46 minute read
ACADEMIC VIEWPOINT
Perceived Wage Inequity Can Often Be Used to Rationalize Employee Theft
by Richard C. Hollinger, Ph.D.
dr. hollinger is a professor in the department of criminology, law, and Society at the university of Florida, gainesville. he is also director of the Security Research Project, which annually conducts the national Retail Security Survey (www.crim.ufl.edu/srp/srp.htm). dr. hollinger can be reached at rhollin@ufl.edu or 352-392-0265 x230. © 2011 Richard c. hollinger
The whole retail industry breathed a collective sigh of relief recently when the U.S. Supreme Court rendered a decision in June not to hear a gender wage inequity case as a “class-action suit” against Walmart. The case was focused on whether or not the largest employer in the world could be accused in civil court with collectively discriminating against numerous women in many different states. All these suits alleged that the plaintiffs were not paid equitably when compared to their male counterparts. If the case had gone forward as a class-action lawsuit, this ruling would have set a major precedent encouraging numerous other similar class-action lawsuits to be lodged against other retailers and large employers.
The Judges’ Opinions
As background to this decision, in The New York Times on June 20, 2011, Adam Liptak reported the following:
The Supreme Court on Monday threw out an enormous employment discrimination class-action suit against Wal-Mart [sic] that had sought billions of dollars on behalf of as many as 1.5 million female workers. The suit claimed that Wal-Mart’s policies and practices had led to countless discriminatory decisions over pay and promotions. The court divided 5 to 4 along ideological lines on the basic question in the case—whether the suit satisfied a requirement of the class-action rules that “there are questions of law or fact common to the class” of female employees. The court’s five more conservative justices said no, shutting down the suit and limiting the ability of other plaintiffs to band together in large class actions. The court was unanimous, however, in saying that the plaintiffs’ lawyers had improperly sued under a part of the class-action rules that was not primarily concerned with monetary claims. The plaintiffs sought to make that case with testimony from William T. Bielby, a sociologist specializing in social framework analysis. Professor Bielby told a lower court that he had collected general “scientific evidence about gender bias, stereotypes and the structure and dynamics of gender inequality in organizations.” He said he also had reviewed extensive litigation materials gathered by the lawyers in the case. He concluded that Wal-Mart’s culture might foster pay and other disparities through a centralized personnel policy that allowed for subjective decisions by local managers. Such practices, he argued, allowed stereotypes to sway personnel choices, making “decisions about compensation and promotion vulnerable to gender bias.”
Justice Scalia rejected the testimony, which he called crucial to the plaintiffs’ case. “It is worlds away,” he wrote, “from ‘significant proof’ that Wal-Mart ‘operated under a general policy of discrimination.’ ” Although she agreed with her colleagues in the unanimous decision that this petition was not worthy of a class-action treatment, Justice Ruth Bader Ginsburg pointed out that both the statistics presented by the plaintiffs and their individual accounts were evidence that “gender bias suffused Wal-Mart’s corporate culture.” She said, for instance, that women filled 70 percent of the hourly jobs, but only 33 percent of management positions and that “senior management often refer to female associates as ‘little Janie Qs.’ ” Justice Ginsburg went on
to say, “The practice of delegating to supervisors large discretion to make personnel decisions, uncontrolled by formal standards, has long been known to have the potential to produce disparate effects,” she wrote. “Managers, like all humankind, may be prey to biases of which they are unaware.”
Discrimination-Free Workplace
In my opinion, perhaps the most remarkable aspect of this decision is not the refusal of the Supreme Court to hear this case as a class action. Based upon the facts of the petition, it is quite understandable that the justices concluded that all these many cases were not sufficiently similar or identical. Instead, to me the most alarming part of this decision is the mere fact that there are still scores of cases based upon gender wage discrimination being filed against major retail firms. If wage inequity still exists on such a broad scale in the industry, despite our many years of effort to increase diversity and fairness, then we are a long way from a discrimination-free workplace.
As professionals charged with addressing the underlying causes of employee theft, we should recognize that this situation creates the perfect environment for encouraging minority retail associates to take informal action on their own to correct perceived workplace inequity. In other words, gender…or racial and ethnic…wage inequity creates a social climate that encourages pilferage, theft, dishonesty, and counterproductive behavior to be rationalized as a justified response in the mind of these employees. This means that the seeds of employee dishonesty may still be present in many companies and workplaces all across the land. I
Perceptions of Retail Careers
When I ask the twenty-something aged college students enrolled in my classes, especially women, racial, and ethnic minorities, whether they are receptive to working in retail, their first answer is usually in the affirmative. In fact, many are already working part-time jobs in either retailing or the food-service industry. “Yes” remains their answer until you ask them if they wish to continue working in retail after receiving their college degrees. Then the answer usually changes to a strong “no.”
Like it or not, retail sales as well as retail loss prevention are not viewed by most college students as an occupation worth pursuing. In fact, most people view retailing as a temporary job, not for permanent employment or a long-term career. This tells me that retailing still has not created a climate that encourages long-term commitment, honesty, and ethical behavior. For many retail associates, who feel they have little or no power in the work organization, we are creating exactly the opposite environment.
It was Albert Einstein who defined insanity as “doing the same thing over and over again, but expecting different results.” Should those of us in loss prevention and retail management be expecting different results when we continue to treat our employees as temporary or marginal workers? If so, perhaps we should not be surprised if they decide that stealing from their employers is a perfectly justified response to an unsatisfactory workplace situation.
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Reducing Shrink through People, Not
Technology A Conversation with Gary Johnson, The Vitamin Shoppe
By James Lee, Executive Editor
EDITOR’S NOTE: Gary Johnson, CPP is currently vice president of loss prevention for The Vitamin Shoppe. With over twenty-five years of LP experience, he has held leadership positions with A&P Supermarkets, Barnes & Noble, Pier 1 Imports, Ivey’s-Florida, and Osco Drug Stores.
Johnson is very active in the LP and security industries. He is currently chairperson of the National Retail Federation (NRF) Loss Prevention Advisory Council. Prior to his election to head this council, he served as vice chair and was the founding head of the NRF LP Awards and Recognition Committee. He is also the regional leader for the NRF’s Investigators’ Network in the Northeast.
Johnson remains active with ASIS International, where he has served on their retail committee. He also sits on the editorial board for LP Magazine.
EDITOR: Let’s start by giving our readers a little background on The Vitamin Shoppe. JOHNSON: The Vitamin Shoppe started in 1977 as a single store and grew over the ‘80s into a regional presence throughout New York, New Jersey, and Connecticut. In 2004 the organization embarked on an aggressive growth plan. That’s when new leadership, including myself, was brought into the organization to leverage all of our past experiences to move the operation from a regional to a nationwide player. We currently have 500-plus stores in thirty-nine states.
EDITOR: Was there a loss prevention organization when you arrived in 2004? JOHNSON: I inherited a small department that was meeting the expectations of the ownership at that time, when there were only 175 stores. When I arrived, they were experiencing the beginnings of some increasing inventory shrink. So in addition to correcting that, my charge was really to modernize the program and change the operating disciplines to integrate LP into all facets of the business; again, to ready us for the growth that was planned.
I think the challenge with technology is that you have to have the people component to support it anyway. You can’t just throw technology at the problem. Throughout my retail career, there’s been a lack of cohesiveness in terms of that. For example, companies may put EAS systems in, yet they don’t tag completely or don’t have training programs for associates on how to deactivate or respond to alarms.
EDITOR: As you sat down with a blank piece of paper, what were some of the early priorities that you felt needed to be put in place to better serve the business? JOHNSON: In my initial assessment there were not any really big surprises, but rather I saw the need to address some basic fundamentals. So early on there were three primary focuses—people, people, and people.
The first people focus was to take a critical look at what we expected the associates in the stores to do. What were the expectations of our policies and procedures and where were the gaps? Working with store operations, we jettisoned any old practices that didn’t make sense, closed or remediated gaps, and then recommunicated our new operating guidelines.
Another people component was partnering with human resources to examine our background screening program. That resulted in implementing a more robust and more automated background screening program, to include drug screening. You can imagine in the health and wellness arena, having a drug-free workforce is paramount to one of our core competencies in terms of living your brand.
The third people piece was taking a fresh look at the organization, not only in terms of the loss prevention personnel, but really the entire field management teams. What were the spans and controls, geographic alignments, and the right size for the growth that we were anticipating?
So, early on it was basic blocking and tackling, focusing on people, people, people, that really laid the foundation for how we wanted to integrate the LP function into store operations.
EDITOR: Are you responsible for anything outside of loss prevention? JOHNSON: From an official reporting standpoint, I’m responsible for the traditional loss prevention functions. But from an overall standpoint, I’m involved in all parts of the business. I am an officer in the company, and one of the advantages of being an officer is I’m a part of the senior leadership team. We meet frequently on all aspects of the business, which allows me to offer my expertise in everything from store operations to human resources, supply chain, IT, business continuity and disaster recovery, to our scientific and regulatory department. I have a seat at the table with these other disciplines, which ensure that an LP point of view is represented in any topic that comes up.
EDITOR: So, in fact, you are a retail business person who happens to have loss prevention as a responsibility. How does being a business person first and then the LP leader second translate to your people in the organization as they interact with the stores? JOHNSON: From a credibility standpoint, they really function as that conduit to the brand, that conduit to the leadership of the organization. Everything we do from a tactical and strategic LP standpoint is absolutely aligned with the company objectives and in support of our brand initiatives; we refer to them as “critical success factors.” Each of the regional LP managers develop their own business plans for their operating area, making sure that what they want to achieve is in support of critical success factors around shrink control, merchandise availability, et cetera, so that they become integrated at the field level as a business partner, not just the loss prevention subject-matter expert.
EDITOR: Do your regionals marry up with their operations counterparts in their particular region? JOHNSON: For the most part, they do align geographically, although we have a couple of regions where there is some overlap. I’ve learned over the years that it makes sense to hire the best people you can and not necessarily tie them to a specific region. Also, they do not report to that regional business partner, but report to the corporate office. So while they work with a regional director as their internal customer, they serve the greater good, if you will, by reporting back to the central organization. That keeps their allegiance and their operating principles in sync with what the whole organization wants, not necessarily with what one region may want. That avoids what I’ve seen in
other companies where a regional LP professional reports to a regional director, and the program becomes the “California way” or the “Northeast way,” not the company way.
EDITOR: Describe your LP organization for us? JOHNSON: There are four regional LP managers in the field. At corporate office, also known as our Customer Support Center, I have a manager of LP for the supply chain, an LP specialist, and an LP coordinator. That’s seven people for 500 stores, so it’s a very lean organization. But I really believe that if you get the right people in the right positions in a specialty retail environment, you can have success with a hundred stores per LP manager. The caveat, of course, is having the right people.
I’ve been blessed that many of my LP team members have worked for me in prior lives. All of them have at least fifteen years of experience in loss prevention. They are all great leaders in the organization. I work hard to get them involved in all parts of the business, so they don’t just stay in the LP silo. Because they’re able to be true business partners, they can work with HR on succession planning, provide feedback to district managers about their store teams, really look at root-cause analysis from an audit standpoint and build localized programs to fix problems.
EDITOR: What technology solutions have you put in place since you’ve been there? JOHNSON: Actually, we really haven’t. And that’s by design. Fundamentally, when we embarked on this LP program, we focused primarily on the people component and how to change behaviors, based on how they operate their business and not based on technology.
That being said, we did introduce LP Analytics from Epicor, which was our POS provider, in order to offer the quickest way to get traction to begin data mining. So, from a technology standpoint, we do have exception reporting. Along with that, we implemented an internal awareness campaign in our new-hire process and on-going store meetings to communicate the capabilities of exception-based reporting. The POS project and integration of exception reporting combined with our associate awareness has really become a deterrent to internal fraud.
We are currently doing a proof of concept with cameras in several stores that are centrally monitored here at our Customer Support Center. The security staff who conduct video audit routines and review video will call the stores or send video clips to the district manager when we see things that are a challenge. Because we’ve just started this test, I can’t tell you yet that my shrink or my margins get any better. I can say that it definitely changes people’s behavior.
EDITOR: Does your awareness and training campaign have any online components? JOHNSON: The whole organization has an online computer-based training
program called Vitamin Shoppe University. One of the things that differentiates The Vitamin Shoppe from our competition is our product knowledge. While many of the components of Vitamin Shoppe University deal with product knowledge, we’ve branched into some different operational and loss prevention components—our operational controls, our business standards, our code of conduct, our policy-and-procedure manuals, for example, are all now available online. If the stores have a question about bank deposits, there’s keyword search functionality they can use to answer their question. We’ve really tried to modernize the old binders and written manuals that retailers have had for years.
Ultimately, what we are trying to do from an LP standpoint is to make sure that we have engaged store managers, district managers, and regionals. We’ve done that through training, which is why we haven’t had to rely on technology. EDITOR: It’s interesting that you’ve relied on people and training instead of technology. Often when a new director comes into a new company, they look at implementing technology-based solutions to make an immediate impact. Tell us why you didn’t. JOHNSON: I think the challenge with technology is that you have to have the people component to support it anyway. You can’t just throw technology at the problem. Throughout my retail career, there’s been a lack of cohesiveness in terms of that. For example, companies may put EAS systems in, yet they don’t tag completely or don’t have training programs for associates on how to deactivate or respond to alarms.
When I joined The Vitamin Shoppe, we had EAS systems in the stores and tagged everything over a certain dollar threshold. We tested EAS by taking systems out of the stores and then analyzed the results. Obviously, we reduced our cost, but we also found out it had no measureable impact on our shrinkage. EAS is probably a great tool for some companies, but in our small footprint store, with our high customer engagement, it was not a value to our organization. I think this is an example that loss prevention solutions are not a one-size-fits-all proposition. I know I’m bucking the trend here, but in our environment, it works. Our shrink results bear that out.
EDITOR: Speaking of shrink, you mentioned that when you arrived in 2004, shrink was on the increase. Based on what you just said, I’m guessing that’s no longer the case. JOHNSON: Since I’ve been with the organization, we’ve reduced shrinkage year over year. Last year we actually posted record improvement. I think our shrink performance validates the notion that you can achieve results through proper hiring, proper training, and a philosophy of transparency.
EDITOR: What do you mean by transparency? JOHNSON: To me, transparency means knowledge. It means telling people what you expect of them and what the ramifications are if they don’t
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continued from page 31 meet expectations. It’s a big piece of building that climate of honesty that many of us strive for. For example, I don’t think anybody should be surprised when they lose their job. We work daily at communicating that message. It’s a cornerstone in everything we do. So, whether it’s our store self-audit program or the quarterly audits by our district managers, there’s transparency. Everyone knows what the expectations are, and they know it’s going to be checked. So, when something needs work or there’s not compliance to a particular area, there’s no “I got you.” Transparency has helped us build our alliance with store operations and diminished that old-school mentality.
EDITOR: Earlier you mentioned that you have an LP manager for supply chain. How many distribution centers do you have? JOHNSON: We currently only have one Vitamin Shoppe distribution center, although we have partnered with a third-party logistics company in California for some of our faster moving SKUs on the West Coast.
EDITOR: Do all products come out of the DC, or are there some direct shipments? JOHNSON: Roughly 90 percent of it comes through the warehouse and about 10 percent is direct shipped.
EDITOR: What process do you have for verifying the receipt of merchandise in stores? JOHNSON: The stores do not do detailed receiving. We ship plastic totes and corrugated boxes, so it’s at the carton level. Obviously, there are a lot of quality-control components that are built into the outbound order from a weight and size tolerance. EDITOR: Supply-chain LP doesn’t always get the attention it deserves. Sometimes it’s difficult to recruit LP professionals on the logistics side because the perception is that all the action happens in the stores. Have you found that to be true?
From an official reporting standpoint, I’m responsible for the traditional loss prevention functions. But from an overall standpoint, I’m involved in all parts of the business. I am an officer in the company, and one of the advantages of being an officer is I’m a part of the senior leadership team. I have a seat at the table with these other disciplines, which ensures that an LP point of view is represented in any topic that comes up.
JOHNSON: I agree with you in general, but I’m fortunate to have a supply-chain manager whose entire career has been on the logistics side. He started twenty-something years ago doing undercover investigations on the distribution side of the house. So, he’s grown up in that business.
EDITOR: Does he also have the safety responsibility? JOHNSON: He has safety within the DC and in our Customer Support Center. He’s done a yeoman’s job in terms of our on-boarding training, material-handling requirements, ladder safety, box-cutter safety; all the issues that contribute to accidents. Even though he has been with us only a year, he has driven down both the frequency and severity of our accidents.
EDITOR: Within your world, are you challenged by organized retail crime? JOHNSON: We’re really not. ORC, and even amateur shoplifting, is not a huge problem. I’m not naïve enough to think that external theft doesn’t happen, but from an ORC standpoint in particular, we have not had any big hits. We’ve not encountered any flash-mob situations or any of the new methodologies that are coming down the pipe. I think that is probably attributable to a couple of things. One, we’re not all that deep in any particular categories, so you can’t wipe out an end cap and get more than a dozen
products. The bigger piece is the resale ability. Most ORC teams are trying to turn a large volume of merchandise into cash. Our customers are not going to buy vitamins and supplements at a flea market or on an online auction site. So, I think it’s difficult to move a large quantity of our product to make it worth their while.
EDITOR: Let’s step back in time for a minute. How did you get started in a career in loss prevention? JOHNSON: Actually, it started when I was going to school at Western Illinois University.
EDITOR: Really? Western Illinois has produced several top LP executives, including Keith White from the Gap, Keith Wanke at Dunham’s, and Jim Giese, now retired from Foley’s. So, what happened for you at Western Illinois? JOHNSON: I was a criminal justice major with dual minors in sociology and security administration with an interest in law enforcement. The turning point for me was their internship program. I did my internship with Osco Drug in Chicago. I was their first intern, and they gave me all kinds of assignments, many of which I suspect they might not give a new intern today. They exposed me to many different parts of the business, from the liquor department to the film department to sundries. I also think I hit the industry at the right time when the private sector was really figuring out that they had to look inward and build better internal controls rather than relying on the public sector.
EDITOR: So, you started your LP career with what company? JOHNSON: I was fortunate enough that Osco hired me full time after I graduated. I started as an LP agent and then was quickly promoted to an LP coordinator for the Chicago area. After Osco, I went to Ivey’s Department Stores in Florida as a corporate investigator. After that, I was hired by Pier 1 Imports and relocated my family to Fort Worth. I really enjoyed my time at Pier 1. Ultimately, though, I got the opportunity for my first directorship with Barnes & Noble in New York.
EDITOR: So, from a college intern to now a vice president of loss prevention, you’ve become a leader in the LP industry, to include serving in leadership roles with the National Retail Federation. What was your impression of the recently completed LP conference in Dallas? JOHNSON: By all accounts, it was a fantastic conference. Allen Tague and the conference planning committee really did a fantastic job of delivering some really solid educational content. Attendance was up around 25 percent both with retailers and vendors, which hopefully means from an economy standpoint, companies are better able to spend expense dollars to participate in these kinds of industry events.
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EDITOR: Congratulations on taking over as chair of the NRF LP council. JOHNSON: Thank you. I’m honored to be selected by my peers to head the council. I’ve been fortunate to serve as vice chair under Bill Titus these past several years. Bill has done a great job leading the council and building significant momentum with all the subcommittees within the LP advisory council, as well as readying me for the challenges ahead. I’m looking forward to building on that momentum and having the opportunity to influence the industry.
EDITOR: What are your goals as chair? JOHNSON: One of my goals is to continue the council’s focus on inclusion and fostering avenues for active participation from the LP community. One of the great things about our profession is that LP professionals have always demonstrated a commitment to work together to advance our industry. So, my message to those LP professionals who are not involved is simple—LP is not a spectator sport. You have to get off the sidelines and become involved in our industry, for both the sake of our profession as well as your own career. There are lots of ways to get involved. Participate in one of the regional investigators’ networking meetings. Join in the Women in LP conference calls and mentoring program. Get involved with one of the many operating committees that focus on everything from legislation to organized retail crime to homeland security. Consider presenting your views and experience at a future conference.
EDITOR’S NOTE: Individuals who would like to suggest topics for presentation at next year’s LP conference may do so on the NRF website, www.NRF.com. The conference planning committee will convene in October to begin shaping the 2012 conference, which is scheduled for June 20 – 22 in New Orleans.
EDITOR: That’s great, Gary. We talk a lot about education and career development and you should be applauded for your leadership in these areas. JOHNSON: Today’s LP professional must have a thirst for learning and a commitment to being a life-long learner. Obviously, attending conferences, whether it’s NRF, FMI, RILA, or ASIS, is just one way. You should also take advantage of any company-sponsored training classes. Consider getting certified, whether it’s the CPP, CFE, CFI, or the LPQ or LPC. Whatever avenue you choose, there are developmental opportunities out there. You owe it to yourself and your career to take advantage of these programs.
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Anthony ‘Tony’ Cavaliere, LPC
Territory Loss Prevention Manager Sears Holdings
Many professions require a single, necessary certification process to prove expertise in that particular field. Until recently in the field of loss prevention, we lacked that universally-accepted benchmark certification process.
When I researched the LPC, I was intrigued by the broad array of subjects that were covered. It’s a legitimate, in-depth review of all areas of loss prevention. The coursework was expansive, and areas that I have had little or
“I have a job. Why do I need certification?”
Certification not only prepares you for the future, it helps you when you need it most—in your current job. Certification refreshes and validates your knowledge base while teaching you critical business expertise to round-out your skill set. It not only covers key components of loss prevention, it teaches you solid business skills to prepare you for your next promotion.
“It costs a lot.” Certification is very affordable and can even be paid for in installments. It is one of the best investments you can make for yourself and will pay for itself over again as you advance in your career. “I don’t have the time.” Certification was designed by seasoned professionals who understand the demands on your time. The coursework allows you to work at your own pace and at your convenience. Everyone is busy, but those who are committed to advancement will find the time to invest in learning.
“I’ve never taken an online course.”
The certification coursework is designed with the adult learner in mind. The online courses are built in easy-to-use presentation style enhanced with video illustrations to elevate comprehension and heighten retention. “What if I fail?” Both the LPQ and LPC certifications have been accepted for college credit at highly respected universities, and as such, passing the exam demands commitment and study. However, the coursework includes highly effective study and review tools to fully prepare you for the exam. In the event you fail the exam, you can review the coursework and retest after 30 days.
“Okay, how do I get started?”
It’s easy to get started. Go online to sign up at www.LossPreventionFoundation.org. If you need help or want more information, contact Kelly Durham at Kelly.Durham@LossPreventionFoundation.org or call 866-433-5545.
no experience with were explained in intricate detail.
I was also amazed to see the widespread support and acknowledgement the LPC garnered. From retailers to grocers to vendors, it seems the entire loss prevention universe has been involved.
I fully believe the LPC and LPQ will be the future benchmark for our industry that had simply not existed before. That’s why I felt I needed to be a part of it and why I’m proud to have “LPC” behind my name.
The past few months have been a whirlwind, culminating with a few quality days in dallas at the 2011 national Retail Federation loss Prevention conference. during the conference, we reconnected with old colleagues, met new friends, and learned about some exciting advancements in the lP field. i was proud that ebay and PayPal sponsored the Fusion center, where numerous law enforcement officials gathered to network with retailers in an effort to establish partnerships and devise plans to reduce organized retail crime (oRc). the conference was educational, inspiring, and enjoyable. it’s hard to open a newspaper or watch the news without seeing the continued economic stress on the american workforce. this stress manifests itself in many companies and agencies as a mandate to “do more with less.” i, too, have been given this mandate over the years when sales were soft or expenses high. in reflecting on this, i believe it is crucial for us to enhance loss prevention programs with robust technology if we are going to have a chance at success. at the nRF conference i walked through the exhibit hall with an eye for “game changers” that could assist retailers and ebay in our efforts to reduce oRc. it was exciting to see several electronic article surveillance (eaS) solutions that address booster-bag detection as well as jamming devices, two solutions that are long overdue. i had the opportunity to meet with several companies that have developed extremely innovative products and programs. the Retail equation demonstrated their new suite of solutions to ensure retailers are on top of the growing challenge of return fraud. their offering is powerful and works at reducing return fraud and shrink, in addition to increasing sales. i also looked at several exception-reporting and data-analytics programs. it is tremendous to see companies continue to invest behind and build their offerings. kevin McMenimen, president of enabl-u technologies, shared his vision and future plans for leRPnet 2.0. all i can say is, “hold on!” We have a lot of exciting things to come with the evolution of leRPnet 2.0. lastly, i had the opportunity to meet with a company that is developing handheld devices that enable retailers to mark high-risk products quickly with identifiers. these identifiers can be displayed or hidden, and only viewed under ultraviolet light—a very innovative, amazing technology.
With the continued advancement of technology, i see a light at the end of the tunnel in our battle against oRc. For those companies that have a mandate to do more with less, these advancements may serve as a solution. unfortunately, we can expect that the number of police and prosecutors will be reduced over the next few years as a result of budget cuts, bankrupt states, and rising felony thresholds. this is problematic for our fight against oRc. in an article published here a few months ago, i highlighted our partnership with the national association of Shoplifting Prevention’s “Say no to Shoplifting” campaign. We believe that partnering with the naSP and reaching young offenders early is a great way to stop crime. the results of their program for reducing repeat offenders are fascinating. i would encourage each of you to visit the naSP website at www.shopliftprevention.org and consider if utilizing their program as a way to handle juvenile offenders may help you reduce repeat crimes, enhance your brand, and save the time and money you would have spent on prosecution.
PRoact is currently working with retailers to refine our exception reporting in key product segments. We are also reviewing and implementing various technology solutions that will identify bad actors early and prevent entry to our platforms when possible. Most recently, we had a working group with a couple of home-improvement companies at our location in Salt lake city, and have several great ideas as a result of our collaboration. one thing that never stops in retail is change. change is what makes this industry exciting. over the next few years, the lines between online and offline retail will continue to blur. the influence of smartphones in changing the ways in which we shop, research, and pay is simply staggering. eventually, we will all sell in multi-channels and choose to be paid in a variety of ways.
With these advances come risks. inevitably, criminals will adapt to the new ways of commerce. as we look at the future of crime, it is imperative for us to be integrated deeply into our companies’ growth plans and collaborate internally as well as with each other to stay ahead of the criminals. i invite loss prevention executives who are involved in oRc efforts to share their thoughts and approach. if you are interested, please send me an email at pajones@ebay.com.
Paul Jones is global director of asset Protection. contact him at pajones@ebay.com. As we look at the future of crime, it is imperative for us to be integrated deeply into our companies’ growth plans and collaborate internally as well as with each other to stay ahead of the criminals.
FLASH MObS
bECOMIng
A THREAT TO RETAILERS
By Frank Muscato
Just when retailers thought they were getting a handle on external theft and organized retail crime (ORC), along comes a new twist called “flash mobs.” What started out a few years ago with the use of social-networking sites and smartphone communications to gather a group of people in a public place to dance or perform another innocent form of entertainment has recently evolved into gathering together protestors in the Middle East democracy movement.
Now, teenagers as well as criminal gangs are using the same techniques to steal from retailers. These groups are in their infancy, but there appears to be a rapidly growing trend throughout the United States. Retailers get ready. A flash mob may be coming to a store near you soon.
Retailers need to recognize the existence of this new phenomenon and form alliances and strategies to deal with these episodes. There needs to be a “solution reaction” developed and shared among retailers. With groups of thirty to sixty people, ranging in ages from 11 to 60, entering stores with the intent to steal large amounts of retail property, the solution has to be quick, formidable, and absolute. Solutions may entail identifying a group leader or methods of actually detaining one or more of the mob participants. Whatever the collective strategy is, if a solution is not developed…and developed quickly…these flash mobs are going to overrun our stores.
Safety in Numbers
First we need to identify and understand the reason the flash mob is entering the retail store. Regardless of the sociology of these groups, be they thrill-seeking teenagers or violence-prone gangbangers, the fact is they are entering your store to steal merchandise; it’s that simple. The merchandise is being taken for personal use or sold to make money. The bottom line for retailers is lost merchandise and possible threat of injury to customers and associates.
The fear ratio among the flash mob is little to zero, because they understand there is power in numbers, and that will win over fear of reprisal or punishment every time. These groups understand that the retailer will likely do little to stop these crimes. After all, retailers have limited responses. They may call the police, who will likely arrive long after the episode is over. Or, they may try to take some of the stolen property from mob members while they are on the way out of the store. The latter is less likely as most retailers forbid their staff, for good cause, from any type of confrontation with thieves.
The flash mob has the advantage in these thefts because there are few things that can be done to stop them. Theft and larceny state laws are weak and often not effective unless there is pressure put on those that enforce these laws, and that rarely happens. The mob knows that if they take the merchandise and just run away, there will be little that can be done because of the size of the group.
Consider this scenario: A thirty-person flash mob enters a store, takes the desired merchandise, and begins to leave the store. In a best-case scenario, a police officer is nearby or actually working in the store. He gives orders to “FREEZE!” Yet all the mob members continue to exit the store with the stolen property. That officer may be able to physically stop one or two of these thieves. That means that the other twenty-eight thieves leave the store with hundreds or thousands of dollars in stolen property. They still have not committed anything other than theft (in most states). There would not be any further charges, such as escape, resisting arrest, or evading arrest, because it would be the state’s responsibility to prove that the person heard the officer or knew that the officer was talking directly to them. All that law enforcement has is a theft, and it is most probably a minor or misdemeanor theft, because the felony levels throughout the county have risen over the past few years.
– Tom Roan, Group Vice President, Loss Prevention, Macy’s
On April 25, 2011, a group of twenty young men entered a trendy clothing store near Dupont Circle in Washington, D.C., and stole merchandise off shelves, racks, and tables. In what was described as a “quick and sophisticated operation” that included a lookout stationed at the front door, hundreds of items worth thousands of dollars were taken. The store manager was quoted as saying, “They had no fear. They were on their cell phones inside the store talking to their friend outside who was watching for police.”
– ABC 7 News D.C.
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Possible Solutions
Retailers have to be proactive and create a deterrence to these flash mobs. If these mobs can create actions and figure out ways to steal property from us, retailers can certainly figure out ways to stop these flash mobs. Sure, legislation can be enacted, but our recent experience with enacting legislation aimed at organized retail crime tells us that this is a long and difficult road. Even if legislation were on the books today, you would still have to find someone to enforce that legislation.
The retailers’ best bet is to develop a series of solution reactions. Unless these mobs have fear of
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Retailers on Chicago’s Michigan Avenue report multiple flash-mob incidents where groups of teens rush into a store creating a disturbance, steal merchandise, and flee in minutes. According to police reports, the youth select a target and use tweets or texts to coordinate these crimes. Filene’s Basement, Express, and The North Face store have all been targets of flash mobs. Police have increased patrols in the area focusing on breaking up large gatherings of youth with threats of arrest for loitering.
– CBS 2 Chicago
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reprisal, they will continue to hit retailers, and it is likely going to start happening at an alarming rate across the country. Following are some suggestions to consider. ■ Create retail and law enforcement flash-mob prevention coalitions to brainstorm and develop prevention and reaction strategies. ■ Develop training for both retailers and law enforcement on how to deal with these episodes. ■ Consider ways for store personal to intervene at the beginning of the episode, not physically, but verbally, vocally, and visually. ■ Develop ways for remote monitoring facilities to alert law enforcement dispatch facilities or mall security. ■ Create an alarm or alert system to identify potential flash mobs in certain areas, such as malls. ■ Create a system identifying these groups with the information shared among retailers. ■ Research present laws that can be enforced when these episodes occur. ■ Lobby for new legislation that brings serious penalties to those involved in flash-mob thefts. ■ Get federal, state, and local involvement to monitor the
Internet sites where flash-mob information is shared. ■ Through interviews of those arrested, identify the leaders and their methods of operating.
Organized Retail Crime
There is a good possibility that those who are already fencing stolen goods are going to participate in these crimes, if they are not already. It is also obvious that criminal street gangs will likely use these same tactics as a cover to acquire large amounts of expensive retail property. That means that flash mobs may become another tactic for organized retail crime.
Violence is always a potential issue when criminal and neighborhood gangs are involved. For the most part, retailers will not be able to recognize the difference between violence-prone gangs and misguided teenagers acting as flash mobs. Therein lies a real threat of violent confrontations if retailers try to stop someone involved in one of these episodes. Retailers need to be trained to recognize symbols, tattoos, clothing, and actions that may indicate gang affiliation.
Fences, on the other hand, face little chance of being identified with these flash mobs because there is no physical participation at the scene of the theft by the fence. The fence just waits till the property is brought to him or her and buys the stolen property for about 25 percent of the retail value. It will be hard to prove that the fence encouraged the group to commit the crime, because a smart fence will only discuss the value of the property, not how the seller acquired it. So the established stolen property fence should have no problem building their illegal business with the oncoming rise in flash-mob thefts at retail stores.
Retailers and Store Personnel
The primary responsibility for preventing flash mobs from committing thefts in the stores lies with the retailer. How merchandise is displayed and controlled is at issue. The number of employees and their positions within the store are vital to preventing these groups from gaining control of high-end merchandise. Retailers are quick to point the finger at the thieves, but some of the blame can be traced back to the retailer. They should have good video systems in place,
experienced, trained associates on the floor, high-end merchandise secured, and loss prevention personnel trained and involved.
Retailers should work together to have a coalition established to deal with identifying these types of crimes once they start occurring in different areas of the country. Retailers need to begin preparing for these incidents before they become rampant. Information on incidents involving flash mobs should be discussed and training established within the retail community. Again, retailers cannot wait for law enforcement to do something about flash mobs, because it will be too late and large amounts of merchandise will be gone from the stores.
Following are a few suggestions for store-level personnel. ■ Call the police as soon as it is recognized as a possible flash-mob theft event. ■ Get descriptions of those involved. ■ Secure any video of the incident. ■ Identify possible leaders, including those giving orders, vocalizing on what to steal, pointing where to go, et cetera. ■ Get any vehicle descriptions possible. ■ Monitor and identify how much and what type of product is stolen. ■ Call loss prevention. ■ If the store is in a mall setting, notify mall security. ■ Share information with other retailers. ■ Protect any physical evidence left by the flash mob.
Law Enforcement
There is little law enforcement can do about flash mobs until they are involved in a crime. Simply organizing a flash mob is not against the law… as of yet. Once the flash mob engages in the actions to commit the crime, law enforcement can take action, but until then they are powerless. So there needs to be some preventive measures and intelligence-building initiated within the law enforcement community dealing with these types of crimes. Coalitions need to be established and information shared among those responsible for preventing these thefts.
When violence is involved, of course, law enforcement takes quick action. However, crimes that don’t involve violence are usually treated as “simple theft” and often put on the backburner. With our prisons full and the costs of keeping felons locked up a growing burden to the state, flash mobs can grow in frequency until someone is seriously injured. Even then, only that incident will be identified as a serious issue.
Legislation
This may be the easiest avenue in helping to prevent these types of crimes. Again, as said before, legislation is only as good as it can
continued on page 44
continued from page 43
Recent Flash-Mob Incidents at Sears
or will be enforced. The best way to create laws specific to flash-mob theft is to amend present statutes already on the books.
Keep in mind that “robbery” is simply “theft by force,” which is a felony in all states. By definition, “force” could be a weapon of some kind, a physical assault, or a “threat that instills an imminent fear in someone.” In essence, imminent fear is what is created when a large group of people enter a retail store and start loading up on merchandise. Individuals working in the store would certainly think that if they tried to interfere in this situation, these thieves would band together to stop that interference, therefore creating that imminent fear. Amending state robbery laws in this way would make the offense a robbery and a felony for any participant of a flash mob involved in that retail theft. Since robbery is considered a violent crime, it would also help ensure law enforcement involvement.
Things have been changing in favor of retail over the past ten or so years as retail and law enforcement have banded together creating coalitions, getting involved with state and national retail associations, enacting legislation aimed at ORC, and sharing information within the private-public sectors concerning criminal acts committed against retailers.
It is time to add flash-mob theft to crimes against retailers before we find ourselves trailing these types of crimes like we did with organized crime. ORC had a healthy foot in our door before retailers recognized it as a serious threat to their businesses. It behooves us to be proactive before flash mobs get out of hand.
In recent weeks, theft incidents involving flash mobs have occurred in Sears stores in Upper Darby, Pennsylvania, and Douglasville, Georgia. The two events involved primarily teenagers who entered the stores specifically to shoplift merchandise.
In Upper Darby seventeen individuals entered the store and took watches, shoes, and clothing in approximately eight minutes. A store loss prevention associate observed the entire incident and immediately called local police, who arrived just after the group exited. The LP associate observed the group going to a nearby fast-food restaurant where police apprehended the suspects and recovered the merchandise. Sixteen juveniles and one adult were charged with retail theft. The young adult, who appeared to be leading the group, was also charged with corrupting minors.
The Douglasville incident involved eight females who entered the store and began concealing large amounts of merchandise in the women’s clothing and cosmetics departments. Upon observing the first concealment, loss prevention called police who arrived within five minutes with the suspects still in the store. The four officers were able to apprehend all but three of the suspects. The five suspects apprehended ranged in age from 12 to 16. A 17- and 19-year-old and another minor escaped police.
“In both of these cases, the flash mobs appeared to be young people involved in personal shoplifting as opposed to organized retail crime gangs,” said Bill Titus, vice president of loss prevention for Sears Holdings. “Fortunately, our store personnel followed their training, resulting in the police making apprehensions and recovering the stolen merchandise.”
The guidelines given to Sears store loss prevention professionals center around three elements:
■ be Aware—Report to LP or store management
whenever associates see large gatherings of juveniles inside or directly outside the store.
■ Deter Theft—Attempt to discourage thefts by stationing
associates near high-value merchandise and displaying good customer service to those participating in the incident.
■ React—Call 911 once acts of theft are observed. Do
not call police simply because a group enters the store.
The LP team should continue to monitor the group and document the incident, but should never attempt to make an apprehension, as it would not be safe to do so.
FRANK MUSCATO retired from the Dallas Police Department’s Intelligence Division as a case supervisor in 1993 following twenty-five years of service to help create retail’s first organized retail crime division inside Walmart. After eleven years with Walmart, he went to Walgreens to assist in creating their ORC taskforce. In 2010 Muscato established The Muscato Group based in Dallas, specializing in ORC training and special investigations. He is recognized nationally for his expertise in ORC and in lobbying for ORC legislation and is affectionately referred to as “The Godfather of ORC” by his peers. Muscato can be reached at 214-930-9359 or fcmuscato@gmail.com.
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