July - August 2012 by Loss Prevention Magazine

THE VOICE OF LOSS PREVENTION LPportal.com | V11.4 July – August 2012

LOSS PREVENTION

MAGAZINE

ORC Are Retailers to Blame?

MOVING FROM LP EXECUTIVE TO SOLUTIONS PROVIDER RED, WHITE, AND BLUE PROFIILE OF AMERICAN APPAREL A REASONED APPROACH TO PREMISES SECURITY LIABILITY

Problem.

Solution.

Lost keys, broken locks and the search for the right key will never again hinder a customer experience or result in a missed sale. Our new cabinet locks are easy to retrofit and even easier to use. New Cabinet Lock lets you service your customers not your locks.

To find out more visit invuecabinetlock.com or call toll free 888.908.4855

Powerful Deterrent Proven RO I

Finding Bad Apples Has Never Been Easier Gulfcoast Software Solutions, LLC Clearwater, FL 33756 (727) 441-2131 www.gulfcoastsoftware.com

Contents 6 PUBLISHER’S LETTER Wide-Ranging Topics for Your Consideration By Jack Trlica

8 ON THE WEB

ORC— Are Retailers to Blame?

10 RETAIL SPONSORS 12 LOOKING BACK Ten Years of LP Magazine

Are retailers creating demand by buying stolen merchandise?

14 INTERVIEWING Cross-Cultural Interviewing: Part 2 By David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP

By Amber Virgillo, Contributing Editor

28 ACADEMIC VIEWPOINT Roundtable Topics on Internal Theft at the NRF LP Conference By Richard C. Hollinger, Ph.D.

40 CERTIFICATION Certification Scholarship Recipients By Gene Smith

Moving to the Dark Side

50 EVIDENCE-BASED LP Data Analytics and Audit Research By Read Hayes, Ph.D., CPP

The transition from LP executive to solutions provider By James Lee, Executive Editor

52 ASSOCIATIONS IN ACTION Building Momentum By Lisa LaBruno

63 SOLUTIONS SHOWCASE - American Dynamics - Intelligent Loss Prevention

Red, White, and Blue. A Manufacturing and Retail Revolution

66 INDUSTRY NEWS - Self-Checkout Theft Survey Highlights Dishonesty - LP Industry Loses Two Well-Known Executives - Vector Security Rebrands to Reinforce an Updated Business Strategy - Glue Thwarts Bank Cash-Box Theft By Robert L. DiLonardo

Profile of American Apparel

By Adam Paul, Contributing Writer

70 CALENDAR 71 PEOPLE ON THE MOVE

A Reasoned Approach to Premises Security Liability

72 ADVERTISER DIRECTORY 73 VENDOR SPONSORS 74 PARTING WORDS Half in the Bag By Jim Lee

Reasoned behavior trumps perfection

By Jon Groussman, J.D., and Constantine “Dean” Nickas, J.D.

July - August 2012 | LPportal.com

10 of the top 100 retailers use the retail equation to improve their return processes.

Leading retailers choose The Retail Equation to improve the customer experience at the return counter. Driven by predictive analytics, your return processes become more flexible and friendly while still managing risk and preventing abuse. See how leading retailers are optimizing returns at www.theretailequation.com/success or call us at +1-888-371-1616 to learn more.

Publisher’s LETTER MAGAZINE

Wide-Ranging Topics for Your Consideration

ecause loss prevention professionals deal in so many areas of expertise and touch so many other parts of the retail organization, we continually look for a wide range of topics to feature in the magazine. You are not single focused or one dimensional, so we try not to be. This issue is a good indication of a wide range of article topics.

Are Retailers to Blame?

The cover story addresses a topic within the ORC discussion that was recently proposed by the loss prevention executive at Harris Teeter, David George. Are retailers exacerbating the ORC problem by purchasing stolen merchandise? We thought that was an interesting question, so we assigned our resident pot stirrer, Amber Virgillo, to address the issue (see page 17). After you read the article, let us know what you think.

Going to the Dark Side

You’ve all heard that phrase when an LP executive leaves his or her retail role and moves to the other side of the desk as a vendor. Our executive editor, Jim Lee, is one of those people who had a long, stellar career as a retail executive before becoming a solutions provider, consultant, and magazine publisher. Some people who make this change are successful; others are not. Jim talked to several individuals who have successfully navigated the transition to discuss the challenges they faced (see page 31). The comments these executives offer provide insights into the retailer-vendor relationship that should be enlightening to anyone on either side of the desk.

700 Matthews Mint Hill Rd, Ste C Matthews, NC 28105 704-365-5226 office, 704-365-1026 fax EDITOR AND PUBLISHER Jack Trlica JackT@LPportal.com EXECUTIVE EDITOR James Lee JimL@LPportal.com

articles on small specialty retailers, wholesale distribution companies, and other niche enterprises. When I visited the Los Angeles Police Department in February, I ran into Blue Montez, one of the nicest, most professional LP executives in our industry. Blue had an interesting story to tell after moving from Sport Chalet to American Apparel eighteen months ago. It’s a story with many levels— building an LP team, implementing RFID, working with IT, global retail, and what was once a common retail theme, “made in America” (see page 41).

Premises Security Liability

CONTRIBUTORS William A. Alford, LPC, CFE Read Hayes, Ph.D., CPP Richard C. Hollinger, Ph.D. Mike Marquis, CFI Gene Smith Shane G. Sturman, CFI, CPP Kelby Woodard David E. Zulawski, CFI, CFE NEWSLETTER EDITOR John Selevitch JohnS@LPportal.com ONLINE EDITOR Matt Richardson MattR@LPportal.com

We often ask for suggestions for article topics. You’ve likely seen them here, on our website, or on one of our social media pages. We typically ask the LP folks we visit for suggestions as well as the members of our editorial board. One of our board members, Bill Heine of Brinker, sent me an email in January that suggested that as LP gets more and more sophisticated with newer and greater technology, we shouldn’t overlook some basic security 101 measures that can impact the company, such as premises security. So we asked a couple of experts in this area to talk about the subject (see page 53).

CREATIVE DIRECTOR Larry Preslar

Hopefully, all of these articles will provide some valuable information, in a thought-provoking way that you can use in your situation. As you can see from these articles, we listen to your suggestions and appreciate your input. Please don’t hesitate to contact us with your thoughts.

SUBSCRIPTION SERVICES

Red, White, and Blue Montez

For most of the life of the magazine, we have tried to profile companies who are not always on the tip of everyone’s tongue. If you look back over our past issues, you’ll see

CONTRIBUTING EDITORS Robert L. DiLonardo Walter E. Palmer, CFI, CPP, CFE Amber Virgillo

Jack Trlica Editor and Publisher

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

July - August 2012 | LPportal.com

PROOFREADER Amy Trainor DESIGN & PRODUCTION SPARK Publications info@SPARKpublications.com 704-844-6080 ADVERTISING

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

CIRCULATION MANAGER Matt Richardson MattR@LPportal.com NEW OR CHANGE OF ADDRESS www.myLPmag.com POSTMASTER Send change of address forms to Loss Prevention Magazine P.O. Box 1088 Lowell, MA 01853 LossPrevention aka LP Magazine (USPS 000-710) is published bimonthly by Loss Prevention Magazine, Inc., 700 Matthews Mint Hill Rd, Ste C, Matthews, NC 28105. Print subscriptions are available free to qualified loss prevention and associated professionals in the U.S. and Canada at www.myLPmag.com. The publisher reserves the right to determine qualification standards. International print subscriptions are available for $99 per year payable in U.S. funds at www.LPportal.com. For questions about subscriptions, contact circulation@LPportal.com. Periodicals postage paid at Matthews, NC, and additional mailing offices.

ON THE WEB

Editorial Board

Columns

There are a number of articles on the magazine website you may have missed. Check out the following articles. Go-to People in LP—Jeremy Han, Rent-A-Center by Jim Lee and Amber Virgillo Your Smartphone Is Making You Dumb by Amber Virgillo Go-to People in LP—Chris Canoles, Home Depot by Jim Lee and Amber Virgillo Aspect User Conference Mixes Education and Entertainment by Jack Trlica Go-to People in LP—Steve Hodgkins, jcpenney By Jim Lee and Amber Virgillo

Weekly e-Newsletter

Get the latest news and features you need every Thursday. ■ Current loss prevention, retail, and technology news, ■ Original content from magazine staff and contributors, ■ People on the move listings, ■ Helpful links, and ■ A little fun to brighten your week. If you are not receiving our e-newsletter, visit the magazine home page at LPportal.com and click on the links under CURRENT NEWSLETTER to read the latest issue or to sign up. If you would like to contribute to the newsletter or have any comments, contact us at newsletter@LPportal.com.

New Digital Magazine Format

Optimized for iPads and Tablet PCs Offers easier navigation, higher resolution, and more functions: ■ Save PDFs of articles ■ Print or email pages ■ Share pages directly to social networks ■ Fast keyword search ■ Hot links to outside content and advertiser offers

Ken Amos, LPC Divisional Vice President, Loss Prevention Walgreens

Bob MacLea Senior Vice President, Loss Prevention, TJX

Leo Anguiano Vice President, Chief Risk Officer, Central Parking Corp.

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

Jim Carr, CFI Director, International Loss Prevention, Rent-A-Center

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

Ken Cornish Vice President, Retail Operations, The Kroger Co.

Tom Roan Group Vice President, Loss Prevention, Macy’s

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

Tim Shipman, LPC Director, Corporate Investigations and Crisis Management, Delhaize America

Charles Delgado Vice President, Manager of Asset Protection BJ’s Wholesale Club

Mark Stinde Vice President, Asset Protection 7-Eleven

Patti Felz Vice President, Loss Prevention, Polo Ralph Lauren

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

Barry Grant Senior Vice President, Operations & Loss Prevention, CPI Corp Bill Heine Senior Director, Global Security, Brinker International Sonya Hostetler Vice President, Asset Protection & Safety, Walmart Stores U.S. Frank Johns, LPC Chairman, The Loss Prevention Foundation Gary Johnson Vice President, Loss Prevention, Vitamin Shoppe Paul Jones, LPC Senior Director, Global Asset Protection, eBay

Bookmark the new digital magazine at digital.lpportal.com Ten years of archives available at digital.losspreventionmagazine.com

July - August 2012 | LPportal.com

Bill Titus Vice President, Loss Prevention, Sears Holdings Bill Turner Senior Director, Retail Operations, Cole Haan Claude Verville Vice President, Loss Prevention, Safety & Hazmat, Lowe's Stanley E. Welch Vice President, Director of Loss Prevention, jcpenney Keith White Senior Vice President, Loss Prevention and Corporate Admin., Gap Inc.

skechers case study

the dynamic vision of IP, delivered join, visit, share

Retail SPONSORS

July - August 2012 | LPportal.com

Join these great companies as an LP Magazine corporate sponsor. Email JackT@LPportal.com for more information. LP Magazine | July - August 2012

LOOKING LookingBACK BackON on10 10YEARS YearsOF ofLP LPMAGAZINE Magazine

According to one LP executive in Mexico, “Crime is going to happen. The challenge we face is how do we minimize the loss and the risks to customer and employees?” “For leaders of the retail LP industry, there is an obligation to do things together to attract talent to our field.” – Monica Mullins, Walmart

Formulation of strong partnerships between retailers and law enforcement are essential to impact ORC.

LAW ENFORCEMENT AND RETAIL PARTNERSHIPS Working Together for Common Goals

Imagine the next evolution of data sharing not just among retail loss prevention, but among LP and security across communities where patterns may be analyzed for activity increasing across a variety of segments.

January-February

“Sometimes taking an opportunity that may be perceived as a lesser position will help you grow in your career and as a leader.” – Stan Welch, JCPenney

March-April

THE VOICE OF LOSS PREVENTION January – February 2011 | LPportal.com | V10.1

MAGAZINE

May-June THE VOICE OF LOSS PREVENTION

THE VOICE OF LOSS PREVENTION

LPportal.com | V10.3 May – June 2011

LPportal.com | V10.2 March – April 2011

MAGAZINE

By Millie Kresevich

41 SECURITY

2020

LP MAGAZINE | JANUARY – FEBRUARY 2011

Identifying the Store of the Future 1/28/11 11:45 AM

2011

LPM 0111-2.indd 41

INTERVIEW WITH JOE FRYAR OF FOOD CITY

LEVERAGING VIDEO ANALYTICS THROUGHOUT THE ORGANIZATION

OVERHAULING YOUR ONLINE FRAUD PREVENTION STRATEGY

1/28/11 12:58 PM

LPM 0311-1.indd 1

BE A GREAT WORKPLACE CITIZEN

3/28/11 11:26 AM

LPM 0511-1.indd 1

Democracy movement engulfs Middle East.

Security 2020— Identifying the Store of the Future by Francis D’Addario Interview with Joe Fryar, Food City

The Challenges of LP in Mexico by William Alford Interview with Walmart’s Monica Mullins Top Three Pitfalls of Vendor-Retailer Partnerships by Amber Virgillo

2011 Loss Prevention Resource Guide

Overhauling Your Online Fraud Prevention Strategy by Phil Mead

July - August 2012 | LPportal.com

7/19/12 6:50 PM

Osama bin Laden killed.

Law Enforcement and Retail Partnerships by Millie Kresevich

A Conversation with Food City’s Joe Fryar By James Lee, Executive Editor

THE CAREER JOURNEY OF JCPENNEY’S STAN WELCH

TOP THREE PITFALLS OF VENDOR-RETAILER RELATIONSHIPS

2011 LOSS PREVENTION RESOURCE GUIDE

Borders files for bankruptcy.

Using Technology and Training to Impact 12 Financial Success

IN RETAIL’S BATTLE AGAINST ORC

INTERVIEW WITH WALMART’S MONICA MULLINS

LAW ENFORCEMENT AND RETAIL PARTNERSHIPS

LPM 0111-1.indd 1

“Prevention is our goal. It has been said that you cannot catch your way to low shrink numbers.” – Joe Fryar, Food City

THE EVOLUTION OF DATA SHARING

THE CHALLENGES OF LP IN MEXICO

The Evolution of Data Sharing in Retail’s Battle with ORC by Jack Trlica The Career Journey of JCPenney’s Stan Welch by James Lee Leveraging Video Analytics throughout the Organization by Jen Richard Be a Great Workplace Citizen by Bruce Tulgan

2008 2011 One could argue that one of the most significant impacts of 9/11 was to dramatically accelerate the already expanding role of LP in the corporation.

The asset protection industry may see a shift from worrying about the control of inventory to the control of information, which travels fast and efficiently. “I think the challenge with technology is that you have to have the people component to support it. You can’t just throw technology at the problem.” – Gary Johnson, The Vitamin Shoppe

July-August

“That morning as I drove across the Brooklyn Bridge, I knew what my destiny in life was. I was going to what we called, ‘The Big One.’” – Bobby Senn, FDNY (retired)

September-October

THE VOICE OF LOSS PREVENTION LPportal.com | V10.4 July – August 2011

MAGAZINE

LAAORCA

THE THREAT OF SOCIAL MEDIA

TAKING A BITE OUT OF ORGANIZED RETAIL CRIME

THE IMPACT OF 9/11 ON LOSS PREVENTION

PROTECTING YOUR BRAND

TEN YEARS LATER

REDUCING SHRINK THROUGH PEOPLE, NOT TECHNOLOGY FLASH MOBS BECOMING A THREAT TO RETAILERS REFLECTING ON QUALITY RECRUITMENT AND RETENTION

Scandal ends Murdoch’s British newspaper.

LPportal.com | V10.6 November – December 2011

LOSS PREVENTION

MAGAZINE

LPM 0711-1.indd 1

THE VOICE OF LOSS PREVENTION

LPportal.com | V10.5 September – October 2011

LOSS L OSS PREVENTION PR RE EVENTION

MAGAZINE

November-December

THE VOICE OF LOSS PREVENTION

The idea behind LAAORCA is a simple one—retailers can pool information and share it directly with law enforcement, who can then prosecute the crimes far more swiftly and easily than they ever could in the past.

7/25/11 12:21 PM

MANAGING LOSS IN THE RENT-TO-OWN INDUSTRY

TEN LONG YEARS FOR ONE NYC FIREFIGHTER

WHY SMART LEADERS DO SUCH DUMB THINGS

TRAINING MALL SECURITY ON TERRORIST THREATS

LPM 0911-A.indd 1

9/27/11 10:40 PM

Hurricane Irene hits East Coast.

Special Edition— Ten Years Later

Interview with Gary Johnson, The Vitamin Shoppe

The Impact of 9/11 on Loss Prevention by Jack Trlica

Flash Mobs Becoming a Threat to Retailers by Frank Muscato

Where Were You on the Morning of September 11th? by James Lee Ten Long, Slow, Consuming Years by Bobby Senn

TRAINING EMPLOYEES TO WRITE GOOD REPORTS

LPM 1111-A.indd 1

11/16/11 6:49 PM

Steve Jobs dies.

The Threat of Social Media by Helen Levinson

Reflecting on Quality Recruitment and Retention by Ryan Kelly

WHERE WERE YOU ON SEPTEMBER 11TH?

LAAORCA— Taking a Bite out of ORC by Adam Paul Interview with Bobby Templet, Rent-A-Center Why Smart Leaders Do Such Dumb Things by Patrick Kuhse Ten Steps to Training Employees to Write Good Reports by Liz Martinez

LP Magazine | July - August 2012

“The term ‘shrink’ is not even in our vocabulary.” – Bobby Templet, Rent-A-Center

interviewing

Cross-Cultural Interviewing: Part 2 T

he beginning of every interview or interrogation revolves around the elements of rapport. Rapport between people is a level of comfort or trust that the other person has your best interests at heart. Effectively, “this person cares about me” is our conclusion. This is difficult enough when cultures don’t clash, but when there are strong cross-cultural differences and language problems, the issues can be exacerbated. There is already a significant difference between the dynamics of an interview or interrogation, then add into the mix cultural issues, and the simple becomes complex.

Regardless of whether you are interviewing or interrogating, an expression of caring will help bring a connection between the interviewer and subject. However, trying too hard to make a connection will breed distrust into the relationship. We want to care about the other person, but not so much that we appear insincere. While researchers differ on the exact time it takes for people to make their first judgment about another, they all agree it is not long. Every human being reads another’s verbal and physical behavior and then predicts whether they like or trust the other person. It is a combination of demeanor, voice, personal space, interview location, and a host of other things that, when added together, create rapport between people. Once a judgment is made about another person, that conclusion is difficult to change. There is no question a common heritage and language gives one a step up on developing rapport. Regardless of whether you are interviewing or interrogating, an expression of caring will help bring a connection between the interviewer and subject. However, trying too hard to make a

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 (www.w-z.com). Zulawski is a senior partner and Sturman is president. Sturman is also a member of ASIS International’s Retail Loss Prevention Council. They can be reached at 800-222-7789 or via email at dzulawski@w-z.com and ssturman@w-z.com. © 2012 Wicklander-Zulawski & Associates, Inc.

connection will breed distrust into the relationship. We want to care about the other person, but not so much that we appear insincere.

Establishing Rapport

Developing a personal relationship is the key to success regardless of the culture. This can be shown by expressing interest in the other person’s comfort and showing a combination of empathy and compassion for the individual’s situation. While we face these situations as a regular part of our jobs, we can never forget the person may be frightened, uncertain, and confused, so the interviewer must adjust accordingly to open a dialogue with the individual. While the interviewer has his own agenda, he must give appropriate respect to his subject. Even simple attempts to establish rapport may trigger resistance since the person is looking through his own lens of reality. Someone who has experienced discrimination may see a slight where none was meant because of his personal history. If a person has English as a second language, his poor speech may be interpreted by the English speaker as unintelligent. The interviewer’s voice is going to send volumes of information to another person. Striving for a calm, steady speech pattern will go a long way to quiet even those who do not understand the language. People will also have a different interpretation of someone who is speaking a guttural language, like German or Arabic, which may sound angry to the unaccustomed listener. This interpretation is common to a number of languages or dialects, such as Greeks, Israelis, African Americans, Poles, Italians, and Arabs to name a few. Many of us from the United States are unaccustomed to the emotional speech patterns of other cultures and may misinterpret this for anger. The context of the conversation and behavioral features of the individual will help in sorting out the true meaning of the situation. Every culture has some element of saving or losing face as part its members’ behavior. The interviewer has to balance the fact that merely participating in an interview may cause shame for some. This may increase resistance and reduce cooperation from the individual. Sometimes it is the interviewer’s questions that trigger shame as the interviewer explores the topics. In other instances it may be the repetitive nature of the questions that makes the subject question whether he is being believed. The “cognitive

July - August 2012 | LPportal.com

continued on page 16

Visit Axis at NFSSC Annual Conference: Booth #311 Baltimore, MD August 5-8

Are you sure you want to permanently erase these items? Yes

It’s time your video surveillance was as smart and easy as your other tech gadgets, don’t you think?

Read more with your smartphone

As a small-business owner today, you have some pretty cool technology available — everything from working on the go with laptops to video conferencing with a smartphone. So when it comes to video surveillance, you should expect to have something equally smart that fits your needs and budget. Now, you can.

Perfect for retail stores, hotels and other small businesses, AXIS Camera Companion offers you benefits like HDTV quality and remote viewing. AXIS Camera Companion records all video on each camera’s SD-card — so no need for a DVR or even a computer during operation. It’s simple: install it, watch it, interact with it, depend on it. AXIS Camera Companion — the easiest way to network video surveillance. Get the Axis picture. Stay one step ahead. Visit www.axis.com/companion

HDTV image quality • Direct recording on SD cards (no DVR needed) • Viewing apps for iPhone, iPad and Android • Cameras powered over the network • No PC needed for operation • Free viewing client • Scales easily from 1 to 16 cameras • Encoder support for analog cameras • No single point of failure

axis_ad_acc-euser_lossprev_fpc_us_1206.indd 1

12/06/2012 1:59:02 PM

continued from page 14

interview”—an interview designed to assist a witness’ recall—seeks to help deflect these thoughts by a series of instructions prior to beginning the interview. Another way to establish rapport in most situations is by listening. Probing questions may make an individual feel as though they are being interrogated, while using narrative or open-ended questions encourage the person to respond with longer answers that provide more information. This allows the interviewer to observe the perspective of the subject and what he feels is important, rather than contaminating the view with the interviewer’s words or bias. The interviewer then uses probing questions to clarify or expand the narrative, which makes sense to the subject who has been allowed to speak freely about his situation. The open narrative question is especially important to those cultures that may be less open to speaking freely in social contexts or those they find intimidating.

Nonverbal Response

The nonverbal world is also something an interviewer can focus on in a cross-cultural interview. While it is difficult for a non-native speaker to associate specific movements with a part of the individual’s response, it may be apparent to the translator. The more often an interviewer can work with the same translator, the more aware the translator will become of what the interviewer finds valuable. Plus, the translator can be a valuable source of cultural information and insight into the subject’s demeanor. During a cross-cultural interview, the subject is constantly sending information on the nonverbal channel through his movements, gestures, and posture. Translators and native speakers can often help interpret the behaviors for the interviewer. However, the interviewer can, in general terms, observe the basic emotional displays and accurately identify the emotion in cross-cultural interviews. More difficult is to establish the exact cause of the emotional response. The basic human emotions of fear, surprise, anger, happiness, sadness, disgust, and contempt are recognized by people across the globe. These emotional displays may be modified by different cultures to minimize or mask the emotion during conversations. The British, Japanese, and American Indian all, to some extent, learn to control their emotions to conceal what they are feeling. We should also mention there are appropriate non-verbal behaviors that should accompany the emotional display; however, these may change from culture to culture. For example, in most of the English-speaking industrialized nations, people will look down, talk slowly, frown, and avert their eyes when delivering bad news. In contrast the Japanese may smile as they inform another of the problem and may do the same when they are regretful or ashamed. This is the cultural way the Japanese express regret. While the basic emotions are cross-culturally recognizable, there are differences in how much people will move their face and brows. The more stoic expressions come from the Asian cultures, such as Chinese, Japanese, and Koreans, who avoid extremes of behavior, including the basic emotions. To many Western cultures who are unfamiliar with the Asian expressions, this lack of facial

affect leaves an impression of deception or non-cooperation, which may be totally incorrect. A strong contrast to the Asians is the Middle East, African American, Latinos, and Jews. These groups often express themselves with stronger emotional displays, such as weeping, flailing arms, deep breathing, or calling out to God when expressing anguish or suffering. One can imagine the strong behavioral cultural differences of how the loss of a loved one may be expressed in these opposite cultural settings. These cultural norms may also lead to concealing how much

Probing questions may make an individual feel as though they are being interrogated, while using narrative or open-ended questions encourage the person to respond with longer answers that provide more information. This allows the interviewer to observe the perspective of the subject and what he feels is important, rather than contaminating the view with the interviewer’s words or bias. something hurts them physically or emotionally. The expression of pain is seen as a sign of weakness in many Asian cultures, while Puerto Ricans and Dominicans may loudly express their feelings of pain. Arabs and Middle Easterners may loudly call out for God’s help while covering their face with their hands in response to pain or bad news. To those unfamiliar with these cultures, it may seem overly dramatic and even phony.

Physical Touching

Cultures may also differ in how much they touch and what it means when they do. The dominant groups in the United Kingdom, United States, and Canada tend to touch much less than other cultures, such as the Slavic, who hug, kiss, embrace, and shower verbal endearments on those they care about. Another example, touching someone on the shoulder to give comfort as done here in the United States would be insulting in the Middle East or Asia. For Muslims and certain other religions, it is not permitted to touch a member of the opposite sex unless they are related, but they may welcome a touch by a member of the same sex. In many cultures males and females will walk arm-in-arm or holding hands with members of the same sex with no hint of sexual attraction. Touching varies significantly and should be treated carefully so no offense is given or taken, and when done while interviewing, it should be used sparingly, if at all. We will continue this discussion in our next column.

July - August 2012 | LPportal.com

Cover feature

ORC Are Retailers to Blame? By Amber Virgillo, Contributing Editor

Are Retailers to Blame?

f you started counting from one to one billion 24 hours The Question—How Do You Know? a day, 7 days a week, nonstop, it would take you 95 If you ask any retailer if they are buying their own stolen years to finish. Isn’t that shocking just how much even product back, the response will likely be a quick rejection one billion is? that the notion is even possible. But, if you follow up with It’s easy to throw around numbers about how big a the even more important question—“How do you know problem organized retail crime (ORC) is to our industry your company isn’t buying stolen product?”—the answer to create a compelling argument about the gravity of a becomes more stammering. problem, but the question is: Over the past three months, at three different industry Are we doing a disservice to the loss prevention events, three major retailers admitted in a candid forum that industry by not being on the same page with how to they have purchased stolen product or they specifically have define, categorize, or combat the growing ORC problem? found other retailers’ product on their shelves. How does Or at least sincerely examining the role retailers play in this happen? With these admissions, doesn’t it make sense to perpetuating this problem? question the notion that the “multi-billion-dollar problem” It’s clear from attending two of the industry’s largest has to include the demand retailers could be creating? trade shows recently, the Retail Industry Leaders “Most companies do not believe that this type of Association (RILA) Loss Prevention, Audit, and Safety occurrence could ever happen,” says Tony Sheppard, Conference and the National Retail Federation (NRF) nationwide manager, organized retail crime at Loss Prevention Conference in New Orleans, that the ORC definition and how retailers categorize ORC is still widely debated. This debate seems valuable considering it was only Consumer-created a few years ago that the acronym demand “ORC” was making its debut. And Retailer supplies Boosters steal from now the industry has moved on to the demand retailer and sell to fence tackle larger questions on the topic, such as the enormity of the problem, defining it across the spectrum of retail, and trying to understand the Wholesaler (“legitimate” Fence sells to retailers’ role in the problem. broker) sells to retailer illegitimate brokers Most authorities on the ORC Illegitimate broker topic are backing off the “$30 sells to wholesaler billion” figure for categorizing the issue. According to the NRF’s seventh annual ORC survey, industry experts today are citing a “multi-billion-dollar problem” and recently NBC’s Brian CVS/pharmacy. “But the individuals who make buying Williams stated that ORC is a $12 billion-a-year problem. decisions need to be educated about the impact ORC has The purpose of this article is not to debate whether and how to identify possible suspicious transactions.” ORC is a problem. Nor is it to define exactly how One retailer interviewed for this article places security significant a problem ORC is in terms of revenue. To argue tags on products that specify to call a hotline number if these points with so many varying opinions would be like the product is purchased anywhere other than that exact buying a four-door mini-Cooper—what’s the point? The retailer. This individual stated there has been more than a point here is to raise some questions for healthy industry dozen occasions that their product has been purchased by debate such as: consumers at competing retailers. Given these examples and ■ What role do retailers play, if any, in creating a demand the admissions of major retailers, there is more than enough evidence that retailers are purchasing stolen product that is for stolen product? ■ Is “diverter” a bad word? ending up on shelves for consumers to purchase—not just ■ What can loss prevention professionals do to ensure their online auctions or flea markets—thus creating demand for ORC rings to steal it. companies know their supply chain is legitimate and has There has recently been a groundswell of retailers integrity? considering their role in perpetuating the ORC issue Given the complexities of various categories of retail, primarily started by an article written by David George, this article will primarily focus on the grocery and drug vice president of asset protection with Harris Teeter, titled, store segments.

ORC Are we to blame?

July - August 2012 | LPportal.com

Are Retailers to Blame? “ORC—Are We to Blame?” in the My Turn section under Columns on the magazine website (LPportal.com/ my-turn). George illustrates what he calls “the economics of ORC” in the chart shown on the opposite page. More and more retailers have begun to take actionable steps within their organizations to implement anti-ORC buying programs and other anti-ORC measures, such as super-duty security tags and laser tagging.

The Hive— Your Company’s Diverters

Have you ever diverted money? You might come back with a resounding “No!” But you could have been diverted to an alternate route in traffic or your attention could have been diverted to a different topic. Why is the word “diverter” met with such negative connotations when discussing

■ Are we doing a

disservice to the loss prevention industry by not being on the same page with how to define, categorize,or combat the growing ORC problem? Or at least sincerely examining the role retailers play in perpetuating this problem? ■

products? Webster’s definition itself is not negative: Divert—to turn aside from a course or direction. Many of those interviewed for this article immediately made a distinction between “diverters” and “alternate-source suppliers,” preferring to refer to their diverters as alternate-source suppliers on principle. One way to articulate how diverting works is to imagine a bee hive with its intense activity. The hive is actually the United States and the bees represent activity between alternate-source suppliers and retailers’ buying teams. It’s an incredibly complicated industry with layers upon layers of people, both legitimate and illegitimate. Michael Kresser, vice president with Food Marketing Group (FMG), an alternate-source wholesaler, states, “It’s incredibly important that our clients believe in our supply-chain integrity. We are very proud of our policies and procedures that ensure we have the

Top This. Introducing Omni Guardé Bottle Cap and the Adjustable Bottle Collar

When it comes to protecting wine and spirits, Alpha’s line of bottle security tops all others. Our two newest solutions offer one-handed application, adjustable fit for a variety of bottles, security and benefit denial. Make increasing your sales with our premium aesthetics and S3 security tops on your list.

Go to AlphaWorld.com or call your Alpha sales representative today.

First in Solutions. First in Value.

AlphaWorld.com LP Magazine | July - August 2012

Are Retailers to Blame? highest quality product, delivered on time, every time. We have our own team of inspectors that ensures our product is completely legitimate. We inspect everything from the dot matrix on the labels, the lot numbers, expiration dates, and even down to the glue used to prepare the boxes. We guarantee genuine product and that’s why we’ve had such long-lasting client relationships.” FMG employs a loss prevention professional with more than 26 years experience who continually ensures the physical security of warehouse premises as well as vetting the various warehouses FMG uses. “Not only is buying stolen product a felony, we’re also focused on the most important part—the product integrity and consumer safety,” says Kresser. “If an alternate-source wholesaler engages in buying stolen product, there is no way to track that product if a possible recall happens. At FMG we always handle product recalls with the utmost efficiency, and it’s a complicated process even for a totally legitimate product.” Kresser stresses the importance of the relationship between the alternate-source wholesaler and the retail buyer. There is a level of trust between buyers and diverters because diverting is such a complex industry, it is very rare a legitimate “company” would pop up with an unbelievable deal on a product and then be around for a long-term, professional relationship with that company’s buyer. “The whole diverting industry is under extreme pressure due to retailers pinching them to get the best price,” says CVS’s Sheppard. “Buyers may have been dealing with the same diverter for many years, but that doesn’t matter if there has never been any due diligence to validate they are a completely legitimate alternate-source provider.” The bottom line is alternate-source providers, or diverters, are completely legitimate business enterprises that help retailers obtain and move product to the benefit of the consumer. If a retailer believes all diverters are purchasing stolen product, he has a fundamental misunderstanding of the industry and probably very little understanding about his own internal supply-chain polices or procedure.

The Wild Card—Your Buyers

Have you ever been totally sure you’ve won a Blackjack hand? Just when you’re about to scream, “Winner, winner, chicken dinner,” you bust. It was that sneaky ace the dealer had that did you in. Some elements in retail organizations loss prevention can’t control. The process is complicated with thousands of different variables. Within the supply-chain process, retail buying groups seem like this wild card that can possibly throw a wrench into your well-laid plans of anti-ORC buying. But just like any amateur Blackjack player, there is a way to play what the book says when it comes to your buying team. Retailers interviewed for this article stressed a few critical elements when it comes to partnering with buyers and why it’s so important. ■P artner with your buyers just like you would law enforcement. ■E ducate your buyers on the impact of ORC and why it’s important to them. ■ Know how they are compensated. Keith Lewis, who retired as a task agent with the Georgia Bureau of Investigation in 2011 where he worked major theft cases, focusing on cargo theft for the past six years, explains there are two supply chains a company must be knowledgeable about—the legitimate and illegitimate. Even for the most honest diverters, as products move through this complicated web of suppliers, there is still the possibility that the diverter could be brokering stolen products and not know it due to fake bills of lading from sophisticated ORC rings that imitate manufacturers’ packaging methods, even down to the outer box markings. “Stolen truck loads move very quickly, and it’s very difficult to track them due to public distribution centers where anyone can store and ship items with ‘legit’ bills of lading as well as the plausible deniability that accompanies this stolen product through the supply chain,” says Lewis, explaining the difficulty in tracking and prosecuting those responsible for stealing large amounts of product and reintroducing it into the supply chain. “Unfortunately, the only way for retailers to be completely sure they are not purchasing stolen goods is to buy directly from manufacturers, or at least deal

■ If you ask any

retailer if they are buying their own stolen product back, the response will likely be a quick rejection that the notion is even possible. But, if you follow up with the even more important question— “How do you know your company isn’t buying stolen product?”— the answer becomes more stammering. ■

July - August 2012 | LPportal.com

Are Retailers to Blame?

with distributors who verify they only purchase from manufacturers,” says John Hawthorne, senior loss prevention manager for Publix Supermarkets. “There are a number of very well-established, legitimate distributors out there. Some well-intended distributors may purchase product from sources other than the manufacturer and may not be aware they are selling retailers goods that were stolen further upstream.” But only buying direct from the manufactures would be a retailer’s nightmare. What if they over-buy and have product left over? Are they supposed to eat that product (no pun intended)? What if diverters didn’t exist and manufacturers truly had no competition when trying to get retailers the best price? With 98 percent of retailers utilizing diverters, this notion of only buying direct seems perfect in the loss prevention world, but definitely not a realistic proposition in the overall retail world. “Law enforcement can’t do it alone,” says Lewis. “We must have educated buyers that partner with us to alert us when a deal seems too good to be true. Loss prevention professionals need to know exactly how the buyers in their companies are compensated because the more they are incentivized on the ‘deal’ they bring to the retailer, the more risk that retailer has of purchasing stolen goods.”

“With 8,100 stores, our purchasing department is only a subsection of those we deal with on a daily basis,” says Jerry Biggs, director of organized retail crime investigations for Walgreens. “But it is critical that you maintain good communication with that department. If you know those individuals, it’s more likely you can trust them to know who they are dealing with on a daily basis, and they will be more apt to alert you to potential problems. “Another important element when dealing with your company’s buyers is to make sure there are guidelines set for purchasing policies and that you are familiar with those guidelines,” continues Biggs. “I communicate with our alternative source buyers regularly. It comes back to relationships just like with local, state, and federal law enforcement. Your buyers are just as critical a partnership to have and maintain.” “Not only do we need to educate our buyers, it’s critical to ensure your executive team knows the consequences of ORC and the risks of potentially purchasing stolen product—no matter the financial incentive,” says Cathy Langley, senior director of loss prevention at Rite Aid. Another retailer said it was critical for her to know exactly how her company’s buyers were compensated. “If your company’s buyers are compensated or bonused off of the best deal they are bringing the retailer, that could

Show Off. Experience the ultimate in power and flexible protection with ShowsafeTM. Alpha makes your high-theft merchandise the star of the show while providing the ultimate in security. So if you’ve got it, show it off and sell more.

For more information, contact your Alpha sales representative or call 888-257-4272.

First in Solutions. First in Value.

AlphaWorld.com LP Magazine | July - August 2012

Are Retailers to Blame? be a risky proposition when faced with a stolen truck load of product for a great price,” explains the retail professional with more than 15 years experience in the food and drug industry. “It’s just human nature that financial incentives can turn some good people bad, and it just helps to know the background, so you can speak their language.”

The First Action—Your Responsibility

Who could use more work to do? It’s rare you hear someone complaining they are paid too much and do too little. Especially with the evolving role of loss prevention professionals into true business partners, there is shrink to account for, internals to investigate, external theft to prevent, and employees to keep safe. How much more can be piled on your already full plate? Maybe just add a few more things—like supply-chain integrity. Why? Because many believe that impacting this segment of the ORC problem would dramatically help retail in all different areas, including external theft, ORC, shrink, employee safety, and even sales. ORC experts interviewed discussed some very specific and tactical mechanisms to implement to truly reduce the retailer’s role in perpetuating the ORC problem. ■ Do your due diligence, ■ Make surprise inspections, and ■ Implement an anti-ORC buying program. Ken Golec, retired federal senior special agent of the USDA Office of Inspector General, explains the importance of a detailed investigation when visiting these diverter’s warehouses. “To make things even harder to detect, there are some warehouses that are quasi-legitimate, meaning half of the warehouse deals with totally legitimate product from the manufacturer or another retailer that over-purchased, but the other half of the warehouse could be dealing in stolen product and acting as the fence for a staff of boosters,” says Golec, who now runs his own investigations and consulting company out of Atlanta, Golec Investigations & Consulting. “These large-scale ORC rings are so efficient in covering their tracks and moving the product that

price alone can’t always be an indicator of stolen items. Once the product gets to a retail buyer for instance, the buyer may only be saving just a few cents per item and would cause no suspicion. This is why is it so critical that loss prevention professionals do their due diligence from within their companies, educating their buyers and making unannounced visits to these warehouses.” Kresser of FMG, an alternate wholesaler, concurs. “We always encourage our clients to conduct surprise inspections because we are proud to show our facility,” he says. “We believe if the entire industry was policed better, there would be a professional standard that weeds out those poor performers that give our industry negative connotations.” “It’s our responsibility as loss prevention professionals to educate our buyers on the importance of knowing where the product is coming from,” says Sheppard of CVS. “It’s imperative we educate our internal audiences as well as execute the tactical due diligence, such as conducting surprise visits and inspections of all the alternate-source providers a retailer may use.” Sheppard goes on to explain the critical elements he and his team look for when making these surprise inspections: ■ Is all the product of the highest integrity? ■W hat is the condition of the warehouse? ■ What type of product is coming into the warehouse? (Bonus packs, pallets, loose product, etc.) ■ Are the products in the manufacturers’ boxes? ■ Do the products have mixed lot numbers? ■ Do there appear to be cleaning stations or chemicals being used? ■ Are there security tags or labels on the floor or in trash cans? ■ What condition is the physical product in? (Touch it and see if you can feel residue or left over security tags.) Sheppard also recommends conducting these visits with a member of the retail buying staff. The warehouse

■ Alternate-source

providers, or diverters, are completely legitimate business enterprises that help retailers obtain and move product to the benefit of the consumer. If a retailer believes all diverters are purchasing stolen product, he has a fundamental misunderstanding of the industry and probably very little understanding about his own internal supply-chain polices or procedure. ■

July - August 2012 | LPportal.com

Are Retailers to Blame?

ORC Incidents Annually 300

Number of ORC Cases

250

Started Lasering Here

200 150 100 50 0

Qtr 1 252

Qtr 2 235

Qtr 3 145

Qtr 4 60

owners don’t need to know you’re a member of loss prevention. “At times we will accompany our buyers to observe details about a warehouse others may miss,” says Biggs from Walgreens. “It’s very important to have feet on the ground and talk to the neighbors even. Another important element is to keep visiting the

KEY_002_Final_Outlines.indd 1

warehouses even after they’ve been deemed legitimate. Unannounced visits are always the best way to understand exactly what’s going on.” Rite Aid also implements similar standards when vetting an alternate-source vendor, including standard business checks, talking to other customers they supply, and simply using the gut-check method when visiting the location—Does this feel right? “It can also be as simple as doing a Google Earth check on the location before you arrive,” adds Langley. “If the location is residential or there are other uncommon sites or dimensions, you might already have red flags.”

The Next Step—Your Program

One method some retailers are starting to employ is laser tagging, one of the newest tools to fight ORC rings. However, the practice seems to inspire some debate on its effectiveness versus cost. One retailer interviewed who utilizes laser tagging stated they achieved a return on investment for the machine in just one week. This same retailer, when comparing sales year over year in the same period, cited a $2.8 million lift in sales. Take a look at the chart at left supplied by this retailer to demonstrate the drop in known ORC cases in one market. Note that the only ORC cases

LP Magazine | July - August 2012

2/24/11 11:26 AM

Are Retailers to Blame?

used in this example are reported and verified cases—no guesstimates. How is this possible, some ask? The explanation given seems simple enough. If everyone can agree that repackage operations are solely intended to cover up stolen product, then laser tagging keeps product out of the repacking business. Why? Because ORC rings know they will earn less than they would for unmarked product. Some opponents of this process tout some of the challenges, such as finding space for the laser machine, changing the flow of merchandise as it comes through the distribution centers, and answering the question, “How long does it take to laser fast-moving product?” It seems at least from the case study cited above, retailers have a duty to research these answers for their own operations for even the possibility of impacting ORC to this magnitude. If retailers can’t afford the latest security tag or invest in a laser system, it does seem there are some rather low-cost, internal steps that can be taken. For instance, Harris Teeter’s David George outlines a straightforward, five-step process of setting up an anti-ORC buying program within retail. 1. M eet with your executives and explain how buying stolen product creates demand for more stolen product. 2. G et a commitment that your company will not purchase stolen product, which may entail revamping incentive structure for buyers. 3. C ommunicate expectations to suppliers by establishing procedures for violations and sending vendors detailed letters. 4. C reate a “right to audit” clause in all supplier contracts that allows unannounced visits to supply warehouses. 5. A udit for compliance by inspecting lot numbers after you receive product. These steps could be implemented by even the lone loss prevention director without a team of resources. Other suggestions for that individual are to leverage your resources by partnering with other retailers in your same segment and educate your distribution center management so they can be an extension of your inspection team— checking for product integrity and lot number matching.

“Retailers need to do everything they can to prevent creating a demand for stolen product in order to help decrease the ORC problem,” states CVS’s Sheppard. Several of his colleagues concur, including Cathy Langley at Rite Aid. “I agree that until all retailers start doing thorough audits of their alternate-source vendors and actually drop vendors that they feel have suspicious practices, it will be difficult to make a major impact against ORC,” says Langley. “Although the Harris Teeter program reduces demand for stolen goods, we can’t do it alone,” explains George when asked about the article. “It’s going to take all of us to put integrity first and take a stand to do the right thing, rather than simply buying from the cheapest, unreliable, and low-quality source. We need to buy from reputable suppliers and at Harris Teeter, we accept nothing less.” So, are we to blame for ORC? This is a very complicated question given the multi-layered complexity of the commodity marketplace. Certainly, retailers are not to blame for the entire ORC problem. It is most professionals’ opinions that the thieves will always find a way to beat the system—laser tagging or not, warehouse visits or not. But does that mean we don’t plug the holes we know of? The purpose of all of these interviews conducted, points summarized, and questions raised here is meant to spark industry debate and conversation, because if we’re not talking, debating, and learning…then perhaps we are to blame. To offer your experiences and insights, add your comments to this article on the magazine website, LPportal.com, or on the discussion groups LP Central on LinkedIn and LP Voices on Facebook.

■ Certainly, retailers

are not to blame for the entire ORC problem. It is most professionals’ opinions that the thieves will always find a way to beat the system— laser tagging or not, warehouse visits or not. But does that mean we don’t plug the holes we know of? ■

July - August 2012 | LPportal.com

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

Focus on what’s in store. Sony Video Surveillance. From profit protection to exception reporting to business intelligence, today’s retail systems depend on video surveillance. Which is why today’s retailers depend on Sony. Sony is a worldwide leader in camera sensors and image processing. So in every retail environment, our cameras deliver outstanding picture quality. And Sony offers a full range of cost-effective solutions from traditional analog to advanced HD, even hybrid cameras that help you migrate to HD IP. So get more out of your video surveillance. Get Sony. Learn more about Sony’s Retail Solutions at sony.com/security/retail or contact your Sony Security Representative. © 2012 Sony Electronics Inc. All rights reserved. Reproduction in whole or in part without written permission is prohibited. Features and specifications are subject to change without notice. Sony and the Sony make.believe logo are trademarks of Sony.

“I’m certified. Here’s why.” Sandy Chandler, LPC, CPP Regional Director, Loss Prevention Rite Aid Corporation

With the evolution of our profession, it is imperative that retail LP professionals become true business partners. Whether you are a seasoned LP professional or just starting out, the Foundation certification courses have valuable content to meet that goal.

These courses contain a wide range of subject matter that validates our ever-changing roles, showing how valuable our position is to our retail organizations. The LPC allowed me to become more proficient on some subjects not previously utilized. For example,

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

the compliance module enhanced my expertise, giving me an edge in our highly regulated retail environment. In order to promote career knowledge and advancement, the Rite Aid LP department endorses both the LPC and LPQ courses, and selects key personnel every year to receive scholarships. Why?

Because these certifications provide the business skills necessary to maximize our contributions, not only within our department, but to impact the company on multiple levels, substantiating a higher return on investment and further advancing our industry through continued professional development.

ACADEMIC VIEWPOINT

Roundtable Topics on Internal Theft at the NRF LP Conference O

n Thursday afternoon, June 21, in New Orleans at the 2012 National Retail Federation (NRF) loss prevention conference, Mike Amanek of Bloomingdale’s, Bruce Pyke from The Bon-Ton Stores, Bob Vranek of Belk, and I moderated a very interesting roundtable on the subject of “internal theft.” The hour-long session generated a series of provocative discussions on a variety of subjects. I thought that readers of this column might like a glimpse of the topics that came up in our group discussion. Perhaps you have different preferences, but it is my observation that roundtables are some of the most valuable sessions to attend at loss prevention events. In this largely unstructured meeting format, approximately forty-five participants actively discussed a series of topics related to the problem of employee dishonesty and internal theft in the retail store.

It is my observation that roundtables are some of the most valuable sessions to attend at loss prevention events. Economic Downturn

To get things going, we first asked the attendees to explain their experiences with internal theft during the economic downturn. Contrary to expectations, we found that most companies experienced lower than expected rates and levels of employee dishonesty during the economic downturn and this ongoing period of high unemployment. When participants were asked for explanations of this counterintuitive situation, a number of theories were offered. Some participants believed that under our current tight labor market, most associates did not want to jeopardize their jobs by involvement in dishonesty. Many employees were fearful that they would not be able to get another job if fired or prosecuted. Others believed that many of the most unproductive and dishonest employees had already been purged from their stores. As such, remaining employees were those who were the more

by Richard C. Hollinger, Ph.D. Dr. Hollinger is a professor in the Department of Sociology and Criminology & Law at the University of Florida, Gainesville. He is also director of the Security Research Project, which annually conducts the National Retail Security Survey (soccrim.clas.ufl.edu/criminology/srp/srp.html). Dr. Hollinger can be reached at rhollin@ufl.edu or 352-294-7175. © 2012 Richard C. Hollinger

honest and also persons who most highly valued their current retail careers.

Collaboration

Another topic that came up involved the increasingly disturbing situation where current employees collaborated with dishonest outsiders in order to “hook up” with employee insiders in order to jointly perpetrate theft from the store. Many participants of the roundtable told stories of these hybrid forms of theft where dishonest insiders enabled dishonest outsiders to carry out incidents of shoplifting, pass-throughs, burglaries, robberies, stock-room pilferage, and large-scale cargo and loading-dock thefts. It is clear that these hybrid types of crime constitute a major problem. Screening associates to determine whether their “friends” have criminal aspirations is a difficult, but potentially productive way to prevent dishonest associates from helping outsiders to steal from their employers. This might be a perfect use of freely available social media information posted by your associates.

Employee Motivation

The final topic of discussion involved the controversial topic of providing financial rewards and other incentives as a way to motivate associates to turn in fellow employees who are stealing or engaging in other forms of illegal activity. Although I observed that many of my young students believed that it was culturally stigmatizing to “rat out” friends who were dishonest, no one in the room found that providing rewards for turning in others was a bad idea. In fact, the debate focused on how much to provide as a reward in terms of dollars or percentage recovered. Despite the commonly found “culture of dishonesty” in our society, no participant thought that providing hotlines and rewards was an inherently bad idea. In fact, many thought that their companies did not provide a large enough reward for turning in fellow employees or shoplifting friends. These folks believed that if the reward was more significant, that even more people would be encouraged to “do the right thing” and stand up to protect the assets of their store. Hopefully, the above summary will encourage further debate among the readers of this column as you determine how you would have personally responded to these roundtable discussion topics. In any event, I encourage you to attend roundtable sessions in future loss prevention conferences. I think that you will conclude, as I have, that these are an invaluable way to share ideas in a face-to-face format on the many controversial subjects that challenge our industry and profession.

July - August 2012 | LPportal.com

Our bad boy is stronger than these bad boys. A Detex exclusive, the 230X multi-point locking device raises the bar on back-door security. When the bad guys try to muscle in, the super-tough 230X keeps them out. Designed with extreme-duty, three-bolt construction, this device is built with a larger side bolt that goes deeper into the frame, plus solid steel connecting rods rather than less-reliable hollow rod/cable construction. How tough is it? The bottom bolt goes 5/8-inch deep into the floor, preventing peeling up the bottom of the door. The largest side deadbolt in the category resists crowbarring. And at the top corner, the solid steel deadbolt provides needed stability. Testing proves that a 230X secured door withstands 10,000 pounds of pull force. Life safety and code compliant, the 230X is both panic hardware and a maximum-strength locking device. Ask us how this powerful new hardware can take the hit for your business, or go to detex.com/230X/.

800-729-3839 830-629-2900 www.detex.com

PARTNERING WITH RETAILERS

Transparency is a core value at eBay. As a company we believe in a transparent marketplace and work to ensure that we maximize transparency around the flow of information and seller activity. We believe that more information means more choice, and ultimately a safer site for our members. As part of our transparency, we: ■W ork with loss prevention departments and law enforcement globally to identify, prevent, and deter criminal activity, and ■ Provide our API to developers to create seller reporting programs. Following are a few examples of tools that are available that may help you conduct investigations. Advanced Search

One program we provide free of charge is the eBay advanced search function, which provides users a way to research product sales, sellers, and protect their brand. This tool allows users to search for: ■ Active listings of a product, ■ Current sellers of a specific product, and ■ Current listings by brand. These searches can be limited by price range and narrowed down to within ten miles of a zip code. ■ Completed listings of a product. ■ Past sellers of a specific product. ■ Past listings by brand. You may search by email address, member ID, member ID history, or member name and set up reporting for new listings of any seller you are interested in. We have also created a button called “Report this Item” that is next to every listing to enable any retailer to report an item as stolen. Any item reported by a PROACT member will be investigated as a stolen item by the PROACT department. If you are interested in receiving a copy of our training guide for advanced search, send an email to PROACT@eBay.com and place “Training Guide” in the subject line. Following is a partial list of additional tools available to our retail partners.

Terapeak.com

Terapeak.com is a third-party reporting tool based on our sales activity. Terapeak allows you to search the last 365 days of closed eBay listings to obtain pricing and listing statistics regarding specific products. A membership can be obtained for around $300 per year for one site, and for an additional charge you can receive the international reports for all eBay sites. Some of what it offers is highlighted below. ■S eller Report—This provides the user with a breakdown of any eBay sellers business, based on the last 365 days. You can view metrics, such as average pricing sell through percent, and the items most commonly listed. ■ I tem Browse—Review how the seller listed their product for closed listings. 30

by Dave DiSilva

■T rending Reports—This report highlights the sales performance

of a seller over the last ninety days and illustrates whether they are increasing or decreasing in sales. ■T op Titles—This report groups seller’s similar listings and ranks them on either sales or units sold. It also includes an average selling price for each top title. ■T itle Builder—Uses current eBay listing titles to suggest keyword searches for items you are interested in. ■C ategory Research—With this report you may search by a category, such as gift cards, and identify the top sellers and the average selling price. ■P rivate-Label and Brand Reporting—You may search by private-label items or by brand name. Once you have run this report you can request the top sellers, which will provide the total sales, average selling price, and the number of units sold over the last ninety days. ■G raphing—Terapeak provides graphing for most of the reports mentioned.

Dave DiSilva is a member of eBay’s Global Asset Protection team.

ORC Workbench

As a company we believe in a transparent marketplace and work to ensure that we maximize transparency around the flow of information and seller activity.

The ORC Workbench is another third-party research tool that also includes a case management system that works in conjunction with your searches. The workbench quickly locates items of interest, revealing necessary details about the seller account, location, and historic sales. Report analytics aids the investigator in determining a need to further investigate or block the seller from future searches. ■Z ip Code Search—Workbench provides the ability to search by product, by zip code and focus down to a half-mile of any zip code. ■ I mage Capture—You may capture images and data from social networking sites and court records to include in your case report. ■S eller History—Obtain all of a seller’s history over the last ninety days with a view of the actual listing. ■ Product Search—Search for specific products sold and the sellers of those products. ■S tore and Analyze Seller Sales History—Commit historical sales to a case and then generate seller analytics (graphs and charts) that summarize seller activity. These are just a sampling of the tools available to you. These tools are made available by eBay to promote transparency. For more information on these or any other tools, contact PROACT@eBay.com for assistance.

July - August 2012 | LPportal.com

INTERVIEW

The Transition from LP Executive to Solutions Provider By James Lee, Executive Editor The loss prevention industry is fortunate to have a strong support network of quality solutions providers. Some of the executives with these companies started their loss prevention careers on the retail side, but have made a successful transition to the vendor side. We spoke with several of these executives to try to understand the challenges they faced and how they became successful in their new roles. The insights they provide are meaningful to both retailers and other vendors. LP Magazine | July - August 2012

Moving to the dark side Prior to your role in the vendor world, you had a long career as a retail LP practitioner. Why did you make the switch? What were your hopes and fears?

Cheryl Blake

Vice President of Corporate Development Aspect Loss Prevention, a division of Verisk Crime Analytics Retail Experience

Director of LP at GameStop and FuncoLand; prior experience with Kids“R”Us, Lord & Taylor, JCPenney, and Korvette’s.

Rod Holm

Senior Vice President of Global Business Development Universal Surveillance Systems

Steven May

CEO LP Innovations, Inc. Retail Experience

Senior Vice President of LP and Audit, J. Baker Inc.

Retail Experience

Vice President of LP at Express; other experience with Limited Brands, Gottschalks, Target, and Marshall’s.

BLAKE: To be completely truthful, being a vendor had never been on my career path. Eleven years ago it wasn’t something that was normally done by dedicated LP professionals. However, the other positions I had been offered necessitated a move, and my kids wanted to finish high school in Minneapolis, so I accepted a position as VP of LP services with Aspect. Being one of the first LP executives I knew to make the transition, I didn’t know what to expect. I hoped for a positive reaction from my peers, since they would be essential to any success I would achieve in this new world. My biggest worry was that the job would be too one-dimensional compared to the ever-changing opportunities in the retail space. As it turned out, this job is every bit as challenging as I desired. HOLM: In the wake of layoffs

Kevin McMenimen

Consultant Verisk Crime Analytics Former President/CEO of Enabl-u Technologies and RuMe Interactive Retail Experience

Corporate Manager of Investigations Worldwide, Tiffany & Co.; additional experience with Bloomingdale’s, Jordan Marsh, and Macy’s.

Walter Palmer

Stuart Rosenthal

President PCG Solutions Former Partner in Contact, Inc. Retail Experience

Director of Loss Prevention, Babies“R”Us; prior experience with Kay Bee Toys.

Director of Sales, North America, Alpha Former Director of Sales, Northeast, for Universal Surveillance Systems Retail Experience

Director of Loss Prevention, Kids“R”Us and Imaginarium Toy Stores; other experience with Bloomingdale’s, Ross Stores, and Britches of Georgetowne.

and mergers, I was given an opportunity to join a company that I had a great relationship with as a customer. I felt that they had great products, an innovative and talented team, major upside growth potential, and a business plan that was well thought out and ready to execute for the future. I also knew how much USS tried to give back to communities through support of different charities, and these values were also very important to me. MAY: My transition to the vendor

community was a voluntary act based on an idea. I believed that the loss prevention function, especially in specialty retail, could be better served with a

July - August 2012 | LPportal.com

Moving to the dark side combination of both internal and outsourced loss prevention services. That idea led to the founding of LP Innovations (LPI) while I was still SVP at J. Baker. The CEO of J. Baker at that time was Alan Weinstein, who was not only very supportive of this concept, but also helped provide our initial funding. That was over fourteen years ago and, though at times it has been fun, challenging, and frustrating, I would do it all over again. McMENIMEN: I made the switch based on opportunity.

Realizing I had designed several solutions that would not only work for one retailer, but that fit well across a variety of retailers, I built a working model of the solution and went to several friends, who happened to also be retailers, and demonstrated the concept for feedback. This “if we build it, would you come?” approach paid off with immediate sales requests. At the time my “hopes” were to be able to make it work and satisfy the immediate customer needs, and the “fears” centered around the unknown in not knowing what may lay ahead that might be a roadblock. I was stepping out of my comfort zone and into an area that left many unknowns. I had less concern for myself or my career at that point as I felt I would have retail to fall back on if it didn’t work out. I was less concerned with “making it big” and more concerned with “making it work,” but I knew that if it did work, then I could help a lot of

The LP world is made up of people who are used to being the ones in control, so when you are a service provider, you have to resist the temptation to try to run your customers’ programs. I offer my customers good advice, but the decisions are ultimately theirs. companies versus just designing a system in-house and working for one retailer. PALMER: Once I started working at corporate, I had the

opportunity to get involved with several special projects in not only the LP arena, but also IT, supply chain, and inventory control. I realized I really enjoy process-oriented projects. I also had a passion for training and awareness. At some point, I thought I’d like to try making a career in those areas.

Protect your merchandise and increase your sales - PERIOD

www.CheckpointSystems.com 1.800.257.5540 marketingleads@checkpt.com LP Magazine | July - August 2012

Moving to the dark side ROSENTHAL: I had spent approximately twenty-plus years on the retail side and was looking for a new challenge. As it happened I had recently played golf at an outing with a vendor partner. A few months later I reached out to discuss making the move and decided it was time to try something new. My biggest fear was the unknown and working outside of my comfort zone. I was very lucky and called on a lot of my friends who graciously met with me and, in most cases, became clients.

It is funny that when I first came over, everyone told me I was going to the “dark side.” Well, the dark side is pretty bright. I love being over here. What was the greatest challenge you faced in making the transition? BLAKE: The LP world is made up of people who are used to being the ones in control, so when you are a service provider, you have to resist the temptation to try to run your customers’ programs. I offer my customers good advice, but the decisions are ultimately theirs. As it turns out, this has actually helped me deal with my kids growing up and making their own decisions. HOLM: I think the biggest challenge was getting to feel

comfortable with presenting all of the products and explaining to customers what differentiated USS products from the competition. As an LP professional, selling was something that happened frequently, sometimes to the CEO and CFO, store operations, as well as your direct reports. MAY: Prior to the launch of LPI, I was challenged daily with

controlling shrink for a multichannel retailer with thousands of stores across the U.S. and Canada and all that entails. Like most of my peers, I found it very challenging and dedicated myself to that goal. However, once I made the transition to LPI, I was not only challenged with leading a team of great folks in a common goal, much like I did as a director of LP, I had to figure out how to bring in new customers. My first customer was easy since it was my current employer, and I assumed it would be as easy for all new customers. I thought it would be as simple as telling the new prospect why they should buy my services, and they would line up at the door. Of course, that ended up being far from the truth and building an effective sales organization has been the biggest challenge of my career, but also, on a personal basis, the most rewarding.

I was essentially still working with my peers and sharing knowledge. In my new role, however, I was actually able to get more involved and help people directly. Rather than just share best practices, I was able to help implement them. I enjoyed it and, if there was a challenge, it was more in needing to charge people and make money, where it was more in my nature to simply be as helpful as possible. But, because I needed to eat and support my family, I had to learn to price the solutions, ask for money, and, worst of all, follow up on billing and late payments and chase people for money. I have since become far more comfortable with the first part, but still hate to call customers and chase down money, especially when the people you are calling are those you deem your peers and friends. ROSENTHAL: The biggest challenge was working from home, which presented two obstacles. One was not having people around you all the time, and the second was conditioning my family to understand that I was working and could not run errands any time they needed something.

Has it been an advantage knowing the retail LP world from the inside? If so, how has it benefited you in providing solutions to your customers? BLAKE: Absolutely. I can relate to what retailers require based upon first-hand experience. I’m familiar with the challenges of implementing a program in the retail space and have been able to educate my customers on issues that they may not have experienced yet. I’m not saying that other service providers don’t understand what is needed, but because I’ve “walked the walk,” I enjoy a greater credibility with LP leaders. It’s also the most enjoyable part of my job. I truly love the evaluation and problem-solving process.

I have found that my biggest disappointment is when I find execs who are not open to new ideas or get too tunnel-visioned to be open to new ideas or even discussion around new ideas. HOLM: I think that the biggest advantage is that I have sat

on the other side of the desk, and understand the challenges that LP leadership faces, not only with budgets for tools and technology, which includes building an ROI model that makes good business sense, but also from a payroll and people standpoint. Credibility and honesty are the keys to the successes that I have had.

McMENIMEN: I actually found the transition to be a

MAY: Having a background in retail LP has been a major

relatively smooth one. It was a different kind of role, but

advantage in my transition to LPI. It obviously has the

July - August 2012 | LPportal.com

Moving to the dark side benefit of helping me identify personally with the challenges facing a director of LP. I have walked in his or her shoes and have faced many of the challenges they have. Also, since we provide loss prevention programs to a variety of retailers, we face those same challenges everyday with our customers. LPI is unique in that we are still very much frontline LP professionals working in the retail industry, so the challenges we face are the same as those working for an internal department. I believe this gives us a unique perspective that helps us provide custom solutions to the specific needs of an LP director. It is not a one-size-fits-all approach to loss prevention, but truly a custom approach that encompasses what is unique about that retailer’s culture.

As a vendor we are not always trying to sell you. We can all learn from each other. Being open to sharing information and providing input on new ideas is critical to our collective success. “selling” process is more about ensuring people know what our capabilities are and then letting them decide when, and if, they could benefit from our services.

McMENIMEN: The insight into retail LP has been the core

of our success. Without this we would not have had the immediate nor long-term success that we have experienced. It was also a significant differentiator from other solution providers in truly being a company that had “walked the walk,” so to speak. It made us real partners in the industry, well beyond just being a “vendor.” PALMER: Our view is that we are not selling an “off-the-shelf” product. Instead, we are selling our capabilities, expertise, and problem-solving ability. The inside knowledge of what it takes to reduce shrink, improve safety, and achieve operational results is critical to our ability to help clients. In fact, our

ROSENTHAL: It is absolutely an advantage. By coming from the LP world, I have clear understanding of what the LP executive faces within their organization in selling programs internally, obtaining funding, and, most importantly, earning the trust of the field and store staffs who must execute these programs. I have always viewed my roles in LP as a sales role. I always was in a position to influence and sell new programs, policies, and procedures. There is a lot more selling from the LP world to their internal customers than most people understand. That being said, I do not view myself as a sales person, but an extension of my clients. I enjoy being in their stores, visiting with the

CLEAR PROTECTION + CLEAR PROMOTION + CLEAR OPTIONS

= CLEAR

ORC

CHOICE

SOURCE TAGGING

STORE LOGO

Label solutions to secure virtually any type of merchandise

www.CheckpointSystems.com 1.800.257.5540 marketingleads@checkpt.com LP Magazine | July - August 2012

Moving to the dark side field staffs and stores, which keeps me close to my roots in LP. I firmly believe in only offering to my customers products that most benefit their shortage or shrinkage reduction programs and generate the best ROI. Have you been disappointed with how some LP executives treat you as a vendor? Any disappointments in partnering with other vendors? BLAKE: I was worried about how my former colleagues would treat me, but it has not been an issue. I entered into this new world striving to be a partner, so I’ve had a great experience. I was surprised when my status as a vendor disqualified me from participating in some events, such as the Women in LP caucus, or from attending conference sessions at certain trade shows. However, many of these things are changing as the industry recognizes the benefits of informed and integrated partnerships.

I have sat on the other side of the desk, and understand the challenges that LP leadership faces, not only with budgets for tools and technology, which includes building an ROI model that makes good business sense, but also from a payroll and people standpoint. HOLM: I have no disappointments at all, and I am very

appreciative of the partnerships that I have been able to establish. My commitment is to provide the customers with cost-effective solutions that work in their stores. MAY: For the most part I have had great relationships

with LP executives and vendors alike and have built lifelong friendships with many of them. I remember early in my career at LPI working with some truly great senior executive’s like Bill Titus and Kevin Valentine, to name just a couple. I had known both Bill and Kevin only casually as fellow LP directors prior to joining LPI and always admired their programs and careers. I recall specifically being intimidated by Bill, being a little younger than him and coming from a smaller retail format. I wasn’t quite sure what to expect from him in my new role as a vendor “trying to sell him services” as compared to when we were peers. He quickly solved that awkwardness for me by challenging me to talk with him about emerging technologies, loss prevention best practices of other retailers, what new issues I thought we would be facing in retail loss prevention in the

near term as would as the long term. What I quickly realized was Bill and Kevin are dedicated lifelong learners who always challenge themselves to stay on top of their business by asking questions and seeking answers from as many sources as possible. Neither one cared if my background was as a vendor or retailer, but both were more interested in actively getting as many diverse opinions as possible to best serve the needs of their employer. So I owe both Bill and Kevin a big “Thank you” because I unashamedly adopted this approach for myself, and it has served me exceptionally well throughout my career. McMENIMEN: With LP executives, I have found that my

biggest disappointment is when I find execs who are not open to new ideas or get too tunnel-visioned to be open to new ideas or even discussion around new ideas. Not just in being close minded to hearing about new products, but in taking the time to get more involved with the industry initiatives and with the industry in general in shaping its direction. It’s not always about hearing a sales pitch. As a vendor we are not always trying to sell you. We can all learn from each other. Being open to sharing information and providing input on new ideas is critical to our collective success. I find the same with other vendors and to date have had great success, even with folks who are in some ways competitors, in being able to work together on certain projects. My only disappointment with other vendors has been limited to a very few occasions where lack of integrity has come into question with someone representing one interest, but having a different agenda and using the situation for gathering intelligence to steal ideas. I prefer the upfront approach…and I prefer to be kissed first. ROSENTHAL: This is interesting. When I was first promoted to corporate manager at Kids“R”Us, my director taught me how important it is to call back a vendor. He always said it is the right thing to do. Be honest and say if you’re not interested, but the bottom line is you might need them later. It is frustrating at times with the lack of response, but I also understand how busy people are and that, if there is not an immediate need, you might not get that immediate phone call back.

Now that you have been in both worlds, how do you react to comments like “the dark side,” “just another vendor,” and “suitcase slammer?” How have you tried to distinguish yourself and your company from those perceptions? BLAKE: When I first started at Aspect, I wasn’t fully at ease in my new role, and often used terms like those to describe myself. It was almost like I was apologizing for being in the position. A good friend in the business told me that by categorizing myself that way, I was actually diminishing

July - August 2012 | LPportal.com

continued on page 38

Our Look Isn’t the Only Thing That’s Changed. Along with a new look, Vector Security®, a trusted name in the security industry, introduces a new brand strategy that delivers intelligent security solutions tailored to the unique needs of our customers. We’re excited about our new brand and you should be too. Because it means our experts will ask the right questions and get to know your business goals and objectives. Then we’ll work with you to craft a security solution that’s a perfect fit. From electronic article surveillance to access control and video, we’ll partner with you to deliver performance-driven solutions for your enterprise. And, you’ll benefit from our 24/7/365, single point-of-contact service, so you can be sure all of your concerns are handled efficiently and cost-effectively. See what’s new at Vector Security. www.vectorsecurity.com

Moving to the dark side continued from page 36

The inside knowledge of what it takes to reduce shrink, improve safety, and achieve operational results is critical to our ability to help clients. myself and the work I did with his company. He said that he saw me as a partner, working with him to help him succeed, rather than an adversary. It was great advice that I took to heart and have made a cornerstone of our company’s approach to business. HOLM: After three years with USS, I am still waiting to feel like I am on the “dark side.” I think by building true partnerships through great communication and follow up, a high degree of integrity and mutual trust, and by listening to what the customer’s needs are and having the solution offerings to address those needs is what makes our company different. Many of our products were developed based on feedback from our customers. MAY: I have heard these comments, but they are usually made

tongue-in-cheek and, from my perspective, not how the vendor community is viewed by most retail LP professionals. I have found that most retailers or vendors take a partnership approach and see our products and services as an extension of the loss prevention program. McMENIMEN: I have not found this as much of an issue as the general perception makes it out to be. In thirteen years there has only been one negative comment made when I was, interestingly enough, compared to a used car salesman. But I hope it was a comment about the suit I was wearing and less about the products or services or my approach to selling them. However, given it was a comment from someone who was frustrated that their request for a free program had been denied, maybe it was just lashing out. I think the success in differentiating yourself and your company comes in being less of a “vendor” and more in being a solid business “partner” and delivering on your word. That can often come at a cost, but I am a firm believer in putting your money where your mouth is. In those rare occasions when something negative happens, we have always accepted responsibility for a mistake and always deliver on making it right at our cost. Some vendors will charge for the privilege of fixing their own mistake, and I have never been a proponent of that. Being a partner and doing so with integrity and ethics has always been what helps us distinguish ourselves from those perceptions.

ROSENTHAL: It is funny that when I first came over, everyone told me I was going to the “dark side.” Well, the dark side is pretty bright. I love being over here. We at Alpha differentiate ourselves in our support, training, and testing programs we conduct. We average a 98 percent success rate on all tests we conduct. We have field trainers and product managers that meet with our customers, and we truly are a business partner. We sell solutions and not just products. We don’t throw everything on a wall and go for what sticks, which is my definition of a “suitcase slammer.” At Alpha we are in it for the long haul, and our customer relationships are the most important to us and why our customers come to us for solutions first. Finally, for me personally, I have never forgotten my roots in LP and that is the foundation for everything I do in sales.

Much More Online These executives had much more to say than space allows in the print magazine. Go to the magazine website to see how they answered these additional questions: It is a reality that LP executives lose their jobs for whatever reasons and some believe they can become a consultant or vendor without skipping a beat? How would you counsel a friend faced with this situation? Based on your experiences, if you were back on the practitioner side, would you treat vendors any differently than before? Are there things that you miss from being an LP executive? Things you have not missed? In your role as a practitioner, you managed a budget inside a large corporation. Is there a different attitude or challenge managing the budget of a small company that may directly affect your personal finances? Your present role takes you into a broader spectrum of retail segments, such as big-box, grocery, restaurant, and department store, than you experienced as an LP executive. Have you found differences in the purchasing process or priorities? In what ways, if any, do you think the decision making on purchasing products and services has changed in the past decade?

July - August 2012 | LPportal.com

le ng es de rs ta nd s th e ch al un l na io at rn te In i³ at ey ar e a co m pa ny th LP Le ad er s fa ce . Th on ts fo r lo ss pr ev en ti of fe rs gr ea t pr od uc ss lit y to de liv er bu si ne bi xi fle e th h it w s, ne ed d , w hi ch ar e an ad de in te lli ge nc e m et ri cs s. in Sa le s & O pe ra ti on es iv ut ec Ex to e lu va nal Director, Loss Rui Rodrigues Natio

Canada. Prevention for Staples

The New Way to Look at Security Video

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

ASIS 2012 BOOTH # 431 Visit our website at www.i3international.com/lp or Scan and read more with your smartphone

Certification

Certification Scholarship Recipients I

n the last several months, a number of the Loss Prevention Foundation’s corporate supporters have awarded scholarships to individuals in the industry interested in obtaining either LPC or LPQ certification. Following are the scholarship winners presented by Vector Security and other winners presented at the recent National Retail Federation LP conference.

Vector Security 2012 Scholarship Winners LPQ Scholarship Recipients

Hart Brown, Rent-A-Center Julio Cuba, HomeGoods Charles Garretson, T.J.Maxx Andrew Gourley, Walmart Tyler Hail, Cabela’s Hector Hernandez, Retired Law Enforcement Officer Tyrone Macon, Marmaxx Julie Morris, Lowe’s Matt Strope, Dick’s Sporting Goods

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

Vanessa Llama, Navarro Discount Pharmacy, from Asset Protection Associates Falisha Mohammed, CFE, Lids Sports Group, from eBay Al Robinette, Charming Shoppes, from The Zellman Group Nesha Smith, H-E-B, from LexisNexis Jeremy Woodtke, Limited Brands, from InstaKey

Recognizing Achievement

It is important to the industry that those professionals who have studied and passed their certification exams should be recognized for their achievement.

Recent LPC Recipients

LPC Scholarship Recipients

Angela Busby, Bealls Kevin Foote, Staples Stephan Kimbrough, Dick’s Sporting Goods Brian LeClair, Cabela’s Paul McGinley, Dollar Financial Group Chris Scheutzow, Bed Bath & Beyond Ryan Sobieski, Cabela’s Jeff Troszak, Cabela’s Marshandala Wilson, Fossil

Canadian LPQ Scholarship Recipients

Navtej Duggal, Winners Luis Maio, A.S.A.P. Stephanie Paraskevopulos, Toronto Police Service Santo Zenone, Gap

Canadian LPC Scholarship Recipients Doug Carter, easyhome Stephen Kennedy, The Source Douglas Smith, Sephora

NRF LP Conference Scholarship Recipients Ron Calton, Pyramid Foods, from Vangent Phyllis Holland, Marshalls, from LP Foundation Matthew Houchen, Summit Racing Equipment, from Vangent Bob Hough, Dunham’s Sports, from Vangent Deborah Kliethermes, REI, from InstaKey Mike Korso, CFI, Tween Brands, from LexisNexis

Able Alvidrez, LPC, Reg. LP Mgr, Office Depot Anthony Arnold, LPC Richard Baxley, LPC, Dist LP Mgr, Rite Aid David Broom, LPC, CFI, Div. LP Mgr, T-Mobile USA Christopher Byham, LPC, LP Team Lead, Best Buy Canada Alecia Camps, LPC, CFI, Dist LP Mgr, Big Lots Christopher Chapman, LPC, CFI, Dist LP Mgr, Rite Aid Brian Eaton, LPC, Dist LP Mgr, Office Depot, Inc. Mike Esterak, LPC, Dist LP Mgr, Rite Aid Laura Guerry, LPC, AP Field Investigator, Walmart John Hassard, LPC, Vice Chairman, ASIS Sandra Hughes, LPC, CFI, LP Systems Analyst, HMSHost Keith Hunter, LPC, Reg. Dir of LP, Dick’s Sporting Goods Mark Jackson, LPC, CFI, Dist LP Mgr, Big Lots David Joyce, LPC, LP & Safety Mgr, Office Depot Dave Leinfelder, LPC, Mgr of Investigations, Best Buy Thomas O’Donnell, LPC, Reg Ops Support Mgr, Bass Pro Shops Mark Rainey, LPC, Dir of Inventory & LP, Murphy Oil John Reid, LPC, LP Agent, Walmart David Sacramone, LPC, Reg Mgr of LP & Safety Supply Chain, Office Depot Michael Sanders, LPC, Senior LP Mgr, jcpenney Lynn Schiess, LPC, LP Auditor, Lacoste James Scott, LPC, Sr Mgr Supply Chain, jcpenney Louis Senecal, LPC, LP Analyst, The Zellman Group Tim Shipman, LPC, Dir of Corp. Investigations & Crisis Mgmt, Delhaize America Amy Stephens, LPC, Dist Dir of LP, Macy’s Duane Stewart, LPC, Ops Mgr, Dollar General Bryan Treat, LPC, CFI, Dist LP Mgr, Big Lots Scott Udulutch, LPC, Multi-Unit LP Mgr, Macy’s Steve Walker, LPC, CFI, LP Supervisor, Walgreens John Watson, LPC, Dist AP Mgr, Home Depot Keith Weiner, LPC, President, Prevention Resources Jonathan Williams, LPC, CFI, Dist LP Mgr, Big Lots continued on page 71

July - August 2012 | LPportal.com

feature

Red, White, and Blue

A Manufacturing and Retail Revolution By Adam Paul, Contributing Writer

AMERICAN APPAREL

o company quite like American Apparel exists in the United States anymore. It’s both cutting edge and an anachronism; a company that defies modern accepted practices. It hearkens back to an earlier era of manufacturing, one that used to flourish here, before it became in vogue to outsource everything and send all production to the Far East somewhere. If you haven’t heard of American Apparel by now, you’re probably not paying close attention to the retail industry. Launched by Canadian immigrant and entrepreneur Dov Charney in 1986, American Apparel is a powerhouse clothing manufacturer that makes all of its products right in the heart of downtown Los Angeles, using local labor and all American materials. With over 1.6 million square feet of factory space in LA alone, as well as 250-plus retail stores scattered throughout the globe, this $547 million public company is a model for the way things used to be done around here. Taking a trip down to Los Angeles’ historic garment and warehouse districts reveals a glimpse into the past. Impossibly large and mostly vacant factories dot the landscape; silent testaments to a bygone era when products were actually manufactured here. American Apparel’s buildings stand out in stark contrast to the rest of the district. The parking lot is full to capacity; in fact, a good portion of the vehicles are crammed together because there isn’t enough room for them all. Workers dart in and out of the building like ants. The place is a bustling hive of activity, one that Charney has created from scratch. American Apparel marches to its own drum, a direct reflection of Charney’s philosophy. Refusing to outsource anything to companies outside the United States, American

American Apparel’s asset protection team includes (from left to right) Tony Kim, Kevin Makoyan, Nelson Sanchez, Andy Flores, and Marylou Vazquez.

Apparel employs over 2,400 Angelinos 24 hours per day in their bustling factory. The place serves as world headquarters as well. Everything is either done, made, or controlled from here. Even American Apparel’s advertising campaigns are

conceived, designed, and photographed here. Technical support for its retail stores is based here. Web programmers and designers that run and design American Apparel’s site work here as well. When Charney states that Los Angeles is American Apparel’s headquarters, he really means it. It’s this uniqueness that sets American Apparel apart from other Blue Montez garment manufacturers. While its competitors, such as GUESS and Forever 21, also maintain a manufacturing presence in LA, none of them produce 100 percent of their product in the U.S. American Apparel’s ethos exudes patriotism and a pride of manufacturing things right here at home, a sentiment that has been largely forgotten in what once used to be an incredibly industrial nation. Can Charney produce his products for less money in China? Most certainly—but he won’t, plain and simple.

The Loss Prevention Challenge

Like any company, American Apparel has its share of loss prevention concerns, exacerbated somewhat by the fact that it has to deal with factory environments as well as retail stores, which means its LP team has to switch gears often. Incredibly, American Apparel really didn’t even have an LP team before a year and a half ago, when loss-control efforts were handled by personnel from the IT department, headed by Stacey Shulman, chief technology officer (CTO) for American Apparel. “We knew we had problems in the factory, and that we needed to bring on an LP professional,” states Shulman, which they did. Blue Montez now heads up loss prevention efforts reporting directly to Shulman. Yes, you heard that right. American Apparel’s asset protection department reports directly to its chief technology officer. While most LP teams report to someone in operations or finance, American Apparel once again takes a different tack than just about any other company on this issue, due in part to the technological nature of its LP efforts. Before Montez and his team were brought on, the IT department paved the way for LP efforts by equipping its stores with remote camera systems, employing heavy RFID tags for inventory control, as well as installing EAS gates. Before Montez came along, Shulman and her IT department had the tools in place to prevent the theft, but they lacked the detailed knowledge on how an LP operation was supposed to be run. “We wanted the LP department to be less like security and more like the FBI,” she states. “We weren’t getting a lot out of the implementation.” While technology is the backbone of many LP operations, it doesn’t replace the knowledge of how

July - August 2012 | LPportal.com

AMERICAN APPAREL to prevent the thefts in the first place. And that’s where Montez came in. Blue Montez is a veteran LP professional, and serves as American Apparel’s director of asset protection. Based out of American Apparel’s headquarters factory in downtown Los Angeles, Montez quickly found out that he had his work cut out for him. Considering that he has to deal with LP concerns within the massive factory—1.6 million square feet of space, packed with 2,400-plus employees, and teeming with easily stolen materials, finished garments, and supplies—not to mention 250-plus stores worldwide, it’s an understatement to say he faced serious challenges from day one.

The Factory Environment

In and of itself, American Apparel’s factory represents a formidable challenge to an LP professional. The sheer size of it, not to mention its porous nature of multiple entrances and an abundance of property to steal, makes it a challenging environment in which to keep losses in check. Before Montez and his team arrived, Shulman makes no bones about the fact that “shrink was out of control.” In her estimation, American Apparel was suffering from a corporate

culture problem first and foremost. “Books were being written online about how to steal specifically from American Apparel,” says Shulman. “Employees posted on social media networks that the reason why they took jobs with us was so they could steal.” Shulman quickly realized that the culture was to blame for this, and sought to change it. “Theft impacted more than just

VIDE O SURVE I LLANCE

VI DEO I NTELLIGENCE

Video intelligence takes retail security beyond mere observation, into the proactive worlds of protection, investigation, and rapid apprehension. What’s more, 3VR’s comprehensive platform is even helping retailers rethink video’s potential. Our ever-expanding toolkit of advanced software is being used to visually analyze a wide variety of consumer behaviors, resulting in increased sales and better service. And because we’ve made integration with existing camera, POS, RFID, and time card systems so easy, 3VR is not only highly intelligent, it’s also street smart. VIDEO INTELLIGENCE PL ATFORM™

www.3VR.com

Visit us for your complimentary Buyer’s Guide to Video Intelligence for Retail.

LP Magazine | July - August 2012

3vr.com/retailguide

AMERICAN APPAREL the shrink; it lowered morale,” she explains. “We needed to educate our people that our items have value; that every item counts.” In case one thinks that poor working conditions were to blame for this culture, consider that American Apparel pays above-average wages to its employees and supplies them with some of the most amazing and unusual perks in the industry. Charney subsidizes their on-site lunches for starters. But amazingly, he also has installed a full medical center within the factory, filled with state-of-the-art equipment and staffed with a medical doctor in order to care for his employees, both for injuries and preventative care. Charney also hired a team of seven masseuses who make their way throughout the company and give employees back massages…free of charge. “It’s the complete opposite of a sweat shop,” states the on-site doctor, clad in his immaculate white lab coat. American Apparel’s employees are among the best treated factory workers in the country, and yet there was still rampant theft.

to appeal to this vast majority in order to get them to help the company by rooting out the problem employees. Montez immediately began drawing on the strength of his IT department as they learned from internal investigations and identified areas of opportunity. “We had situations where we could not effectively control what an employee was working on,” states Montez. “We would see them sewing something on a machine, but we couldn’t be sure if it was for their own personal use (considered theft) or part of a job.” The IT department installed timekeeping/productivity devices at each work station that require an employee to sign in and enter the order number he or she is working on in order to use the machine. The system provides exceptions on employees’ productivity and, more importantly, ensures that employees are working on valid orders they have been assigned to, thus closing that loophole for all intents and purposes. Ultra-high-tech biometric punch clocks also ensure that the employees’ time is also closely monitored and accounted for.

The Internal Investigations Process

After bringing Montez on, the first order of business was to announce the formation of the asset protection department and the company’s new emphasis on controlling loss. In cooperation with the in-house advertising department, Montez formulated an awareness campaign that was designed to encourage employees to report theft and make them aware that changes were afoot. A confidential tip line was also put in place. The campaign wasn’t designed to be intimidating. Rather, it was designed to make employees feel like they had an outlet to avail themselves of, a place where someone would listen to them and what they had to say. As in most companies, American Apparel’s workers are a mirror of society—the vast majority of them are excellent and honest employees, and a select few are where the bulk of the problems come from. The awareness campaign was designed

Montez instituted an internal investigative model to pursue the less casual thefts, and has a team of people closely watching the goings on at the factory both visually and through surveillance. Montez also forged new allegiances with his department managers, encouraging them to work closely with him to take care of their theft and related personnel problems. Montez’s initiatives have resulted in the construction of an interrogation room on site at the factory. Essentially, the in-house LP team compiles evidence based on surveillance or investigation and then requests that the employee come in for an interview. “The interviews last about two hours,” says Montez. The employee is brought in and questioned on his or her activities, and then Montez’s team decides what needs to happen to that employee. “Sometimes we find the employee has made an honest mistake,” states Montez. “They may have been told something was okay to do by someone else, and there is no malicious intent.” The employee is then educated on how not to repeat the error, thus helping to curb shrink a little at a time. In other cases the interviews will reap full-on malicious activity, and the employees are prosecuted criminally. Montez’s biggest case to date culminated in the bust of a ring of employees who had stolen over $180,000 worth of materials and finished goods. The employees in question had setup a scheme where both first- and second-quality finished goods as well as materials were being moved out of the factory, in some cases using American Apparel’s own FedEx accounts. These goods were then being fenced locally for great profit.

July - August 2012 | LPportal.com

continued on page 46

AMERICAN APPAREL continued from page 44

How many of these interviews occur at American Apparel? “I would say in the neighborhood of five or more interviews a week,” states Tony Kim, corporate asset protection manager for American Apparel. Montez estimates that this year alone, they will process between 200 and 300 cases in-house, with the corresponding number of interviews. “I expect the number of interviews to go down as we get up to speed,” Montez adds. Has the investigative model and interview process worked thus far at American Apparel? “Absolutely,” states Kim unequivocally. “We have been able to work alongside security at the factory, and since the inception of the LP department, we have been able to bring in new methods, added resources and skill sets that have made a huge impact here at the factory.” Asked about the success of the program, Montez is guarded. “Have we addressed it entirely? I feel strongly today we have greatly raised awareness and implemented intelligent programs that have established the foundation of our department’s future,” he states, fully realizing that reigning in shrink within his massive facility is a work in progress. Employee morale is also increasing tremendously in conjunction with the new LP initiatives; after all, no one wants

Marylou Vazquez, AP corporate analyst (right), conducts a store audit on her iPad with store manager Sandy Altamirano.

to work in a culture of theft and dishonesty. Montez claims that morale “has definitely improved for the better, and we are viewed as a partner to many factory department managers. Today there is a sense of importance that we have implemented where continued on page 48

RFID Enabled Smart Surfaces Smart Surfaces// LP meets RFID. Smart surfaces read RFIDtagged products.

Our smart surfaces use item-level RFID technology to provide advanced security within an open environment. Smart surfaces identify and quantify RFID-tagged products placed near a smart surface and send alerts in the event of product removal. Smart Surface Styles

Report product quantity and movement on smart surface.

Display equipped with smart shelves.

Shelf

Panel

Floor

Fitting Room

Scan this QR code to view PDFs, video and more! And send notification in the event of sweep.

800.747.4384

July - August 2012 | LPportal.com

www.intelligentlossprevention.com

THE CLICK-IT ADVANTAGE

Your choice for digital video solutions

CAPTURE

VIEW

ClickIt offers a complete line of NVR, HVR, DVR and Embedded video solutions to meet the needs of the most

ANALYZE

demanding environments. Our Analytics at the Edge releases untapped potential of your video data to deliver value to all levels of your organization.

RECORD

ClickIt’s Central Management provides a unique opportunity to truly manage your video systems by monitoring the health and well being of your video assets right down to the camera level. And, our

MANAGE

Smart360 now provides H.264 support making 360 video an excellent alternative.

www.clickitinc.com

A better way to manage your video asset technology

For more information regarding our complete line of Digital Video Solutions give us a call at 516-827-6326 or email us at info@clickitinc.com

AMERICAN APPAREL continued from page 46

the factory employees are aware of the role we play within American Apparel.”

The Retail Stores

When sitting in Montez’s office, the headquarters within a headquarters at American Apparel, it’s easy to forget that Montez has retail stores to deal with as well, one of which is housed within American Apparel’s own factory. American Apparel’s model is to produce the garments in Los Angeles and then move them out to its retail stores for sale. American Apparel boasts 142 stores in the United States alone, as well as stores in twenty countries, including Canada, Japan, Korea, Israel, Australia, France, the United Kingdom, Italy, and Germany—250-plus stores in total.

investigative functions are outsourced, allowing Montez’s department to be a little leaner. The team focuses mainly on shrink-prevention awareness programs, internal investigations, financial-fraud prevention, remote store audits, and remote viewing. All of American Apparel’s stores worldwide are extensively monitored with cameras, except where local laws prevent such video. Much of American Apparel’s LP efforts related to the stores are centered around inventory discrepancies, with an extra close eye given to American Apparel’s high-shrink markets. “We’re essentially concerned with internal process operations, auditing, and reviewing store footage,” Montez states. However, Montez does not take outsourcing lightly. “You can only outsource something that you have mastered yourself,” he adds, referring to the fact that his highly experienced LP team knows how to oversee critical store LP functions without actually having to perform the task themselves. American Apparel’s LP team isn’t beholden to their outsourced in-store LP teams while being left in the dark. They are firmly in charge of them. The corporate culture change envisioned by CTO Shulman has also trickled down to the retail stores, where efforts are underway to bring store managers into the new culture of accountability. In a break from the norm, store managers are encouraged to directly communicate with Montez and his team, and he hears from them frequently regarding the issues they are experiencing.

American Apparel Today

The asset protection team meets quarterly to discuss results, initiatives, and future strategies.

American Apparel’s revenue includes both their retail stores as well as American Apparel’s wholesale customers—companies that take American Apparel’s clothing and brand it with their own name. The stores are another area where American Apparel’s unique LP model, headed by IT, really shines. Being headed up by an IT department has its advantages, and one of them is seamless technology integration with loss prevention efforts. The stores are heavily reliant on RFID technology for loss prevention and inventory-control purposes, and Montez’s team does lots of remote monitoring of its product. “Just by showing the stores how to properly sensor tag the product, we were able to prevent $30K per store in losses,” states Montez, a testament to the fact that technology alone does not solve LP problems, but that technology, married to good LP practices, definitely makes an impact. Montez’s team works on a hybrid LP model where the stores are concerned. The actual security and external

A year-and-a-half after a massive LP paradigm shift within American Apparel, the results are already apparent. While Shulman feels that within the past year the foundation has been laid for future efforts, positive results are already starting to show. According to Montez, American Apparel’s CFO is already receiving compliments on the job that the IT department…and thus, the LP department…is doing. What’s it like being headed up by an IT department? “Technology groups are just more creative when it comes to LP issues,” states Shulman, and Montez concurs. “It improves and modernizes the asset protection department,” he believes. It’s no coincidence that American Apparel, a company known for being completely different in almost every way to its competitors, uses a novel…and frankly unorthodox…model with which to run its LP efforts. And like everything else American Apparel does, its fledgling LP department is enjoying much success, with an increasingly bright future in store…and in factory. ADAM PAUL is a business writer based in Los Angeles, California, and an ongoing contributor to LP Magazine. He can be reached at AdamP@LPportal.com.

July - August 2012 | LPportal.com

EVIDENCE-BASED LP

Data Analytics and Audit Research Y

ou walk into your favorite doctor’s office for your annual physical. You and your doctor both want to see how you’re doing and check for any upcoming issues. So, what does your physician check and why? It’s pretty simple. Neither of you have the time or resources for every single body part or function to be examined, only the most important, the most likely, the most relevant. This should sound eerily similar to conducting store and distribution center audits. Nobody has the time or resources to check everything. Best practices probably dictate that you focus on the most meaningful measures of the most likely and harmful problems. But there’s often a huge gulf between what your doctor has to work with to guide efficient diagnoses versus what the LP practitioner has. As I’ve mentioned many times, physicians are largely evidence-based experts. They practice medicine based on a ton of research. They tend to measure (for diagnosis) just what the preponderance of the relevant theory and evidence indicates. They then discard the rest. And, they look for fact-based, meaningful levels in the most critical measurements.

When conducting store and distribution center audits, nobody has the time or resources to check everything. Best practices probably dictate that you focus on the most meaningful measures of the most likely and harmful problems. For example, if they’re monitoring heart performance, they’ll probably be looking at resting heart rate, blood pressure, body mass index, family history, smoking, inflammation, exercise, and stress levels, as well as blood fat, cholesterol, and sugar levels. They look at these or other metrics because multiple rigorous research studies indicate that they should do so. But most important here, based on research, and the current patient’s profile, they’ll be looking for specific ranges of those metrics. Most

by Read Hayes, Ph.D., CPP Dr. Hayes is director of the Loss Prevention Research Council and coordinator of the Loss Prevention Research Team at the University of Florida. He can be reached at 321-303-6193 or via email at rhayes@lpresearch.org. © 2012 Loss Prevention Research Council

retailers haven’t yet come close to this type of precision. Therein lays our industry’s opportunity.

Audit and Performance Management R&D

Research across chains and multiple stores over time, combined with field experiments, will provide practitioners with more precise information on the most efficient and meaningful measures and ranges to include in ongoing data analytics and audits. The industry associations as well as the Loss Prevention Research Council (LPRC) among others are working to greatly refine diagnostic and treatment measures to achieve this end. The process will take a while, and needs to be exhaustive, but should prove powerful. Here are just some of the audit questions the LPRC’s Predictive Analytics Working Group…a retailer-led coalition…is working: ■ What should really be measured? ■ Why should this be measured? ■ How and how often should it be measured? ■W hat are meaningful and actionable performance ranges? ■ Who should measure? ■ How and by whom should follow-up action be taken? ■W hat performance rewards and consequences provide the best impact? This working group is using sophisticated data analyses to help determine the best answers to some of these questions and others.

Action Teams

In the March-April issue (page 56), I mentioned the currently forming action teams. The Sporting Goods Action Team is the first action team to come together, with initial members Cabela’s, Dick’s Sporting Goods, Walmart, and Gander Mountain setting objectives, deliverables, process, timing, and resource needs. The group is also reaching out to recruit other sporting goods retailers into the group. The team is initially planning to conduct firearms/ ammunition protection and selling innovation and evaluation before moving on to other priorities. Other action teams are in the process of forming: ■ Auto parts chains Pep Boys, Advance Auto, and AutoZone are working on their group. ■ Chad McIntosh of Bloomingdale’s is leading department stores, lease department manufacturers, and mall-based chains. ■ Brian Bazer of Dress Barn is forming an apparel retail team.

July - August 2012 | LPportal.com

■ Several

drug and supermarket chains are also forming their teams with others to come.

Maximize Cash Flow

Offender Research

Two retailers are working with LPRC scientists to study employee deviance, while individual shoplifting offenders are being run through a specially set up CVS/pharmacy store to learn more about tweaking the “see it, get it, fear it” components to achieve “overload” or deterrence with varying levels of shoplifter experience and motives. Likewise, the team is working with multiple retailers and MeadWestvaco from the Packaging Innovation Working Group on enhancing deterrence via persuasive messaging, as well as more durable and less concealable packaging designs. The Benefit Denial Working Group is also working on similar questions, along with setting up two store technology pilots to tweak anti-theft technologies that preclude product use until the item is legitimately purchased (benefit denial).

Impact Conference in October

The LPRC has put out research findings and discussed implications at Impact conferences now for the past seven years, with the 8th annual event scheduled to be hosted on the University of Florida campus in Gainesville this coming October 15 – 17. This year’s workshop and conference promises even more collaboration via numerous breakout groups, interactive sessions, and case studies, as well as networking opportunities at the opening reception and barbeque dinner at the Hayes family farm the second evening. There will be a special panel discussion around how criminologists can and will support LP practitioners. There will also be a special interactive session on mobile POS and the digital journey to plan protective innovation research. Please email operations@LPresearch.org or visit our website, LPresearch.org, for more information.

Future Industry Talent

It is also worth mentioning to retailers and solution partners alike, that both Dr. Richard Hollinger and I are teaching some really bright students what we believe to be cutting-edge loss prevention strategies and tactics as part of their University of Florida curriculum. Incidentally, if you have not heard, Dr. Hollinger has been named the new chair of the UF Department of Sociology, Criminology and Law, which is a great honor. Students are being exposed to real-world environments, current crime- and loss-control theory and practices, incident and offender interview video footage, and multiple site evaluations. Some of them are even taking the Loss Prevention Foundation’s LP Qualified certification program to supplement their academic studies. I would encourage both retailers and solutions providers to take a look at these students for internships and possible employment. We would also love to have industry representatives as guest speakers for these classes. As always, I look forward to your insight, comments, and questions. Please consider getting involved with the LPRC to advance our industry. Email me at rhayes@lpresearch.org with your suggestions, comments, and questions.

isit Please v C SS us at NF 0 30 Booth #

ACCEPT BILLS AND DISPENSE COIN WITH CONFIDENCE AND VISIBILITY • Increase visibility and “anytime reporting”– remote access management and immediate view of cash flow, with detail reports for accountability audits • Employee self-service – increase cash management productivity with direct, authenticated and traceable employee deposits • Remote management – remote access management and support for software rollouts, updates, setup control and data retrieval or upload • P.O.S. and back office integration – track the flow of cash to the transaction level

TO MOVE AHEAD To learn more about products that can take your operations to a new level, please contact us today at (800) 342-3033 ext. 3 or visit us at www.remotecashcapture.net.

LP Magazine | July - August 2012

The Right Combination 51

AssociationS In Action by Lisa LaBruno

Building Momentum A

lthough RILA’s 2012 Loss Prevention, Audit, and Safety Conference (LPAS 2012) took place three months ago, the session content lives on in the form of initiatives driven by RILA and our members. One of the biggest challenges to planning the conference year after year is identifying session topics that help “move the industry forward” and apply across retail segments, sizes, and footprints, at the same time securing the most qualified speakers to deliver the message. Our LP steering committee invested considerable time and effort into making this year’s program great, and we took pride in the exceptional quality of the education attendees received. So, rather than file it away once the conference ended, the educational content is laying a foundation for some of RILA’s key initiatives over the next several months.

Summer Webinar Series

RILA’s Summer Webinar Series, which runs June through August, features some of the top-rated sessions from LPAS 2012. Walter Palmer, CEO and president of PCG Solutions, kicked things off with an encore performance of “Survival Skills in the Era of Doing More with Less.” Palmer provided a blueprint for understanding where you are spending your time, identifying the most important things you should be doing, and then negotiating for resources and outcomes. On July 24 Steve Szilagyi, senior vice president of distribution at Lowe’s, will share how ownership and personal accountability can reduce workplace injuries in “Cornerstones of Lowe’s Safety Program.” Conference attendees were impressed by Lowe’s energy and passion around safety. To hear it for yourself, join us July 24. In August, Bryce Bennett, senior manager of asset protection supply chain for The Home Depot, will discuss how his team effectively implemented a quality ergonomic program in a warehouse environment. Webinars are free and open to everyone. To register for upcoming webinars or to view past ones, go to the Events and Education page at RILA.org.

Innovative Technology

LPAS 2012 featured several sessions addressing the need for innovation in the retail industry—how the industry is driving innovation and retailers’ expectations for loss prevention technology of the future. This desire for innovative technology solutions to emerging risks is the driving force behind the Retail Loss Prevention Technology Priorities Document (TPD), a compilation of preferred technology functionalities for theft-deterrent solutions that retailers believe can advance with innovation. The spirit of the TPD is to encourage collaboration across industries and to stimulate innovation

Lisa LaBruno leads the asset protection offerings in the areas of loss prevention, retail crime, workplace safety, disaster recovery, operational audit, research, and benchmarking for the Retail Industry Leaders Association. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs, and more than 100,000 stores, manufacturing facilities, and distribution centers domestically and abroad. LaBruno can be reached at 703-600-2024 or lisa.labruno@rila.org.

for the benefit of the industry and the solution providers who offer cutting-edge solutions to problems retailers face. RILA’s horizons committee, comprised of LP technology experts from among RILA’s retail members, is helping drive the TPD initiative.

Emerging Criminal Risks

The open forums and roundtable sessions in the investigations, workplace safety, and audit and analytics tracks at LPAS 2012 opened our eyes to ideas for initiatives that can deliver value to RILA member retailers. Just listening to retailers discuss the multitude of challenges they face helps us stay focused on the big picture, rather than getting wrapped-up in one issue to the exclusion of other pressing issues. For example, it was clear from the discussion during the investigations roundtable session that organized retail crime (ORC) is not the only pressing criminal risk retailers are struggling to manage. Following LPAS 2012, RILA’s crimes against business committee conducted a SWOT (strength, weakness, opportunity, threats) analysis to pinpoint other challenges facing retailers. Among them were crimes against persons, financial crimes, cyber/e-commerce fraud, and healthcare. We’ll be tackling these and other emerging criminal trends in 2013.

Mobile POS and Beyond

Finally, there was a lot of buzz among LPAS 2012 attendees about a session led by The Home Depot and Walgreens entitled “Mobile POS and Beyond.” No doubt emerging POS technology has captured the industry’s attention. Earlier this month, RILA announced an initiative in partnership with the University of Arkansas (UA) and with support from Checkpoint Systems and Ernst & Young to study emerging POS technology, evaluate the associated loss prevention risks, and identify possible preventive strategies. In September RILA member retailers will convene at UA’s Center for Retailing Excellence to continue driving the research project forward and to take advantage of the grand opening of UA’s RFID Research Center laboratory. Following that, RILA’s Asset Protection Leaders Council (APLC) will meet at Walgreens’ headquarters outside Chicago in early October to review the preliminary research findings. A good litmus test for evaluating our conference program is the extent to which the session content lives on once the conference has ended. I am proud to report that LPAS 2012 passed the test. If you are interested in registering for the Summer Webinar Series, attending any of the meetings referenced in this article, or joining a RILA committee, please feel free to contact me at lisa.labruno@rila.org.

July - August 2012 | LPportal.com

Feature

Premises Security Liability Reasoned Behavior Trumps Perfection By Jon Groussman, J.D., and Constantine“Dean”Nickas, J.D.

Premises Security Liability

wners, operators, and insurers of businesses, including commercial and residential properties of all types, take little solace in news reports that suggest a decline in the nation’s crime rate. The focus of their concern is more likely to be the growing volume of incidents of violent crime, diminished law enforcement assistance, and the related risk of premises security litigation. Just in the two-week period preceding the February 27th Ohio high school shooting where three students died, for example, a supervisor was shot at a California Federal Building; two were killed and two injured outside of a New Jersey market; and two were shot at a Connecticut hospital. Less than two weeks later, two people were killed and seven injured at a Pittsburgh health clinic shooting.

Increasingly, employees, customers, shareholders, and the general public hold all companies accountable for irresponsible behavior, whether that involves product integrity, quality of service, or premises security. The cost of crime in a court of law for any company that has not managed that risk in a responsible manner is limited to financial loss. The cost of crime for an irresponsible company, in the court of public opinion, however, is unlimited. Beyond the loss of life, what’s peculiar to many business owners is the lack of sustained media coverage and law enforcement focus of events such as these, suggesting that random violence is now commonplace and viewed as an inevitable risk that may not be possible to manage. When the Columbine High School tragedy occurred in 1999, for example, the nation’s attention was focused on that event for many months. In contrast, this year’s Ohio school shooting remained in the national news for less than a week. Brazen robberies, senseless shootings, and other horrific acts of workplace violence now occur with such frequency that they often go unreported, even at the local level, on a busy news day. For corporate security professionals who are understandably focused on shrink reduction and other types of physical losses, the nation’s frequency and growing

acceptance of violence may serve to divert attention away from protection of their company’s human assets—employees, customers, and suppliers. However, there is a substantial price to pay for not paying adequate attention to premises security. The stakes and odds are stacked heavily against any organization that does not take necessary steps to protect their employees, customers, and others who might expect security measures minimizing the risk of physical harm. Multimillion dollar settlements and jury verdicts against owners and landlords continue and are now commonplace, not only for physical and psychological injuries suffered, but also involving punitive damage awards against corporate entities for negligence. Increasingly, the underlying message is clear—demonstrate reasonable preparation in advance of violent crime or face significant financial consequences. Beyond reduction of financial liability, however, companies that properly manage premises security stand to benefit in many other tangible ways. A secure physical environment, for example, serves to attract and retain better employees who are likely to deliver higher levels of customer services. In turn, customers who feel secure and receive better service will shop and buy more frequently, and both of those factors can also have a positive impact on shrink. Management of premises risk not only drives revenue, it also benefits a company’s internal culture, overall brand reputation, and shareholder value.

The Significance of Foreseeability in Litigation

The most critical circumstances driving premises security lawsuits are related to failure to assess risk factors and to adjust security measures accordingly. Risk factors can be measured by reliable crime and risk data, prior incidents or complaints, risks inherent to the industry, and the frequency of assessments. In 2009, for example, a Mississippi jury awarded $2.5 million in a premises liability case involving an elderly woman who was attacked in the parking lot of a major grocery store chain. The defendant was found to be negligent for failure to provide proper security in light of several prior purse snatchings and assaults in the same parking lot. Premises security litigation always involves looking into the “retrospectoscope” and micro-analyzing events and decisions that have occurred long before a violent criminal event takes place. The key inquiry in these cases is whether a premises owner may be held liable for failing to protect people from the results of reasonably foreseeable criminal conduct. Foreseeability of a security threat may be established by proving that a retailer or property owner either had actual knowledge or should have known of a particular assailant’s inclination toward violence, or by proving that the defendant had actual or constructive knowledge of a dangerous condition on the premises that was likely to cause harm to a patron or employee.

July - August 2012 | LPportal.com

Premises Security Liability

A dangerous condition may exist if, based on past experiences, there is a likelihood of criminal conduct by third persons in general or if security conditions are inadequate. Generally speaking, jurors are more apt to punish a defendant for outright ignorance and failure to investigate and proactively address known security risks. Jurors may also react to poorly reasoned decisions, such as concluding, contrary to evidence, that additional security measures are unnecessary. Most state courts conclude that the type and extent of prior crimes will supply admissibility to establish foreseeability of criminal activity, and the radius from the business and the time period of prior crimes are key issues of relevance that are determined on a case-by-case basis. Evidence relating to the nature and likelihood of any future crime has a direct bearing on whether the preventative measures taken by the property owner were reasonable in light of all the other relevant facts and circumstances in the case. Because of that, most state courts will not exclude evidence of similar, relevant criminal activity at surrounding businesses. In a Florida lawsuit involving a woman murdered during a robbery at her apartment complex, the building’s management company settled for $5.3 million for failure to provide adequate security measures based on the high crime rate in the surrounding area.

Satisfaction. The Yarra Honda four-story dealership in Melbourne, Australia focuses

on customer service with help from Milestone XProtect® Enterprise. Staff use the video surveillance software to identify showroom customers who need help and receptionists monitor if employees are at their desks before transferring incoming calls. Proving again Milestone can solve problems that are more than security.

Milestone XProtect® is the world’s leading IP video surveillance management software and is reliable, future proof and easy to use. It supports the widest choice in cameras and seamlessly integrates with business and security solutions such as video analytics. Which means your possibilities are unlimited and you can keep your security options open. Discover more with Milestone and try our software for free at: www.milestonesys.com

LP_halfpage_Honda_landscape.indd 1

LP Magazine | July - August 2012

Milestone Systems U.S. Tel: 503 350 1100

29-06-2012 11:22:38

Premises Security Liability based on reliable data, and that’s updated on a regular basis. The most effective tool in a defense counsel’s arsenal is the ability to introduce evidence at trial detailing the rationale and the steps taken by a defendant to reasonably ensure the safety of its customers and employees.

Security Program Assessment and Resource Allocation Provide Additional Defense

A well-researched and comprehensive corporate security plan must be properly implemented and documented, or it will provide little protection in court. Regardless of a defendant’s economic circumstances, juror reactions are particularly adverse when evidence is introduced that there had been a reduction of necessary security due largely to costs or budget cuts. If optimal security solutions are cost-prohibitive, then security plans must explore viable alternatives and must weigh the consideration of losses related to those alternatives. Allocation of security resources should be based on any unique circumstances at the location, the loss trends and/or crime experience for the premises and the surrounding area, and the security plan should evaluate and articulate the associated risks those trends reveal. In any reallocation of resources, for any reason, planned documentation should also identify the security measures that remain in place to protect customers and employees. It’s critical for premises owners to illustrate that the security of customers and employees is their uppermost priority. Anything less than a demonstrated and well-documented level of commitment to that goal will likely result in a significant adverse verdict, if and when a third-party criminal event occurs. The foundation of a defensible security plan must include several components, including: ■ Up-to-date, objective security surveys of the business location and immediate vicinity,

elevant internal written policies and procedures, R Employee training on those policies and procedures, ■ Periodic awareness programs to reinforce that training, and ■ A schedule for ongoing review and updating of the overall plan. One of the most significant obstacles to a successful defense of premises security is when an employee testifies that there was no training from the owner on customer safety. Even more damaging is when the employee cannot even explain the physical security measures that were in place, given the level of risk. Most of the time jurors will accept that the legal standard in a negligent security case does not require perfection, but they do expect premises owners will do what is reasonable, given the specific circumstances and available resources. That’s why regular training, designed to educate employees on the security plan and the measures in place, is a key aspect of loss prevention as well as litigation defense. Other key factors can influence the outcome of litigation, including whether: ■ Security guards, where applicable, were appropriate, available, and effective, ■ Physical devices, such as security cameras and appropriate lighting, were properly installed and operational, and ■ Policies regarding employee safety were in place and applied. In some cases, taking partial security measures can backfire. For example, a state appellate court determined that a defendant who had no security cameras, employed no guards, had no windows that looked onto the parking lot of the restaurant, but did have a policy of requiring employees to be escorted to their cars in the parking lot at night, raised sufficient questions on foreseeability, so that the jury found the restaurant owner negligent following an assault despite enhanced security measures. In some states, such as Florida, statutes mandate very specific security conditions, such as an unobstructed view of the cash register area from outside the establishment for certain types of businesses with a high potential for crime, notably convenience stores. ■ ■

Several Security Factors to Address

Decades of improvements in premises security techniques and tools, a higher level of communication among security professionals and business owners, and a lower level of public tolerance for negligent behavior have resulted in an environment in which violation of accepted industry standards and best practices can place a corporate defendant at risk of an adverse verdict. Additionally, failure to adhere to internal policies and procedures…intentionally or otherwise…will often subject a corporate defendant to a finding of negligence. Some states conclude that violation of internal policies constitutes outright negligence, while most states simply place such violations in the category of “evidence of negligence.”

July - August 2012 | LPportal.com

continued on page 58

If Interviewing is Your Profession,

The International Association of Interviewers is

Your New Association

Knowledge is power. That is why the time is right to join IAI — the only association focused on the unique needs of loss prevention and investigation managers. Founded by the developers of the Certified Forensic Interviewer (CFI) designation, IAI takes the skills and insights of the professional interviewer to a whole new level by providing a wide range of essential members-only offerings previously only available for CFIs.

Key IAI benefits include: • Online interview support though a customized rationalization matrix • Discounts on webinars, conferences, seminars, books, self-studies, and more • Complimentary subscription to IAInsider Journal • Collaborative idea exchanges through members-only blogs, social networking and mentoring programs • Much, much more!

“The creation of IAI is just what our profession needed to grow our skills and techniques through education and interaction. I am thrilled to become one of IAI’s first members.” ChrIs MCDonAlD, senIor VICe PresIDent, CoMPAss GrouP, north AMerICA

Why Wait Another Day to Join IAI? The International Association of Interviewers is your association, with distinct membership levels from which to choose. Visit www.iaofi.org today.

www.iaofi.org

The Official Association of the Certified Forensic Interviewer Designation

Premises Security Liability continued from page 56

Premises security negligence can be based on many factors. Broken, inoperable, missing, and insufficient security equipment, as well as out-of-date technology, can make litigation defense difficult. Very often a corporate defendant faces additional peril in litigation for the failure to preserve evidence, particularly surveillance video. Intentional destruction of evidence is uniformly viewed by most states as a basis to strike a corporate defendant’s pleadings or, at a minimum, to prevent the defendant from being able to contest liability. In many states, even negligent destruction of evidence, or failure to preserve it, subjects the defendant to a shifting of the burden of proof. This involves the imposition of a rebuttable presumption of negligence against the premises defendant. When this occurs, it forces that defendant to essentially disprove the proverbial negative. Alternatively, some states have a slightly less draconian punishment under certain circumstances, concluding that an “adverse inference” instruction to the jury is sufficient. An adverse inference instruction can also be damning, however, because jurors are told that they can assume the evidence would not have been disposed of if it was favorable to the evidence. Therefore, it is of critical importance to preserve all evidence. In some cases, the defendants have even been penalized with sanctions for failure to preserve video that did not show anything. The rationale behind this is that it requires one to conclude that the corporate defendant is correct in its description of the contents of the surveillance video. All of these challenges, involving planning, implementing, and maintaining a security plan, are increased considerably when multiple locations are involved, and increased exponentially when franchisees are involved. For large companies, consistency, communication, and control are paramount issues, and their financial resources, regardless of actual balance sheet conditions, often make them a perceived rich target for plaintiffs and juries. Although size and complexity are not viewed by jurors as a legitimate basis for improper security planning or implementation, consider, for example, the significant security challenges faced by large retail companies who operate from thousands of company-owned or franchised locations across all fifty states on a 24-hour, 7-days-a-week, 365-day basis. At one of the 2,000 North American locations of the Super 8 Hotel (a division of Wyndham Hotel Group), for example, a jury awarded more than $500,000 to a victim who was assaulted by a hotel employee who had entered her room with a master key. The hotel was sued for failure to conduct a criminal background check and for entrusting the master key to an employee who had been arrested on multiple occasions prior to and during his employment at the Super 8 Hotel.

Whether operating 2,000 locations or two, the unique risk assessment-related challenges for multisite owners include: ■ Staffing required to conduct regular on-site visits to facilities, ■ The application of inconsistent crime data, ■ The lack of event history at new locations, ■ Varying asset requirements and local laws, and ■ The cost, feasibility, and effectiveness of differing countermeasures. Regardless of the complexity of situation, premises owners must understand and accept that the unique challenges to be confronted must occur within the entire organization, and not solely reside within the corporate security department.

Building an Effective Security Risk Matrix

Protection against premises liability is established most effectively through development of a risk security matrix, which represents a comprehensive and integrated picture of

A well-researched and comprehensive corporate security plan must be properly implemented and documented, or it will provide little protection in court. Regardless of a defendant’s economic circumstances, juror reactions are particularly adverse when evidence is introduced that there had been a reduction of necessary security due largely to costs or budget cuts. an organization’s risks and the solutions to address them. A company’s security risk matrix is built on its underlying security strategy, which address four basic questions: 1. What are we attempting to protect? This question requires greater exploration and insight than simply identifying “employees and customers” as assets that require protection. Intangible factors, including “goodwill” that’s identified as an asset on most corporate balance sheets, is based largely on a firm’s internal and external reputation. 2. What are the internal accountabilities? What roles will various departments or people play in the development, implementation, and ongoing evaluation of the security plan? Who is responsible for program effectiveness and how will results be reported and measured?

July - August 2012 | LPportal.com

continued on page 60

Fighting crime through information sharing and advanced analytics

Retail Crime. Cargo Theft. Bank Crime. Fraud. Verisk Crime Analytics helps companies fight crime through information sharing, technology, and advanced analytics.

LP Magazine | July - August 2012

Premises Security Liability continued from page 58

Regardless of internal disciplines, in the eyes of the public, accountability for premises security ultimately is borne by a company’s senior management. 3. What is the cost justification? Measuring a return on investment that’s largely intended to avoid or offset a liability claim is far from an exact science. However, it is possible to estimate, with a fair degree of accuracy, the potential impact of a negative premises security event, including jury or settlement awards; loss of business and revenue related to the incident; employee recruitment, training, and turnover; and similar items. 4. How will we articulate this program? Typically, there are a number of audiences that will require different explanations. Senior management will need insights focused on the program’s risk management strategy and cost-effectiveness. Employees will need a tactical explanation of goals, roles, and responsibilities. Legal counsel may require all communication regardless of audience. The underlying goal is to establish program awareness that creates transparency within the organization at all times, and not wait for a violent crime to be the catalyst for the company to focus on premises security. A company’s security risk matrix should consider a variety of risk factors, and ideally, designate appropriate weightings. Each situation is unique, but as an example, a company might apply the following weightings: ■ 25 to 35%—Nature of the business, including inherent risks, operating hours, and cash on hand, specifically for each site. ■ 30 to 40%—Event history at the specific location. ■ 20 to 30%—External crime risk or the level of “social disorganization” in and around the immediate vicinity. ■ 10 to 20%—Subjective input from site management or law enforcement (unique circumstances). In weighing risk factors, it’s important to recognize that premises owners are not absolved from liability simply because a particular criminal activity had not previously occurred on or near the property. In other words, a plaintiff’s contention that no duty to secure premises can arise until there is evidence of similar prior criminal activity will not warrant a dismissal of the case. Conversely, inherent risks and prior experience weigh heavily in jury decisions, such as in the landmark $102 million negligent security verdict in 2007 against a corporate owner/manager of a shopping center where an adult cabaret patron was shot. In this case twenty-six violent crimes had been previously reported at the club, and the owner had failed to illuminate or patrol the parking lot. By combining objective and subjective crime data/forecasts, risk ratings should be developed for each location. The risk matrix survey tool should collect and evaluate information on event history, security countermeasures, industry and local practices, staff experience,

law enforcement intelligence, and even the likelihood and potential crime-related impact of natural disasters. The site selection process plays an important role in security risk evaluation. If properly managed, it can limit construction-related capital costs and eliminate the need for retrofitting. Depending on the risk-related classification designated to a particular location, a set of minimum security countermeasure thresholds can be allocated. Once a location’s risks are identified, security countermeasures must be designed and implemented with the understanding that security is not a one-size-fits-all undertaking. To accommodate differences in risk classification, and to provide for any changes in risk that may arise, a risk matrix should include a menu of appropriate countermeasure options. The underlying goal is to establish flexibility that will provide alternative countermeasures that are considered reasonable under a broad range of circumstances, increasing or reducing security resources over time as the situation warrants. However, this system is effective and defensible in court if there is an established protocol for regular reevaluation of risk and countermeasure effectiveness.

Preparing for Security Premises Security Litigation

Even the most sophisticated and dedicated risk management program will not entirely eliminate the likelihood that some unfortunate event will inspire litigation. Early investigation is a key component of any successful defense. Although every situation is different, there are a number of basic steps that can increase the likelihood of a positive legal outcome. In advance of any litigation, these measures include: ■ Ensuring that statements from employees and witnesses are thorough and accurate and that all evidence (notably video tapes) are properly preserved. ■ Involving legal counsel as soon as possible in order to protect your investigation with attorney-client privilege. ■ Putting boots on the ground as early as possible to ensure a first-hand understanding of the environment and the incident. Second-hand reports or interviews conducted long after the incident are typically unreliable. If internal security personnel are unavailable, consider engaging an outside security professional to assist in the investigation and to serve as liaison with the local police. ■ Analysis of the security measures in place at surrounding businesses and examination of area crime grids. Having been served in connection with premises security, pre-emptive steps can include: ■ A careful re-examination and scrutiny of all the information collected following the incident, ■ Investigation of the security credentials of the plaintiff’s expert witness, and ■ Initial steps to explore alternative dispute resolution in advance of a trial.

July - August 2012 | LPportal.com

continued on page 62

Don’t Hire Monsters

Hire Winners Instead

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

Premises Security Liability continued from page 60

Weigh the Full Impact of Premises Security Liability

The process of creating and articulating a security risk matrix takes time and patience. It can’t be constructed overnight and requires a disciplined, data-driven approach to protecting the assets of the company and demonstrating a return on investment. In premises security litigation, “reasonableness” is the standard, rather than perfection. Corporate cultures that are comfortable with rolling the dice and living with high levels of risk or that base decision-making solely on immediate ROI, are prone to shortcuts in assessing premises risk and to avoiding necessary security expenditures. Those risk calculations, often driven by worst-case scenarios of a catastrophic event and a related jury JON D. GROUSSMAN, J.D., is president and COO of CAP Index. He is nationally recognized for advising private corporations and government entities on crime prevention strategies, as well as post-incident response and analysis. Groussman frequently provides expert forensic analysis in litigation charging negligent security. He can be reached at jgroussman@capindex.com.

award, often fail to take into account the substantial damage that’s unrelated to economic loss. Increasingly, employees, customers, shareholders, and the general public hold all companies accountable for irresponsible behavior, whether that involves product integrity, quality of service, or premises security. The cost of crime in a court of law for any company that has not managed that risk in a responsible manner is limited to financial loss. The cost of crime for an irresponsible company, in the court of public opinion, however, is unlimited. Intangible factors that drive a company’s long-term success, including reputation and good will, as well as its ability to recruit, retain, and motivate employees, are also damaged as a result of inadequate management of premises risk. The loss of brand equity and public confidence that’s driven by premises security negligence, however, is the biggest price that’s paid. CONSTANTINE “DEAN” NICKAS, J.D., is a senior partner in Wicker Smith’s Miami office. In his 20-plus-year career, Nickas has litigated many cases involving negligent security and premises liability at both the state and federal levels. He has earned an AV® Preeminent™ rating from his peers, the highest level rating awarded to lawyers by Martindale-Hubbell®. Since 2009 Nickas has been named to the list of Florida Super Lawyers. He can be reached at cnickas@wickersmith.com.

July - August 2012 | LPportal.com

Solutions Showcase American Dynamics

SKECHERS Partners with American Dynamics to Meet Foreign Trade Zone Security Requirements

s one of the leading footwear companies in America, SKECHERS USA, Inc.’s latest distribution facility in Rancho Belago, California, moves a mountain of shoes each day. This high-volume center is designated as a U.S. foreign trade zone, which requires specific and measurable security standards as set down by U.S. Customs and Border Protection officials.

The Company

SKECHERS, an award-winning global lifestyle footwear company, develops and markets more than 3,000 styles for men, women, and children through its fitness and lifestyle divisions. The company is known for its popular lines, such as Shape-ups, Tone-ups, GOruns, and Active, and celebrity spokespeople, such as actress and Dancing with the Stars host Brooke Burke, fitness trainer Denise Austin, and former hockey player Wayne Gretzky. The $2 billion company was founded by Robert Greenberg in 1992. Today, SKECHERS sells its products in more than 120 countries, ranging from Austria and Ireland to China, Thailand, and Brazil. The company has opened more than 300 retail stores in key metropolitan areas worldwide and partnered with distributors to open an additional 250 locations. A significant portion of this worldwide product volume goes through SKECHERS newest distribution facility in California—a 1.8 million-square-foot, $250 million complex that serves as a U.S. foreign trade zone, one of eighteen foreign trade zones in California. As defined by the government, a foreign trade zone is a designated location in the United States where companies can use special procedures that help encourage U.S. activity—in competition with foreign alternatives—by allowing delayed or reduced duty payments on foreign merchandise, as well as logistical and tax benefits.

Challenges

While being a foreign trade zone reaps benefits for SKECHERS, it also comes with some specific security requirements. Greg

Drivas, director of loss prevention for SKECHERS USA, says there is a higher expectation for perimeter security, as product is monitored entering and exiting the warehouse, which heightens the overall security needs versus a traditional warehouse operation. Surveillance, especially in the form of high-quality video recording and playback, was a required feature for SKECHERS as it laid out its security plan to Select Systems Technology (SST) of Torrance, California, the systems integrator chosen for the installation. That meant that the video needed to be quickly accessible, clear and smooth, and provide the ability to zoom in as needed, according to Vijay Patel, senior manager at SST. SKECHERS also needed the video management system to have an open platform to accommodate cameras from multiple manufacturers and have a degree of scalability to grow along with the changing needs of SKECHERS operations. This new warehouse was built by SKECHERS to replace five existing facilities, and there is still room to grow. SST, which had worked with SKECHERS on security projects at the other distribution centers under the consolidation plan, was already familiar with the requirements associated with

SKECHERS designed this new distribution center to give the company flexibility in its operations and a centralized distribution point for the next twenty years. By choosing victor and an IP surveillance solution from American Dynamics, SKECHERS is giving its security staff the same flexibility, allowing the camera network to grow along with the facility.

LP Magazine | July - August 2012

Solutions Showcase American Dynamics foreign trade zones. The integrator, which has done numerous retail-related projects, found this to be its largest distribution center to date and the one deploying the largest number of cameras. Patel says the challenges for SST included the length of the project—it took several years from concept to completion—and making changes along the way as the building took shape and needs changed, all while still staying within the structures of the budget.

The Solution

As the backbone of its surveillance system, SKECHERS and SST selected the victor video management system from American Dynamics. With the powerful victor unified client, SKECHERS’ security staff is able to view, manage, and control recorded video from five VideoEdge network video recorders. Some key features of victor, including its ability to instantly play back high-resolution video and tie into the access control system to bring up video related to alarms, such as doors left open, made it an easy selection for the project according to Patel. For operators, victor is fairly intuitive so that officers could use it even before receiving formal training on it. “Even the least technical officer can get into the system and set up views and do archiving,” said Drivas. “The user-friendly nature of the victor interface allowed our staff to be up and running on the system very quickly.” The driving factor, though, was ensuring that they had the ability to constantly capture the comings and goings within the foreign trade zone, even to the point of following vehicles from camera to camera as they traveled through the complex. “Because of the amount of live, streaming video and the need to manage large, megapixel cameras at all times, we were confident that the victor client would be powerful enough to meet our needs,” Drivas said. One of the additional benefits, added Drivas, was the ability to capitalize on the clarity and accessibility of the video for non-security uses, such as the operations group at the distribution center using the video to monitor product movement on the conveyor system. Patel said they worked closely with SKECHERS’ IT department on the fiber that was laid for both security and the IT infrastructure in the facility. The fiber was laid out to specifications, according to Patel, even accommodating those cameras that needed to be placed above 350 feet. Other pre-planning efforts went into the project, including laying out the network typology with IP addresses for each camera, making the installation go smoothly. For cameras, SST installed a variety of cameras, including American Dynamics Illustra 400 Series mini domes and IP

While being a foreign trade zone reaps benefits for SKECHERS, it also comes with some specific security requirements. Greg Drivas, director of loss prevention for SKECHERS USA, says there is a higher expectation for perimeter security, as product is monitored entering and exiting the warehouse, which heightens the overall security needs versus a traditional warehouse operation. SpeedDome programmable cameras. In addition, the project used Flir thermal-imaging cameras to view the backside of the building, and four 180-degree megapixel cameras that increased the capacity of the 150 or so cameras to that of 300 individual camera views. SKECHERS is using an internal network video storage solution from American Dynamics, which was attractive because it was a turnkey solution for the IT department. To bring the SKECHERS project to fruition, SKECHERS and SST staff needed to work closely with the SKECHERS’ compliance department to meet the specific foreign trade zone security requirements. Because of the size of the facility, the project was accomplished in three sections. The building’s security control room, where video is monitored 24/7, features three 42-inch screens on the wall and four additional 24-inch call-up monitors for each control room officer. There is also a separate monitor for the Identicard access control system used for all points of entry, which is tied into the victor system. SKECHERS designed this new distribution center to give the company flexibility in its operations and a centralized distribution point for the next twenty years. By choosing victor and an IP surveillance solution from American Dynamics, SKECHERS is giving its security staff the same flexibility, allowing the camera network to grow along with the facility.

July - August 2012 | LPportal.com

Solutions Showcase Intelligent Loss Prevention

RFID Meets LP—Reduce Shrink by Using RFID in Targeted Categories at the Display Level

FID in the retail market has been a long time coming. So long in fact, that when we introduced our first RFID-enabled loss prevention solution, most retailers agreed that RFID was the future…the distant future. RFID-based initiatives were for early adopters while the majority of retailers preferred to “wait and see.” But this year we have seen a shift in receptiveness toward RFID after the widely-publicized success of pioneers like American Apparel and Macy’s. According to a report published by RFID Journal in January 2012, half of U.S. retailers are currently using item-level RFID, and most retailers will adopt RFID technology within three to five years. With RFID a present or soon-to-be reality for most retailers, loss prevention professionals need to be equipped to maximize the benefits of RFID within their department. RFID is often misunderstood as exclusively a system-wide solution that evokes more fear than progress. Sadly, retailers miss the immediate and achievable benefits of RFID when looking at it only as a long-term, all-encompassing solution. We’ve developed a scalable solution that works at the display level and is ideal for high-theft categories. By targeting as little as one category, retailers can reduce shrink, automate inventory management, and increase sales.

Smart Surfaces

Smart Surfaces contain embedded antennas that detect when a RFID-tagged product has been removed. Smart Surface formats include shelves, panels, flooring, and fitting rooms. Our RFID-enabled Smart Surfaces have loss prevention applications in addition to traditional inventory management functions: ■ Sweep Notification—If unusual product movement occurs, an alert is immediately sent to store staff on a smartphone or via overhead page. ■ PVM—An optional integrated monitor will switch from promotional content to recording mode upon product removal to create additional deterrence. ■ Inventory Reporting—By quantifying and identifying all items within their reading area, Smart Surfaces automatically provide real-time inventory alerts via

smartphone or PC in the event of low inventory or approaching expiration dates. ■ Fitting Room Alert—Associates receive updates via handheld device if a high-theft item enters the fitting room, if an unusual quantity of items are brought into the fitting room, or if items remain in the fitting room for an unusual amount of time. Scalability. Only a few retailers are close to achieving storewide RFID implementation within the next year. However, RFID can reduce shrink in targeted categories long before full-scale deployment. Our Smart Surfaces allow retailers to utilize RFID at the display level in as little as one high-theft product category. Plus, Smart Surfaces can be integrated into a full-scale solution that we develop over time. Sell More, Lose Less. Our goal is always to integrate product security in an open display format that drives sales. With item-level tagging, Smart Surfaces provide nearly “invisible” product protection resulting on average in 50 percent shrink reduction and 19 percent sales increase. Win-Win. Departments are increasingly working together to achieve the common goal of selling more and losing less. Smart Surfaces not only reduce theft, they deliver marketing analytics, interactive customer experience, and automatic inventory management, making this a multi-level solution that can be supported across several departments, not just loss prevention.

Intelligent Loss Prevention (ILP) is the consultative security division of Southern Imperial, Inc., a leading manufacturer of retail displays for over fifty years. Southern Imperial is an employee-owned corporation headquartered in Rockford, Illinois. For more information about Smart Surfaces, please contact ILP at info@IntelligentLossPrevention.com or visit IntelligentLossPrevention.com.

LP Magazine | July - August 2012

Industry News

Self-Checkout Theft Survey Highlights Dishonesty

aise your hand if you regularly read the “Dilbert” comic strip written by Scott Adams. A mid-May installment pictures Bob the Dinosaur in the first panel, flanked by Pointy-Haired Boss and Wally, lamenting that product sales have “dropped to zero in retail stores that have self-checkout.” Bob reasons that the customers who are “dumb enough to want our product are too dumb to know how to use self-checkout.” In the last panel, Pointy-Haired Boss agrees with Bob’s proclamation of the bright side of the situation. “On a positive note we have the most shoplifted product of the year.” Scott Adams must have seen the results of an on-line consumer survey indicating that almost 30 percent of shoppers admit to stealing when using self-checkout in supermarkets in the United Kingdom. The single-question survey was conducted in April by Watch My Wallet, a UK-based Internet site that provides advice, reviews, features, and news on retail-related topics. Here are the results from the survey question “Have you ever cheated at a supermarket self-service checkout?” ■ 58% chose “No, I’m scared of getting caught.” ■ 13% “No, I consider it stealing.” ■8 % “Yes, I selected a cheaper item when manually entering fruits and vegetables.” ■ 8% “Yes, I selected ‘small’ when scanning a ‘large’ salad box.” ■ 7% “Yes, I bagged something without scanning it.” ■ 5% “Yes, I walked off without paying.” ■ 2% “Yes, I tampered with the weighing scales.” The good news is that 71 percent of survey respondents indicated they would not cheat at self-checkout systems. Consumers make the assumption that self-checkout systems contain some sort of inherent security measures. In practice, however, the systems are built for maximum transaction throughput with a minimum of disruptive requests to “see the attendant.” In the early development years, circa 1984 to 1995, self-checkout designers were concerned about security and thought that the system should be able to somehow discriminate between every item. Scanning a cheap item and placing an expensive one in the bag should not be possible, they thought. Developers came up with two possible solutions—weights and measurements. The idea was to measure or weigh every single stock-keeping unit (SKU) and compare the scanned item to the database to see whether or not it was “correct” within certain statistical limits. One of the original systems had a large box covering a conveyor belt, not unlike the luggage scanning portals used by airport security personnel. Laser

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

beams were strategically positioned inside the box to try to measure the outer dimensions of the scanned items. If a “fit” occurred, the belt continued to move. If the item’s size didn’t match the database, the belt stopped, reversed itself, and sent the item back to the customer for a rescan. While measurement may have been a good idea in theory, in practice it simply slowed down transaction productivity and raised customers’ blood pressure, so the practice was never adopted. A more recent solution to this problem is a sophisticated weight-learning database software program that is constantly running in the background. Weight-learning database software corroborates items quickly and transparently to the customer. It is designed to allow retailers to easily update the system with either new or discontinued items. As items are scanned and placed in the bag well of the system, an internal scale tracks additional weight and queries the database for corroboration. If no item is bagged or if an item’s weight doesn’t match up to the database, the system prompts the customer to seek assistance from the attendant. The bottom line is that retailers continue to weigh the positive and negative aspects of a self-checkout regimen. Some, like the European giant Tesco, continue to deploy self-checkout systems wherever practical, whether or not they contain suitable security measures. Others like Big Y Foods have removed them entirely. Luckily, the fraction of consumers who are inclined to steal remains under 30 percent…at least in the U.K.

LP Industry Loses Two Well-Known Executives Former Walmart loss prevention leader, Dave Gorman, succumbed to cancer on May 15 at the age of 65, and CarMax’s Fred Wilson died from a heart attack on June 5 at the age of 62. Both were well-known, respected retail executives.

Dave Gorman

July - August 2012 | LPportal.com

Gorman began his loss prevention career in shortage control and inventory administration with Venture Stores, a division of May Company, in 1973 following his graduation from Southern Illinois University and service in the U.S. Marine Corps in Vietnam. He joined Walmart in 1980 as director of audit and was promoted to vice president of loss prevention in 1983. When he continued on page 68

At any moment, your organization could come face-to-face with an active shooter.

Will you be ready? Every day, new threats arise from unexpected sources—cyber attacks on critical data and systems, a disgruntled employee who turns violent, even extreme weather that threatens lives and commerce. If you are responsible for protecting your organization’s human, logical, or physical assets, you can’t afford to miss ASIS 2012. It is here that you’ll discover what’s changed, what works, and most importantly, what’s next. The conversation will focus on real-world results: how to face down challenges, maintain strategic growth, and profit in any economy, in any threat environment. Plan now to join more than 20,000 top professionals at the world’s most influential gathering focused on driving security’s future. Visit www.asis2012.org today.

ASIS 2012 FEATURES: • 700+ top manufacturers and service providers • Hundreds of new product introductions, thousands of solutions • Comprehensive, high-caliber education program (200+ sessions) • Unparalleled networking opportunities • Colocated event: (ISC)2 Security Congress

ASIS INTERNATIONAL 58TH ANNUAL SEMINAR AND EXHIBITS September 10–13, 2012 | Philadelphia, PA

www.asis2012.org

a ten-year member of the Retail LP Council of ASIS International where he was council chair from 2006 – 2008.

continued from page 66

retired from Walmart in 2002, he was responsible for risk control, food safety, security, and loss prevention worldwide. He remained active in the industry as a consultant through his company Dave Gorman and Associates, working with a wide variety of retailers and supply-chain clients. “Setting the standard in loss prevention defined Dave Gorman with his intensity, aggressive opinions, and strong belief that propelled the term ‘world class.’ Dave was just that—a world-class icon in our industry,” says Kevin Wolfe. “He once told me not to leave things the way they are; change is the norm, and it’s no excuse for a lack of performance. He said to make change work for you and focus on what’s most important to the success of the enterprise. He was passionate, honest, and open to sharing his success, and never retreated from assisting others toward reaching their goals. Dave has left us a legacy to remember well beyond tomorrow.” “At my first meeting with Dave, I engaged him in a couple of hours of debate at a whiteboard discussing the possibilities within retail loss prevention,” remembers Darrell Taylor, vice president of LP and security at H-E-B. “It was then I realized just how much fun it was just to talk with him about what we do. I had a deep respect for Dave and was always impressed with his candid ‘call-it-like-it-is’ approach and his willingness to give advice. He could always help you maneuver through tough spots and was willing to give you full advantage of his experience in our discipline. My team and I will truly miss Dave’s presence and friendship.” Gorman served on the LP steering committee for the Retail Industry Leaders Association for more than twenty years and was a

Fred Wilson

Wilson was vice president of store administration at CarMax at the time of his death. He transferred to CarMax in 1996 from its parent company, Circuit City, where he was director of LP. Wilson’s forty years in the LP industry included positions with a number of retailers, including Payless ShoeSource, Shaak Fred Wilson Electronics, Musicland, and Montgomery Ward. “I first knew Fred in the late ‘70s when both of us were at Montgomery Ward,” says Jim Lee, executive editor at LP Magazine. “Even then Fred was quiet and introspective. If you did not know him, you might think there was not much going on with him. Very much the opposite. Fred was a brilliant loss prevention executive and thinker. He created analytics at Circuit City before the word ‘analytics’ was created; way out ahead of the rest of us. I am deeply saddened by his passing and will miss him greatly. The industry has lost one of the innovators in loss prevention and a friend to many.” One of those friends is Kris Fuerstenberg, loss prevention specialist at the Navy Exchange Service Command. “Fred was an incredible, very unique man,” says Fuerstenberg. “He had a brilliant mind, a generous spirit, a fun sense of humor, and a huge heart. He loved his work and his family and friends. He was selfless, both professionally and personally. Every conversation that I had with him left me feeling energized and enthusiastic. He was

July - August 2012 | LPportal.com

my professional mentor and my friend. He had a tremendous impact on my life. I will miss him dearly. Fred’s death is a devastating loss.” Wilson was a member of the National Retail Federation (NRF) LP advisory board as well as the Retail LP Council of ASIS International. He was inducted into the NRF Ring of Excellence for lifetime achievement in loss prevention in 2008.

Vector Security Rebrands to Reinforce an Updated Business Strategy For the first time in twenty-six years, the recognizable Vector Security® logo is changing its look to a more contemporary design to go along with an updated business strategy. The company’s plan is to engage customers in new ways that will position the company as a leading provider of security and security-related solutions tailored to a customer’s specific needs and business objectives. This positioning is expressed in a new company tagline—Intelligent security tailored for you.SM “Our updated look and strategy reinforces our commitment to several hundred thousand customers that we are constantly working to anticipate their security needs, apply new technologies, and advance how we deliver them,” says Pam

Petrow, president and CEO of Vector Security. “Our goal is to build lasting relationships with customers through unparalleled customer service and to be their advocate on security issues, product advancements, and services to help maximize the value of their security investments.” Vector’s business approach involves tailoring a customer’s specific security needs by deploying quality security solutions uniquely crafted for their home or business. This customized approach is backed by personal, customized support and a reputation for outstanding customer service.

Expanding Business Opportunities

With security more top-of-mind than ever in the United States, the company’s business is expanding beyond being a burglar- and fire-alarm company. Today, the company uses numerous technology-based solutions to address customer needs, including mobile applications for smartphones and tablets, interactive services, or video-based solutions. While there are no organizational changes associated with this rebranding, the company saw this as an opportunity to create a customer experience that is consistent and valued no matter where the customer interacts with Vector Security. “Our business model has consistently matured to offer a complete roster of security solutions and related services to our retail customers,” says Michael Grady, executive vice president of Vector Security. “Over the past twenty years, our success in the retail space has been based on recognizing changes and emerging trends in loss prevention needs and responding with innovative products, services, and new approaches. Most

PROTECT YOUR BRAND. When it comes to civil recovery, how important is brand protection to your company? At Palmer, Reifler & Associates, we work closely with our retail clients to provide customized legal representation that is right for them. Our team of attorneys is integral to our civil recovery process, ensuring important legal standards and protections, while optimizing recovery performance.

Place your trust in the law firm with a focus on Civil Recovery Law.

Toll-Free in the U.S.: 866.875.6565

P A L M E R R E I F L E R L A W . C O M LP Magazine | July - August 2012

Calendar

August 5 – 8, 2012 National Food Service Security Council Annual Conference and Exposition Hyatt Regency Inner Harbor Baltimore, MD www.nfssc.com September 10 – 13, 2012 ASIS International 58th Annual Seminar and Exhibits Philadelphia (PA) Convention Center www.asisonline.org September 12, 2012 Retail Council of Canada Loss Prevention Conference International Centre, Toronto, ON www.rcclpconference.ca September 17 – 20, 2012 Coalition of Law Enforcement and Retail (CLEAR) 2012 Annual Training Conference Hyatt Regency, Dallas, TX www.clearusa.org October 7 – 9, 2012 Sponsored by Sony, Envysion, Axis, and Bright Hat Solutions 3rd Annual MVaaS Summit—Unleash Video The St. Julien Hotel, Boulder, CO www.envysion.com/mvaas-summit October 8 – 10, 2012 Sponsored by Tyco Integrated Security RETECH Westin Fort Lauderdale Beach, FL October 15 – 17, 2012 Loss Prevention Research Council 8th Annual Impact Workshop University of Florida campus Gainesville, FL www.lpresearch.org October 30 – 31, 2012 ISC East 2012 Jacob Javits Convention Center New York, NY www.isceast.com March 10 – 13, 2013 Food Marketing Institute 2013 Asset Protection Conference Pointe Hilton Tapatio Cliffs, Phoenix, AZ www.fmi.org April 28 – May 1, 2013 Retail Industry Leaders Association 2013 LP, Audit, & Safety Conference Gaylord Palms Resort, Orlando, FL www.rila.org

recently we built a state-of-the-art National Services Center and entered into the managed network services business to add additional value to our retail customers across North America.”

The Rebranding Process

Vector Security built an internal marketing communications team to help support the new rebranding effort led by Art Miller, VP of marketing, who brought over twenty-five years of experience in building brands and marketing programs for companies across the U.S. and Canada. The internal marketing communications group worked with various boutique design and marketing companies to support the initial development of the brand positioning and identity development. The rebranding process began in late 2011 through a series of information-gathering sessions with employees across the company, with a particular emphasis on obtaining feedback from their sales teams. “Our sales teams are the direct contact with our customers,” said Miller. “We wanted to understand how customers were responding to our brand in the marketplace and how that experience differed by type of customer. We completely approached our rebranding with the customer in mind every step of the way.” Vector also launched a survey to all customers in January to obtain their direct feedback on what is important to them. “We asked and our customers responded,” noted Miller. “The results from this survey underpinned what is important to customers and when coupled with our internal feedback, gave us a strong starting point to rebrand the company. “We also looked at the industry, our competitors, and turned to our product partners for additional feedback. We then developed a value proposition that reinforced our commitment to our customers’ security goals and objectives.” All the feedback was used to begin the development of key messages, look and feel, and new logo development that were then tested with our July - August 2012 | LPportal.com

customers. “We held three separate focus groups—one with residential customers, one with commercial customers, and one with national account customers,” explained Miller. “The feedback was overwhelmingly positive and reinforced that we were heading in the right direction with our new branding.” The company began communicating the new branding to all employees in March and then to customers in June. A series of direct marketing pieces were sent directly to customers, reinforced by face-to-face meetings with customers to introduce the brand. A redesigned website is set to launch in July at VectorSecurity.com.

Glue Thwarts Bank Cash-Box Theft The slang term “sticky fingers” is synonymous with petty thievery. Three Londoners were apprehended shortly after they had difficulty handling cash filched from a stolen cash box at a Lloyds Bank branch that had been fitted with a new security system that coats the bills with glue mixed with dye and a colorless, traceable liquid known as SmartWater. A classic benefit-denial device, the liquid substance is released when someone tries to tamper with the cash box. The glue laminates the bank notes together, the dye stains them, and the SmartWater contaminates the person who has breached the box. The DNA-style code within the SmartWater lasts up to six months and will link the individual to the specific theft. In recent years cash-in-transit thefts in the London metropolitan area have risen to the extent that the police have activated a “Flying Squad” whose sole duty is to gain some control over the situation. This is the first case in which a conviction has been made on the strength of the glue. London police have high hopes that the widespread use of this new technology will result in a drop in cash theft attempts. The moral of this story is, while sticky fingers may get the goods, sticky glue fingers the thieves.

People on the move 7-Eleven announced the appointments of Byron Smith, CFI to Corporate Supply Chain AP Manager and Karl Suhanyi to Zone AP Manager. Nate Frazier, CFI was promoted to Director of LP for Abercrombie & Fitch. Todd Worthey was promoted to Regional VP at Advanced Auto Parts. Kristen Silva was named Regional LP Investigator at A’GACI. Scott Ziter was promoted to VP of AP for Ahold USA. Cassie Kiser Brodie was appointed LP Manager at Amazon.com. Lance Williams, CFI was promoted to VP of LP for Big Lots Stores. Gary Joseph was appointed to LP Manager at Bloomingdale’s. John Harrison has been named Regional Investigator at Books-A-Million. Karen Duckworth, CFI was appointed Regional LP Manager at Brighton Collectibles. Jonathan Carroll was named District LP Manager at Brookstone. Katerina Chizhikova was appointed Internal Investigations/Auditor/Trainer at Burlington Coat Factory. Ted Grekos, CFE was promoted to Senior Manager, Global Security and Compliance for Charming Shoppes. Mike Matz was appointed Regional LP Manager at The Children’s Place. DeWayne Harrison, CFI was named Regional LP Director at Compass Group. Marty Schnurr has been appointed President of Stanley CSS North America. Scott Perry was appointed Regional LP Manager at Dollar General. John Anthony was named Divisional LP Manager at Genuine Parts Company. Greg Houting was named Regional LP Manager at Golf Galaxy/Dick’s Sporting Goods. Art Silva has been appointed Director of LP for Hallmark Cards. Mike Appel was appointed District Investigator at The Home Depot. CERTIFICATION continued from page 40

Recent LPQ Recipients

Casey Alexander, LPQ, Gordmans Deborah Bunch, LPQ, Haynes Furniture Raychelle Burwell, LPQ, Old Navy Christopher Conforti, LPQ, Ocean State Jobbers Thomas Courtney, LPQ, LifeWay Christian Stores

Chris Woodroffe was promoted to Director of LP for International Group of Companies. Jennifer Geiser was promoted to Manager of AP at Jo-Ann Stores. Limited Brands announced the promotion of Bill Gropper to Director LP/Safety Services and the appointment of Imran Qazi, LPQ to District LP Manager. Johanna Agudelo was named LP Manager at Louis Vuitton. Hank Jones was promoted to Director of Safety and Hazmat for Lowe’s. Michael Elliott was appointed Data Analytics Manager at LP Innovations. Brian Starling, CFI was appointed District Manager of Investigations at Macy’s. Frank Hernandez and Juan Ospina, CFI were appointed Regional LP Manager and Corporate LP Manager, respectively, at Michael Kors.

Hector Graciani was named AP Manager at Saks 5th Avenue. John O’Leary was appointed Regional Sales Manager at Secura Key. James Martin was promoted to Director of Sales for Security Resources. Carol Bowker, ARM was appointed Director of Risk Management for Smashburger. Robert Rice was named Director, Retail Security for Sony. Jen Drake, CFI was named AP Operations Manager for Target Canada. Sanford Siegel was appointed Manager of LP at TGI Friday’s. Universal Surveillance Systems announced the promotion of Rod Holm to Senior VP of Global Business Development and the appointments of Erin Edwards to VP of Sales and Steve McClain to Executive Vice President.

Bill Warrick, CFE was appointed Senior Product Consultant at MICROS Systems.

Richard C. Hollinger, Ph.D. was named Chair of the Department of Sociology and Criminology and Law for the University of Florida.

Hal Parker has been appointed Retail LP Specialist at New Balance.

Rob Skelly was named LP Director, Central U.S. for U.S. Security Associates.

Sal Miele was named Manager of LP at NPC International.

Bret McGowan was promoted to Senior VP, Sales and Marketing for Vicon.

Chris Bitner was promoted to Senior Director/CISO, Global Information Security and Compliance for Office Depot. William Gravelyn was promoted to Corporate Investigations Manager at Orchard Supply Hardware. Melanie Meschwitz was promoted to Regional LP and Safety Manager at PetSmart.

Sonya Hostetler has been promoted to VP of AP and Safety for Walmart. David Groh was promoted to Corporate Risk and LP Manager at Weekends Only. Megan Lynch was appointed Senior Manager of Recovery Operations at The Zellman Group.

Chris Hinger, CFI was named Senior Director of AP for Polo Ralph Lauren. Chris Penton has been appointed Senior Director of LP for Radio Shack. Darian Griffin was appointed Division Manager of LP at Ralph’s Grocery Company. Ross announced the following changes: Will Baker promoted to Senior Director of LP, Tayton Fain appointed Area LP Manager, and Adrian Mesa named LP Outbound Investigative Analyst.

David Crill, LPQ, Archangle Investigations Ricardo Diaz, LPQ, Kmart Melissa Elson, LPQ, Shopbop.com Gregory Enfinger, LPQ, Student Andrew Field, LPQ, Goodwill Blake Hampton, LPQ, Goodwill Darren Jackson, LPQ, Home Depot Charlyne Lagudi, LPQ, Pep Boys Brandon Mathews, LPQ, Corrections Corporation of America LP Magazine | July - August 2012

To stay up-to-date on the latest career moves as they happen, sign up for the magazine’s weekly e-newsletter or visit the People on the Move page in the Community section of the magazine website, LPportal.com. Information for People on the Move is provided in part by the Loss Prevention Foundation, Loss Prevention Recruiters, and Jennings Executive Recruiting. Send information on promotions and new hires to peopleonthemove@LPportal.com.

Philippe Meca, LPQ, El Rancho Jose Mendoza, LPQ, Michaels Milan Nelson, LPQ, Michaels James Nguyen, LPQ, Pep Boys William Pond, LPQ Michael Rusk, LPQ, Walmart Kristen Schrader, LPQ, Apple Jerry Sisson, LPQ, Pep Boys Shannon Speelman, LPQ, Rite Aid Edward Turner, LPQ, Staples

ADVERTISERS 3VR......................................................................... 43 www.3vr.com/retailguide Alpha.................................................................19, 21

www.alphaworld.com

MAGAZINE

American Dynamics...............................................9

www.americandynamics.net/illustra

ASIS International................................................67

www.asis2012.org

Axis Communications...........................................15

www.axis.com/companion

Checkpoint.......................................................33, 35

www.checkpointsystems.com

LP Magazine is available free to loss prevention and retail professionals throughout the U.S. and Canada. There’s no excuse for anyone interested in keeping up with the LP industry to not get the magazine.

www.remotecashcapture.net

To sign up for a free subscription, go to www.myLPmag.com. It’s simple. Takes only a minute. Or fax the completed form below to 978-671-0460. ❍ Yes, I would like to receive/continue to ❍

Detex.......................................................................29

❍

Evolution Robotics Retail.....................................62

Please fill out completely:

ClickIt Inc...............................................................47

www.clickitinc.com

Contact...................................................................49

www.contactinc.com

Corporate Safe Specialists.................................51

www.detex.com/230X www.evoretail.com

Gulfcoast Software Solutions...............................3

receive LP Magazine FREE of charge. No thanks.

❍

International Subscription. LP professionals outside the U.S. and Canada can either read the digital magazine free or receive the print version for $99 per year. Visit the Subscription page at www.LPportal.com to purchase an international subscription. Y es, I would also like to receive/continue to receive your e-newsletter FREE of charge. No thanks.

Signature_____________________________________________________________Date___________________

www.gulfcoastsoftware.com

Telephone___________________________________________________________________________________

i International.......................................................39

Fax_________________________________________________________________________________________

www.i3international.com/lp

InstaKey..................................................................23

Email_______________________________________________________________________________________

www.instakey.com

First___________________________Middle______________________ Last______________________________

Intelligent Loss Prevention..................................46

Title________________________________________________________________________________________

www.intelligentlossprevention.com

International Assoc. of Interviewers.................57

Company___________________________________________________________________________________

www.iaofi.org

Address1____________________________________________________________________________________

InVue.........................................................................2

Address2____________________________________________________________________________________

www.invuecabinetlock.com

LERPnet2.0.............................................................59

City________________________________________________________________________________________

www.lerpnet2.com

State/Province____________________Zip/Postal Code____________________Country

LockUp....................................................................45

You must answer both questions to receive LP Magazine

www.lockup.com

LPC..........................................................................26

www.losspreventionfoundation.org

LPjobs.....................................................................61

www.lpjobs.com

Milestone...............................................................55

www.milestonesys.com

NuTech National.....................................................7

www.nutechnational.com

Palmer, Reifler and Associates..........................69

www.palmerreiflerlaw.com

The Retail Equation.................................................5

www.theretailequation.com/success

Security Resources..............................................75

www.securityresources.net

Sony Retail Solutions...........................................25

www.sony.com/security/retail

Tyco Integrated Security.....................................76

www.tycois.com

Vector Security.....................................................37

www.vectorsecurity.com

Verisk Crime Analytics.........................................59

www.verisk.com

WG Security Products.........................................68

www.wgspi.com

Subscribe for Free

❍ USA ❍ Canada

1. What is your company’s primary business? (Check one only) Retail ❍ (A) Department store/mass merchandiser ❍ (B) Discount/wholesale club/outlet/

2. What is the primary focus of your job? (Check one only) Retail Loss Prevention/Security ❍ (10) Corporate/regional/district manager ❍ (11) Store LP manger/investigator/

❍ (C) S pecialty apparel/footwear/gifts/

❍ (12) DC/logistics/supply-chain

❍ (D) Home center/hardware/appliances/

❍ (19) Other LP manager

❍ (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 ________________ July - August 2012 | LPportal.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 978-671-0460

Vendor Sponsors

High Theft Solutions

Vendor Advisory board 3VR Pete Schmidt Senior Director, Retail Solutions

ClickIt Inc. Jim Paul Director of Sales

Alpha Diane Wise Global Marketing Manager

Corporate Safe Specialists Ed McGunn President/CEO

American Dynamics Carol Vardaro Marketing Specialist

LockUp Emma Mann Marketing Director

Axis Communications Jackie Andersen Business Development Manager, Retail

Evolution Robotics Colleen Lindsey Marketing Director

Checkpoint Carlos Perez Senior Director, Global Marketing

i3 International Vy Hoang Executive Vice President, Sales and Marketing InstaKey Security Systems Cita Doyle Director of Sales & Marketing Intelligent Loss Prevention Jay Leedy Business Development Manager

Gulfcoast Software Solutions Tim Lindblom Executive Vice President

Milestone Systems Trenton Thoms Retail Sales Manager

The Retail Equation Tom Rittman Vice President, Marketing Security Resources, Inc. Kris Vece Business Development Tyco Integrated Security Kevin E. Lynch, LPC Executive Director Verisk Crime Analytics David Duhaime President Aspect Loss Prevention

Palmer, Reifler & Associates Jeff Welch Executive Director

LP Magazine | July - August 2012

Parting Words

Half in the Bag Since my total alcohol consumption is an occasional glass of wine, I can safely use the term “half in the bag” and not feel a bit guilty. The year 2012 is half in the bag, and the planning for 2013 is upon us. The three industry-related events that I attended for the magazine were the national conferences put on by FMI, RILA, and NRF. Each is unique from one another, and each has its own distinct value. If you attended any then you bear the responsibility to be better and pass along your learnings to your people. Maybe the best part of these conferences is renewing friendships and making new contacts. The worst part is not having quality time to spend with those people or, even worse, not seeing them at all. At the recent NRF I was frustrated not to see some special people. Some were there, but we passed in the hall. Others just could not attend. Following is a list of people I could spend half a day with and enjoy the dialogue. Dan Faketty. He always has an opinion and is willing to share it with you. You don’t have to agree with him, but that is the fun part. At NRF he expressed some strong opinions on ORC, which made people think. He always seems to have a smile on his face that helps make you feel comfortable with him. Rich Mellor. This was his first conference as leader of NRF’s LP initiatives. As someone said to me, “Do you know anyone nicer than Rich?” He is open, honest, and objective—a real LP professional who is committed to this industry. Dr. Dick Hollinger. I have often wondered what we would know and who would have helped us know it if Dick had not chosen retail crime to research as a young academic. I may be biased, but he does not get enough time nor money to speak and research for retail. Melissa Mitchell. It has become an annual event for her to moderate my favorite presentation—the awards ceremony. She shows that video of various companies and LP people giving back to others, and it makes you feel good all over about the LP profession. As we all know, there are many other LP groups who are not shown in the video who are going above and beyond to help others. Phyllis Holland. Who? Phyllis is a district LP manager who had been a store manager before switching to LP and was in attendance because of her outstanding achievements in shrink reduction. It is no surprise. She owns a big smile, is positive and eager. Isn’t it grand to see store-line people find career value in LP? Denise Jennings. Denise is one of my personal heroes. She has fought health battles and won, and continues to bring honesty and dedication to this industry. There were some people not in attendance I missed seeing. One was Monica Mullins, VP of asset protection for Walmart, who recently retired. Monica’s beliefs in diversity, education, training,

Jim Lee Executive Editor and respect for others are traits we all could emulate. I am one of many who will miss her involvement in this profession. Bob MacLea, SVP of LP for TJX, was not in attendance at NRF, but he sent about fifty executives; many because they had achieved outstanding results over the past year. As Bob is apt to do, he stayed home to fight fires at headquarters. If you watched the Volunteers in Action video, you saw Bob front and center leading the charge for his company. He has created a legacy of giving that will go on well past the time he decides fishing and hunting can be a full-time job.

Some Who Have Passed

“One piece of advice that I believe will contribute more to making you a better leader, will provide you with greater happiness and self-esteem, and at the same time advance your career more than any other advice I can provide to you. And it doesn’t call for any certain chemistry. Any one of you can do it. And that advice is that you must care.” That quote is from U.S. Army General Melvin Zais, who was highly decorated in WWII and Vietnam. He was the commanding general of the 101st Airborne at the battle of Hill 937 in Vietnam, more commonly referred to as “Hamburger Hill.” My brother was there for the two-week battle and survived, but he did not survive his recent battle with cancer. I miss him every day. Two other people I miss are Dave Gorman and Fred Wilson. Both passed this spring (see page 66). Gorman had retired from Walmart after many years as the LP leader. He started there when they were a small company and left when they were the largest. He was a real gentleman. I missed seeing Dave in the exhibit hall, often sitting alone, because so many really did not know him. He was unassuming and laid back. I really enjoyed sitting with him and sharing a story or two. Fred was a unique individual. Melissa did a marvelous job of speaking of Fred at the awards ceremony. He was a past recipient of the Ring of Excellence award, and no one was more deserving of the honor. I spoke with Fred at the RILA conference, and what was utmost on his mind was not retail crime or shrink. Fred wanted to talk about the broken education system in this country that he felt was the root of many of the problems in our society. He wanted to find ways to fix the system. What General Zais expressed about great leaders was true of both Dave and Fred. They truly cared about others.

July - August 2012 | LPportal.com

Managed Video helps improve your operations, so you can increase your profits.

Managed Video is an innovative way to get more out of your video investment. Using video and remote monitoring, Tyco Integrated Security can help you keep an eye on your operational efficiencies. • Video Guard Tours can enhance your audit programs, improve safety compliance, and reduce

guard expenses • Video Alarm Verification helps reduce false alarms and costly fines • Video Escort helps improve employee safety during open, close and large cash transactions • Unattended Delivery allows for deliveries before or after hours without employees present • Video Assist uses two-way audio and video contact when and where you need it

Tyco Integrated Security’s UL- Certified monitoring centers watch over retail stores all across North America. Let our special operations team help you improve your operations. We can help manage your video monitoring, so you can focus on the bigger picture. To learn more, call 1.877.258.6424 or visit www.tycois.com.

VIDEO ALARM VERIFICATION

VIDEO ESCORT

UNATTENDED DELIVERY

VIDEO ASSIST

V11.4

MAGAZINE

ORC—Are Retailers to Blame?

LPportal.com

July - August 2012

Articles inside

EVIDENCE-BASED LP Data Analytics and Audit Research By Read Hayes, Ph.D., CPP

PUBLISHER’S LETTER Wide-Ranging Topics for Your Consideration By Jack Trlica

ON THE WEB

ASSOCIATIONS IN ACTION Building Momentum By Lisa LaBruno