourself that isn’t widely known? COMBS: Well, one is that I have an

identical twin brother. Second is I was a professional golfer for a few years. EDITOR: Tell us about your golf career.

COMBS: I played for about three and a half years from 1998 to 2001. I played two years on the Asian PGA tour, which was predominantly in Malaysia, China, Thailand, Indonesia, and India; basically, everywhere in Southeast Asia minus Japan. I also played pretty much every minor tour you can think of in the US. In winter months I played in South America on the South American PGA tour. We tried PGA Q-school twice and did not quite make it through that grueling process. But after three and a half years, I wasn’t quite sure I was going to make it. I definitely had the physical game, but the mental side of it

was difficult. It was getting better, but it was far from a sure thing. So that is why I decided to get back into the industry and make some money. It’s expensive to golf professionally, except the PGA Tour. If you can break even doing that, you are doing very well. The experience of traveling the world and meeting new people from diverse cultures has changed me forever and really gave me a new perspective on life. EDITOR: How did you get from golfing into supply-chain asset protection?

COMBS: Early on, I really thought I wanted to be in criminal justice, either a police officer or FBI. My father was a judge in my hometown, and his dad before him was a judge as well. I knew I was into criminal justice, but I leaned more towards law enforcement. So I went to Eastern Kentucky University in its criminal justice program, graduated, and got my master’s degree there.

EDITOR: Given your studies, why didn’t you end up in law enforcement?

COMBS: Well, I was working through college at Kings Island amusement park as supervisor of security. Another guy and I were challenged to start an undercover shoplifting prevention program for all of their shops. As goofy as that sounds in an amusement park, there was a lot of crazy stuff that went on there. We were able to develop that program with the police department there in the amusement park and did that for a couple years. That’s where I really caught the bug. When I graduated college I got a job with what was then Lazarus department stores, which eventually ended up being Rich’s and then Macy’s. I worked in logistics and then in their stores in different roles. I really fell in love with retail and never looked back. EDITOR: What was your final position at Lazarus before you left there?

COMBS: I was the regional director of distribution. When we merged with Rich’s, I became a regional director of security for stores. Then, around the time of the Macy’s merger, I took my

I would agree that nine years ago there were probably only a few places doing much more than physical security. To some extent there’s still a lot of focus on security. But absolutely now things are much more automated. There’s much more data. There are more systems. Now there are more people trying to leverage those to craft a better strategy to look at everything end to end versus just the four walls of that warehouse. 30

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BUILDING A SUPPLY-CHAIN AP TEAM

I think people who are really looking at the landscape realize that logistics, supply chain, and order fulfillment are where a lot of career growth starts, not only in AP but also in any part of the process. From 2009 to 2015, Home Depot grew from a $500 million online business to $5 billion. So it’s definitely a great career path, and it’s somewhere you can grow your knowledge base as well. stint in golf. When I came back from the golf venture, I knew I wanted to do something different. Fortunately, Libby Rabun at AutoZone was willing to take a chance on a guy who had been out of the scene for three years. I learned a great deal about the retail business, how to grow profits, and how to run a company profitably at AutoZone. It was a pretty unique opportunity. Libby was a great leader and mentor who championed my career. I owe her a lot. EDITOR: What then attracted you to Home Depot?

COMBS: When I left AutoZone, I was the director of the field loss prevention team, which was at the time about 4,500 stores. There was a guy by the name of Mike Lamb who I had worked with at Rich’s. Mike called me and said, “We’re going to be transforming the supply-chain AP team at Home Depot. Mainly we’ve shipped from vendors straight to stores, and we’re rolling out a major capital play to build a central fulfillment distribution network. We need someone to help craft the AP team.” I knew Mike’s leadership style. I loved Atlanta. Plus, I was always enamored by Home Depot and their stores as a customer. That’s what got me started listening, and the more I listened, I was really intrigued by the investment they were making in their supply-chain network to set the company up for the future. Now I’ve been here nine years and thankful that Mike put his trust in me. EDITOR: Thinking about the changes in the supply-chain side of the business from nine years ago until today, have you seen

a transition from a role of just physical security to a broader asset protection role?

COMBS: I have, and I would agree that back then there were probably only a few places doing much more than physical security. To some extent there’s still a lot of focus on security. But absolutely now things are much more automated. There’s much more data. There are more systems. Now there are more people trying to leverage those to craft a better strategy to look at everything end to end versus just the four walls of that warehouse. The great thing about going to Home Depot at that time was that we were at the development stages of a long-term supply-chain transformation. We were able to build an infrastructure, both team and technology, that had the vision of our long-term strategy guiding us. Starting from scratch like we did, we are able to build the physical security aspects from the outside in to where we have a really sound, secure network of distribution centers. The controls are great. You don’t have a lot of unknowns like you do in a store environment with customers, returns, and all that. By setting up the proper controls up front, we didn’t have to deal with questions like, “Did we put the right fence up, do we have the right alarms, how are we controlling visitors, and is our freight secure?” We can trust that those types of things are solid, so you can focus on other things. EDITOR: What do you mean when you talk about your process being end to end?

COMBS: As we built our supply chain, we were also building infrastructure LP MAGAZINE | MAY–JUNE 2017

for omni-channel retail, which we call interconnected retail at Home Depot. So we built out online fulfillment centers that are connecting our online sales to the customers. They’re also delivering to our stores through our other distribution network. So there are a lot of moving parts, and inventory is moving around to fulfill the customers’ needs in any way possible. What we figured out pretty early on is that we needed to build our facilities around an end-to-end view, meaning from vendor to customer. From the time product leaves the vendor to the time it gets to the customer, and even the reverse logistics process when a customer does a return and gives it back to us, we have complete visibility throughout. Our senior leaders supported having AP look at loss from an end-to-end perspective. It really matches up with how Adrian Beck has been preaching for several years. His work has been enlightening in this area. We have a shrink exposure report that a member of my team created that helps us look at the end-to-end process. It also gives operations leaders a tool to watch how they’re doing week to week on shrink and loss exposure. It’s not just the inventory shrink that we look at. We do manage that, but we look at everything from damages to parcel carrier credits or customers saying they didn’t get what they wanted and making a return—the whole process. EDITOR: Give us a brief look at the size and breadth of the operation that falls under your responsibility.

COMBS: To support Home Depot’s global supply chain, we manage these key areas: the safety and environmental

BUILDING A SUPPLY-CHAIN AP TEAM regulations throughout the supply chain; the end-to-end shrink and loss; physical security; cargo security; and theft and fraud. And finally, we audit the outbound accuracy of what the distribution centers are sending to our stores. All in all, we have about sixty-nine Home Depot locations around the country—some of which have a group of buildings, so it’s more of a campus environment. Also, a year and a half ago, Home Depot bought a great company called Interline Brands, so we also support their business, which is another ninety-plus locations scattered around the country.

EDITOR: Would you say that you and your people spend more time in the operational compliance disciplines than you do necessarily in theft and fraud investigations?

COMBS: Without a doubt, especially early on. I’ve been here nine years, and that’s about the time we started the supply-chain network. For the first few years, about half that time was operational compliance where we’ve gotten very, very stable, and the results, whether they are shrink or safety, have been trending great for six years now.

EDITOR: How many people report to you, and what functions do they perform?

EDITOR: In a Home Depot store, safety is a very critical discipline. Do you have a safety manager or somebody on your staff who leads that effort?

COMBS: I have five senior managers reporting to me. One manages the store-support center and the ten team members there. They design, develop, build, and support our supply-chain teams. I also have four geographically based senior managers who control a group of facilities. Three of those line up with the north, south, and west regional configuration, just like how Home Depot runs its stores. A fourth is in charge of the Interline Brands company and the program there.

COMBS: We own safety as well. It has not been my discipline over my career, so I’ve learned a lot from my peers at Home Depot like Bryce Bennett, director of safety for store. Bryce was on my team prior to his promotion, and he helped develop our safety programs along with our safety manager, David Bell. David helped us build some really good programs to help drive safety. Most of our injuries are ergonomic related, so we built a comprehensive

What we figured out pretty early on is that we needed to build our facilities around an end-to-end view, meaning from vendor to customer. From the time product leaves the vendor to the time it gets to the customer, and even the reverse logistics process when a customer does a return and gives it back to us, we have complete visibility throughout. Our senior leaders supported having AP look at loss from an end-to-end perspective. 32

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program with the help of a company called Safety in Motion. The program is all about teaching people how to do things the right way from an ergonomic standpoint. It doesn’t teach you never to do something; rather it teaches you how to do things in a less stressful way in order to prevent repetitive-motion injuries. A small change between a “stressed” body position and a “better” body position can make a huge difference in our associates’ lives, both at work and at home. We’ve also tried looking at safety from other perspectives. The typical measurements in safety performance are the OSHA rates of workplace injuries. As we’ve reduced those metrics over time, we have also looked for other ways to measure progress. We’ve gone from a $50 billion company in revenue to almost a $100 billion company, so clearly the volume moving through the supply chain is increasing year over year. We started looking at different metrics to make sure that increasing productivity wasn’t having a bad effect on safety. For example, how many cartons do we produce between injuries? And looking in different ways really showed whether or not we were improving as fast as we thought we were. I am happy to say we are safer now

BUILDING A SUPPLY-CHAIN AP TEAM even with the increased product flow and productivity. EDITOR: Often one of the measurables in supply chain is something you mentioned earlier, which is accuracy to the store. Often the stores side of the house may claim that you all in supply chain are not nearly as accurate as you tell us that you are. How do you manage that relationship with the stores and ensure that you are delivering what you say you’re delivering?

COMBS: I think that’s probably the most universal issue that supply chain has in retail. First of all, we make sure that we have an open feedback loop with our store partners. For every trailer that gets to the store, we have a feedback loop electronically that allows them to rate how we’re doing on that truck and give us any feedback. The process includes a mechanism for us to respond to that. Our AP team owns the audit process and the

teams that conduct the audits, which gives our store partners a peace of mind that it is an unbiased effort. The other thing we do is welcome our store partners to come into our locations at any time. We have district and retail meetings where they can come in and watch our process, see what we’re up against, and give us insight into how they think differently. And vice versa—we send groups of people from the supply chain into the stores. Sometimes it’s training for our people, and sometimes it’s the other way around where we’re trying to educate or train new store or district associates that might need some help. I think that kind of partnership has really helped. Another thing that’s important to call out is the fact that I report to Kathleen Eaton, our vice president of asset protection, who reports to the store operations team. My supply-chain team leaders know that I’m reporting up through store operations, which means I always have a keen focus on how we’re impacting our customers or stores. I give

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them that direct feedback all the time, and they are very open to that perspective. It really helps solve problems when your relationships span end to end and not just in the supply-chain silo. EDITOR: Since you’ve had a great deal of store experience in your background and you know the value of that experience, do you make a habit of moving people from the store side into supply chain, and vice versa?

COMBS: We have probably a dozen managers from AP within distribution centers who have come from the store side. I even have a couple of district AP store managers who are now working in our supply chain and have provided amazing value to both sides of the equation. And then there are other people on my team who are pursuing careers down the road that will get them into the store operations piece. This type of cross-pollination has been key to the success of my team and is a pillar of

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BUILDING A SUPPLY-CHAIN AP TEAM

I think that Millennials might possibly change the world for the better. I’m not as pessimistic as other people looking at this new generation. I see things in them that really make me proud. They love their work-life balance, and they see the big picture there. Everybody loves hard work, and they’ll work hard, but they also appreciate friendship and compassion because usually a lot of their relationships have been strong. Home Depot talent management. We have leaders on my team who can lead in many different areas of the company should they wish to do so. EDITOR: In the past, the supply chain was sometimes a place where store people who weren’t making the cut got farmed out. But that’s changed in the last decade. Do you see supply chain as a place for career growth today?

COMBS: Absolutely. I think people who are really looking at the landscape realize that logistics, supply chain, and order fulfillment are where a lot of career growth starts, not only in AP but also in any part of the process. From 2009 to 2015, Home Depot grew from a $500 million online business to $5 billion. So it’s definitely a great career path, and it’s somewhere you can grow your knowledge base as well. EDITOR: If somebody in LP wants to learn more about the supply-chain side, can you give any advice on where to look for information?

COMBS: Right here in Atlanta, Georgia Tech has a great program. Home Depot has been involved with some of the research there. Auburn University is the other leader, and they turn out great training material that you can get online. There is also a supply-chain management industry group called the Council of Supply-Chain Management Professionals (CSCMP), which has tons of online training you can do. EDITOR: What accomplishments are you and your team most proud of over the last several years?

COMBS: First off, we have an amazing team, a diverse team. I couldn’t be prouder. If I were to move on, there are fifteen to twenty people who are ready to step up into an AP senior manager role. Any of my senior managers could easily step into my role. So the team is the thing I am most proud of. On the technical side, I would say that the shrink-exposure dashboard that we built early on in our development is amazing. I give our manager of loss MAY–JUNE 2017

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prevention a ton of credit for this. We basically look at every single thing that comes into the supply chain and everything that goes out. On a weekly basis we can look at a building and predict what their shrink or loss rate would be at any given time. And that has allowed us to drive down shrink for several years even as our size has doubled. That has probably been the biggest thing my team has delivered, not just the technical development, but embedding this into our operations culture. EDITOR: From the store side of the business, the buzzword over the last several years is analytics. What types of analytics are critical to your business?

COMBS: The biggest one we’re looking at now is more the end-to-end exposure program. That is looking at the omni-channel side, or the interconnected side—just making sure that as our interconnected business grows, we’re not growing the loss with that. We have to continually evolve that as the business evolves.

BUILDING A SUPPLY-CHAIN AP TEAM

Most of our injuries are ergonomic related, so we built a comprehensive program with the help of a company called Safety in Motion. The program is all about teaching people how to do things the right way from an ergonomic standpoint. It doesn’t teach you never to do something; rather it teaches you how to do things in a less stressful way in order to prevent repetitive-motion injuries. EDITOR: You’ve been involved with the Loss Prevention Research Council for a long time. Tell us a little about the supply-chain working group at the LPRC, what that means, and what you hope to gain from that partnership.

COMBS: I think that for anybody who works in supply chain on the fulfillment side, it’s great to get involved. It’s a great way of sharing information. There have been multiple times when we will work on an investigation and call peers and find out they’re working the same thing with the same group. We share information and are able to make

a better case. So just having contacts in other companies and learning how they’re investigating or how they’re solving problems is a great benefit. EDITOR: What are your thoughts about where the industry is headed in the future?

COMBS: One thing that comes to mind that I find myself saying that’s different from a lot of other people is that I think that Millennials might possibly change the world for the better. I’m not as pessimistic as other people looking at this new generation. I see things in them that really make me proud. They love their work-life

balance, and they see the big picture there. Everybody loves hard work, and they’ll work hard, but they also appreciate friendship and compassion because usually a lot of their relationships have been strong. They’re close to their parents. They’re close to their friends from high school and college. It just seems like they’re much more social and committed to keeping that going than maybe my generation was. Much like how our retail world and customers’ needs are drastically changing, our employees and what motivates them is very different. We better change and adapt to that quickly, or we will be left behind.

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FUTURE OF LPVIEWPOINT ACADEMIC

When Ordinary Things Get Smart

By Tom Meehan, CFI Meehan is director of technology and investigations for Bloomingdale’s. He specializes in new technology deployments, business intelligence, industrial intelligence, and systems implementation and design. Meehan brings nineteen years of expertise in retail LP, information technology, and process improvement, the last eleven years with Bloomingdale’s and eight years prior to that with Home Depot. Meehan is also chair of the LPRC’s Future of LP Working Group and co-chair of the Fraud Working Group. He can be reached at tom.meehan@bloomingdales.com.

Security can sometimes be challenging with IOT devices. Embedded firmware needs to be kept up to date. Also, a lot of devices are made to be easy, which can leave out more-advanced security features.

ton of great smart tech was on display at the National Retail Federation’s Big Show in January, from wearables to the Internet of Things (IOT). My team was invited to a small get-together. I noticed several people had sharp-looking ski jackets. As a trained investigator, I knew there was more to it. It was a ski jacket, and it was a bit warm and out of place at a cocktail party. I asked around and learned the ski jacket had near-field communication (NFC) in it. I started speaking to people about the jacket and learned—aside from the style—it was a smart jacket. The NFC chip was under a patch on the chest, and when scanned with my Android phone, the chip instantly brought me to the company’s website. The jacket also could engage in social media with ski team members and show trail maps, points of interest, and location-based weather and events. My thought is that’s just the beginning. Imagine using that technology for return authentication, proof-of-ownership verification, conversion, or inventory turn, or even being able to pay for things at the ski lodge. Let’s review some smart technology—RFID, IOT, and wearables—that are out today, how the technology works, and some of the endless possibilities that could reduce theft and fraud.

The Internet of Things

RFID

The IOT is comprised of the physical devices, cameras, speakers, phones, buildings, or other objects connected to the Web with embedded electronics, software, or sensors. IOT devices collect data, and studies estimates there were more than 50 billion IOT devices active in 2016. If you were asked five years ago whether you or someone you knew would pay hundreds or even thousands of dollars to wear something on their wrist to track steps and share with people, you would probably say no. Today, people are embracing wearable IOT, from smart watches to GPS trackers. When you wear a device that tracks your movement, you’re sending that data somewhere. What happens to it? Is it used for marketing or to see how healthy you are? It could be. I am not suggesting a reason for concern. I am sharing what is often brought up in relation to IOT wearables. So how does it re late to retail? Today an IOT with Bluetooth can tell you how often a customer shops, give a client specific offerings, and allow for smarter shopping experiences as long as the customer opts in. If you reverse that capability, could the device potentially alert you to deviant behavior in a store?

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Radio-frequency identification (RFID) has been around for some time. The adoption of RFID is growing as the technology becomes scalable. It uses electromagnetic fields to automatically identify and track tags attached to objects. The tags contain electronically stored information. Passive tags collect energy from a nearby RFID reader’s interrogating radio waves. RFID is commonly used for inventory tracking. RFID in an omni-channel environment is a no brainer as it allows you to know where your inventory is and helps get it into the customer’s hands. For every three to five percent improvement in inventory accuracy, you can expect a 1 percent sales improvement. Ned McCauley, director of retail strategic accounts at Tyco Integrated Security, said, “Success in omni-channel retailing is not possible without precise data, and RFID is the single greatest enabler of this capability. From operators to loss prevention, retailers are starting to reap the benefits of item-level visibility in a way that was just not possible in the past.” RFID has many applications from “RFID as EAS.” Instead of installing a tradition EAS system, retailers are using RFID tags as opposed to EAS tags. This allows them to be ready for the future. Some retailers are using RFID in an effort to track organized retail crime and dishonest employees. It doesn’t end there. Imagine customers using RFID to help pair a dress with a handbag. All of that is possible today. Steve Sell, vice president of global sales and marketing at CONTROLTEK USA, said, “We have seen a growing trend in retail where retailers in various formats are leveraging RFID as an effective EAS solution all while positioning their infrastructure investment for many other future RFID use cases.” Always challenge yourself to think bigger. RFID, IOT, and NFC used together can help increase productivity, drive sales, and reduce loss. At the Loss Prevention Research Council, we currently have an Innovation Working Group. One of the topics covered is RFID. If you’re interested in learning more, please visit lpresearch.org or reach out to me directly.

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BENCHMARKING by Adrian Beck, Walter Palmer, and Colin Peacock

Emerging Technologies

Beck is a professor in the criminality department of the University of Leicester in the UK where he is primarily focused on research on retail crime and shrinkage issues. He can be reached at bna@le.ac.uk. Palmer is CEO/president of PCG Solutions, a loss prevention consulting, training, and education firm. He can be reached at wpalmer@pcgsolutions.com. Peacock is a visiting fellow at the University of Leicester and strategic coordinator for both the ECR Europe Shrinkage and On-shelf Availability Group and the Retail Industry Leaders Association Asset Protection Leaders Council in the US. He can be reached at colinpeacock@hotmail.co.uk. All are frequent contributors to both LP Magazine US and European editions.

n the second in a series of industry-focused benchmarking surveys, the authors present a few key findings from a new study of how some of the biggest retailers in the US are using a range of emerging technologies to manage the problem of loss prevention.

Background

Loss prevention practitioners have a long track record of investing in a wide range of technologies to help control the various losses retailers experience. The extent to which they do this has regularly been measured by various annual surveys, such as the National Retail Security Survey. This current benchmarking study, however, focuses particularly on understanding LP executives’ views of the potential value of emerging technologies, the extent to which those technologies are currently being used, and the main business challenges the executives see the technologies addressing. For the purpose of this benchmark survey, “emerging technologies” are defined as those evidence suggests some retailers have begun to use, but not as widespread as more established technologies prevalent across the retail sector (such as alarms, EAS, and CCTV). They also differ from what might be regarded as future technologies that sound promising but have yet to move beyond the conceptual, laboratory, or testing phase of development, for example drones or robotics. After extensive discussion with representatives of the retail loss prevention industry, nine emerging technologies were chosen for consideration: ■ Feature recognition—the ability to recognize and assign a unique ID to individuals within a store environment. ■ Smart shelves—the ability to detect the removal of product from specific shelves or displays based on defined criteria. ■ Biometrics—the use of unique physical characteristics, such as fingerprints or retinal scans, to identify employees and grant access against defined roles or rules. ■ Point-of-sale (POS) product activation—the ability to require an activation protocol at POS in order for the product to function properly. ■ Body-mounted cameras—cameras worn by store and security staff, with or without audio. ■ Non-scan POS detection—the ability to identify transactions where merchandise passes through the checkout process without being properly scanned or identified. ■ GPS product tracking—the ability to track the movement and location of specific products. ■ Exception-based video alerts—automatic video-based alerts generated by agreed rules or events, such as the opening of a door or the removal of a product.

FID—the ability to provide a unique identifier to a R specific product. While some of these technologies have been available for a considerable period of time, such as RFID, they have not had a high level of adoption across the retail industry to this point and can still be considered emerging, especially when compared with highly established technologies such as EAS. Of course, the value of any benchmark survey is highly dependent on the quality and representativeness of responses. For this study, the authors chose to target as many of the largest US retailers (based on sales) as possible, exploiting existing contacts within the loss prevention industry. A request for information was sent out to ninety-five retailers, which elicited a response rate of 63 percent, giving a sample representative of 48 percent of the US market, totaling $1.576 trillion in retail sales. Overall, respondents had a total of 123,333 stores. While this represents a significant percentage of the retail industry and, more specifically, a very significant percentage of chain-store retail, it is important to note that this sample cannot be used as a representative sample of the entire US retail industry. Therefore, no effort will be made to extrapolate estimates from this data to try and represent US retailing as a whole. If individual companies intend to draw comparisons with this data, it is important that they understand the overall profile of the companies that responded. This article provides only a snap shot of the main results from the study, which are available only to participating respondents or by special request to one of the authors.

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Benchmark Findings

Detailed below are some of the key findings from the survey, looking specifically at how respondents view the potential of each of the nine selected emerging technologies to impact loss prevention efforts, the extent to which they are currently using them, and the perceived potential of them to help deal with particular loss prevention issues. The survey also asked respondents to comment on the loss prevention technology industry’s track record on developing new innovations to reduce loss or improve safety and security.

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Understanding the Potential of Emerging Technologies

Respondents were asked to rank the potential of each technology on a scale from 1 (very low potential) to 5 (very high potential) as to the possible impact they might have to improve safety, security, or asset protection in their businesses.

Potential of Emerging Technologies Exception-Based Video Alerts GPS Product Tracking RFID Non-scan POS Detection Feature Recognition POS Product Activation Smart Shelves Biometrics Body-Mounted Cameras

4.10

3.65 3.54 3.36 3.28 3.00 3.00 2.93 1.73 Very Low Low

Unsure

High

Very High

Exception-based video alerting technology was regarded as the technology with the highest potential with an overall score of 4.1 out 5. GPS product tracking (3.65) and RFID (3.54) followed. Respondents were much less convinced about the potential of body-mounted cameras, which only achieved a score of 1.73, and biometric technologies at 2.93. Respondents were largely unsure about the potential of the remaining four technologies: smart shelves, POS product-activation technologies, feature-recognition systems, and technologies designed to manage non-scanning at the point of sale.

Using Emerging Technologies

Respondents were then asked about the extent to which they were using or planning to use these technologies in their businesses.

Using Emerging Technologies ■ Piloting/In Use

GPS Product Tracking Exception-Based Video Alerts RFID Biometrics Feature Recognition Smart Shelves POS Product Activation Non-scan POS Detection Body-Mounted Cameras

■ Planning

■ Not Using

50 60 Percent

100

For most of the selected emerging technologies, very few respondents were currently using them or had plans to use them in the near future. The technologies most in use or being piloted were GPS product tracking (46%), exception-based video alerting systems (41%), and RFID (32%). At the other end of the spectrum, no retailers responding to this survey said they were currently using body-mounted cameras, although two were planning to use them in the near future. With regard to the other technologies, relatively small numbers were currently using smart shelves and non-scan POS detection systems, the two that were most likely to be used in the near future. In many respects these results are not surprising—the technologies chosen were considered to be currently on the fringe of mainstream retail use, so it will be interesting to see the extent to which they become more established in future years. continued on page 40 LP MAGAZINE | MAY–JUNE 2017

continued from page 39

Loss Prevention Technology Industry’s Ability to Innovate

Primary Use Case for Emerging Technologies

Respondents were then asked to consider what, for each of the selected emerging technologies, would be the main loss prevention issue they would see it addressing. They were given the following issues to consider: organized retail crime (ORC), opportunistic crime, safety and security, inventory control, fraud, and internal theft, and could only select one for each of the technologies.

Primary Use Case for Emerging Technologies ■ ORC ■ Opportunistic Crime ■ Safety/Security ■ Inventory Control ■ Fraud ■ Internal Theft

Feature Recognition Smart Shelves GPS Product Tracking POS Product Activation Exception-Based Video Alerts Body-Mounted Cameras Non-scan POS Detection Biometrics RFID

13.3

48.3 33.3

3.3 0

Percent

both vendors and practitioners would like to see these numbers move more heavily to the “very successful” end of the spectrum. Perhaps this report can serve as a catalyst for loss prevention practitioners and solutions providers to sit down and discuss technology and innovation. Practitioners should shoulder the burden to do a better job of identifying their business needs while vendors need to listen and respond lest they be viewed as offering “solutions in search of a problem.”

Putting These Finding to Work

50 60 Percent

100

The majority of respondents saw both feature recognition and smart-shelf technology impacting ORC as the primary use case. However, a sizable minority of respondents (31%) also regarded the smart shelves as being useful for inventory control. A similar picture emerged with both GPS product tracking and POS product-activation technologies, where respondents were split between ORC and inventory control as the primary business case. Perhaps not surprisingly, RFID was primarily seen as a technology for helping with inventory control (81%). Most current case studies point to the role it can play in reducing problems with on-shelf availability and product visibility in the supply chain rather than malicious losses. Both exception-based video alerts and non-scan POS detection were primarily seen as tools to help tackle internal theft—the former perhaps helping with the identification of illicit activities at the back of the store and the latter helping to monitor checkouts for potential sweethearting. Body-mounted cameras were viewed as a tool almost exclusively to help with issues of safety and security, with a small minority also suggesting they could play a role in gathering evidence for cases of ORC. Finally, biometrics was largely seen as a technology that would be used to target internal theft and safety and security issues.

Loss Prevention Technology Industry’s Ability to Innovate

The final benchmark question asked respondents to consider how well the loss prevention technology industry had been in developing innovation to help them manage the problems that they face. With the responses to this question clustered in the middle, one’s reaction to this chart will depend on how “adequate” is interpreted. If it represents “acceptable,” “up to par,” or “meets expectation,” then the overall mood of the industry skews positive. If instead, one reads it as “just getting by” or “reaching only minimal level,” it indicates there is work to do. Clearly,

1.7

Very Unsuccessful Unsuccessful Adequate Successful Very Successful

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When looking at innovation, it is often hard to separate the publicity and hype of new technologies from the actual state of adoption and deployment. The authors hope the data presented in this second benchmark study will help retailers and the loss prevention technology industry to better understand current levels of adoption, interest, and perceived potential of the technologies in this report, as well as the broad business needs that are being addressed. Like the rest of retailing, technological change is happening at an extraordinary pace, and loss prevention teams need to be prepared to innovate and experiment to understand how they can remain active and engaged business partners. Using emerging technologies will undoubtedly be an important part of this, but it will require considerable clarity in understanding what they might achieve and under what circumstances. As with all interventions, it is often as much about how they are managed as what they can deliver. Based on this snapshot of where our industry currently stands on innovation and emerging technologies, loss prevention practitioners might want to consider taking the following action steps: ■ Assess, evaluate, and prioritize which, if any, of the identified technologies could potentially address your business needs. And determine your state of readiness to adopt and implement. ■ Share your findings internally with your team and peers in the organization to get feedback from others as to the viability, appetite, and perception of value. ■ Share with the vendors who work alongside your organization to facilitate brainstorming, and challenge your “solutions providers” to help meet the needs of the business. ■ Consider how these technologies might converge in the future and how they will affect or interact with other systems and legacy technologies currently deployed, such as CCTV, EAS, locks, and so forth.

Future Benchmarks

The authors are extremely grateful to all those companies that agreed to take part in this second benchmark. If you would like to participate in future surveys, please get in touch with one of the authors. The next benchmark will focus on the role and use of data analytics. LOSSPREVENTIONMEDIA.COM

FEATURE

THE GREAT GENERATIONAL SHIFT HOW EMPLOYERS CAN PREPARE IN 2017 By Bruce Tulgan

THE GREAT GENERATIONAL SHIFT

n just the last year alone, millions of First-Wave Boomers and pre-Boomers have left the North American workforce, while millions of Second-Wave Millennials have joined. The long dominant Boomers are on the wane, while the Second-Wave Millennials are on the rise. The oldest of the First-Wave Boomers are now in their seventies, and every single day in North America alone, another 10,000 First-Wave Boomers turn seventy. In terms of percentage, the trends are very similar throughout Europe and in Japan. By 2020, First-Wave Boomers will be well under 6 percent of the workforce. And those who do remain in the workforce will continue trending heavily toward “reinventing” retirement and late-career pre-retirement—working less than full-time, often partially telecommuting, and often working nonexclusively for more than one employer. At the same time and for the foreseeable future, the Second-Wave Millennials (and soon post-Millennials) will be the fastest-growing segment of the workforce. By 2020, those born 1990 and later will be greater than 28 percent of the workforce altogether (including post-Millennials).

The Forces Driving Change: No Ordinary Generation Gap

Why is this generation gap different from most? Throughout most of history, in most societies, every new generation has come along with new attitudes and expectations that differ—at least in part—from those of previous generations. That’s why every new generation prompts a “generation gap” of sorts. Today’s generation gap, in contrast, is about much more than a clash of styles and preferences, much more than the creative energy of youth challenging the cautious wisdom of experience, and more than the new butting up against the old. The generational shift unfolding today is of historic significance, defined by the confluence of macro forces driving change at an extraordinary magnitude and pace. The Second-Wave Millennials coming of age today have been shaped by those same forces of change. As such, the current generation gap not only is an important diversity issue, but also coincides with a qualitative

2016

2017

2020

<1%

BB First Wave (1946–1954)

13%

11%

<6%

BB Second Wave (1955–1964)

17%

16%

13%

Generation X (1665–1977)

27%

26%

Millennials First Wave (1978–1989)

28%

27%

Millennials Second Wave (1990–2000)

14%

17%

24%

>1%

>4%

Pre-BB (pre–1946)

Post-Millennial 42

transformation in the norms of life, work, and society—at every level. Everything is changing so much and so fast that the youngest, least-experienced people bring to the table a unique wisdom that comes from being in sync—much more so than older, more-experienced people—with the immediate and intermediate future, like so many “canaries in the coal mine.” That’s why generational differences evident in today’s youth can serve as a powerful lens through which to understand the trajectory of today’s changing world. Efforts remain focused on understanding today’s changing workforce, changing workplace, changing nature of employment, and even changes in the very nature of work itself. To that end, generational researchers continue tracking the same six profound historical forces of change we’ve watched unfolding in plain sight now for more than two decades: 1. Globalization 2. Technology 3. Institutional insecurity 4. The information environment 5. Human diversity 6. Virtual reality

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THE GREAT GENERATIONAL SHIFT

By 2020, First-Wave Boomers will be well under 6 percent of the workforce, and those born 1990 and later will be greater than 28 percent of the workforce. Can there be any doubt that these same six macro forces driving change continue to accelerate and continue to define the transformations evident in every aspect of life and work? Does anyone remember a year prior to 2016–2017 with more object lessons demonstrating the impact of each and every one of these forces of change?

Human Capital Management 2017: What the Generational Shift Means for Employers

As employers are constantly trying to become more lean, flexible, and high performing, downsizing, restructuring, and reengineering are now accepted as constants of the LP MAGAZINE | MAY–JUNE 2017

workplace—taken for granted now as “continuous improvement.” Employers are more likely to undertake major organizational changes that eliminate jobs regardless of employees’ lengths of service. Such changes include mergers, acquisitions, spin-offs, restructurings, and liquidations. Employers are

THE GREAT GENERATIONAL SHIFT

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THE GREAT GENERATIONAL SHIFT also more likely to implement new technologies that eliminate jobs due to reengineering. Meanwhile, there is a strong trend among employers of hiring fewer “employees” (full-time, exclusive workers) and more contingent workers. And most employers’ staffing strategies for the future continue to move in this direction. As a result, the number of traditional “employees” is diminishing as a percentage of the overall workforce, while the percentage of “contingent workers” is increasing. There has been a fundamental change in employment practices, away from long-term, stable employment relationships and toward a more efficient supply-chain management approach known as human capital management. The goal is to optimize human resources. That means having the right people in the right places at the right times, employing them exactly as long as you need them and no longer, and paying them the market value of their contributions and no more. Because

Everything is changing so much and so fast that the youngest, least-experienced people bring to the table a unique wisdom that comes from being in sync—much more so than older, more-experienced people—with the immediate and intermediate future, like so many “canaries in the coal mine.” of these new realities, employers are now less likely to make formal or informal guarantees about continued employment and job security. In most companies, organization charts have become flatter, layers of management have been removed, reporting relationships are more temporary, and more employees are being managed by short-term project leaders instead of “organization chart” managers. Instead of awarding status, prestige, authority, flexibility, and rewards on the basis of seniority, employers are more

likely to award status, prestige, authority, flexibility, and rewards on the basis of short-term measurable goals. Employers are also reducing long-term fixed pay as a percentage of overall employee compensation, while increasing the percentage of variable performance-based pay. Compensation strategies for the future reflect this change. Part of this new compensation strategy includes a reduction in the percentage of employee benefits (paid for by the company for full-time, exclusive workers) in relation to continued on page 47

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THE GREAT GENERATIONAL SHIFT

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THE GREAT GENERATIONAL SHIFT continued from page 45

overall compensation. Further, employers are increasing the percentage of “employee services” (paid for by the worker on a pre-tax basis), such as health insurance and retirement savings. The question leaders and managers should be asking is this—given the great generational shift, what kind of organization do we need to create to make sure we can continue to still be known for our great people? What kind of workplace do we need to create to bring out the very best work in the very best people on a consistent and sustainable basis? Here’s the answer—the successful organization of the near future will have one or more core groups of critical talent, but it will also rely on a fluid, flexible talent pool. It will have a wide repertoire of ways to employ people and leverage talent—full-time, part-time, flex-time, on-site, off-site, telecommuting; as consultants, temps, partners, vendors, franchisors, franchisees; and upside down and inside out. Successful organizations will be able to get people on board, up to speed, and into meaningful roles very quickly, not to mention providing ongoing training and development to stay one step ahead of the constantly changing needs for new skills and knowledge. Successful organizations will continue to cut waste to the bone, improve efficiency, implement new technologies to streamline operations and eliminate labor, drive employee productivity, and try to get more and more work out of fewer and fewer people. Meanwhile, they will be forced to pay high premiums with lush benefits and lavish work conditions for in-demand talent—dream jobs for superstars—and at least some of the dream job factors for any employee an employer wants to retain for any significant period of time. The successful organization will have as many different career paths as they have people.

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EDITOR’S NOTE: This article was excerpted from The Great Generational Shift: Update 2017. Download the complete white paper at rainmakerthinking.com/whitepapers.

BRUCE TULGAN is an adviser to business leaders all over the world and a sought-after keynote speaker and seminar leader. He is the founder and CEO of RainmakerThinking, Inc., a management research and training firm, as well as RainmakerThinking.training, an online training company. He has authored numerous books, including the best-selling It’s Okay to Be the Boss (2007), the classic Managing Generation X (1995), The 27 Challenges Managers Face: Step-By-Step Solutions to (Nearly) All of Your Management Problems (2014), It’s Okay to Manage Your Boss (2010), and his newest release Bridging the Soft Skills Gap: How to Teach the Missing Basics to Today’s Young Talent (2015). Tulgan can be reached by email at brucet@rainmakerthinking.com.

LEARN MORE AT

www.instakey.com/retail

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OR CALL US AT 1-800-316-5397

LPM EXCELLENCE

LPM “Magpie” Awards: Applauding Excellence The LPM “Magpie” Awards offer a means to celebrate industry

accomplishments on an ongoing basis, recognizing the loss prevention professionals, teams, solution providers, law enforcement partners, and others that demonstrate a stellar contribution to the profession. The ability to influence change is a product of drive, creativity, and determination, but it also requires a unique ability to create a shared

Excellence in Leadership Don Knox, President of the International Association of Black Security Executives (IOBSE)

vision that others will understand, respect, support, and pursue. Each of the following recipients reflect that standard of excellence, representing the quality and spirit of leadership that makes a difference in our lives, our people, and our programs. Please join us in celebrating the accomplishments of our latest honorees.

Excellence in Community Service

Excellence in Partnerships

As a seasoned veteran of the loss prevention industry, Mays has shown excellence both with her performance in the stores and in the community. Following an unfortunate accident involving a coworker’s toddler son drowning in a swimming pool, Mays decided to take action and make a difference. “Drowning is the number one cause of accidental deaths among children ages one to four, and unfortunately, not every family can afford to send their children to adequate swimming lessons,” said Mays. “This is why my colleagues and I founded Strokes for Strokes, a charitable organization providing swimming scholarships to children in need.” Through an annual golf tournament, funds are raised to support swimming lessons at community pools to help avoid similar incidents moving forward. Since the inception of the program in 2013, hundreds of disadvantaged children have received swim lessons. “We hope not only to continue helping children learn to swim in future years, but also to inspire retailers and their employees to start their own community-focused projects and identify creative ways of giving back,” added Mays.

After joining InstaKey in 2001, Doyle was quick to build upon her new-found passion for the security and loss prevention industry. She was soon promoted to director of sales and marketing where she has continued to thrive as a genuine and valued partner. She stresses the need to become an expert in not only what her retail clients do and the value that it provides, but also the industry. “Ask questions and actively listen to others,” Doyle explained. “Talk less and hear more of where you can help. Educate yourself about the industry and the people in it. Never stop learning, share your knowledge, and help others become successful.” But there’s something more. “I can attribute many of my successes to a strong core belief that we should do the right thing regardless of opportunity or cost and provide value in every relationship,” said Doyle. “Strong partnerships provide success to everyone involved, and especially to oneself. Be kind, honest, and always build a foundation of trust. No matter what you sell, service, or support, strive to make a positive impact—it will be the legacy you leave for others to follow.”

Sara Mays, former Director of Loss Prevention Stores and Training, Barnes & Noble

A veteran industry professional, Knox carries more than twenty years of experience in enterprise security strategy, policy and program development, risk management, crisis management, business continuity, and information security. He is currently the director of enterprise security, crisis management, and business continuity for Sears Holdings. Beyond his responsibilities with Sears, Knox also serves as president of the IOBSE. Offering a message of inclusion, the fundamental goal of IOBSE is to broaden the thought processes of individuals, teams, businesses, and the community in general. Through the exchange of information, ideas, knowledge, and experience, the IOBSE facilitates professional resources, education, and training. Knox and the entire team at IOBSE also focus on the identification and development of talent and helping to develop leadership skills that translate to success in the business environment. Every year a select group of college students are invited to attend an annual event and participate in educational programs, guidance and learning exercises, and networking with industry professionals. Workshops are also held with subject-matter experts that share strategies for communication, networking, resume building, and job interviews—with many leading to career opportunities.

Cita Doyle, LPQ, Director of Sales and Marketing, InstaKey Security Systems

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

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CERTIFICATION

De-escalation Training Program Addresses Disruptive Behaviors

ddressing disruptive customer behavior and de-escalation training efforts has become a topic of great interest to retailers across the globe amidst growing concern over the challenges and opportunities for safety in retail stores. The subject was discussed in great detail at the September 2016 Loss Prevention Foundation’s (LPF) board of directors meeting, where all LPF board member companies agreed that there was a pressing need to address the concerns of disruptive behavior and respond with a solution that would benefit the entire retail industry, our associates, and the retail customer. This resulted in the LPF decision to spearhead the effort to create a retail-focused de-escalation training program for the retail industry. With a reputation for creating world-class interactive training initiatives, such as the academically accepted and internationally known LPCertified and LPQualified retail certification programs and other courses focused on topics important to the industry, creating a course that involves the development—and approval—of industry leaders and subject-matter experts is essential to earning the LPF “stamp of approval,” as a new LPF-certified certificate course, and vital to building a program that best meets the needs of the retail industry. Efforts to build a de-escalation training course that would best fit these needs were put in motion before the meeting even adjourned, with an emphasis on developing a solution that matches the essentials of the training with the challenges of the retail environment. Creating a program that united retail knowledge and experience with subject-matter expertise in addressing disruptive behaviors was determined to be the best course of action, leading to the most positive and productive outcomes. Addressing Disruptive Behaviors in Retail—Essentials will be the first among several titles in development and launching under the new LPF-certified designation.

by Gene Smith, LPC 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.

the industry to partner with and support our retail counterparts in driving a message of safety for every professional in our industry.” Walmart will also utilize this courseware internally to help further promote their mission for safety in their stores. It will serve as required training for both their asset protection and management teams, including store managers and other key front-end associates. The program is being developed under the guidance and direction of Jesse Stanley with Strongside Principles, a former loss prevention professional and nationally-known speaker and subject-matter expert on de-escalation techniques. Strongside has extensive roots and experience in retail, with larger retail clients already engaging with Strongside’s approach. Stanley also serves as a subject-matter expert supporting internal training and policy development, with teachings and skills that are very retail-centric. Unlike other de-escalation training that is drawn from law enforcement experience, practice, and principles, the expertise of Strongside was selected by LPF as recommended by several retail leaders and current board members as the preferred method and approach focusing on the business of retail.

Defining the Problem

“Disruptive behaviors are intended to cause harm to others, whether trying to hurt someone, make them feel inferior, or simply damaging their reputation,” explained Stanley. “While customer service may be a prominent message for retailers, on any given day you’re likely to deal with insults, profanity, and other forms of aggressive and non-compliant behavior. Effectively addressing disruptive behaviors involves being able to identify, avoid, and respond to them—even when it involves common but less severe behaviors like rudeness and intimidation. However, all too often it’s our own employees’ actions that customers use to justify their behaviors. “De-escalation training that helps us better deal with such disruptive behaviors—learning to use tactics that work and avoiding those that don’t, how to effectively organize your thoughts, and Leading the Way responding from a position of strength—therefore becomes essential to As a strong and long-standing advocate for promoting and safer and more successful interactions with your customers. improving safety in retail, the Walmart asset protection team quickly “When we started working on this with clients back in 2010, we stepped up and took the lead as the initial sponsor in supporting this saw challenges: companies dissatisfied with how difficult customers very important industry initiative to help make the program available were handled and employees feeling powerless. Today, we see for asset protection professionals across the country—and beyond. opportunity. Loss prevention is leading the way, helping retailers The Walmart AP team has been engaged with the LPF and industry subject-matter experts in developing this essential educational resource, improve customer service, promote safety and strengthen brands,” said Stanley. which will be released soon. “We feel very strongly about our commitment to safety at Walmart. It is one of our corporate core values,” said Tom Arigi, senior director Creating a Best-in-Class Solution of asset protection for Walmart. “This commitment extends beyond The partnership of industry leaders and subject-matter experts will our doors; and we see this as a terrific opportunity to reach out across produce a best-in-class product that leads the way in improving safety

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for retail loss prevention. The LPF is honored to be the conduit in bringing together this group of professionals who all share a passion for safety and to support the creation of this education resource that will be available to every company and every retail associate. Nothing is more important than the safety of our industry associates, our management teams, and every retail customer. We would be remiss in our mission if we did not actively support and address these concerns by bringing forward this valuable resource and supporting the safety of our membership and every professional in our industry. This certificate-based, interactive, online training program, focused on the retail environment, featuring industry-centric examples and exercises, for and from a variety of retail environments, is in its final stages of development and will be released to the industry at large by early summer 2017.

Advanced Analytics Actionable Insights

Newly Certified

Following are individuals who recently earned their certifications.

Recent LPC Recipients Joseph Carr, LPC, Zaxby’s Margaret Chapman, LPC, Lowe’s Dominic DeNicola, LPC, The Zellman Group Nicholas Deringer, LPC, Sears Holdings Thomas Devaney, LPC, Rite Aid Allen Flower, LPC, CFI, Walmart Stores Andrew Gowin, LPC, Lowe’s Randall Heale, II LPC, Walmart Stores Mark Ingalsbe, LPC, Sears Holdings Alexsander Kacprzyk, LPC, Goodwill of Southwestern PA Daniel Kaiser, Jr., LPC, Army & Air Force Exchange Service Michael Limauro, LPC, Alchemy Jodie McDonald, LPC, Office Depot Jason Montgomery, LPC, Sears Holdings Bradley Nichols, LPC, Sears Holdings Jason Odell, LPC, Advance Auto Parts Mark Ortega, LPC, T-Mobile USA Glenn Skinner, LPC, TJX Raymond Sosa, MBA, LPC, CFI, CVS Health Adam Stern, LPC, Belk Department Stores Jan Trexler, LPC, Retail Business Services LLC, an Ahold-Delhaize company

Recent LPQ Recipients Paul Bayer, LPQ, Rite Aid Marcus Collins, LPQ, Sav-A-Lot Jeremy Faries, LPQ, United Supermarkets Stephen Frechou, Jr., LPQ, Inner Parish Security Corporation Robert Galloway, LPQ, Inner Parish Security Corporation Erika Kopanic, LPQ, Goodwill of Southwestern PA Christian McCarty, LPQ, Walmart Stores Cheryl Miller, LPQ, English Gardens Preston Miller-Silveira, LPQ, Navy Exchange Service Command William Parrish, LPQ, Goodwill Industries International Joshua Suit, LPQ, LPI, Inner Parish Security Corporation Tanesha Turner, LPQ, Jobworks Education and Training Systems Kristine Vece, LPQ, Protos Security Lory Whitton, LPQ, KPH Healthcare Services

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EVIDENCE-BASED LP by Read Hayes, PhD, 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. © 2017 Loss Prevention Research Council

Information Dominance I

ntelligence drives the fight. Ask General George Washington. In fact ask anyone battling an adversary. Good, accurate, current intel and definition makes the total difference. We should know more about our opponents than they know about us. But who does know more? Us or them? If we want to win the fight, we must better control violence, theft, fraud, and loss. Information dominance means we know certain things and more than our criminal opposition knows, including what are our most desirable assets and our vulnerabilities. We also need to know our tendencies and limitations. Part of information dominance is knowing the opposition’s wants, objectives, intentions, capabilities, methods, “players,” and tendencies. And what are they likely to know (or think they know) about us? Our intel should help us get inside the opposition’s planning and decision cycles. Intelligence should also be actionable—it needs to drive executive decisions.

Be Better, Have A Process

We need certain capabilities to achieve information dominance, so it is important to deploy fused sensors. These sensors can include social media, Web and Deep Web apps, hotlines, store and field staff feedback, case reporting, and investigative and surveillance information, to name just a few. The Loss Prevention Research Council’s (LPRC) Security Operations Center Lab (SOCLab) has been established to help us learn together even better ways to establish information dominance at the corporate level. The SOCLab’s motto is “detect, define, decide.” And just as the motto indicates, the first step is to detect a probable or recent event or pattern. We then strive to define the problem (who, what, when, where, why, and how) to allow for well-informed and precisely targeted solutions and decisions. And we should accurately and basically describe the problem and solution options to the decision-maker. Finally, we need to quickly communicate with our critical or otherwise involved associates and officials.

hat to collect. W How to collect. ■ How to validate initial information. ■ How to best display data—locally and distributed. ■ What technologies are needed. ■ How to better, more quickly analyze and define. Battle track situations? ■ Who and how to staff. Training? Ongoing Preparation? ■ How to best and most simply present options to decision-makers. ■ How to decide. ■ How to communicate with local and distant team members and others. ■ How to lead and execute during crises. ■ How to recover and use lessons-learned to improve prevention and the SOC process. The initial SOCLab steering team includes retail, military, federal government, and solution backgrounds and responsibilities to ensure our lab and its mission are done correctly. Our initial team is below, with room to add even more expertise: ■ Lucas McDonald and Josh Allen, Walmart ■ Tom Meehan, Bloomingdale’s ■ Hendrik van der Meulen, Voyager Analytics ■ Justin Taylor, TJX-Marmax Group ■ Garret King and Jason James, CCI/Protection 1 ■ Lincoln LeFebvre, The Home Depot ■ Clayton Brown, Reconasense ■ Tony Zwart, Brian Peters, and Jason Bailey, Target ■ Katie Jurkas, Rite Aid The SOCLab group is a subset of the LPRC LP Innovation Working Group and will hold separate bimonthly calls. Each call will include a virtual tour of an operating security, tactical, or emergency command center, whether a full-time or part-time operation, where the group will discuss research and development opportunities. Please contact operations@ lpresearch.org if your group has interest in learning more about SOCLab.

SOCLab

Recommended Reading

We have a growing SOCLab steering panel that is helping us acquire needed technology, apps, checklists, experience, and expertise. Our security operations center (SOC) is real, powerful, and now ready for testing. As with any of our projects, we start with retailer’s needs in the form of questions. Here are some initial issues:

MAY–JUNE 2017

■ ■

In The Reasoning Criminologist: Essays in Honour of Ronald V. Clarke edited by Nick Tilley and Graham Farrell, leading criminologists from around the globe present situational crime-prevention-research essays that provide evidence-based, practical thinking on a variety of crime problems. LOSSPREVENTIONMEDIA.COM

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FEATURE

UPDATE PROGRESS

AN UPDATE ON MAJOR SUBJECTS AFFECTING RETAIL LP ORC, RFID, AND MORE By Bill Turner, LPC

UPDATE ON MAJOR SUBJECTS AFFECTING RETAIL LP

fter completing the three-part series on the first fifteen years of Loss Prevention magazine, I promised to write an additional article that looks at the current and future state of some subjects we discussed that have a huge influence on the retail loss prevention profession. As I looked at the subjects covered in the series, it became clear that some are evolving faster than others and will probably have a bigger impact on loss prevention going forward.

Organized Retail Crime

From the very first cover story in the fall 2001 preview edition of the magazine, through today, modern-day organized retail crime (ORC) has been featured more than any single subject with the exception of LP technology. In that premiere issue, King Rogers referred to it as “organized retail theft.” When I first started in the business, we simply called it professional shoplifting. But things have changed. In the early years, most efforts to fight professional shoplifting were mainly coordinated with fellow retailers in a given city. Pros in those days were much less mobile and much less organized. Interstate and intercity communications were limited. Local efforts were often coordinated through various cities’ Stores Protective Associations. With the growth of sophisticated communication capabilities and ease of travel came more highly organized and far-reaching crime organizations. King Rogers made note of this in his article. Between then and now, the magazine featured numerous articles on the growing threat of ORC and offered many tips on how to effectively investigate and control it. Some industry efforts were successful; some weren’t. Of particular note is LERPnet (Law Enforcement Retail Partnership network). Retail LP professionals worked for many years to create a network where law enforcement and retail LP could share information

across the United States to combat ORC. There were many attempts and several start-ups, most of which failed. Finally in the fall of 2007, through the combined efforts of the National Retail Federation (NRF) and the Retail Industry Leader’s Association (RILA), LERPnet became a reality. Many major retailers enthusiastically jumped on board. In 2011, Verisk Analytics joined, adding its financial and analytical expertise. But it’s curious to note that as of today, Verisk’s website says it is “not currently onboarding LERPnet clients as we re-envision our ORC-oriented solutions for retailers and law enforcement.” Hopefully, whatever issues exist with LERPnet can be solved, and it (or some other solution) can once again drive communication between retail LP and law enforcement. It is very much needed. ORC is still a huge problem, and it is growing, as highlighted in NRF’s 2016 ORC report. The report reveals some very sobering statistics: ■E ighty-three percent of retailers reported an increase in ORC in the past year. ■F ifty-nine retail LP executives stated that 100 percent of their companies had experienced ORC in the past year. ■ I dentified ORC losses soared to $700,000 per $1 billion in retail sales, up from $454,000 in the prior year. ■S eventy-one percent of retail executives believe that top management now understands the ORC threat. ■S ixty-three percent of those surveyed said they had recovered merchandise from physical locations such as storefronts, pawn shops, or flea markets. ■S ixty-eight percent of respondents experienced ORC criminals refunding merchandise for store credits. Those credits are often resold on the black market. ■T hirty-four states now have ORC laws, but conversely, sixteen do not.

MAY–JUNE 2017

F ifty-six percent of respondents in states with ORC laws said they have seen no increase in support from law enforcement. ■C argo theft, often by ORC perpetrators, was noted by 44 percent of respondents. ■L os Angeles was cited as the hardest-hit area followed by New York City, Chicago, Miami, Houston, San Francisco, Dallas-Fort Worth, Atlanta, Philadelphia, and Orange County, California. ■

Crisis Management

As we have speculated, the flurry of crisis management articles after 9/11 discussed many best practices, and as a result, less has been written on the subject in the magazine in recent years. But things are changing. Some of the events taking place just since the presidential inauguration on January 20 may portend that civil unrest, once again, will become a major issue in the months and years ahead. It’s timely that the January/ February 2017 issue of the magazine contained an insightful article by Lawrence Barton, PhD, a renowned expert on crisis management and communication. In his article, Dr. Barton outlined some basic types of threats, things to think about, and what to prepare for in formulating an effective crisis plan.

Retail LP Technology

Articles and columns dealing with retail LP technology covered more pages than any other subject during the magazine’s first fifteen years. It is the subject changing most dramatically— one that will affect the future direction of retail LP more than any other. And it probably will be the most-covered subject going forward. In fact, the January/February 2017 issue contained an insightful article written by Garrett Seivold that talked about retail video surveillance and what’s coming. I will also take

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UPDATE ON MAJOR SUBJECTS AFFECTING RETAIL LP

a look at that subject a bit later in this article. Electronic Article Surveillance. Many of the experts I talked to in preparing this article readily admitted that EAS has seen no significant advances in many years. Yes, we have seen the development of independently alarming tags and multi-alarming tags. And yes, there are now such things as keepers and spider-wrap tags to protect unique products. But the basic concept of alarm tags and pedestals at the door hasn’t changed much. One retailer conducted a test and removed all tags and pedestals from ten stores. Shrink went through the roof. Often due to pressure from the visual team, many retailers shifted to soft tags and hidden tags sewn into garments. Once again, shrink usually skyrocketed. Most experts agree that EAS, with its tags and pedestals, is strictly a deterrent to shoplifting. And most everybody agreed that it is here to stay. One interesting EAS development being tested is long-range scanning deactivation. A retailer who sells large, bulky items was experiencing an inordinate amount of false alarms at its exits. When investigated, it turned out that cashiers didn’t want to wrestle with bulky items, so they simply did not remove or deactivate the EAS tag during a legitimate sale. Working with a vendor, the retailer came up with the idea of being able to deactivate the EAS tag from a distance using Bluetooth-type technology—something new for sure. Beyond some hardware and software advancement, every expert I talked to agreed that the real future of EAS revolves around leveraging those pedestals and tags in a way that adds value to operations and stimulates sales. The question to ask is how to invent new or use existing LP technology that supports corporate philosophy and direction. Regarding EAS, the pedestals and tags are there, so how can we put them to new or better use? The key may be using or modifying existing EAS

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From the very first cover story in the fall 2001 preview edition of the magazine, through today, modern-day ORC has been featured more than any single subject with the exception of LP technology.

technology or combining it with RFID to drive better inventory accuracy. With the growth of omni-channel retailing and the buy online and pickup-in-store concept, pinpoint inventory accuracy is critical. If a customer buys something online and shows up in the store to pick it up, it better be there. One industry expert told me a story of buying a giant screen TV from an electronics retailer online. Since he needed it right away, he indicated he would pick it up at the store. He rented a van and went to the store. When he got there, he was told, “Sorry, it’s not in stock.” My advice to him was to call first. Totally accurate inventory is not only a boon to the customer

LP MAGAZINE | MAY–JUNE 2017

experience but also a huge competitive advantage for those retailers who get it right. Leveraging EAS pedestals and tags to help drive inventory accuracy leads directly into a discussion of RFID. I’ll hold a more in-depth discussion around that for later in the article. Cameras and Video Technology. Unlike EAS, cameras and video have seen more advancement over the years. In the “old days,” use of cameras by LP involved banks of monitors observed real-time by in-store LP personnel. Then came pan-tilt-zoom cameras enabling LP to follow prospective shoplifters throughout the store. Later, the ability to easily record made video review after the fact possible. But some of those

UPDATE ON MAJOR SUBJECTS AFFECTING RETAIL LP

processes are things of the past. Now, the ability to remotely monitor and record over IT networks is a reality. Digital and IP (internet protocol) cameras are replacing old analog cameras and CCTV systems. One challenge for LP switching to IP cameras is that they use up system bandwidth, which most of us know is the private domain of the IT department. Or so they claim. Thus, very often, that domain is hard to penetrate. In addition, since IP cameras operate on the network, hacking can become an issue. And IP cameras and video monitoring systems can be expensive. One alternative may be to create a secure LP network and employ HD (high definition) cameras. But with cameras, as with EAS, the real question centers around how this technology can be expanded beyond LP and become invaluable to operations and help improve

profits. The future here will involve using cameras and video technology to aid in traffic counting and customer-dynamic analytics. And this expansion of LP technology is already beginning. Historically, customer traffic counts were conducted using beams at the door, later replaced by ceiling-mounted detectors that simply counted customer entries and exits. Results were not truly accurate due to those technologies’ inability to distinguish between individuals in crowds. And once the customer entered the store, information regarding their actions stopped. Plus, these old systems were easily “massaged” by unscrupulous store management wanting to alter counts. But cameras can “see.” Traditionally, LP has managed in-store camera systems, and they have cameras installed at most entrances. With the advancement of video technology and LP’s need to assist in

Beyond some hardware and software advancement, every expert I talked to agreed that the real future of EAS revolves around leveraging those pedestals and tags in a way that adds value to operations and stimulates sales. 58

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enhancing profit beyond low shrink, it follows that cameras can be a major contributor to consumer in-store analytics. Providing metrics and analytics, smart cameras can be used to record customer patterns, dwell times, and flow throughout the store. One major retailer’s LP department led the way in installing modern smart cameras throughout the chain. Going beyond LP, one of their first discoveries involved their customers’ habits at their in-store ATM machines. They had ATMs installed inside all their stores near the front. Video observations and analytics, made possible by the new system, clearly showed that customers often came in, used the ATM machine, and left. The ATMs were moved to the back of the store forcing the customers to walk through the aisles to get their cash. The results were that sales increased because of this simple move. Everyone I talked to agreed that the future value of cameras in stores must go well beyond LP and shrink. Another interesting technology being developed is the ability to track an individual customer through their personal devices—a smart phone, key fob, and so forth. A unique identifier can theoretically be tied to an individual, and once established, that person’s movements and habits can be tracked. The theory is that a retailer can learn from an individual’s habits and vastly improve on the knowledge that is currently available. There are also obvious advantages to LP of being able to track habitual offenders’ routines. Positive uses in marketing and analytics are the goals of this technology, but as we will see with facial recognition, privacy issues and “big brother” are bound to be major hurdles to its wide scale adoption. Facial Recognition. The mechanics behind facial recognition are complicated. And the concept is frightening to many. In 2013, Loss Prevention magazine contributor Chris Trlica described facial recognition as “having the potential to change the

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UPDATE ON MAJOR SUBJECTS AFFECTING RETAIL LP

rules of retail” but cautioned against poor execution. As of this writing, at least one major retailer is championing the use of facial-recognition software to help LP identify prolific shoplifters. And there are potential operations and marketing applications around identifying loyal and important customers entering a store. Costs are coming down, and accuracy is increasing, but there is still room for improvement. A recent FBI document on the subject noted “the computer-based facial-recognition industry has made useful advancement in the past decade; however, the need for higher-accuracy systems remain.” The value of being able to identify an individual through cameras and software is obvious for national security and, potentially, for retail. Both Facebook and Google are investing heavily in the technology. However, most forms of identifying a person involve actions or processes of which

the person being identified is well aware. Facial recognition can identify someone without their knowledge or consent. So it goes without saying that the huge elephant in the room, once again, is “big brother” and privacy concerns. For facial recognition applications to become widely adopted, the government and private industry must deal with these issues and develop protocols and practices that will take full advantage of its capabilities but lessen, if not eliminate, privacy concerns. That may not be possible. Because of the issues of privacy, we are starting to see applications that assign unique numbers instead of names to individuals based on identification using multiple identifiers beyond facial. This and other emerging technologies may be what’s needed to move this technology forward. Mobile Payments. The rise in mobile payments has been described as the next big security headache. It’s

continuing to catch on, but as of today, it is far from mainstream. James Martin, in a recent CIO article, outlines some reasons why: ■A mobile payment transaction is actually more involved than simply inserting or swiping a credit card. There are many more steps that need to be taken on one’s smart phone to activate a mobile payment. ■M obile payments don’t offer enough special incentives to persuade consumers to switch. Mobile payment users often can’t take advantage of loyalty points or special offers at the point of sale (POS). ■T he mobile payment infrastructure has been slow to evolve. Merchants must invest in POS terminals capable of near-field communication (NFC) transactions. More phones are coming with NFC chips, but they need a compatible POS terminal to be used. ■E MV (chip cards) transactions won’t help mobile payments. When using

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LP MAGAZINE | MAY–JUNE 2017

UPDATE ON MAJOR SUBJECTS AFFECTING RETAIL LP

I tem-level RFID is the future. O n-shelf accuracy is critical to omni-channel retailing. ■R FID “may” be useful in combination with EAS. Fast forward to today. Most experts I talked to for this article agreed 100 percent with those four points. But the first point still rings true. It’s generally agreed that RFID (radio frequency identification) is amazing technology. Its roots can be traced back to military use in World War II. The Germans, Japanese, Americans, and British had radar, but they needed a method to identify whose planes were whose. Experiments were conducted with early RFID-type detectors. It wasn’t until 1973, however, that the first patent was issued for the type of RFID in use today. IBM did some early pilots with Walmart, but these efforts never resulted in the commercialization of the technology. Development continued. In the 1990s many retailers, including Walmart, saw supply-chain accuracy as a major potential use of RFID. Walmart further envisioned RFID saturation at the item level and proposed demands that its suppliers comply. As of November 2003, Walmart announced that it would modify its position with vendors and concentrate on only using RFID at the carton and pallet level. When asked why the slow evolution given the potential value and interest level, one industry expert said, “It didn’t work very well in the beginning.” And there were issues of size and cost. In addition, for simple applications, a barcode works pretty well. But 100 percent item-level inventory accuracy has been a goal of retailers for decades. And with the emergence of omni-channel retailing, the need becomes even more critical. Given shrinking size, reduced cost, improvement in performance, and the growing business need for accuracy, RFID has begun to gain traction in retail in recent years. Fulfillment of consumers’ online purchases in-store, from a different store, or from a warehouse ■ ■

With the advancement of video technology and LP’s need to assist in enhancing profit beyond low shrink, it follows that cameras can be a major contributor to consumer in-store analytics. Providing metrics and analytics, smart cameras can be used to record customer patterns, dwell times, and flow throughout the store. EMV machines with mobile payment, the transaction actually slows down. Numerous messages requiring action pop up on the POS terminal, which slows the process. ■ Modern mobile pay experience is inconsistent. The diversity of mobile pay options (Apple Pay, Android Pay, PayPal, Visa Checkout, and so forth) confuses the customer, thus slowing adoption. Which one to use? Which one does this retailer accept? ■ Ingrained behavior is tough to change. Only 31 percent of mobile payment users always use mobile payments. And the majority of those are Millennials or Gen Xers.

obile payments raise security M concerns. They are actually more secure than other forms of payments, but many consumers fear they aren’t Younger generations’ adoption and advances in technology will no doubt drive ever-increasing popularity of mobile payments. But it has a ways to go become an everyday part of consumers’ lives. RFID. As discussed in my previous three articles chronicling the first fifteen years of Loss Prevention magazine, RFID took center stage when it came to discussing LP technology. The following comes from a 2012 article in the magazine regarding RFID: ■I t’s coming, but it’s not really here yet. ■

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continued on page 62

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UPDATE ON MAJOR SUBJECTS AFFECTING RETAIL LP

continued from page 60

requires the inventory system to be as accurate as possible. For RFID to truly track inventory accurately, every piece of merchandise must be tagged. Source tagging has been the desire of retailers for years when it comes to EAS, but it has seen mixed success. Less than 100 percent tagging is not an option for RFID to work effectively. To that end, Macy’s has led the effort to expand RFID in retail and also to adopt standards. Retailers such as JCPenny, Kohl’s, and VF are getting on board. In addition, Zara, the world’s largest fashion retailer, is working hard on complete RFID implementation knowing that total inventory accuracy will be a competitive advantage and will drive sales. They have an advantage over many retailers regarding tagging in that they are vertically integrated, manufacturing their own product. On a less positive note, American Apparel, one of retail’s early adopters of RFID and one-time poster child for inventory accuracy, has recently announced that it is closing all of its 110 US stores. Hence, RFID is not a panacea for all things. Increasing RFID adoption, even given the compelling business need, has not been totally smooth. As recently as 2013, there have been intense legal battles regarding who truly owns the patents for RFID technology. Round Rock Research won most of these battles resulting in royalty payments to them from the vendor community. But despite many hurdles and a few setbacks, RFID expansion in retail continues. From on-shelf accuracy to “smart” fitting rooms to accurate loss reporting, the positive applications are not only endless but also critical to retail growth in the twenty-first century.

Fulfillment of consumers’ online purchases in-store, from a different store, or from a warehouse requires the inventory system to be as accurate as possible. For RFID to truly track inventory accurately, every piece of merchandise must be tagged. One RFID application that has long been talked about is the mass adoption of a combination EAS/RFID system and tag. This is just one more example of how LP may become a major player in operations and sales enhancement. It truly does look like the next five years will see RFID come into its own in retail and drive tremendous value in terms of improved operations, inventory accuracy, and sales—and of course LP. We’ll see.

Not Just Shrink Anymore

I talked to a number of retail industry experts in the preparation of this article. I won’t list them all, but I want to give shout-outs and special thanks to the following individuals. Their information and insights were invaluable.

ob DiLonardo, noted consultant and B retail expert ■ Randy Dunn, Tyco Retail Solutions ■ Kevin Lynch, LPC, Tyco Integrated Security ■ Adel Sayegh, USS There you have it. Some LP subjects haven’t changed a great deal over the years. Some have seen dramatic change. I tried to highlight those that I thought were of the most interest and ones that have the potential to significantly change our industry going forward. One thing is very clear regarding LP’s future—successful LP departments and professionals need to continually expand their scope and find new ways to become integral to their companies’ profit-enhancing efforts. It’s not just shrink anymore. ■

BILL TURNER, LPC, currently serves as a contributor to LP Magazine. He is also a founding member of the Loss Prevention Foundation, serving as its treasurer and on the board of directors executive committee since inception. Over the past forty years his career has concentrated in two industries—retail and entertainment—and has included stints at Bullock’s Department Stores, Disney, Nike, and USS. Throughout his career in loss prevention and operations, crisis management and response has been a passion of Turner’s as well as a reoccurring responsibility. He led the effort to formalize the programs at Bullock’s Department Stores, Walt Disney World, and Nike. Walt Disney World completed construction of its first formal emergency operations center under Turner’s direction, seeing its completion just prior to 9/11. Turner can be reached at BillT@LPportal.com.

MAY–JUNE 2017

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continued on page 64

SOLUTIONS SHOWCASE CHECKPOINT

What’s New in Merchandise Protection?

hree new merchandise protection products from Checkpoint’s Alpha High Theft line of products are empowering retailers to better protect their valuable retail merchandise. “We are excited to bring to market these three new and innovative solutions,” said Stuart Rosenthal, VP of sales and marketing for Checkpoint and Alpha High Theft Solutions. “These solutions are a result of listening to customers’ needs and our deep understanding of the competition and retail market. I am very proud of the work put forth by the entire team to deliver best-in-class products.”

Density Tag

Critical Protection of Boxed Store Merchandise Density Tag is so innovative that it was selected as a finalist for the Retail Industry Leaders Association’s 2017 Tech Asset Protection Innovation Awards. It protects valuable items inside packaged merchandise by “sensing” presence through the box. If the item is removed from the package, the change in measured density results in an alarm. Density Tag offers the ultimate protection of the actual merchandise inside the box, helping to prevent malicious customer fraud, without the need for puncturing a hole in the packaging. Key features include: ■ AM or RF technology 2- or 3-Alarm® (activates EAS alarm if a breach occurs, arms when merchandise is tampered with in store, and self alarms if merchandise is removed from store) ■ 95-decibel alarm and flashing LED light ■ Isolated sound chamber ■ Easy to apply and remove by retailers ■ Available in the fourth quarter of 2017

key advantage is that pulling on the StrapLok will not generate false alarms, and the StrapLok readjusts to any strap tension variation related to the pull. Key features include: ■ AM or RF technology ■ 2- or 3-Alarm® (activates EAS alarm if a breach occurs, arms when merchandise is tampered with in store, and self alarms if merchandise is removed from store) ■ 95-decibel alarm and flashing LED light ■ Isolated sound chamber ■ Easy to apply and remove ■ Tough, secure, and reusable ■ Available in the second quarter of 2017

Bug Tag 2 and Snare

Protecting Six-Sided Boxed Merchandise, Electronics, and Display Merchandise

StrapLok

Protecting Boxed Merchandise with Nylon Straps

Bug Tag 2 and Snare

Many retailers use nylon straps around boxes to prevent consumers from opening merchandise in the store and to confirm to potential buyers that all boxed parts are inside. StrapLok quickly attaches onto existing box nylon straps. Thanks to the dynamic tension adjustment, it is compatible with low-quality, loose straps found on boxes already pre-strapped from manufacturing. StrapLok is unique in actively monitoring the strap’s tension and will only alarm if the strap is being cut. The

Bug Tag 2, one of Checkpoint’s newest hard tags, is specifically designed to protect a variety of six-sided boxed merchandise and electronics, such as tablets, sell-through packaged merchandise, and display merchandise. Using it as a “line-alarm” system combined with the specially designed Snare accessory can increase its versatility. Applications include protecting display tools, sporting goods, kitchen appliances, and handbags. Used with Snare, it can adapt to curved or straight surfaces and attach to other articles. Any attempts to cut the coiled lanyard or the CableLok results in the Bug Tag 2 module alarm. Key features include: ■ AM or RF technology ■ 2- or 3-Alarm® (activates EAS alarm if a breach occurs, arms when merchandise is tampered with in store, and self alarms if merchandise is removed from store) ■ 95-decibel alarm and flashing LED light ■ Improved sound chamber ■ Compact design ■ Quick and easy to apply and remove ■ Reusable module ■ Disposable adhesive sled ■ Snare accessory for securing display merchandise ■ Available immediately

Visit checkpointsystems.com for more information.

LP MAGAZINE | MAY–JUNE 2017

SOLUTIONS SHOWCASE 7PSOLUTIONS

Checking All the Boxes on Your GPS Solution

ith today’s retail business environment and the ever-increasing prevalence of organized retail crime, LP professionals must ask themselves two important questions about their GPS loss prevention programs—are we getting the most return on investment, and what is behind the GPS technologies we are using? With the influx of new companies and trackers being introduced into the market, it is more important than ever that these questions are answered and that LP professionals understand what should be expected when using GPS and the associated data. Two key components together enhance the capabilities of GPS technologies, and both must be considered to ensure an effective GPS loss prevention program.

Return on Investment

Software Platform. GPS software platforms should not be designed as one-size-fits-all, especially today when companies must take advantage of the data available. A user’s daily task should be based on user permissions, allowing one device to be used in different ways based upon permissions.  Does the platform go beyond the event-based communications that allow monitoring centers to monitor shipments and prevent against cargo theft?  Does the platform provide complete supply-chain visibility and have the flexibility to be used in other departments outside of loss prevention and asset protection? Examples are the ability for transportation and logistics personnel to manage carrier performance, and purchasing’s ability to manage supplier and vendor on-time performance, which can translate to inventory dollars that are in the supply chain at any given time.  Does the platform allow for clients to capture electronic data interchange (EDI) transactions for non-GPS shipments and use these transactions for risk and inventory management? GPS Tracking Device. Through side-by-side testing, real-time GPS has proven time and time again to be the most effective and accurate technology in the market. By taking an extra couple of minutes for device placement within the shipment, you reduce the time (labor) required to manage shipments.  Reduce or eliminate false alarms.  Enhance event-based communications by using tighter geo-fences around facilities and turn-by-turn linear geo-fencing.

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 Take less time for theft recovery. Real-time GPS is within a matter of feet from the device location, whereas other technologies can be shown within a 20-mile radius of the actual location.

What Is Behind My GPS?

Since beginning 7PSolutions in 2010, this is a question that we have not seen addressed within the industry, but is fundamentally one of the first questions that should be asked. It should be not only asked but also verified. Software Platform. When managing a customer’s brand, a GPS provider must ensure that the software platform is available and on-line to users at all times, has robust IT security protocols, and has a responsive user interface.  I s the data being managed using a combination of servers and virtual servers?  Is the traffic volume and health of the servers being managed?  How is the data backed up, and is there automatic failover?  Are battery back-ups being used and dual generators supporting the facility?  Are dual Internet providers supporting the facility?  How are we ensured the platform is available at all times? Is technical support available 24/7/365?  What type of load testing is done?  Is the platform fully licensed with Google Maps?  Is data available for a minimum of five years? GPS Tracking Device. The GPS device must be available at all times. In many instances the battery specifications will meet the required transit times, but an additional battery should be maintained in the event of a cargo theft.  If the recovery process takes several days, will the battery survive?  What is the process for placing the device into sleep mode? If there is an event while the device is in sleep mode, will it automatically wake up and respond?  Can I communicate with the device remotely?  Is the device SIM carrier specific or agnostic?  Are disposable or single-use devices truly disposable, or do you incur a charge back for late or non-return? Today’s LP professionals are required to know loss prevention and asset protection best practices and also global supply-chain and transportation best practices. All of this combines with GPS technologies to ensure a proactive and robust GPS program. Call us at 812-988-4430 or visit 7pgps.com to find out how 7PSolutions checks all the boxes.

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SOLUTIONS SHOWCASE NEDAP

An RFID Solution for DSW

ootwear retailer DSW is looking at the future—one that doesn’t include dual electronic article surveillance (EAS) technologies. EAS systems utilize one of two signal technologies: radio frequency (RF) or acousto-magnetic (AM). Having both RF and AM EAS systems in most stores, DSW was faced with the challenge of moving forward with only one solution. Its existing EAS systems proved to be one-dimensional, with their only function acting as traditional EAS. The company needed a security solution with not only traditional EAS functionality, but also the ability to provide stock-keeping data for sales optimization and analytics to assist with investigations, all while blending seamlessly into their stores’ polished warehouse design. Focusing on the future, the DSW team initially started looking at RFID solely as a theft prevention solution—one that provided store personnel with real-time data. They began testing RFID on handbag tables that would alert store personnel of any grab-and-runs. Additionally, they used RFID to keep track of their in-store mobile devices, particularly their iPads. After several tests and research, however, they realized the true ROI would be in the absolute unit accuracy of their inventory. They were ready to upgrade to RFID technology for EAS.

The Nedap Solution

Following a successful proposal process, which included a pilot phase, Nedap was selected to supply DSW with the sleek, aesthetically pleasing !D Top RFID overhead reader. Unlike traditional EAS systems that require pedestals to be mounted on the sales floor near each entrance and exit, the !D Top is mounted overhead, helping to maintain a vibrant, clean, and clutter-free sales floor. In addition to the aesthetics, the !D Top adds to each store’s appearance. The !D Top was chosen for its intuitive and simple technology. The DSW team needed a solution on which store associates with varying technical knowledge could be easily trained. They wanted a solution that was easy to install and not too complex. They were particularly impressed with the fact

that Nedap’s !D Top has PoE (Power over Ethernet) capability, meaning a power outlet does not have to be located anywhere near the installation point as is required by other EAS systems. PoE saves a tremendous amount of costs typically associated with installing power outlets within six to ten feet of traditional EAS equipment and needs no involvement from IT departments. After the successful pilot, the DSW team decided on a complete chain-wide rollout of the !D Top with many installations already completed, and additional deployments in fifty to seventy stores per year. “RFID was a new technology for us, so this was a high-profile project. We had dabbled in RFID with a few proofs of concept with other providers, but we had never rolled chain-wide like this before. We partnered with store construction, store operations, training and development, and other departments within DSW to make sure this project was a success,” said Matt Brooks, DSW’s senior manager of investigations.

About Nedap

Nedap has both the product and the people to help retailers be successful protecting their merchandise. With Nedap, it’s what’s now and what’s next. Visit nedap-retail.com to learn more.

LP MAGAZINE | MAY–JUNE 2017

SOLUTIONS SHOWCASE SOUTHERN IMPERIAL

Detecting Theft at the Point of Concealment

outhern Imperial’s LM Tag loss prevention solution has proven to reduce shrink and labor costs. Additionally, the LM Tag has helped increase sales opportunities while providing early notification when offenders conceal merchandise. Using proprietary light and motion sensor technology, the LM Tag is the first loss prevention product to detect theft at the point of concealment rather than the point of store exit—allowing retailers to monitor and defeat theft risk before the product leaves the store.

How LM Tags Work

LM Tags are small, versatile, and reusable theft-deterrent devices. They attach to merchandise using a replaceable adhesive backing that does not damage packaging and adheres to most flat surfaces. Deactivators are available in either a countertop station or handheld unit. Once applied, any motion and concealment of the product will immediately notify store employees. LM Tags start working immediately. Their slim profile design (1.5 by 1.5 by 0.5 inches) allows the product to display on merchandise while supporting branding objectives. How does it work? The LM Tag is designed to be a multi-faceted theft deterrent. When concealed (in a bag, pocket, or another method) and in motion, the LM tag sounds a warning beep and alarms if the product remains covered. Store associates get the benefit of having an early notification to a potential theft threat. Tampering with the product also triggers the LM Tag to alarm if the tag is not removed using the unique deactivator. The strobe deactivator generates a customizable light sequence to disarm the tag. Unlike magnetic deactivators, this process cannot be defeated or duplicated; no other deactivator can replicate the light code. Finally, as an added value of security, the LM Tags feature an EAS gate alarm function that can be configured to AM or RF signals to alarm at the point of exit. Southern Imperial has also designed additional mounting accessories—the LM Tag Wrap and the LM Tag Clip—allowing

MAY–JUNE 2017

LM Tags to secure bags, packages, shoes, oddly shaped merchandise, and soft-line products. The LM Tag Wrap uses a monofilament preventing unauthorized access to boxed items. Cutting the wrap triggers the LM Tag to alarm. The LM Tag Clip is a lightweight plastic housing for the LM Tag. Once installed, the clip can be attached to boots, shoes, and purses without piercing or damaging the product. Any attempt to remove the clip will trigger the LM Tag alarm. Both products also feature the same light-and-motion sensor technology as the LM Tag.

Research Backs Them Up

The LM Tags are a proven system. In the Loss Prevention Research Council’s 2015 study Specialty Beauty Retailer Offender, Shopper, Employee Feedback Study – LM Tag, Kyle Grottini and Read Hayes, PhD, observed and interviewed actual employees, shoppers, and potential shoplifters. All respondents felt the LM tag would deter theft but would not negatively affect brand identity or the overall store experience. Potential shoplifters noted they immediately recognized the LM Tag as a loss prevention product but did not identify all the different methods that activate an alarm. All stated they would reconsider attempting to steal items with the LM Tag attached. And all employees interviewed believed the LM Tag to be very effective at reducing loss.

Southern Imperial, Inc., of Rockford, Illinois, with factories in Centerville, Georgia, and Xiamen, China, is one of the industry’s leading designers and manufacturers of store fixture hardware and retail display solutions—delivering proven results and influencing point-of-purchase for the nation’s top retailers and their suppliers. For more information on the LM Tag or other Southern Imperial loss prevention products, please visit intelligentlossprevention.com or call toll-free 800-747-4665.

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SOLUTIONS SHOWCASE THE ZELLMAN GROUP

Combating Organized Retail Crime at Its Source

ver the last twenty years the retail industry has been in a constant uphill battle to remain profitable. From online resellers to social media, it is now easier than ever to make purchases without leaving your own Facebook app. Online resellers that used to be limited to eBay and Craigslist have expanded into new and more mobile-friendly platforms. Besides changing the way consumers shop for goods, these online marketplaces have changed the way thieves steal and resell merchandise. The days of selling stolen watches from the inside of a trench coat are gone. Thieves are now an organized team skilled in exploiting the Internet for their own profit. For the first time ever, 100 percent of companies participating in the National Retail Federation’s (NRF) 2016 Loss Prevention Survey reported being a victim of organized retail crime (ORC). According to the same survey, ORC costs the retail industry over $30 billion a year. The popularity of e-commerce, social media, and marketplace seller sites has had a considerable impact on the way goods are bought and sold, as well as the significant rise in ORC theft. One organization that is combating this problem at its source is The Zellman Group.

Open-Source Intelligence and ORC Investigations

The Zellman Group recently launched an Open-Source ORC Investigation service. Combined with their ORC Recovery division, The Zellman Group now provides an end-to-end solution to retailers for their ORC needs. The Zellman Group recognizes how difficult it is for current loss prevention senior leadership to balance combatting ORC theft and the ROI on a full-fledged ORC team. By providing an end-to-end solution, The Zellman Group can help shift this balance. The Zellman Group has the capacity to identify, investigate, and resolve ORC thefts of all sizes. The Open-Source program consists of online research to gather information from e-commerce communities, classifieds, social networks, Dark Web, and criminal data to identify the core of ORC rings. Once the criminal enterprise is identified, The Zellman Group ORC investigations specialists combine cutting-edge forensic with proven investigative techniques, high-level law enforcement contacts, and financial recovery solutions. The Zellman Group’s service is designed to assist retailers at every step of their investigative process.

The Zellman Group ORC team is led by Ben Dugan as the Director of ORC Field Investigations, and Bill Ramos as the Director of ORC Recovery. Dugan has more than ten years of ORC field investigations experience and is a well-known expert and speaker in the industry. Ramos has more than thirty years of investigation and recovery experience with extensive background leading major investigations and recovery efforts for high-end retailers throughout the US. CEO Stuart Levine; VP of Operations Lauren Bridgeo; and Chief Counsel Michael Ira Asen, who is a criminal attorney, provide additional support and expertise. Each member of this team has more than thirty years of retail, e-commerce, and investigative experience.

Twenty Years of Innovation

The Zellman Group is celebrating its twentieth birthday this December. Since its founding in 1997, The Zellman Group has embodied the phrase “the only constant is change.” From its start as an employee-screening company to the multiservice loss prevention organization it is today, The Zellman Group is always evolving with the needs of the loss prevention community. This being said, it is no surprise that The Zellman Group would tackle ORC head on. “The ORC problem in this country is continuing to grow every year, but the resources dedicated to the fight are shrinking,” said Levine. “Unlike standard retail loss prevention efforts that can be easily justified with lower shrink, an ORC team ROI is more difficult to prove. While many ORC teams document tens of millions of dollars in admissions, very few can offset program expenses with recovery like we can.” The Zellman Group, LLC, based in Greenvale, New York, is a loss prevention services and consulting company working in the retail, food service, and hospitality industries. Visit The Zellman Group’s Open-Source Intelligence and ORC Investigations team at NRF PROTECT (booth 601) in Washington, DC, in June. For more information, please visit zellmangroup.com.

LP MAGAZINE | MAY–JUNE 2017

LPM DIGITAL By Jacque Brittain, LPC, and Kelsey Seidler Brittain is editorial director, digital, and Seidler is managing editor, digital. The two manage the magazine’s digital channels that includes multiple daily e-newsletters featuring original content and breaking news as well as vibrant social media conversations. Brittain can be reached at JacB@LPportal.com and Seidler at KelseyS@LPportal.com.

A New Chapter in Retail F

ollowing are a few article summaries that can provide you with a small taste of the original content available to you every day through our daily digital offerings, which are offered free through LossPreventionMedia.com. In addition to our daily newsletter, a comprehensive library of original content is available to our digital subscribers at no cost to you. Visit our website to gain access to all of our content. You can also follow us on Facebook (search LP Voices), Twitter (@LPMag), and LinkedIn.

By Loss Prevention Media Staff

Mike Lamb, LPC, has been named vice president of asset protection for Kroger. A seasoned industry leader, Lamb has served with some of the nation’s most prominent loss prevention programs, embodying a style of leadership and a standard of performance that his teams respond to, rally around, and strive to emulate. He was previously the vice Mike Lamb, LPC president of asset protection and safety for Walmart US, where he also served as senior director operations support, asset protection prior to assuming his role as VP. Over the course of his career, he has also held leadership positions with The Home Depot and Federated Department Stores. In addition to serving with some of the nation’s most prominent loss prevention programs, Lamb has also offered his guidance and leadership throughout the loss prevention community as a board member with the Loss Prevention Foundation (LPF), the Loss Prevention Research Council (LPRC), the Retail Industry Leaders Association (RILA) LP Steering Committee, and LP Magazine’s editorial board. Most recently, he was also recognized with the LPM “Magpie” Award for Excellence in Leadership in January 2017. “As a lot of people in the AP/LP industry have heard, I’ve decided to resign from Walmart and accept a role with Kroger,” said Lamb. “I thoroughly enjoyed my time and experience at Walmart. It’s an outstanding company with an outstanding history, and I will always reflect back on my time there with a sense of pride and appreciation for the opportunity and support provided to me. I established lifelong friendships with an outstanding group of AP leaders and store executives. “I’m equally excited to join Kroger as their vice president of asset protection. Their storied past, enormous future, and legacy brand are equaled by their leadership team and core values. I could MAY–JUNE 2017

Shoplifting in Fitting Rooms By Bill Turner, LPC

Mike Lamb Named Vice President of Asset Protection for Kroger

not be prouder nor more humbled to join the Kroger family and look forward to the next chapter in my career!” To learn more about Mike Lamb, his style of leadership, and the outstanding commitment to excellence offered by the entire asset protection team at Walmart, check out “Making It Easier to Get It Right,” from the March–April issue of LP Magazine.

Any loss prevention professional who has worked in a store that sells apparel is probably familiar with customers shoplifting in fitting rooms. But how much do you know about changing shoplifting laws, current practices to control it, public opinion, and future technologies when it comes to fitting rooms? Records are not exact, but shoplifting is estimated to cost US retailers between $24 and $40 billion per year in terms of shrink and the costs to control it. Below are other statistics being quoted from various sources, some of which are estimates: ■O ne to 2 percent of all customers enter a store with the intent to shoplift. ■F emale shoplifters outnumber men by a large margin. ■N ine out of ten shoplifters are reported to be under the age of thirty. ■T he peak shoplifting age is fifteen. ■F orty-nine percent of all shoplifters have attended some college. ■D ollar for dollar, shoplifting losses outnumber bank robbery losses 300 to one. ■A ccording to the National Retail Federation, shoplifters are responsible for 38 percent of retail shrink. These statistics do bear varying degree of statistical accuracy, but when it comes to shoplifting in fitting rooms, it’s difficult to find even estimates as to its magnitude. However, the anonymity offered by a fitting room is a strong draw to a shoplifter. Whether in a booster bag, booster girdle, or stroller, or wearing stolen merchandise out of a store, the fitting room seems like a great place to conceal merchandise. So what are some current methods to curb shoplifting in fitting rooms? Most are obvious and not new. They include: ■F itting room attendants counting garments in and out ■P ublic-view monitors and highly visible video cameras outside a fitting room entrance ■F itting rooms located near high-traffic areas ■ I ndividual fitting room service at upscale retailers ■C himes to alert store personnel when a customer enters a fitting room area

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S trict policies of clearing fitting rooms of left-behind apparel on a regular basis In addition, numerous vendors are leveraging modern technology to develop methods to provide a better customer experience and, at the same time, reduce shoplifting in fitting rooms. The future may see a system that seamlessly records and tracks merchandise being taken into and out of a fitting room by an individual customer. Customers may be able to summon sales help or automatically request different sizes through a “magic mirror” in their fitting room. Nothing is off limits in terms of tech advancements to fitting rooms as long as a consumer’s privacy is not compromised in any way. Speaking of privacy, how do shoplifting and surveillance laws affect current fitting room control? As of this writing, only thirteen states expressly prohibit use of any monitoring system in fitting rooms. Others allow some sort of monitoring to prevent shoplifting as long as the customer’s privacy remains 100 percent intact. Regardless of the state, however, any form of photography or video used within a fitting rooms area is a direct violation of the Video Voyeurism Prevention Act and thus is totally off limits as a shoplifting control method. Numerous legal cases have dealt with the dilemma of shoplifting in fitting rooms, but the one overriding standard is an individual’s “reasonable expectation of privacy.” So the shoplifting battle and the challenges that fitting rooms pose continues. Hopefully, evolving technology will enable greater customer service for fitting room users and simultaneously establish legal means to reduce shoplifting.

■

The Loss Prevention Foundation Announces the Retirement of Gene Smith By Loss Prevention Media Staff

Over the past decade, the loss prevention community has taken significant steps to strengthen the profession, adapt with the changing landscape of business, and underscore the role of loss prevention as a critical component of the retail industry. Following the birth of the Loss Prevention Foundation (LPF) in 2006, the industry Gene Smith, LPC watched as the LPF took root and evolved with the development of the industry’s academically accredited and internationally accepted certification programs, LPQualified (LPQ) and LPCertified (LPC), as well as several other initiatives that have helped educate the profession and set the bar for excellence across the loss prevention community. In addition to world-class education programs, the Loss Prevention Foundation has taken many other steps to assist and elevate the men and women of loss prevention. With the support of industry retail partners and solution providers that support LPF’s mission, hundreds have received educational scholarships to advance their careers. Other initiatives have reached into the community through volunteer efforts, support of the men and women of our military, new and developing education programs, and the creation of the LPF’s Benevolent Fund, which helps support extended loss prevention families in times of great need. There are also many new and exciting opportunities that are currently in development that will only further enhance the industry. These

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programs have touched many lives and provide a vehicle for industry growth that we should all embrace and be proud to call our own. Leading the foundation in these efforts has been Gene Smith, LPC. Many have known Smith for years, long before his taking over the reins as president of the LPF. For several decades leading up to his LPF role, Smith was involved in helping to build the careers of many LP professionals and has led several loss prevention departments for various retailers. Smith’s appointment as president of the LPF was a tremendous fit as an experienced and valued advocate for the loss prevention profession, a position he first accepted back in 2007. On April 3, the LPF board of directors was informed that Smith had officially announced his retirement. Frank Johns, chairman of the board for the Loss Prevention Foundation, released a statement that includes the following: “During the past ten years, the Loss Prevention Foundation has evolved from an idea that many thought might never come to reality into the international authority on professional loss prevention certification. Much effort has been given in creating something that has tremendous credibility and value. Because of that, we all can be proud of what LPF, LPQ, and LPC represent. “Gene Smith has led this organization and its efforts to help elevate the profession. However, after much thought, he has decided to announce his intention to retire. No official date has been set until a replacement is made.” The executive committee for the LPF board of directors has assembled a selection committee and has started the process of identifying a replacement, in which Smith will be involved.

Five Ways Employees Are Stealing from Your Stores Right Now By Garett Seivold

What is the latest employee theft scam putting a dent in the profits of your retail organization? Think about any recent changes. Maybe you’ve implemented a new cash management protocol, loyalty program, or tabletop payment system. Regardless of what your stores have recently done to boost revenue, it’s likely that some employees are figuring out a way to personally enrich themselves with it. The hottest employee theft schemes are, by nature, very personal. They are specific to each retailer depending on its business and existing security measures, such as whether or not it’s using inventory management software, as well as a host of other unique factors. That’s why a universal best practice for countering employee theft schemes is to identify, track, and analyze incidents of internal theft across the organization. Implementing targeted theft-deterrent strategies depends on consistent recordkeeping, organization, and pattern recognition. A data-driven incident management process is the only way to keep pace with an extremely adaptable foe. That is all to say that the employee theft scams listed here may not currently be a significant cause of loss in your retail organization. However, when we ask retailers about the ways in which employees are trying to steal from them right now, these five methods keep coming up. Retailers have caught employees stealing in the following ways. By taking advantage of customer convenience tools. Mobile point-of-sale (MPOS) devices—such as smartphones equipped with credit-card readers—are increasingly popular tools for checking out customers. They offer retailers an opportunity to accelerate checkout, accept credit card payments anywhere, and enhance the customer

MAY–JUNE 2017

experience. But some employees are taking advantage of that mobility to conduct theft that might be more difficult to do in a structured checkout environment with cameras watching. At one clothing store, for example, employees recently conducted a string of bogus MPOS transactions in the men’s room, including processing false returns and putting the money on depleted gift cards that had been handed in by customers. MPOS frauds aren’t different than the popular ones listed below, but crooked store workers are trying to use checkout mobility to provide some cover to those schemes. By bridging the real and virtual worlds. Some of the new online fraud schemes require a physical “insider” to pull off. Whether that person is doing reconnaissance for an organized retail crime group, or mapping out a retailer’s processes to look for exploits, or whether an employee applied for a job specifically to carry out a fraud plan, internal avenues of attack need to be top of mind for LP as it tries to combat online fraud. Some employee fraud is relatively straightforward. One fraud occurring today is collusion between online buyers and employees readying packages for shipment: insider thieves simply pack the box with extra products. Weight data is key to stop this type of fraud. If you know the weight of all your SKUs, you know what to expect an online order to weigh. So if the shipping company reports back an unexpected weight, you can check the reported weight against the expected weight. These schemes are being carried out at distribution centers but also at brick-and-mortar stores that double as mini-fulfillment centers and ship to customers’ homes or to other stores. Upon recognizing an instance of process exploitation on the part of an employee, a data-driven LP team can quickly enact safeguards to protect against the type of insider fraud that was just uncovered. With the same old tricks. Though not the most costly, the most frequently cited employee theft is the old trick of colluding with a “customer” to steal merchandise. For example, cashiers sometimes void large transactions but still place merchandise in shopping bags for customers. Others ring up only portions of an order to let accomplices walk away with stolen merchandise. Such scams dominate local news reports of arrests of store employees. At a Dollar General store in Elloree, SC, employees would wait until near the close of business, bring pre-loaded shopping carts to the register, pretend to scan most items, and leave with the carts of merchandise. Seven employees stole $56,000 over eight months, according to police. At a Walmart in Philadelphia, a four-person employee theft ring allegedly stole $60,000 worth of merchandise by only ringing up inexpensive items from large orders of merchandise, leaving the rest to go unpaid. Strategies to reduce theft at the point-of-sale include use of electronic article surveillance; RFID technology; CCTV at POS, specifically the use of video analytics with overhead surveillance of sales counters; and maintaining hiring and employee-screening standards. By integrating high-definition video with point-of-sale transaction data, retail investigation units can quickly and successfully review video surveillance footage associated with a specific transaction to identify individuals in a sweethearting scheme. With gift cards and pre-paid credit cards. In another type of collusion, employees are issuing pre-paid store credit cards without paying for them. Friends, family, or accomplices bring the pre-paid credit cards to the crooked cashiers at registers, where they load

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continued on page 74

As a member of The Loss Prevention Foundation, you join an association founded by and for loss prevention professionals. With access to an elite network of fellow industry professionals, development tools tailored specifically to our industry to help you advance your career and other great member benefits such as exclusive access to elite savings and discounts on thousands of products and services nationwide. Your membership is not only a demonstration of industry leadership; it’s a commitment to the profession and to your own professional development. Elevating the Industry, One Leader at a Time. For more information, visit losspreventionfoundation.org or call (866)433-5545

CALENDAR continued from page 72 May 5, 2017

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Int:rsect Enterprise Security Risk Management Conference Nobu Eden Roc Hotel Miami, FL resolver.com June 1, 2017

Cyber Security Summit The Westin Seattle cybersummitusa.com June 26–28, 2017

National Retail Federation NRF PROTECT Gaylord National Harbor Washington, DC nrfprotect.com June 29, 2017

GRAORCA 7th Annual Retail Crime Conference AmericasMart Building 2 Atlanta, GA graorca.org September 12–13, 2017

International Supply Chain Protection Organization 2017 Conference Curtis Culwell Conference Center, Garland, TX iscpo.org September 15, 2017

Cyber Security Summit

Grand Hyatt New York cybersummitusa.com

September 20–22, 2017

LP Magazine Annual Meeting

The Renaissance Nashville losspreventionmedia.com

Cyber Security Summit

September 25–28, 2017

July 10–11, 2017

Kay Bailey Hutchison Convention Center, Dallas asisonline.org

Ritz-Carlton Tysons Corner McLean, VA cybersummitusa.com

CyberSecurity International Symposium Conference Chicago at University Center cybersecurity-symposium.com July 20–21, 2017

Florida Retail Federation Annual Loss Prevention Conference

Gaylord Palms Resort and Convention Center, Orlando sunshineexpo.com July 30–August 2, 2017

Restaurant Loss Prevention & Security Association Annual Conference M Resort, Las Vegas rlpsa.com August 8, 2017

Cyber Security Summit

Hyatt Regency Chicago cybersummitusa.com August 14–16, 2017

Axis Communications Retail Leadership Forum

Intercontinental New York Times Square axis.com

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ASIS International 63rd Annual Seminar and Exhibits

October 2–4, 2017

Loss Prevention Research Council Impact 2017 Conference

University of Florida, Gainesville lpresearch.org October 16–19, 2017

Coalition of Law Enforcement and Retail 8th Annual ORC Training Conference

Menger Hotel, San Antonio, TX clearusa.org October 17, 2017

COORCA 2017 Western US Anti-Organized Crime Conference

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MAY–JUNE 2017

them up with hundreds of dollars. In a gift-card scam at a retailer in the Midwest a few months ago, an investigation found the company software allowed employees to add funds to a gift card in a cash transaction and then void the cash transaction, leaving the funds on the card. In addition, the transactions could be completed without reswiping the physical gift card. One employee’s alleged theft totaled nearly $60,000 over a ten-month period. Employee training is an integral part of curbing this type of theft. In December 2016, police said thieves were soliciting Target and Walmart employees throughout the Atlanta metropolitan area to participate in gift-card scams, approaching them in parking lots, on social media, and elsewhere. In exchange for fraudulently loading money onto prepaid visa gift cards, the employees were being promised a small cut. Typically, thieves are telling these employees that they have jamming devices on their cell phones that will prevent the transactions from being recorded. They don’t, of course, so employees are being caught and prosecuted while thieves make off with loaded gift cards—in one case $29,000. In all these cases, employees are never paid for their participation but are the only ones who get caught and face prosecution. With some help from above. Finally, several retailers say that strict loss prevention controls are being thwarted in some cases because supervisors are helping to cover up employee theft schemes. In one new case, for example, members of an overnight cleaning crew were stealing thousands of dollars worth of tools during breaks in their shifts. Surveillance video was capturing the activity, but a shift manager was intentionally overlooking the evidence to facilitate the crime. In that case, an audit finally uncovered the yearlong fraud. Finally, employee crooks continue to show that they don’t lack imagination. In September, employees of a Radio Shack in Laurel, MD, turned off the electricity on the store’s breaker panel, cut the store’s surveillance DVR system, and made a holdup alarm activation call to police. “We’ve been robbed,” they falsely claimed—twice—stealing more than $55,000 in cash and merchandise. And the latest employee theft scam at Apple stores doesn’t even involve employees. Crooks are simply dressing the part, donning a blue shirt that passes for the store uniform, and making their way into repair or storage areas to collect an armful of devices. These are a few of the employee theft scams of the moment, but keep collecting and analyzing your incident data. It’s the best chance to learn, as your technology and retail processes change, how crooked employees are trying to exploit them.

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PEOPLE ON THE MOVE Brian Quast, CFI, was named national manager of LP at Ace Hardware.

was promoted to senior director of LP operations at CVS Health.

Jeremy Nerbonne was promoted to regional LP manager at LIDS Sports Group.

Greg Adams was named director of LP with A.C. Moore.

Erik Schmidt and Al Robinette were promoted to senior regional LP managers at Destination Maternity.

Little Caesars Pizza announced the following promotions: Brad Piros to national director of LP, Syd Workman to regional LP director, southwest, and Paul Isaacson to regional LP director, Midwest.

David Huhner, LPC, is now manager, business intelligence/reporting, and Pam Copeland, Colleen Dillon, Scott Lee ll, Christopher Breton, CFI, Eva Shkurti, Richard Anderson, Deanna Gunter, Charles Simms, and Kyle Lott were promoted to area managers, asset and profit protection, at Sears Holdings.

Gloria Fausto-Figueroa and David Robbins are now regional AP managers at Advance Auto Parts.

Robert Sanchez, Jr, CFI, was named director of LP at DFASS Group.

Brad Milo is now East Coast LP manager at Aeropostale.

David Bytnar is now DC LP supervisor for DHL eCommerce.

Ron Kornblum, CFI, CFE, LSSBB, is now director of corporate security at Loblaw Companies.

Matt Robertson was promoted to acting divisional VP of retail operations at Sears Canada.

Lucy (Agurcia) Bessell is now a district manager of AP at Albertson’s/Von’s

Stephen Anderson and Amanda Weaver are now district LP managers at DICK’S Sporting Goods.

Will Pratt, CFI, is now a district LP manager at Loomis.

Tina Marie Knighten was promoted to senior district LP manager at Sephora.

Matthew Haughton was promoted to assistant VP of corporate security at L’Oréal-USA.

Michael Elliott is now managing consultant, XBR/LP at SkillNet Solutions.

Amazon announced the following promotions: Dayna Howard, CPP, to director, NACF, LP, and security; Edouard Kane to senior security program manager, emerging markets; Howard Stone to director of logistics LP; Lee Davies to senior manager of LP; and Chris Frey to senior project manager, security, and LP. Adrian Mesa is now logistics investigator, North America, David Rozhon, LPC, is now safety manager, and Jo Day and Brian Sanders are now regional LP managers.

Carissa Brinkmann, CFI, and Scott Vollrath, CFI, are now regional LP managers at Dollar General. Chadd Cranfill, CFI, was promoted to zone AP director, and Stephen Seefeldt is now regional AP manager at Dollar Tree. Greg Dolcich has been promoted to LP operations specialist at DSW. Hawken Averett, LPQ, is now supervisor of global AP at eBay.

Adam Walker is now manager, corporate security and LP at APMEX, Inc.

Ian Hartman was promoted to director of field LP for Eddie Bauer.

Christie Delaney is now a territory leader of AP at Ascena Retail Group.

Brian Akonom, CFI, CORCI, is now regional AP manager at EZ Corp.

Aki Moore, CFI, is now a regional LP manager at Athleta.

Fred Manzitto is now a regional security manager at FedEx Supply Chain.

Dave Siler, CFI, was named director of AP for Bartell Drugs.

Matt Palmer was promoted to senior manager of LP at The Fresh Market.

Anthony Murguia is now a regional AP manager at BCBG Max Azria.

David Henger was promoted to director of LP at GameStop.

Jake Wilson was named corporate director of LP at Bed Bath & Beyond.

Teri Railey was promoted to regional LP manager, and Andrew Robinson, LPQ, was promoted to senior LP analytics manager at Gap Inc.

Kevin Trimble, CFE, was named director of LP development at Blue Dot Safes. Ken Keegan was promoted to director of profit protection US and Mexico at The Body Shop. Ruben Castillo is now a district asset and profit protection manager at Burberry. Jim Faulds was named director of AP at Calgary Co-operative Association Ltd. Matt McMahon was promoted to regional AP manager at Century 21 Department Stores.

Neil O’Neill, CFI, is now a district LP manager at H&M. Kevin Morrison, CFI, LPC, was named director of LP at Helzberg Diamonds. Rui Rodrigues, BA, LPC, is now national director of AP at Holt Renfrew. Miguel R. Llull is now a multi-store AP manager at The Home Depot. Michael Phillips is now a business development executive at Intelliq.

Kyle Mellusi was promoted to manager of fraud analysis and investigations at The Children’s Place.

James Fanella was named chief executive officer at Iverify.

Sam Ross is now a territory LP manager at Claire’s.

David Grinstead was named VP and general manager of global security products at Johnson Controls.

Justin Thomas is now a senior regional manager of AP at Coach.

Stephen Walls is now a district LP manager at Kohls.

Paul LaBlanc was promoted to director of global AP, John Cafiero was promoted to LP analyst, and Amanda Bowen, LPC, is now an LP investigator at Coinstar.

Mike Lamb, LPC, was named VP of AP at The Kroger Co.

Richard Brenner was promoted to senior manager, regional AP at Southeastern Grocers.

Chad Garrett and Anthony Bruni, CFI, are now regional managers of AP at Luxottica.

Tom Jones, CFI, is now a partner and AP at Starbucks.

Stephen Boarman was promoted to director of central investigations and ORC; Tim Huff was promoted to director of AP administration and operations; Debbie Ho is now a regional ORC manager; Robert Chunko, CFI, is now regional director, supply chain AP; and Jonathan Douma, Adam Ennis, LPC, CFI, and Daniel Rutschke are now district managers of investigations at Macy’s.

R. J. Anderson, Marfrelina Melendez, Brian McKay, CFI, and Kassandra Van Ghle are now district LP managers, and Matthew Schoenauer is now a senior ORC investigator at TJX.

Henry Johnson, LPC, CFI, is now director of LP at Memphis Goodwill. Ayoka Moss is the new corporate LP coordinator at Michael Kors.

Tom Doyle is now a regional LP manager at Goodwill of Southern California.

Dale Jackson is now a regional LP manager at Charming Charlie.

Justin Carroll was promoted to area LP and operations support manager at Lowe’s.

Casper Sten Felding is now director of global sales operations; Keven Marier is now director of technology business development; Henrik Sydbo Hansen was promoted to group manager, devices and integrations; Mikkel Winther was promoted to group manager for product management; Jesper Lachance Ræbild is now director of product marketing; and Kim Jørgensen is now vice president, global IT and operations at Milestone. Mike Rackley was promoted to senior director retail operations risk and control at Nike. Tom Zaroban, Jr. was promoted to regional investigations manager, and Maria Plascencia-Avina is now a regional LP investigator at Nordstrom. Max Walzenbach promoted to senior LP manager at Old Navy. Tom Sinciro, Jeff Oakie, and John “JC” McKitterick are now regional sales directors, and Daniel Cisneros is now a field sales engineer at Oncam.

Tom Meehan, CFI, has joined CONTROLTEK USA as the new chief strategy officer.

Bill Gropper was promoted to associate vice president of international AP, Damien Walter is now an ORC market investigator, and Lauren (Elflein) Jackson is now an LP investigative analyst at L Brands.

Quinby (Yost) Squire was named VP, head of asset analytics and insights, and Christopher Crossman

Carolyn Korchik, CFI, LPQ, was named global security and retail LP operations manager at Levi Strauss.

Jerrod Johnson, CPP, CPPM, has been named director of global investigations and corporate security systems; Melanie Meschwitz, CFI, was promoted to senior regional LP and safety manager; and Robert Seaser, CFI, PCI, was promoted to manager of brand risk investigations and intelligence at PetSmart. John Marketti is now regional AP manager at Ralph Lauren. Adam Eaton was promoted to director of corporate LP technology, and Allia Ceal, CFE, and Oscar Rodriguez are now area LP managers at Ross Stores.

Robin Gates was promoted to manager, national investigations center at Target.

Adam Dawkins was named manager of LP at TJX Australia. Paul Trickett is now a regional manager of LP, and Michael Romeo is now regional supply chain investigations manager at TJX Canada/Winners. Greg Lavers was promoted to manager of high-tech crime at TJX Europe. Marlene (Bordonaro) Giordano is now regional LP manager at T-Mobile. Linda Wood was named regional account manager for North England and Scotland for Tyco Security Products. Misty Davis, CFI, is now lead area LP manager, and Richard Escandon is now an area LP manager at ULTA Beauty. Jeff Hunter was named director global AP and investigations at Under Armour. Jeremiah Brajczewski is now an ORC investigations area supervisor at UNIQLO. Randy Hamilton is now vice president of operations at USS. Marty Andrews, CFI, was promoted to senior director of LP, and Ryan Dzwigalski, CFI, LPC, was promoted to senior LP manager at VF Outdoor and Action Sports Coalitions. Luis Loayza is now an ORC market investigator at Victoria’s Secret. Jen Drake, CFI, was promoted to director of total loss, global security, and Billy Wilson is now a market AP manager at Walmart. Brett L. Ward, CFI, was promoted to divisional VP of business development and client relations at WicklanderZulawski & Associates. Brandon Pohlman was named safety and AP manager at Yesway Convenience Stores. Ben Dugan is now the director of ORC field investigations at The Zellman Group.

To stay up-to-date on the latest career moves as they happen, sign up for LP Insider, the magazine’s daily e-newsletter, or visit the Professional Development page on the magazine’s website, LossPreventionMedia.com. Information for People on the Move is provided by the Loss Prevention Foundation, Loss Prevention Recruiters, Jennings Executive Recruiting, and readers like you. To inform us of a promotion or new hire, email us at peopleonthemove@LPportal.com.

MAY–JUNE 2017

LOSSPREVENTIONMEDIA.COM

- -    

       

       

- -   - -  

       

  

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

       

 

ADVERTISERS 3M..................................................................................76 3m.com/lossprevention 7PSolutions..................................................................76 7pgps.com AFA................................................................................76 afap.com American Public University.......................................27 studyatapu.com/lpf APG Cash Drawer.......................................................76 cashdrawer.com/smarttill Appriss Retail................................................................5 apprissretail.com Axis Communications.................................................53 axis.com/retail Bold Technologies......................................................77 boldgroup.com/lp CA Partnership............................................................77 crimeaccountabilitypartnership.com CAP Index.....................................................................35 capindex.com Certified Forensic Interviewer .................................79 certifiedinterviewer.com Checkpoint...................................................................19 checkpointsystems.com ClickIt Inc.....................................................................61 clickitinc.com ControlTek......................................................................9 controltekusa.com/rfid Cyber Security Summit..............................................64 cybersummitusa.com Detex...............................................................................2 detex.com/maxloche DICE Corporation........................................................49 dicecorp.com/hosting Digilock.........................................................................77 digilock.com FireKing Security Group.............................................18 fireking.com Gunnebo.......................................................................24 gunnebo.us Hanwha Techwin America........................................25 hanwhasecurity.com Industrial Security Solutions.....................................45 isscorpus.com InstaKey Security Systems.......................................47 instakey.com/retail Kenwood......................................................................39 kenwood.com/usa Loss Prevention Foundation......................................73 losspreventionfoundation.org LossPreventionSolution.com....................................71 losspreventionsolution.com LPI..................................................................................21 lpinnovations.com LPM Media Group.......................................................54 lpmmediagroup.com LPjobs.com...................................................................77 lpjobs.com Nedap...........................................................................59 nedapretail-americas.com Protection 1..................................................................23 protection1.com/business Protos Security..............................................................3 protossecurity.com Restaurant Loss Prevention & Security Assoc.....75 rlpsaannualconference.com Securitas Electronic Security...................................13 securitases.com Securitech....................................................................63 securitech.com/trident-locks Security Resources....................................................83 securityresources.net Southern Imperial.......................................................33 southernimperial.com Tyco Integrated Security...........................................84 synergyinretail.com USS..................................................................................1 ussinnovate.com Vector Security Networks...........................................7 vectorsecurity.com/networks Verisk Retail.................................................................51 veriskretail.com The Zellman Group.....................................................37 zellmangroup.com

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❍ (E) Drug store/pharmacy/vitamins ❍ (F) Office supplies/electronics/videos/

Other Retail ❍ (20) Corporate operations/store manager ❍ (21) Finance/HR/legal/IT/training manager ❍ (29) Other retail manager

off-price

jewelry/sporting goods furniture

music/books

❍ (G) Grocery/supermarket/

convenience store

❍ (H) Restaurant/hospitality/

entertainment

❍ (X) Other retailer_____________________ Non-Retail ❍ (N) Consulting/integrator ❍ (P) Product manufacturer ❍ (R) Services/outsourcing ❍ (S) Law enforcement/government/military ❍ (T) Education/library/media ❍ (Z) Other non-retail ________________ MAY–JUNE 2017

LOSSPREVENTIONMEDIA.COM

associate manager

________________________________

Non-Retail ❍ (30) Vendor executive/owner/

manager

❍ (31) Consultant ❍ (32) Sales/marketing manager ❍ (33) Police officer/active military ❍ (34) Educator/student/librarian ❍ (39) Other non-retail manager

________________________________ Fax to 714-226-9733

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OUTSMART CRIME

VENDOR ADVISORY BOARD ALTO US Karl Langhorst, CPP, CFI Executive Vice President

Checkpoint Stuart Rosenthal Vice President Sales

InstaKey Security Systems Cita Doyle, LPQ Director of Sales & Marketing

Security Resources Patricia M. Rusak Director of Sales

American Public University Tatiana Sehring Director, Corporate & Strategic Relationships

ClickIt Inc. Jim Paul Director of Sales

LP Innovations Steven May President/CEO

Southern Imperial Robb Northrup Marketing Manager

ControlTek Steve Sell Vice President, Global Sales & Marketing

Nedap Retail Patrick O’Leary Vice President & General Manager the Americas

Tyco Integrated Security Kevin E. Lynch, LPC Executive Director, Business Development

Detex Ken Kuehler National Account Manager

Protos Security Kris Vece, LPQ Director of Client Relations

Universal Surveillance Systems Adel Sayegh Chief Executive Officer

The Retail Equation Tom Rittman Vice President, Marketing

Verisk Retail Cheryl Blake Vice President

Securitas Electronic Security Terrie Ipson Director of Marketing

The Zellman Group Stuart Levine, CFI, CFCI CEO

Axis Communications Hedgie Bartol, LPQ Business Development Manager, Retail Best Security Systems (BSI) John Gantenbein President CA Partnership Program Lohra Miller President and CEO CAP Index Stephen B. Longo Vice President, Strategic Initiatives

FireKing Security Group James Currey Senior Vice President Cash Management Solutions Industrial Security Solutions Dave Sandoval President

LP MAGAZINE | MAY–JUNE 2017

PARTING WORDS

Change Isn’t Just Something You Carry in Your Pocket

Jim Lee, LPC Executive Editor

ere we are again—quickly making our way to the midpoint of another year. And while we may realize that time won’t stand still for any of us, it’s still difficult to come to terms with how quickly it can move by. We’re once again in the midst of conference season, learning of the newest products, latest trends, and the fresh ideas that keep the business of retail on track and moving forward. Don’t tell anyone, but I really do enjoy this time of year. It’s a great opportunity to catch up with old friends, meet new up-and-coming leaders, and charge our batteries for what lies ahead. Each one of these events marks time as we reflect on what’s happened over the past year, what’s happening today, and what we expect the next twelve months will bring us as we move forward. We’re reminded of the importance of keeping our eyes on the ball.

“How do you embrace disruption? Make it a part of your business.” – Richard Ashworth, President, Pharmacy & Retail Operations, Walgreens Still, as much as we talk about time marching forward, it’s really not time that marks our progress—it’s change. And in today’s retail climate, we’re not talking about the type of change that we can carry around like so many coins in our pockets. We’re referring to the kind of change that can make a real difference in the way that we approach our jobs and the way that we are perceived as business partners. In the opening keynote presentation at the Retail Industry Leaders Association (RILA) Asset Protection Conference last month, Richard Ashworth, president of pharmacy and

MAY–JUNE 2017

retail operations at Walgreens took the lead by discussing the transformative changes impacting retail, the evolution of asset protection strategies, and the essential role that asset protection has played in the company’s overall success. He discussed how the role of asset protection has evolved both at Walgreens and across the industry and the essential role that he feels asset protection will play as the retail industry moves forward. “How do you embrace disruption? Make it a part of your business,” he said. Ashworth also highlighted how the adoption of the total retail loss concept is changing how companies are approaching asset protection. Designed to provide the retail industry with a better understanding of what constitutes retail “loss,” this approach advocated by RILA and researcher Adrian Beck moves beyond the traditional confines of “retail shrinkage” to develop the much broader concept of “total retail loss” to help the industry better understand and tackle the problem. By offering a different way of thinking about how a much broader range of losses impact retail businesses, retail companies in general—and loss prevention practitioners in particular—we'll be able to better understand the impact of current and future retail risks and how to make more informed choices about how to utilize the increasingly scarce resources that are available to us. This way of thinking is more than a trend; it is a benchmark for the way retail companies are going to approach their loss prevention and asset protection programs moving forward. For those in the LP profession, it will provide an opportunity to build upon and reinforce the critical role that our programs and our teams can play in becoming agents of change within the business. This should also be seen as a sign of things yet to come. When we talk about the “evolution of the loss prevention professional” and how we need to take the lead in changing the way things are done, we truly need to take it to heart. We are now legitimately seen as true business partners in the retail community. Gone are the days of specialization and a singular focus on what we do and how we approach things. And when it comes down to it, we can either get out front and lead the parade or watch it pass us by.

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May - June 2017

Articles inside

PEOPLE ON THE MOVE

PARTING WORDS

SUPPLY CHAIN

SOLUTIONS SHOWCASE

EDITOR’S LETTER

LPM DIGITAL

FUTURE OF LP

LPM EXCELLENCE