November - December 2012 by Loss Prevention Magazine

THE VOICE OF LOSS PREVENTION LPportal.com | V11.6 November-December 2012

LOSS PREVENTION

MAGAZINE

DOING MORE WITH LESS? MYTH VS. REALITY

CHANGING THE VOICE OF THE INDUSTRY PROFILE OF CANADIAN RETAILER MARK’S RFID IN RETAIL

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INTERVIEWING

PEACE 2013 A

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

t a recent seminar we were asked by a participant what other interview formats were available besides the selective interview. The selective interview is a structured series of questions that elicit behavioral responses from the subject that can be categorized as typically truthful or untruthful. The purpose of this interview is to identify truthful individuals to eliminate them from the investigation. There are several additional types of interviews we will discuss in some detail that have differing purposes, but have significant utility in dealing with suspects and witnesses. Over the next several columns we will discuss the PEACE interview, the cognitive interview, and fact-gathering interviews. The first interview we will consider is the PEACE interview.

Moving Away from Confessions

The PEACE interview was developed in the United Kingdom by Dr. Eric Shepherd. It was through Dr. Shepherd’s work that interviewer deficiencies and psychological issues relating to the interview were considered in a conversation-management approach. This interview moved the country from an accusatory interview to one of developing information from victims, witnesses, and suspects. Since 1984 the United Kingdom has required electronic recording of the interviews of suspects after a series of cases were overturned by the Court of Appeals because of false confessions. It was decided that the police service would benefit from a single model of interviewing that was not focused on obtaining confessions. The PEACE interview took a different view of the process from adversarial to something more akin to interviews conducted by counselors or psychotherapists. This made sense since Dr. Shepherd was an on-call psychologist. The use of reciprocity at the beginning of the interview helps open the conversation and builds rapport between the interviewer and subject. The interview itself is designed to be aware of the subject’s sensitivities, self-esteem, and self-image. The technique uses the word “response” as a memory jogger to aid the interviewer in remembering key components to developing a relationship. The term response stands for:

Respect Empathy Supportiveness Positiveness Openness Nonjudgmental attitude Straightforward talk Equals (speak as equals while talking to each other)

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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.

The PEACE model of investigative interviewing helps obtain accurate and reliable information from victims, witnesses, and suspects. This information should always be tested against evidence and other witness statements to determine its reliability. It should be noted that the United Kingdom is unique in that a suspect who chooses to remain silent runs the risk of having an adverse inference being drawn in court. The suspect must give an account to police that is consistent with that given to his legal advisor, and he may not later use a story or alibi he did not tell the police. The police also are not allowed to use any form of inducements or promises to a suspect making admissions. Furthermore, they are not allowed to use rationalization or minimization during the interview to induce an admission from the suspect. In general, whenever possible, an interviewer should not interview a victim so he may remain non-judgmental during the interview. The PEACE acronym was designed to help interviewers consistently remember the parts of the interview. PEACE stands for:

Planning and preparation Engage and explain Account Closure Evaluate

Planning and Preparation

The first step in the PEACE model is to plan and prepare for the interview. As with our interviews here in the United States, this would include room preparation and logistical issues surrounding the conversation. This might also encompass any legal issues, such as Miranda warnings. The interviewer in this first step would consider the elements of the crime that must be proved, evidence available, the timeline of events, possible suspect explanations, and background of the people involved. The interviewer also would consider the important topics to be covered during the interview and the order in which they should be reviewed. There is also a meeting with the suspect’s legal advisor to provide him a basis for the arrest and give him an opportunity to understand the evidence against his client. The suspect’s

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legal advisor then has the right to meet with his client and determine his story or explanation for the incident.

Engage and Explain

Especially in the United Kingdom where specific legal requirements exist, the interviewer must record the time, day, date, and location of the interview during the audio-video recording. There will also be introductions of the legal advisor for the suspect, plus any other investigators or interpreters. There will also be an advisement of the caution and explanation of it, plus a check for the subject’s comprehension of the caution. The interviewer then details the reason for the interview, laying out the explanation of the offense in layman’s terms. The interviewer must then lay the groundwork for the arrest, although there is no requirement that the interviewer provide all the evidence available to the suspect.

The structure of the PEACE interview can be used in witness interviews to encourage a comprehensive examination of the subject’s story and sequence of events. Using a structured approach to the interview will elicit more details and relevant facts than a rambling non-structured approach to the process. The interviewer sets ground rules for the interview, asking for the truth and as much detail as possible. The interviewer encourages the subject to take as much time as is necessary to answer the question and think about his answer before and after he talks. The interviewer also explains the second investigator’s role in note taking and helping with materials or evidence that may be presented during the conversation.

Account, Clarify, Challenge

Next, the interviewer asks for the suspect’s account of events relating to the incident. The interviewer may also ask a question to determine if the suspect is willing to admit to the incident prior to asking for the suspect’s recountal of events. As the suspect offers his untainted version of the story, the interviewer asks no questions and uses silence to encourage a longer narrative response from the suspect. During the untainted story, the interviewer observes the suspect and listens to the story to determine potential “hotspots” or omissions that will need further explanation

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or clarification. If the suspect’s narrative lacks detail, he should be reminded to include as much detail as possible before the interviewer asks him to retell the events. The interviewer will now begin to develop the suspect’s story in segments, using open-ended questions to encourage a narrative detailed response in the particular segment. Then the interviewer will begin to probe the segments using more open-ended questions followed by probing questions. A probing question is more focused than in an open-ended question, but is designed so they may obtain precise information. The interviewer then summarizes the details provided by the suspect and links them to the overall story provided. The interviewer should ask the suspect for clarifications of any information that is vague or contradictory.

Closure

The interviewer may at this point suspend the interview for a short time to review what the suspect has told him. The interviewer now plans and prepares to re-interview the suspect regarding contradictions or anomalies in his story. The interviewer reviews all the suspect’s responses and details the contradictions in them relating to the story itself, evidence, or witness statements. The interviewer returns and restates any legal requirements and confirms the previous introductions. The interviewer at this point selects a contradiction and asks the suspect to take them through this portion of the story again. The suspect is asked to clarify the contradiction without being called a liar. The interviewer may now offer evidence, statements, or other pertinent information that contradicts the suspect’s story. The interviewer then asks the suspect to account for the apparent evidence to the contrary. Once the suspect has had a final opportunity to explain any contradictions, he will have an opportunity to again consult with his legal advisor. The interviewer may decide that additional interviewing is appropriate. The interviewer does not use rationalization or minimization to encourage an admission from the suspect, but instead uses the suspect’s own words and contradictions to create a trap leading to an admission and, perhaps, a full confession.

Evaluate

The final component of the PEACE interview is to evaluate the information obtained and the evidence in the investigation. The interviewer may determine that there are additional investigative leads to be followed or that further interviews need to be conducted. The interviewer should also evaluate his performance during the PEACE interview and consider lessons learned from the encounter. The structure of the PEACE interview can be used in witness interviews to encourage a comprehensive examination of the subject’s story and sequence of events. Using a structured approach to the interview will elicit more details and relevant facts than a rambling, non-structured approach to the process. In our next column we will consider the cognitive interview, which assists a victim or witness in accurately recalling events.

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COVER FEATURE

DOING MORE WITH LESS? MYTH VS. REALITY By Walter Palmer, CFI, CPP, CFE

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DOING MORE WITH LESS?

ver the past few years, the mantra of “doing more with less” has become so ingrained in corporate and business jargon that it goes unchallenged, unquestioned, and accepted as a legitimate business strategy. It is almost impossible to pick up a business publication, a newspaper, or read an industry blog without hearing the phrase. A quick Google search of the phrase yields thousands of news articles featuring businesses, non-profits, government agencies, schools, and even sports teams that are facing the challenge of “doing more with less.” And this is not solely an issue in the U.S. As I travel around the world and read local publications and talk to business executives in Europe, Asia, or South Africa, they face the same challenge inherent in this conceptual language. In the loss prevention industry, we have certainly been as challenged as any group in the business community to “do more with less.” This phrase is heard at virtually every LP conference, in industry publications, and within the halls of corporate offices across the retail industry. This magazine, in fact, published a cover story in November-December 2008 at the beginning of the recent recession entitled, “The Economic Crisis—Doing More with Less.” While this phrase might have been a well-intentioned response to budget constraints when we first started hearing it, “doing more with less” has risen to the level of

While this phrase might have been a well-intentioned response to budget constraints when we first started hearing it, “doing more with less” has risen to the level of unchallenged manifesto. It is only recently that we have started to see some challenges and questioning of the tenets of this philosophy and an examination of the implications of this as a business strategy. 16

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unchallenged manifesto. It is only recently that we have started to see some challenges and questioning of the tenets of this philosophy and an examination of the implications of this as a business strategy. Almost two years ago, I wrote a column titled “Doing More with Less. Seriously?” for the RILA Asset Protection Report published by the Retail Industry Leaders Association. In this column I took a look at whether this omnipresent catchphrase could be true or if we are misusing it to avoid addressing key underlying issues in the way we manage ourselves, our people, and our workload. Out of the hundreds of articles, columns, and blog posts I have written over the years, I have never received the volume of reaction, feedback, and appreciation as I did to this one little column. I suspect this was because it resonated so well with those of you who live with this challenge every day. It reminded me of the scene toward the beginning of the movie Jerry Maguire where the main character challenges the status of the sports-agent industry and suggests that agents should work with fewer athletes and invest more time and care into each one, even if that means making less money. An excited colleague congratulates Maguire and says, “Finally, someone said it!” Of course, Maguire gets fired as a result. Speaking the truth is not without risk. In this article, we are going to take a look at these issues and how we might shift our thinking about the phrase “doing more with less.” We will not pretend that budget pressures and resource constraints do not exist. Instead, we’ll look at how we might manage differently in this environment that goes beyond a buzzword or phrase.

“Flying” through the Work Day

The inspiration for the newsletter column came to me when I was flying home from a meeting. We were about 25 minutes late in pushing back from the gate when the pilot came on the public-address system. He said that he still anticipated an on-time arrival as we would “try to make up some time en route.” After thinking about this for a few minutes, I could only come up with four possible ways that could happen: ■ We could fly faster, ■ We could fly a more direct route, ■ There was already time built into the original schedule to mitigate these types of delays, or ■ We could travel to a different destination. Those were the only possibilities I could come up with that would allow us to arrive on time. Let’s apply a similar analysis to the statement that we are going to “do more with less” in the business environment. How is this possible? There are four possibilities that are analogous to the airplane example I just used: ■ We are going to have our people work more hours (“fly faster”),

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DOING MORE WITH LESS? ■ We

have discovered a more effective way to do the same work (“more direct route”), ■ We had excess capacity previously (“extra time already built into the schedule”). In other words we had people or resources that were not fully being utilized, or ■ We are going to produce different results (“different destination”). Let’s look at the list in reverse order. The fourth option— different results—is often the actual result of cutting budgets, reducing resources, and eliminating payroll. It is not the intended outcome, but certainly a logical one. The third option is not one that many senior loss prevention executives would want to speak up about in a leadership meeting. Who wants to say they aren’t currently utilizing all of their resources, especially when budget cuts and resource constraints have been occurring for several years as organizations have tried to squeeze more productivity out of their people. The second option is certainly the one that most of us like to believe is the answer. Perhaps there is a way to better leverage technology, to eliminate unnecessary or redundant processes, or to streamline procedures in a way that won’t affect desired outcomes. However, when pressed to identify specifics, most executives have a hard time identifying what “synergies,” “efficiencies,” and “reengineered processes” are to be realized, especially, once again, when every company

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has been looking to do this year after year over the past decade. At what point is there no more substantive efficiency to be found? Finally, consider the first option—work harder, work more hours, and at a faster pace. In the world of aviation, jets can, in fact, fly faster than the original flight plan and schedule demands. But, this increased speed comes at a high cost—much higher fuel burn rates. This is probably a great analogy for the human costs and sustainability for having our people work more hours or work harder. Can it be done? Certainly. But, for how long before effectiveness and efficiency start to drop?

Achieving Desired Results

In reality we use a combination of the above solutions to the problem, plus one very important coping mechanism that is not on the list because it doesn’t fit the definition of “doing more with less.” In fact, when we say that phrase, most of us really don’t mean it literally. Usually, it is understood that our goal is to “do the same with less.” In other words, we are going to cut your budget, your payroll, and the resources available to you, but you still need to deliver the same shrinkage result or safety metrics. But all of the challenges enumerated above remain, and we end up using one key tactic—we stop doing some things we were doing before. This could be a little less of everything

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DOING ORE WITH LESS? or a complete elimination of certain tasks. For instance, we could go from auditing every location three times each period to only twice per period. Or, we could audit the same number of times, but not go as in-depth on each item and spend a little less time going over the results with the store manager. Each of these would be a way to do a “little less” than before in hopes that it won’t affect the desired results. Another strategy would be to completely eliminate certain questions or audit points from the audit, or stop conducting audits in low-shrinkage locations. Again, the goal would be to eliminate certain low-value tasks in hopes that results are not impacted. The point is that it’s probably unrealistic to think we are going to be able to “do the same with less” much less “do more with less.” Therefore, if we want to achieve the desired results, it is imperative on the part of senior management to be engaged in deciding what tasks and responsibilities are eliminated or done less thoroughly. Otherwise, those decisions will be made…consciously or unconsciously…by each individual in the field who is trying to squeeze 80 hours of work into a 50-hour workweek. If that happens you will have a tremendous amount of variance on what is actually being done in the field and when your results come in—good or bad. You will have a hard time evaluating whether to continue with current budget levels or not.

In fact, when we say “do more with less,” most of us really don’t mean it literally. Usually, it is understood that our goal is to “do the same with less.” In other words, we are going to cut your budget, your payroll, and the resources available to you, but you still need to deliver the same shrinkage result or safety metrics.

Workload/Task Analysis—What Is on Our Plate?

One very effective way of discovering whether your organization is fooling itself is to do a workload/task analysis. In this analysis you take key positions and identify all of the task expectations that fall on that role. For instance, if you are looking at a district LP manager (DLPM) position, you would identify all of the tasks they are responsible for, including such things as: ■ Audits, ■ Conference calls, ■ Exception report review, ■ Investigations, including court time, ■ District, national, or departmental meetings, ■ Target-store program, ■ Travel, ■ Physical inventory prep, overview, and analysis, ■ Safety activities, ■ Training meetings, ■ Physical security repairs, and ■ New store openings. Once you have identified the tasks, you then assign an average amount of time needed to properly complete each one and roll it up to a standardized work period. Let’s take a look at a retailer who recently did this very type of analysis for their district LP manager position. First of all, they found the average number of hours worked per week was in the 53-plus-hour range (see “DLPM

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Hours Worked” chart at right). This was not particularly shocking despite the fact that the job is, theoretically, a 42.5 hour per week job in their company. However, this is very important information because it already starts to give perspective on the “work harder” idea. We are so used to bragging about how many hours a week we work that we tend to think that 53 to 56 hours a week doesn’t sound like too much. But, that is a significant workload. Second, when they annualized how many work days it would take for them to get all of the tasks completed that they are responsible for, it came out to 378 work days a year (see “DLPM Days Required” chart). Don’t forget, the “typical” number of workdays available to any employee working five days a week is 250. Even if you planned on a six-day workweek, every week of the year, there would only be 300 days available. Even if some of the methodology was off slightly, it seems clear that the gap is so pronounced that there is no possibility that everything on the list is being completed. Additionally, their task list did not capture very important aspects of the job, such as planning, strategy development, professional development, relationship building, and other qualitative activities that can have a direct impact on effectiveness. But, the story gets better.

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DOING MORE WITH LESS? Over the past couple of years, this organization has been trying to “do more with less.” Part of that effort is to identify some areas where one district LP manager can cover two districts. Typically, they try to do this where there is relatively low shrinkage and good geographical proximity of locations. When this same analysis was done for these “dual-district” positions, the annualized work days needed to accomplish all required tasks jumped to an astonishing 482 workdays. After analysing the results, they found: ■ Non-store tasks go up disproportionately for dual-district LP managers, ■ DLPMs with two districts spent 13 percent less time in stores than their counterparts, and ■ Shrink results were significantly worse, based on delta change, where “doing more with less.” This is not an isolated case. Time and time again when organizations do these types of task analyses, we find there are gaps of 55 to 80 percent between available work hours and the amount of time required to complete all tasks per expectations.

Time Tracking—Where Are We Really Spending Our Time?

Another tool that needs to be used is to do some actual time tracking. This can yield different results than the task analysis since the task analysis is based on where we are theoretically spending our time versus the reality of where we actually do. This can be harder to accomplish as efforts in this direction will usually be met with scepticism from the workforce as they perceive it to be an attempt to micromanage their schedules or gather information with which to criticize them. However, the benefits of this information can be significant. Let’s look at another case study from another loss prevention organization that illustrates the power of this information. In this case we had a high-growth retailer that was rapidly expanding, but not operationally competent at the field level due to the aggressive growth, including a major acquisition. Shrinkage was running approximately 125 percent higher than anticipated for their retail segment and footprint. There was pressure for higher earnings contributions to the parent organization due to expectations in the financial markets, so they were trying to grow aggressively while keeping payroll budgets flat. In anticipation of tough resource constraints, we ran a time-tracking study to identify where the regional loss prevention managers (RLPM) were spending their time (see “RLPM Time-Tracking Analysis” chart). The average RLPM was working 54.6 hours per week, broken down by the following categories in descending order: ■ Audits = 34% ■ Travel = 28% ■ Investigations = 20% ■ Administration = 12% ■ Training = 6% Additionally, based on the task analysis, the group was already 94 days in deficit to expectations on deliverables. By having this information, the entire dynamic of budget

DLPM Hours Worked Planned vs. Actual 60 45 30

Planned 42.5

15 0

DLPM Days Required Planned vs. Needed 500 375 250 125

Needed 482

Needed 378 Planned 250

Planned 250

0 Single District

Dual District

RLPM Time-Tracking Analysis

Travel - 28% Investigations - 20% Administration - 12%

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Actual 53.8

Audits - 34% Training - 6% 19

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DOING MORE WITH LESS?

In a business environment that is moving more and more toward data-based decisions and where the emergence of “big data” is one of the real buzzwords in corporate hallways, we are often in a severe data deficit when it comes to where our people resources are spending their time, what their task expectations are, and what is realistic to expect from them. discussions changed. Of course, the CFO and budget committee wanted to keep payroll flat while the vice president of loss prevention wanted to add two RLPMs to handle the additional workload of 45 to 50 new stores.

Based on the data, the LP executive simply asked, “What do you want us to give up?” His first suggestion was, “How about we only audit stores two times per year versus the current three times standard?” The head of operations immediately said, “No, with the operational challenges we face and shrinkage being so high, those are absolutely critical.” His second suggestion was, “How about we don’t do all of the investigations we are currently doing? Maybe the district managers of operations can handle the smaller cases?” There was consensus from the executive group that the DMs did not have the necessary skills to do this and that they needed to remain focused on sales and presentation standards in the stores. The LP executive finally asked for suggestions on what other activities could be cut from the workload of the RLPMs. No one had any ideas. Guess what? They budgeted for two new RLPM positions.

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DOING MORE WITH LESS? continued from page 20

our people resources are spending their time, what their task expectations are, and what is realistic to expect from them. This is not an article to complain about the workloads our employees are carrying, although there is significant evidence that there are severe costs in working long hours on a continuous basis. For instance, one study found that young medical doctors who worked longer shifts made almost 36 percent more serious mistakes. Instead, the focus must be on how we navigate this “do more with less” environment. I’m convinced that we often do not have the courage to speak up more aggressively because we have not done the work of collecting the data we need. As one CFO used to say at budget time, “In God we trust. All others bring data.” In the budget example above, the outcome was a “win” for the head of loss prevention. But, it could also have been a win without getting the two new positions as long as the service expectations were adjusted to align with reality. The biggest mistake is to try and deliver the same results and task deliverables while having resources reduced. Something has to give.

we have seen company after company go through the same cycle where, when results are good, they cut resources to the LP team, as if the problem had been solved once and for all. Every time this happens, it is relatively easy to predict the pattern. Within a two- to four-year window, shrinkage trends up and increases in velocity in the wrong direction over time. This is when the organization reaches what my good friend, Adrian Beck from Leicester University in the U.K., calls the “tipping point.” This is the point where the results are so unacceptable that the organization believes something must be done. Oftentimes, they change the leadership team and, almost always, reinvest in resources for the loss prevention effort. It becomes a priority once again. Perhaps it is time for all of us to collect the data on the things we do that affect shrinkage.

Articulating Cause and Effect

Perhaps adding these data points to our tool box will help us better articulate the cause and effect of loss prevention resources on shrinkage and safety outcomes. Over the years,

WALTER PALMER, CFI, CPP, CFE is president of PCG Solutions, a loss prevention training and consulting firm. Prior to moving to the vendor side, he spent sixteen years as an LP executive with Babies“R”Us and Kay Bee Toys. Palmer is cofounder of LP Magazine and LPjobs.com and remains a contributing editor to the magazine. He is very active in the LP industry as a frequent speaker at industry events both in the U.S. and internationally. Palmer can be reached at 859-963-3517 or via email at wpalmer@pcgsolutions.com.

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

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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,

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th ex hi

an de LP ev

“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?

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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.

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ACADEMIC VIEWPOINT

Criminal Background Checks: Good in Theory, Problems in Practice O

ne of the longest held axioms in social science is, “The best predictor of future behavior is past behavior.” Over the years many employers have increasingly relied upon criminal background checks as the principle strategy used to screen out potentially risky hires from the workforce. The problem is, as expressed by another axiom of behavioral science, namely, “People often make bad decisions early in life.” These bad decisions, which they later regret, usually are not permanent. People can recover, rehabilitate themselves, and turn their lives around. In making hiring decisions, we find ourselves at the horns of a dilemma. Most people who are convicted of a crime, especially property offenses, will never offend again and not become a threat to society. The problem is that we do not have very good tools to predict who will be successfully rehabilitated and who will offend again. As such, most employers, on the advice of legal counsel and risk management, choose to err on the conservative side of this question. This means, if a person has been convicted in their past, we generally exclude these individuals as candidates for employment forever. The net effect of this policy is gross discrimination. This is especially true for those who have used drugs, stolen anything, and who are male minorities, particularly true for African American males.

New EEOC Guidelines

After the evidence of hiring discrimination was allowed to pile up to levels that no longer could be ignored or tolerated, the Equal Employment Opportunity Commission (EEOC) finally took action in April of this past year. The EEOC issued enforcement guidance that is expected to yield significant practical and legal impact. The commission stated that “people cannot be denied employment solely on the basis of criminal histories.” However, they stopped short of totally banning the use of criminal background checks in the hiring process.

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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

Since this ruling in April, I have asked many in the loss prevention community what their companies were going to do in the future. A few have told me that they were going to continue to screen out former criminal offenders, knowingly taking the risk that potential discrimination lawsuits would result. However, the majority of firms have reexamined their entire hiring process, asking this critical question—“Is it necessary to exclude everyone who has a criminal history from potential employment?” Many of you already know my position on this issue. You might even remember when I argued before a large convention audience of LP executives that dishonest employees could be successfully rehabilitated and might actually be good candidates for hiring. My logic is based upon the fact that most offenders do not reoffend. My position is further

Perhaps it will be the retail industry that sets the national standard for reintegrating former offenders back into the mainstream of our society. In my opinion, this would be a noble and truly worthwhile achievement by the nation’s largest industry as led by its loss prevention professionals. supported by the fact that those who have been caught and punished would probably be the easiest to deter, given the fact that they knew that their behavior would be more carefully watched than any other employees. In this presentation, I was mildly booed and fully expected tomatoes to fly in my direction at any moment. In hindsight, however, I still think that I am right. However, since my job was not in jeopardy, I fully recognized and appreciated the significance of my radical recommendation to this particular audience. Well, here we are some ten years later and find that the EEOC is supporting my controversial position. Based

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upon this ruling, employers are expected to take the risk and hire ex-offenders, unless their prior offense is directly related to the performance of their future job. Of course, we do not have to put persons with previous embezzlement convictions in the cash office, nor drivers with a DUI behind the wheel of a delivery truck. However, when future job responsibilities are not related to their former offense, people should be given a chance to get a job, prove their honesty, and turn their lives around. Wearing the “scarlet letter” of ex-offender is a difficult label to erase. However, it can be done. Pilots with alcohol problems are now permitted back in the cockpit in many airlines. Recovered pharmacists with former drug dependencies are now dispensing medicines in many drug stores. The list goes on. A review of today’s Washington infidelity scandals clearly indicates that even the most prestigious people can make mistakes. However, most recognize their mistakes, make amends, and go on to live productive lives when employed in occupations that recognize the fact that rehabilitation can and usually does work.

Will Retail Lead the Way?

As a criminologist I would hope that the retail industry would embrace and implement these new EEOC guidelines to change their present hiring policies. Fighting expensive legal battles over this issue seems to me a waste of time and money. The social science research literature supports the new EEOC hiring guidelines. Moreover, one could argue that the industry that hires the largest number of employees in our

country should be the one to lead the rest of the nation in reducing the level of racial, ethnic, gender, sexual orientation, and other forms of unwarranted discrimination. I know this is a controversial subject, but firmly believe that the risks that we take in hiring ex-offenders are far smaller than our discriminatory stereotypes would lead us to believe. Who knows, perhaps it will be the retail industry that sets the national standard for reintegrating former offenders back into the mainstream of our society. In my opinion, this would be a noble and truly worthwhile achievement by the nation’s largest industry as led by its loss prevention professionals.

Renew Your Subscription

THE VOICE OF LOSS PREVENTION LPportal.com | V11.5 September- October 2012

LOSS PREVENTION

MAGAZINE

Readers must renew their free subscription every three years. To be sure you continue to receive the magazine, go to myLPmag.com to renew your subscription, change your address, or sign up others in your organization.

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LP MAGAZINE | NOVEMBER - DECEMBER 2012

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PARTNERING WITH RETAILERS

by Paul Jones

eBay Inc. Aids Storm Relief in Sandy’s Wake Superstorm Sandy hit the East Coast

of the U.S. on October 29 to devastating effect. Over 100 lives were lost in nine states due to storm-related incidents. In addition, more than eight million people were left without power and over 18,000 plane flights were cancelled. Generous volunteers, however, immediately leapt to the aid of those in need, and eBay Giving Works and PayPal were proud to join their ranks with a pair of storm-relief initiatives. “Since our company was founded seventeen years ago, eBay has been committed to changing the world for the better. It’s part of our DNA,” says Amy Skeeters-Behrens, Director of Marketing and Social Innovation, eBay North America. “We are proud to use our platform to help those who have been impacted by Hurricane Sandy.” In a November 7 email to employees, eBay Inc. President and CEO John Donahoe said, “In just a few days, customers donated more than $350,000 to relief organizations, including the American Red Cross, Salvation Army, and the Humane Society of the USA—all enabled by eBay and PayPal. And the eBay Foundation is donating $50,000 to the Food Bank for New York City and the American Red Cross. Both organizations are doing a remarkable job providing emergency food and other services to those hardest hit.” eBay Giving Works has launched a dedicated Hurricane Sandy site, where shoppers can buy products marked with a yellow-and-blue ribbon. The icon indicates that anywhere from 10 to 100 percent of that item’s final sale price, as designated by the seller, will go to one of a dozen charities or organizations working in the affected areas, such as the American Red Cross. eBay will credit seller fees in proportion to the amount the seller donates per completed transaction, with 100 percent of proceeds delivered to designated nonprofits. To date nearly 1,900 sellers have agreed to participate

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in the relief effort and are currently selling over 17,700 items as part of the campaign. Meanwhile, PayPal has launched its own disaster-relief campaign, setting up a separate site where users can donate to one of four organizations, including the Humane Society and the Salvation Army. 100 percent of users’ donations will reach the nonprofits, as PayPal is waiving its typical fee for any donations made as a part of the campaign. MissionFish, a program of the PayPal Charitable Giving Fund, will ensure delivery of the donation.

Paul Jones, LPC is Senior Director, Global Asset Protection. Contact him at pajones@ebay.com.

On October 29th Hurricane Sandy struck and affected millions of people on the East Coast. We have read stories of how LP professionals helped their companies through the storm and the aftermath. To add to that, we wanted to share the efforts of eBay to provide assistance to those affected.

“First and foremost, our thoughts are with those who have felt the devastation caused by this storm, including our employees, our users, and our partners,” says Sean Miliken, eBay Inc. Director of Nonprofits Strategy. “We are continuously inspired and humbled by the generosity of the eBay and PayPal communities. When the need is greatest, they have proven time-and-again that individual acts of kindness of many can be a powerful force for good.”

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INTERVIEW

EVOLVING THE VOICE OF THE INDUSTRY UPDATES FROM THE STAFF OF THE MAGAZINE By James Lee, Executive Editor

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EVOLVING THE VOICE OF THE INDUSTRY EDITOR: Why would we want to interview you

and members of your team? Does the magazine have an update for the readership? TRLICA: We recently hosted our annual editorial board and vendor advisory board meetings where we discussed the current status of the magazine as well as received input from the executives on the many things the magazine is involved with, such as print versus online readership. Both the retailers on our editorial board and the advertisers on our vendor advisory board provide us with great input into how we’re doing and what we can do better. EDITOR: What are the various components or offerings by the magazine? TRLICA: In addition to our bimonthly print magazine, we have a robust website at LPportal.com with archived articles, videos, podcasts, white papers from the vendor community, current retail and technology news, our industry resource guide, current people on the move listings, as well as original editorial that does not appear in the print magazine. In addition to all of that, we also have an interactive digital edition of each print magazine that can be read on your computer or tablet, such as the iPad. EDITOR: Do you need to be signed up for each of these or do they come automatically? TRLICA: Currently, all the information both in print and online is available to our readers in the U.S. and Canada for no cost. International readers who wish to receive our print magazine must pay $99 per year. The print magazine requires a simple subscription qualification form be filled out that gives us the information that the post office requires to allow us to mail the magazine at what is called “periodical rate,” which is both quicker and cheaper than bulk rate. Our readers will get a message from us every year or so that asks them to renew their subscription, because the post office requires us to requalify our subscribers at least every three years. If someone wants to subscribe or renew their subscription, they can do so at myLPmag.com. Our digital edition is available to all readers for free. There’s a link on our website, which is digital.lpportal.com. Currently the digital edition can be accessed without an account per se. However, one of the changes that may be coming down the road is to require a login and account number to access the digital edition, even though there won’t be a charge to have an account. Readers of our weekly e-newsletter can ask to get the newsletter when they sign up for the print magazine, or they can sign up on our website. Again, it’s free. EDITOR: What is the mission or objective of the magazine? TRLICA: The primary mission of the magazine is to provide a voice for the loss prevention industry and offer educational information to our readers.

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Jack Trlica

“Since we started the magazine in 2001, we have been fortunate to have a great group of what I would call the ‘who’s who’ of the LP executive community on our editorial board. These twenty-five or so executives serve as an advisory council to advise us on the direction of the magazine and offer their suggestions for articles and subject matter to pursue.” – Jack Trlica, Editor and Publisher

The goal is to produce interesting, informative editorial that contributes to the growth of the LP professional. At the same time, the magazine offers our advertising partners a vehicle for communicating the products and services that LP organizations require to do their jobs and meet their objectives. EDITOR: You mentioned the recent annual meeting. Who was in attendance and what were the outcomes of the meeting?

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TRLICA: Since we started the magazine in 2001, we have

been fortunate to have a great group of what I would call the “who’s who” of the LP executive community on our editorial board. These twenty-five or so executives serve as an advisory council to advise us on the direction of the magazine and offer their suggestions for articles and subject matter to pursue. Once a year we get together in what is essentially a brainstorming session where we discuss current and emerging issues in the industry that need to be covered editorially in the magazine. In this year’s meeting, there were more than sixty retail and vendor executives who met at the Trump National Golf Club in Mooresville, just north of Charlotte. There was detailed discussion of numerous topics, including the challenges of mobile POS, which was a discussion led by Claude Verville of Lowe’s, Paul Jones of eBay, and Jim Paul of ClickIt. Bill Titus of Sears Holdings demonstrated their new iPad app that they have just rolled out to their field organization to help them manage intelligent store audits and other internal LP data. Cathy Langley from Rite Aid talked about a number of their internal initiatives. And Francis D’Addario of the Security Executive Council offered his perspective on shrink indicators and how the next generation of LP leaders will be using data to better meet corporate goals.

In addition to these informal presentations, we spent a good deal of time in an open discussion on whatever the individuals had on their minds. This resulted in a discussion of a wide range of topics, from opening stores internationally to working with internal IT people, from legal issues to Homeland Security issues that effect LP. One of the great things about our annual meeting is it offers retail and vendor executives the opportunity to come together in a non-selling environment for a couple of days of informal discussion, networking, and a little play. We usually end the meeting with a golf outing. EDITOR: There were some additional meetings as well, correct? TRLICA: Yes, we typically coordinate our meeting with the annual meeting of the Loss Prevention Foundation board of directors, since there is a good deal of overlap in the two boards. We often invite other organizations with similar overlap to have their board meetings in conjunction with ours. This year the LERPnet board met and also participated in the magazine meeting. In past years the LPRC held board meetings at the same time. From the magazine’s perspective, it is important for us to support the Foundation and other organizations that make a positive contribution to our industry.

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editorial and advertising approach that we have with our current magazine to ensure we have the same success there that we’ve enjoyed in North America.

John Selevitch

“We try very hard to find articles that are useful to our readers. It can be tricky because we have such a diverse readership, from entry level to senior leaders. And while the temptation is to just throw in a bunch of news articles that have the words LP, security, or asset protection, we always ask questions about the content we might use before anything gets into the LP Insider. ‘How will this help?’ Or ‘What can we learn from this?’” – John Selevitch, Digital Editor EDITOR: I know that one topic of discussion at the meeting was an international LP magazine. What can you say about that? TRLICA: We have been approached by some individuals from the United Kingdom who want to partner with us on an European-focused LP Magazine. Right now, we are in early discussions and there’s a good deal of research to do before it becomes a reality. Assuming we move forward with this, we would take the same

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EDITOR: How can others who are not on the editorial board get involved with the magazine? TRLICA: As anyone who reads my Publisher’s Letter in the magazine hopefully knows, we are constantly asking for suggestions and contributions from readers. We do not have a staff of writers, but rely on articles written by working LP professionals. From the beginning, with input from our editorial board, we determined that our articles should be primarily written from the retail LP perspective. Other trade magazines traditionally publish articles written by the vendor community, which can sometimes result in marketing pieces rather than objective editorial. We didn’t want that and, frankly, our advertisers agree. This has helped the magazine create and maintain a great deal of credibility in the industry. So, if an LP person wants to contribute an article, they should contact me directly at JackT@LPportal.com. For more details about contributing articles, I would suggest readers see my Publisher’s Letter in the recent September-October issue where I talk about “How to Submit an Article.” EDITOR: What about companies and solutions providers who want to contribute articles? TRLICA: We recognize that the companies who supply technology and services to our LP organizations want and should contribute to the discussion in the industry. At times we do allow solutions providers to provide quotes or input into articles to share their expertise and insights into an issue without pitching their solutions. A good example of that is the Interviewing column written by Wicklander-Zulawski. The Solutions Showcase section of the print magazine is also a venue for our best advertisers to provide thought-leadership articles, case studies, and other information for our readers. Our website is the primary vehicle for companies who want to communicate to our readers. We have a large White Paper section on the website as well as current product releases that are updated weekly if not daily. There is a My Turn section that is available to almost anyone who wants to express an opinion. Of course, we do exercise editorial judgment over what is published on our website. EDITOR: What features for 2013 can you speak about that are new and exciting for the magazine? TRLICA: There are a couple of exciting new things in the works. One is an iPad app that will offer our readers a convenient way to access not only our digital magazine, but also videos, podcasts, and other digital offerings. The second thing is what we are calling EyeOnLP, which is a new part of our website that will provide unique video-based content that will not only be educational, but

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fun to watch. I’ll let Amber Virgillo discuss EyeOnLP in more detail. EDITOR: Before we turn to Amber, what is the role of the weekly e-newsletter and why not a monthly or even a daily newsletter? TRLICA: We produced a monthly e-newsletter for several years before we asked our readers what they would like in an e-newsletter and how often they would like to receive it. By far, the vast majority of readers surveyed said that a daily was too much and preferred a weekly. So, early in 2011 we brought on John Selevitch to be our newsletter editor. With his loss prevention background and quirky sense of humor, he’s produced a really good newsletter with what we think is the right mix of original content, current LP news, links to online content, and a little fun. Recently, with Matt Richardson leaving the magazine, John has taken over managing all of the magazine’s digital offerings. EDITOR: So, with that, let me turn to Mr. Selevitch. John, how long have you been involved in the magazine? SELEVITCH: I feel as though I have been connected to the magazine since the first issue, although, my favorite issue would have to be from July-August 2003 when I was one of six LP executives profiled as “The Go-To People Inside LP.” It has always been amazing to me that this is the only

publication of its kind for the LP profession and that it has such overwhelming support from the LP community. I am proud to say that I have been more actively involved over the past three years and am very excited in taking over managing all-things-digital for the magazine. EDITOR: You’ve managed the weekly e-newsletter now for almost two years. Is there a name for the newsletter? SELEVITCH: While most people call it the Thursday newsletter for the obvious reason—we send it out every Thursday morning—the actual name is the “LP Insider.” EDITOR: What are your objectives with the LP Insider?

SELEVITCH: We try very hard to find articles that are useful

to our readers. It can be tricky because we have such a diverse readership, from entry level to senior leaders. And while the temptation is to just throw in a bunch of news articles that have the words LP, security, or asset protection, we always ask questions about the content we might use before anything gets into the LP Insider. “How will this help?” Or “What can we learn from this?” EDITOR: What kind of acceptance and circulation does the newsletter have? SELEVITCH: It really has been rewarding to be associated with the Insider because of the tremendous feedback that

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we get. We started the newsletter in May of 2011 and ended the year with just over 505,000 sent. This year…knock on wood…we are on track to break 1 million by the end of 2012. EDITOR: If one wanted to be involved in the LP Insider, how would they do that? SELEVITCH: Like Jack said before, we are always looking for articles from our readership. Since Jack manages the entire operation, they can always contact him directly. But for anything digital, whether it’s for the newsletter or the website, they should contact me at JohnS@LPportal.com. As you know, we benefit a lot by having LP executives contribute articles, because many of the writers are so knowledgeable and well known throughout the industry. But people are always surprised to hear that some of the most popular articles, in fact, the top two, have been from field LP people. These are some of the things that set us apart from other publications. EDITOR: What advantage does your background in loss prevention give you with selecting and chasing content? SELEVITCH: Like so many other people in this profession, I started my career by getting my butt kicked catching shoplifters. I’ve worked in positions from door guard to vice president, so I think I know what interests the LP community at all levels. I also know that no one wants to be “all LP all the time.” That’s why we have other things of interest to the profession. We look at technology, personal development, travel tips, and a little bit of fun to break up the workday like “The Week That Was” and “You Can’t Make This Stuff Up” departments. EDITOR: Okay, Amber, your turn. Talk about your role as a contributing editor and some of the articles you have written. VIRGILLO: Jack has labeled me the resident “pot-stirrer,” and I like that nickname quite a bit. My goal is to tackle stimulating topics that spur debate or fiery opinions. But above all, hopefully, I’m providing several different perspectives regarding a particular topic, such as interrogation or organized retail crime. I like to choose industry hot-buttons as topics to provide varying perspectives and make our readers think or consider other points-of-view. EDITOR: You have a communications and journalism background, correct? VIRGILLO: That’s right. That’s one reason I strive to provide the information in an unbiased way and let the reader decide what they agree or don’t agree with. While I’ve been associated with the LP industry for a number of years, I think my communications background helps me take a different perspective on LP issues. Some articles I’ve written include such topics as vendor-retailer etiquette, job jumping,

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EYEONLP Amber Virgillo

“EyeOnLP is a quirky, fun way to examine some of LP’s hottest topics, events, and climb inside the minds of the industry’s executives in an unusual way. These certainly aren’t your daddy’s video clips with talking heads and stuffed shirts. We’re going to have fun keeping it real while uncovering what our readers really want to know about.” – Amber Virgillo, Contributing Editor

how not to investigate ORC, and, most recently, an article discussing an anti-ORC buying program. I’ve also tackled some super important subjects like cussing in the workplace and buying your way to honest employees. But my all-time favorite was an article examining the LP person’s role in the interrogation room called, “Are We the Liars? Getting an Admission at Any Cost,” that ran in the May-June 2010 issue. It definitely caused a stir. EDITOR: Talk about the new initiative EyeOnLP. What is the objective? VIRGILLO: EyeOnLP is a quirky, fun way to examine some of LP’s hottest topics, events, and climb inside the

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EVOLVING THE VOICE OF THE INDUSTRY Foundation. Watch the magazine website and the weekly e-newsletter for details of the giveaway.

continued from page 34

minds of the industry’s executives in an unusual way. These certainly aren’t your daddy’s video clips with talking heads and stuffed shirts. We’re going to have fun keeping it real while uncovering what our readers really want to know about. The objective is to create a new vehicle to communicate with our readers through video. We also want EyeOnLP to become the place to visit if you’re looking for knowledge on industry topics or people, and you don’t want to be bored stiff. EDITOR: When is EyeOnLP going to be available? VIRGILLO: We recently began filming at the magazine’s editorial board meeting where we conducted a bunch of interviews with LP executives as well as solution providers; all of which are entertaining and value-packed with hard-hitting questions as well as a lot of fun. One example of the direction we are going is on the magazine website. We did a shoot with Bob Vranek at Belk headquarters that follows up on the interview with him that was published in the September-October print magazine. We are officially launching EyeOnLP in January 2013 with an educational scholarship package giveaway. One lucky viewer will receive a scholarship package to study for the CFI certification or the LPQ or LPC certification from the Loss Prevention

EDITOR: What are your plans in 2013 for the EyeOnLP? VIRGILLO: 2013 will be a busy year for EyeOnLP as we establish ourselves in the industry. We will be attending events, making personal visits to retailers, and looking beyond the stereotype as we develop this strategy. Our goal is to provide an insider’s view on the typical industry events, but also spice it up with some other filming locations as well. We will strive to be where the story takes us and, most importantly, where our viewers direct us to go. We hope to give a voice to all different levels of practitioners at all types of events. EDITOR: What else do you want people to know about EyeOnLP? VIRGILLO: Just as there are many fascinating stories always happening in loss prevention, the EyeOnLP can’t be everywhere at once. We need our dedicated readers to keep an eye out for interesting or quirky stories. We will also consider viewer-submitted videos for possible posting on our site, pending approvals of course. If you are interested in video and interested in LP issues, contact me to discuss how you can get involved at AmberV@LPportal.com.

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CERTIFICATION

Foundation Establishes Memorial Fund L

by Gene Smith, LPC

uis Jhon prepared for work that Saturday just like he always did. He put on his socks, shoes, pants, and that now famous blue-striped shirt. He kissed his wife, grabbed a bite of food, took a final approving glance in the mirror, and went out the door. The kids were playing as he started up the car, drove five minutes, navigating the traffic into his favorite parking spot at the Margate Walmart on West Atlantic Boulevard in Coral Springs, Florida. There he greeted his fellow employees, looked at all the things he needed to do that day, and at some point on September 22, 2012, he probably sat down at his work station to survey who was in the store. You’ve been there, right? Someone walks into a department, no bag in their hands, looking around, and suddenly you get that feeling that something is about to happen. You see them conceal an item, and you call for assistance so continuous observation is maintained. The next thing you know, your heart starts racing, you are running out of the control room, and you find yourself talking to someone you’ve never met before, trying to convince them they need to stay and have a little chat, as they start wanting to leave more now than ever.

We suggest that those who read this article give $10 (or more) to the Loss Prevention Memorial fund to help the Luis Jhon family and any future family in our industry who suffers the death of an LP brother or sister while in the line of duty. The vast majority of us have our quick chat with the subject. We call the police. They come, ask a few questions, and write an appearance ticket. We write up a detailed report about what we saw, heard, and did, then clock out and go home. Most of us get to look back, tell stories about our stops, log the apprehension, and share how we accomplished all of the required steps prior to the stop. This did not happen to Luis Jhon. He did not get to look back nor move on without much thought to the next day. In fact, his family will remember September 22 for the rest of their lives. Alexandra Jhon didn’t have her husband come home that day. The Jhon family was and is still not complete. Luis Jhon died because someone shot him, trying to avoid that inevitable chat about suspected unpaid items…in this case $16 worth of t-shirts. We sadly wonder “What could be in that store that is worth taking

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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.

an innocent life over?” “Why did this happen to Luis and not to me on one of my routine stops?” Those questions may never be answered, but if you are wondering how you can help, then you have focused in on a question that does have an answer. We can work together to help one of our own. As I write this, Luis’s family can’t pay the bills because the investigation into his death isn’t complete. Here is an opportunity to show the Jhon family that we care. As loss prevention professionals, as an industry, let us demonstrate our hearts and not move on to another day, another stop, without looking back and paying respect. The Loss Prevention Foundation has established the Loss Prevention Memorial Fund to help the Luis Jhon family pay their necessary bills in this difficult time. Sadly, we know that there will be more hurting families of LP professionals killed doing their jobs, so the memorial fund is established for more. We pray that the “more” is not you or your family, but we know we can’t control the future. We suggest that those who read this article give $10 (or more) to the Loss Prevention Memorial fund to help the Luis Jhon family and any future family in our industry who suffers the death of an LP brother or sister while in the line of duty. Please go to www.losspreventionfoundation.org and click on the yellow “Donate” button located on the lower left part of the page and send a gift. The Foundation will send a check for 100 percent of the donations on your behalf to this family in need.

Foundation Board Adds New Members

The Loss Prevention Foundation board of directors held their fall meeting October 24 – 25 at the Trump National Golf Club just north of Charlotte, North Carolina, in conjunction with the LP Magazine editorial board and vendor advisory board meetings. Among the business conducted was the nomination and approval of two new board members: ■ Charles Delgado, Vice President of Asset Protection, BJ’s Wholesale Club and ■ Sonya Hostetler, Vice President Asset Protection and Safety, Walmart Stores. Each of these new board members has clearly demonstrated their support for industry-specific loss prevention certification. They have either personally enrolled in the LPC course or support their companies’ approving the LPQ and LPC as a preferred requirement for all job postings. It is clear that each of them has a passion for improving our professional perception as an industry and that they feel professional certification is a critical step in achieving that goal. continued on page 40 |

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Maximize Cash Flow

Also, reconfirmed for another three-year term were the following individuals: ■ Kevin Valentine, LPC, Vice President, Internal Audit and Risk Management, Signet Group Services (Sterling Jewelers) and ■ Stan Welch, LPC, Vice President Loss Prevention, jcpenney. The Foundation continues to strive for a broad range of industry perspectives so it can serve the loss prevention industry in an informed and comprehensive manner. These leaders have proven that they have tremendous industry vision and have clearly demonstrated their commitment to improving the loss prevention industry through supporting education. “The Foundation continues to amass strong retail support for its mission—educating the loss prevention industry by providing challenging and convenient resources such as our LPQ and LPC certification programs,” said Frank Johns, LPC, Foundation chairman. “Each of these professionals brings a unique perspective as a result of their extensive expertise in loss prevention and store operations.” The board also approved Marcus Felson, Ph.D., of Texas State University to a position on the Academic Committee. Dr. Felson had previously served on the committee while he was at Rutgers University.

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The Right Combination 40

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Chris Carmody, LPC, Reg. LP Mgr, Office Depot Steven Crenshaw, LPC, Dist LP Mgr, TJX Mark Crumpton, LPC, Reg. Investigations Mgr, Office Depot Chris Girone, LPC, CFI, LP Dist Mgr, Office Depot Luis Gonzalez, LPC, LP Investigator, Michaels Stores Tyler Hail, LPC, AP Mgr, Cabela’s Jodi Harkness, LPC, Dept Mgr LP, Lowe’s Chad Huntsinger, LPC, AP Coordinator, Brookshire’s Grocery Chris Kellett, LPC, Reg. Investigations Mgr, Office Depot Michael Lamb, LPC, VP of AP, (formerly) The Home Depot Douglas Lemmons, LPC, Div. LP Dir, Walgreens Theodore Louis, LPC, Reg. LP Mgr, Office Depot Diana Lukash, LPC, Dist LP Mgr, Office Depot Edward Lyle, LPC, Dist AP Mgr, Weis Markets Michael Nelson, LPC, Reg. Dir of LP, Bed Bath & Beyond Terry Nichols, LPC, Sr Dir of LP/Safety, Retail Stores, Office Depot Neil Parke, LPC, CFI, Dist LP Mgr, Nike Rich Pinkerton, LPC, Dist LP/Safety Mgr, Office Depot Marc Ringuette, LPC, LP Mgr, Rite Aid Brian Smith, LPC, Dist LP Mgr, Walgreens William Soop, LPC, Reg. Investigations Mgr, Office Depot Jeff Teator, LPC, Reg. LP Mgr, Urban Outfitters Stan Welch, LPC, VP of LP, jcpenney Brian Young, LPC, LP Analyst, Agilence

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Chad Alexander, LPQ Justin Anthony, LPQ Wayne Blough, LPQ, Penske Michelle Brown, LPQ, C Spire Wireless Brandon Brumley, LPQ, Murphy Oil USA Michael Cavallo, LPQ, Barnes & Noble Jacob Densley, LPQ, Cabela’s Lisa Kelleher, LPQ, Best Buy Taylor Kozielski, LPQ, C Spire Wireless Ryan Mast, LPQ Michael Molthen, LPQ, Genesco Kevin Smith, LPQ, C Spire Wireless Kevin Turnbull, LPQ, Army & Air Force Exchange Service Derrik Welsh, LPQ, Hastings Entertainment

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PROFILE

GROWTH, , PROGRESS A Profile of Canadian AND Retailer Mark’s REINVENTION By Adam Paul, Contributing Writer

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MARK’S

ark’s is a retail chain that has succeeded in rebranding itself, amazingly, without alienating its original core customer base. As a retail chain, it has achieved an impressive result—a complete reinvention—which is not easy for any chain to do, much less one that was inexorably linked to the Canadian West, a place where change is not always welcomed. To understand what Mark’s is, you need to understand what Mark’s was. Originally founded in the Western Canadian city of Calgary in 1977 by a former Hudson’s Bay executive, Mark’s soon evolved into what would be known as Mark’s Work Wearhouse for the better part of three decades. Mark’s Work Wearhouse grew hand-in-hand with the burgeoning oilfield industry that pervaded the Canadian West and still does to this day. Where Mark’s was strongest was where the oil flowed the most, namely, Alberta, Saskatchewan, and Manitoba. In the 1980s and ‘90s Mark’s was essentially a chain of stores with an incredible and loyal following of mainly blue-collar laborers. Its store shelves were overflowing with work-related apparel, such as boots, winter coats, overalls, and other industrial Mark’s Work Wearhouse originated in Calgary, primarily serving the blue-collar workers fashion. Its products were proudly worn by in the Western Canadian oilfield industry. The new Mark’s remains headquartered there. construction workers, oilfield laborers, and welders—workers of all stripes who wanted solid, reliable clothing to endure the rigors of their jobs. “Mark’s went from having no asset This all changed two years ago with the emergence of Mark’s protection to quickly recognizing the need without the “Work Wearhouse.” The company decided to for it,” says Wendy Bennison, vice president rebrand itself and pursue a broader range of product, including of national operations for Mark’s and women’s wear, men’s casual wear, and some children’s apparel, a thirteen-year veteran of the company. while still catering to and respecting the laborer around Bennison was one of the key members of the which the store chain was originally built. By all accounts team that was instrumental in the rebranding the transformation of a blue-collar-worker-oriented store into effort that turned the old Work Wearhouse Wendy Bennison, a full family retail store has been a smashing success. The into the new Mark’s. Vice President of National Operations new Mark’s now boasts close to 400 stores nationwide. Initially probing the industry to see what If you thought that in the rebranding, they may have other retail chains were doing about loss prevention, Bennison forgotten the Canadian laborer who made them who decided to recruit LP-industry veteran Andy Buchanan, who has they are, you’d be wrong. Select Mark’s stores contain a now been with the company for almost three years. Buchanan freezer within the store where you can try on a coat and was installed as associate vice president of asset protection for see how warm it is before you buy it. You can thank the Mark’s, a position that previously didn’t exist. Buchanan reports ubiquitous Canadian laborer who’s had to toil outside directly to Bennison. While Buchanan had worked in senior in freezing temperatures for that store feature. LP management positions at retail giants Home Depot and Eaton’s, he had his work cut out for him at Mark’s, where asset protection was, by all accounts, an afterthought until his arrival. The Need for Asset Protection Like most companies that were started by a single founder as a private enterprise and then experienced a rapid growth, A Corporate Transformation Mark’s really hadn’t given much thought to loss prevention As if the prospect of reinventing a Canadian icon wasn’t over the years. In fact, it wasn’t until 2010, almost thirty years enough, Bennison also understood that building an asset after Mark’s Work Wearhouse was founded, that any real protection organization was critical to the future of the rapidly consideration was given to the topic. expanding retail chain. “It wasn’t hard to build a case for an

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MARK’S asset protection department,” she states retrospectively, referring to Mark’s ballooning shrink numbers. Mark’s had all of the issues that plague any retail chain, from internal theft and refund fraud all the way to organized retail crime. Armed with a management team in the C-suite that gave him their full support, a decent budget, and a clean slate with which to work, Buchanan immediately launched into his portion of the corporate transformation. “We started with two things,” explains Buchanan, “exception software and cameras. Those were the low-hanging fruits.” While building up his team, which is now comprised of six regional AP managers, one central investigator who is a 28-year veteran of the Calgary Police Department, and one analyst, Buchanan put a huge initial emphasis on data analytics, specifically exception-reporting software. Mark’s chose and quickly implemented Aspect Loss Prevention’s technology for its exception-based reporting software. Buchanan was and remains a strong proponent of exception-reporting software, which allows Mark’s to track patterns, trends, and “outliers,” which he describes as events that may not necessarily be bad, but are anomalous nevertheless. “We wanted to know, for example, all the times in the past six months that a given cashier had interacted with a certain credit card number,” states Buchanan. “It may not necessarily be a bad thing; that situation might happen with a return customer. But if that same cashier refunded that same credit card multiple times in that time period, we want to know about it.”

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“Mark’s went from having no asset protection to quickly recognizing the need for it. It wasn’t hard to build a case for an asset protection department.” - Wendy Bennison, Vice President of National Operations It’s these sorts of analytics that formed a good portion of Mark’s initial efforts to curb the effects of refund and employee fraud. “We have a central analyst that does nothing but run analytics reports all day,” says Buchanan of Mark’s quest to analyze and identify patterns of fraud or criminal activity within the company. Andy Buchanan, Associate Vice Like other companies where the LP President of department was either nonexistent or Asset Protection ineffective, the previous climate at Mark’s allowed a healthy amount of internal theft to flourish before Buchanan came on board. Mark’s suffered from the effects of a small percentage of personnel who were essentially professional thieves, defrauding the company for significant sums on a regular basis.

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MARK’S

Like other companies where the LP department was either nonexistent or ineffective, the previous climate at Mark’s allowed a healthy amount of internal theft to flourish before Buchanan came on board. Mark’s suffered from the effects of a small percentage of personnel who were essentially professional thieves, defrauding the company for significant sums on a regular basis. “The first year or so was like shooting fish in a barrel,” says Buchanan of his early efforts, which resulted in a massive shakeup of the internal theft activities, netting many prosecutions and saving the company hundreds of thousands of dollars in losses. “We introduced the new software. We campaigned it. We went around to the stores and told everyone what it could do. We educated the employees about it. And still, we would catch the odd person trying to steal,” says Buchanan. Major gains, but as any asset protection professional knows, eliminating internal theft 100 percent is an unrealistic goal. Still, Buchanan claims that in the three years of his tenure, the size of the internal thefts has shrunk dramatically. Previously, a typical case would be in the $6,000 to $10,000 range, whereas now, the average case is in the $800 to $1,200 range. This is because would-be thieves are caught much sooner than they would have been under the old system. Additionally, Buchanan made sure that each member of his team was schooled as a Certified Forensics Interviewer (CFI) to ensure that internal investigations were conducted thoroughly and accurately. Investigations conducted by Mark’s now typically result in criminal prosecutions rather than simply termination; the only result a thieving employee would have faced under the old regime. “We needed to build a corporate culture of integrity,” says Bennison, which by all accounts they’ve been successful in achieving.

Attacking Crime from the Outside

After addressing the internal issues, Buchanan has spent the past few years beefing up Mark’s resistance to crime coming from outside the company. He’s used most every means at his disposal to harden Mark’s stores into places that are hostile to shoplifters and organized retail criminals. “We want criminals to take one look at our stores, then go somewhere else for an easier target,” states Buchanan. Some of the changes to combat crime were simpler than others. Buchanan borrowed some of the tricks from his previous employers. Changing Mark’s refund policy is

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an example. “We revised Mark’s refund policy in 2010,” explains Buchanan. “Previously, you could grab a pair of jeans off the rack and walk them up to the cash register with no receipt and get a full cash refund. Now, if you don’t have a receipt, you only get store credit. We’d been doing it that way at Home Depot since 2002,” adds Buchanan referring to his previous employment. The ongoing implementation of a comprehensive system of cameras and video analytics is a much more involved task. External theft, especially organized retail crime, remains a thorn in Mark’s side, much as it does for any other retailer. Buchanan decided to partner with Toronto-based i3 International to attack this problem. The experts at i3 International brought to the table a linked collection of tools to help Mark’s AP

i³ p o n s a t

Thermal imaging cameras allow traffic counting to help merchandisers evaluate product preferences and display effectiveness.

department better do its job. The magic of the solution is not so much any one component, but a system that links multiple components, including DVRs, cameras, thermal imaging, and other bells and whistles, into a powerful tool that transcends pure asset protection. At Mark’s, for example, the i3 International solution is configured such that it will allow point-of-sale systems to link with thermal-imaging cameras. While the system will still record conventional video, it goes one step further by “seeing” each customer also as a heat signature blip. With this system Mark’s will be able to record how many heat signatures…meaning customers…enter the store in a given day. They will even be able to track a wall of product and all the associated SKUs to understand how many customers viewed and interacted with those products to see how effective their displays are. Displays that don’t attract heat signatures, and therefore aren’t enticing customers, are flagged for later review. It’s a system that goes above and beyond conventional asset protection. That doesn’t mean that traditional loss prevention tactics have been forgotten. Buchanan adds, “We can pull up a given refund transaction, which is linked by time and date to the

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continued on page 46 |

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and flexible ven to be a versatile i³ International has pro ing their ly, continually develop partner for HD Supp mpany’s support to suit our Co ing vid pro d an s ng eri off ional retail d outside of the tradit needs both inside an t Protection oration between Asse setting. Ongoing collab ovative cess to the latest inn and i³ ensures us ac property, protect the people, technologies to help of HD Supply. products and profits

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MARK’S continued from page 44

point-of-sale system through the Aspect Elite and i3 interface. We will see if there’s a heat signature in front of the cashier when she’s performing a refund. If we have a cashier who’s performing a refund with no heat signature, we know we have a situation we need to look into.” While the anticipated result of adding all of these technology solutions is obviously aimed at reducing shrink, it will also save Buchanan and his team loads of time. Linking the video to the point of sale, adding the heat-mapping analytics, and using the exception-reporting software will result in a toolbox where AP managers can remotely login to stores, view transactions and video, and, ultimately, travel less while doing more, which is in and of itself a savings to the company. Buchanan has a roadmap in place for the implementation of the remainder of the stores and is looking forward to pushing the technology out chain wide. “We have six stores fully up and running, with 35 percent of our stores plug-in ready,” says Buchanan.

Expanding the Success of the AP Department

Overall, the emergence of a full-blown AP department seems to be going extremely well at Mark’s according to Bennison. “Andy and his team have done an amazing job thus far, and our shrink is now normalized,” she says. “Theft and fraud are now under control. The transition could not have been smoother.”

As many AP executives understand, once you have theft and fraud under control, you tend to find ways to use your team and skills to make the company run smoother in other areas; another way that loss prevention departments add value and help enhance the bottom line. To realize the enormity of her assessment, one needs to keep in mind that asset protection at Mark’s was introduced in force nearly three decades after the foundation of the company, and there were more likely than not more than a few old dogs who needed to be taught new tricks among the ranks of Mark’s employees. The fact that Mark’s organization is composed of a large number of career employees makes the company as unique as the brand itself. “In all my years in asset protection, I’ve never seen a company with the sheer number of long-term veterans of Mark’s,” says Buchanan. “Every quarter we do an employee recognition event, and I see a huge number of twenty- and twenty-five-year service awards.” continued on page 48

Select Mark’s stores contain a freezer within the store where you can try on a coat and see how warm it is before you buy it. You can thank the ubiquitous Canadian laborer who’s had to toil outside in freezing temperatures for that store feature.

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MARK’S continued from page 46

The experts at i3 International brought to the table a linked collection of tools to help Mark’s AP department better do its job. The magic of the solution is not so much any one component, but a system that links multiple components, including DVRs, cameras, thermal imaging, and other bells and whistles, into a powerful tool that transcends pure asset protection.

Buchanan and Bennison continue to look for new initiatives to harness the power of Mark’s AP systems to assist operations. Now that the heavy lifting of getting an asset protection department off the ground is complete, the policies and procedures are in place to keep Mark’s shrink low for years to come. But that’s not where Buchanan’s work ends. He finds himself cooperating with operations more than ever, leveraging technology to assist operations by helping store managers analyze the efficacy of store displays. “We now need to look at controlling process shrink,” says Buchanan of the need to further enhance the efficiency of the company. As many AP executives understand, once you have theft and fraud under control, you tend to find ways to use your team and skills to make the company run smoother in other areas; another way that loss prevention departments add value and help enhance the bottom line. “We need to be more cross-functional to stay viable,” acknowledges Buchanan. It’s not easy to reinvent an iconic store chain, and certainly not easy to introduce asset protection measures to a good-sized retail chain in which there were previously none. But by all accounts, Bennison and Buchanan have succeeded in doing just that. Mark’s stands as a shining example of just what can be done to improve a retail chain…even long after its founding. 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.

Pep Boys: A Success Story in Shrink Reduction Challenging Conventional Thinking in LP Awareness In 2009 Pep Boys overhauled their loss prevention awareness program, applying some innovative new methods as part of a comprehensive, multi-pronged LP strategy that together has resulted in a 58 percent reduction in shrink and millions of dollars in savings a year. This archived webinar focuses on the awareness program and the technology that has helped deliver both sustainable and measurable results: ■ Created a cultural shift, where their 19,000-plus employees have internalized the organization’s LP message, ■ Seen a significant reduction in employee theft, and ■ Achieved 95 percent voluntary participation in their ongoing awareness initiative.

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Vice President of Store Operations, Pep Boys

Christine Tutssel,

Vice President of Sales, Axonify Sponsored by To view this webinar, visit the Webinar page on the magazine website, LPportal.com, or scan the QR code.

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

Safe, Easy, Fun R

etailers today are battling online selling for their lives, and so in my opinion three variables are critical. Brick-and-mortar shopping needs to be safe, easy, and fun for customers. If not, then everyone can just buy most things online. Loss prevention organizations can affect the first two factors. Sound crime and loss control means using problem-solving processes to evaluate and cost-effectively control the causes of “fear of crime” by customers, such as potential violent crime in the parking lot and stores, while deploying better open-selling of key merchandise and mobile POS tools means shoppers can try and buy hassle-free.

Problem-Oriented Policing

To some, everything’s a problem; to others, an opportunity. Regardless of our orientation, LP practitioners exist to support their company’s objectives and operations by preventing and solving its crime and loss issues. Being a skilled problem-solver is a major part of what we do. Law enforcement, like medicine, has identified evidence-based practice as their future since multiple research projects revealed random patrol and after-the-fact crime investigations were not making their geographic areas safer.

SARA is a very problem-specific process, so every problem that is identified should get special, specific attention to discover the best possible solution to the problem in question. By using the SARA model, LP teams will be able to accurately and costeffectively identify and control crime, loss, and safety issues. 50

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Far-sighted law enforcement practitioners and researchers began to look for a process to increase their crime-control effectiveness. They found it in three similar processes entitled community policing (CP), intelligence-led policing (ILP), and problem-oriented policing (POP). These processes work to focus police action to reduce crime events. Community policing primarily creates partnerships with other governmental entities and faith-based and other citizen groups to use problem-solving techniques to proactively address conditions that can breed public-safety issues like crime. Intelligence-led policing can be defined as a strategic, targeted approach to crime control, focusing on identification, analysis, and management of persisting and developing problems or social and environmental risks that enable problems. Finally, problem-oriented policing identifies and analyzes specific crime and disorder problems to develop effective response strategies in conjunction with ongoing assessment. At the LPRC and University of Florida, we primarily refer to this third process, but regardless, all these policing programs use a simple, but thorough problem-solving process to increase police impact—the SARA model.

The SARA Model

Like law enforcement, LP practitioners and their solutions partners typically use systematic problem-solving tools to better understand problems in order to carefully design retailer-friendly, cost-effective solutions. At the LPRC, we use the SARA model to address all projects retailers and others bring to us. The SARA model can assist in the decision-making process, for a wide variety of issues from medical diagnosis to car repair. SARA is an acronym that stands for scan, analyze, respond, and assess. SARA is a very problem-specific process, so every problem that is identified should get special, specific attention to discover the best possible solution to the problem in question. By using the SARA model, LP teams will be able to accurately and cost-effectively identify and control crime, loss, and safety issues. (Thanks to my former student Justin Gorrell’s support on this SARA description.)

The SARA Process

Scan. Scanning is arguably the easiest step in the SARA process. Think of this step as radar—simply identify and

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describe a current or upcoming problem. Data can come from personal observations, employee reports, unit-and-dollar loss data, CCTV footage, incident reports, and a myriad of other sources. In the same sense that a doctor would ask “Where does it hurt?,” this is the first step towards developing a solution. Other questions and statements that may be considered in the scanning step are: ■ Identifying recurring problems, ■ Identifying the consequences of the problem, ■ Prioritizing those problems and developing broad goals, ■ Confirming that the problems exist, ■ Identifying real-time indicators that a crime or crimes has been committed, ■ Determining the frequency and duration of the problem, and ■ Determining how widespread or clustered the problem is. Analyze. Having identified characteristics of the problem, it is pertinent that more background information is compiled to identify primary, actionable causes. Being as specific as possible, the analyze step should answer the following questions: [NOTE: To create a SARA worksheet, add multiple blank lines after each question where you can place your answers.] 1. Identify the events and conditions that precede, accompany, and result from the problem. 2. Identify relevant data to be collected, such as sales reports, employee statements, etc. 3. Research what is known about the problem type or identify sources of information for use later. 4. How is the problem currently being addressed? How do others respond to similar problems? Identify strengths and limitations of the current response. 5. Develop a working hypothesis about why and specifically how the problem is occurring. Respond. Within loss prevention there are several tools available to combat problems. Call this your “tool box” of technologies or techniques that can be used to counteract the problem identified in the scanning phase. By using the SARA process, LP teams will have research to justify the cost of new or upgraded solutions and procedures. This targeted implementation will likely show a greater return on investment as opposed to the traditional method of throwing every tool at numerous problems. In the respond stage, it is important to identify and answer the following questions: 1. Brainstorm new interventions or possible upgrades to current interventions that address each specific cause of the problem; that is make the problem harder, riskier, or less rewarding for offenders. 2. Outline a response plan and identify responsible parties. 3. State the specific objectives for the response plan. 4. Put the plan in action. All of the work and research thus far has led to this point, but the work is still not over. There is still one more part to the SARA process. Assessment. This is the section of SARA that makes this process so unique. As opposed to implementing new solutions and looking to tackle the next problem, the SARA process also provides for follow-up. This section of the SARA process asks

the question, “Did the plan that was developed help solve the problem?” A few questions or tests may include: 1. Conduct a process evaluation. Was the plan implemented? Was it done so in accordance with the outline produced in the respond phase? 2. Collect pre- and post-response qualitative and quantitative data. Did crime or loss levels come down in test locations compared to non-test (control) locations? How do the employees and customers feel about the implementations? 3. Were the broad goals stated earlier and the specific objectives outlined attained? Why or why not? After reviewing the answers above, identify any new strategies needed to augment the original plan. This is a good time to also refer back to any research conducted in the analyze phase to compare and contrast the findings. Lastly, conduct ongoing assessments to ensure continued effectiveness in order to stay at least one step ahead of the next problem. The SARA process is versatile enough to be used again on the same problem. However, the earlier stages will now include information and solutions that were identified in this SARA problem-solving form. Next steps. Regardless of the problem, we should use our problem-solving template to make sure we accurately diagnose, more effectively treat, and then measure and adjust for the future. This consistent process means more precision and a safer and more profitable environment.

LPRC Impact Conference and Action Teams

Over 120 leading LP and vendor executives participated in three days of new LP research briefings, panel discussions, and breakout action sessions on the University of Florida campus October 15 – 17. Thanks to all of our conference sponsors, participants, and planners who worked hard to pull off a successful conference. If you missed this event, please stay tuned as we announce next year’s date and location. Several new action teams have been designed so LP executives along with solutions and manufacturing partners can direct actionable research in their most critical needs. The Sporting Goods Action Team has added Walmart, Cabela’s, and Dick’s Sporting Goods, along with the National Shooting Sports Foundation (NSSF) for independent gun shop owners. The Apparel/Footwear Action Team has Marmaxx and dressbarn, which is part of Ascena Retail Group that includes maurices, Justice, Lane Bryant, and Catherines brands. This team is recruiting new members. The Department/Mass Merchandisers Action Team has formed with Sears Holdings, jcpenney, Bloomingdales, and Marmaxx. This team is also recruiting other retailers and has identified the first project focusing on employee communication and motivation, with digital selling protection next. The Food/Drug Action Team is just starting to form with CVS/pharmacy, Walgreens, Rite Aid, SUPERVALU, Publix, Wegmans, Kroger, Kmart, and Walmart with more to come. Other action teams are also forming. If you are interested in participating in these or other research teams, please contact me at the phone number or email address on page 50.

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MY TURN By Kevin E. Lynch, LPC

Stop, Look, and Listen I

recently took a golf trip with a group of friends to the “Holy Grail” of golf—St. Andrews, Scotland. One of my companions on the trip was the executive editor of this publication, Jim Lee. Jim and I became business associates when I was with Sensormatic Electronics as his account representative when he was the vice president of loss prevention at Marshalls. Jim had brought a significant number of his LP team with him from Broadway Department Stores, where he vacated the top loss prevention spot. This was the prime example of my oft-quoted saying, “You can’t buy loyalty, but you can come pretty close!” Throughout my career it has been my great pleasure to work with some of the best LP executives in retail America. I sit on the board of the Loss Prevention Foundation board of directors with many of the consummate professionals I grew up with in this industry. As Jim and I stood on the first tee at St. Andrews, we marveled at the landscape. It was beautiful, intimidating, and exhilarating. Hitting off the first tee of any new golf course is filled with hope and trepidation of the many hazards that could befall you over the course of eighteen holes. This feeling is not unlike the one you get when you take over the reins of a loss prevention department in a new

Kevin Lynch with his caddie at St. Andrews.

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Lynch is executive director of business development for Tyco Integrated Security. He is well known in the industry and sits on the board of directors for the Loss Prevention Foundation and vendor advisory board for LP Magazine. Lynch can be reached at 401-846-6123 or via email at kelynch@tyco.com.

company. On the golf course it’s water hazards, bunkers, tight fairways, long carries, and undulating greens that could impede your attainment of a low score. In your company it’s the personnel, policies, vendors, suppliers, and management that affect your success in lowering shrink and maximizing sales. Eventually, Jim and I met our caddies on the first tee box. Jimmy Reid was my caddie—a diminutive man, who had caddied at St. Andrews for thirty-seven years. Jim’s caddie was named Alex—a gentleman who approached his job with the utmost seriousness. We all possess a modicum of pride in our abilities to perform our jobs. We all have a certain amount of ego that indicates we may perform it better than others. Low scores at your home course did not ensure success at St. Andrews for misters Lynch and Lee. The analogy is “spot on” that Jim’s ability to keep shrink down at the Broadway didn’t guarantee his success at Marshalls. However, one of the most important concepts in your quest for success is to stop, look at the landscape, and listen to your people. Your store security and district and regional managers play in the grasslands of a challenging retail field every day. They know the weaknesses and strengths of the management teams and sales associates. Listen to them. Personally absorb how they view the landscape. You may pick up data that will change your course of action as the leader of your department. Jim and I listened to our caddies. They, in turn, viewed our abilities as golfers as we assessed their recommendations. The player and the caddie do not always agree on club selection or type of shot. Over the course of four days with the same caddie, the communication was streamlined and the capabilities assessed more accurately. Our scores were consistently lower over the latter part of the week. Solicit advice from your team. If they tell you it’s time for new technology to play the game right, listen to them. If they have alternative ways to attack the course that is your shrinkage number, take heed. Your people, like our caddies, are the most valuable resource in charting the course of your success. Stop, look, and listen to their views of that landscape, and you’ll be a better manager and leader in retail loss prevention. POSTSCRIPT: For those of you who know Jim and me, you can appreciate the fact that we employed most of the tenets of this missive. Checking our egos at the first tee…well, that’s a work in progress.

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FEATURE

RFID IN RETAIL WHAT LP LEADERS NEED TO KNOW By Jack Trlica, Editor and Publisher

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RFID IN RETAIL

FID has been a topic of discussion in the retail industry for a decade or more. This year the buzz has intensified as RFID implementation appears to be viable and no longer “on the horizon.” A number of retailers both in the U.S. and Europe have successfully tested RFID applications and are moving to large-scale rollouts. With that, many loss prevention executives have questions about how this technology relates to LP operations. In early October the magazine hosted a webinar entitled “RFID in Retail: What LP Leaders Need to Know.” The speakers included: ■ Dr. Bill Hardgrave, Dean, College of Business, Auburn University, ■ Joe LaRocca, Vice President, Loss Prevention, RetaiLPartners, and ■ Tom Racette, Vice President, RFID Solutions, Checkpoint Systems. We recently caught up with the speakers to ask a few follow-up questions.

RACETTE: We’re involved with multiple retail RFID deployments in North America and Europe, from single-store pilots to chain-wide rollouts. Interestingly enough, we’re seeing a diversity of retailers: brands, specialty stores, luxury retailers, and department stores.

WHAT ARE RETAILERS REALLY USING RFID FOR?

Dr. Bill Hardgrave,

Dean, College of Business, Auburn University

WITH ALL THE NEW TECHNOLOGY INVESTMENTS IN RETAIL, WHY WOULD RETAILERS DEPLOY YET ANOTHER TECHNOLOGY, SUCH AS RFID?

LAROCCA: As mobile retail technologies are deployed and engage consumers differently, consumers demand items be available on shelves and get very frustrated when they’re not. Omni-channel benefits are making the accuracy at the store level even more important, because we know consumers have many choices today, and if it’s not available in a store, we don’t know where they’re going to buy it next. So, we have some great opportunities with RFID from the operations side of the business and in the loss prevention space.

Joe LaRocca,

Vice President, Loss Prevention, RetaiLPartners

HARDGRAVE: There was a major shift in RFID a few years ago; moving away from pallet and case and toward item level. It happened in a few categories, but the most common category and the one that’s really dominating everything now is in apparel. We saw major retailers in the U.S. and many more in Europe that changed that emphasis from pallet and case deployment to item level. The visibility provided by RFID really opened our eyes to a lot of things, including inventory accuracy and loss prevention. We began to realize that RFID at the item level made a lot of sense. It provided a lot of visibility. As a result adoption really took off from that point. As we were going through these early pilots with retailers, including specialty retailers, department stores, apparel, and non-apparel, four big issues emerged—inventory accuracy, out of stocks, locating product, and loss prevention. There were other things like dressing-room management, price-change management, and so forth that were also important, but every retailer faced those big four. LAROCCA: One big-box company said they

were able to effectively eliminate or change the entire way that they conduct physical inventory in the company. We all know that cycle counting is every store manager’s favorite thing to do, right? Rather than taking all night long and having dozens of people marching WHILE THERE IS A GOOD DEAL Tom Racette, around the store from an outsourced company, OF BUZZ ABOUT RFID IN RETAIL, Vice President, they now can take full inventory with a few THERE IS NOT AS MUCH NEWS ON RFID Solutions, Checkpoint Systems people inside with a few readers in just a WHO IS ACTUALLY USING IT. WHAT couple of hours. Imagine that! Once you have ARE YOU SEEING IN THE INDUSTRY? an accurate, up-to-the minute status of your LAROCCA: We’ve all heard the media reports inventory, you can use RFID handheld readers to update the of the big-box stores, companies like Walmart, jcpenney, inventory hourly or twice a day, and replenish fast-moving Bloomingdale’s, Macy’s, and Dillard’s, but many people haven’t items right away. heard stories about Disney, American Apparel, Under Armour, Brooks Brothers, and many more. So, why don’t I just rattle off a list of them so everyone knows exactly who to go talk WHY WOULD A RETAILER to? Well, a number of companies have said, “We don’t want to USE RFID FOR LOSS PREVENTION? share all of this information publicly.” In fact, RFID has been HARDGRAVE: There are a host of factors that are impacting such a strong technology in their companies, they view it as a the use of RFID for loss prevention. Let’s start with the idea of competitive advantage, so they’re keeping the results quiet. continued on page 56

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RFID IN RETAIL

Once we become aware of these things, we can actually do something to prevent them. employee theft. As I talk to loss prevention Without that visibility, we’re guessing as to officers in retail, one of the questions I ask what’s happening, and it becomes very hard them is, “How do you know the source of to prevent something when you’re guessing. theft, in particular, or shrinkage, overall, Another thing that happens, of course, in in your stores?” There are annual surveys retail stores is the idea of sweethearting, where of loss prevention officers that provide the AS MOBILE RETAIL somebody comes up to the register with two main causes where they believe shrink is TECHNOLOGIES ARE items and they’re working with the cashier to occurring, whether it’s employee theft, casual DEPLOYED AND steal one of the items. The cashier rings up or shoplifting, organized crime, and so forth. ENGAGE CONSUMERS scans one item, but puts both items in the bag, For example, the survey may suggest that essentially stealing one. Well, with RFID we can 38 percent of shrink is due to employee DIFFERENTLY, become aware when a cashier is trying to do theft. And I then ask the follow-up question, CONSUMERS DEMAND those things, again, leading to prevention. “How do you know the percentage for each ITEMS BE AVAILABLE cause of shrink?” The answer is almost ON SHELVES AND GET always the same, “Well, it’s a guess. We LAROCCA: Take ORC, for example. According really don’t know.” Most retailers really to the Organized Retail Crime (ORC) survey VERY FRUSTRATED don’t know, because they don’t have that released by the National Retail Federation WHEN THEY’RE NOT. visibility into what’s really happening there, in June of this year, 96 percent of retailers OMNI-CHANNEL so the best that we’re left with is a guess as nationwide have experienced ORC activity. BENEFITS ARE MAKING to what’s actually happening. Eighty-seven percent have seen a rise in ORC With RFID we are really providing the activity, and 52 percent have been the victim of THE ACCURACY AT THE visibility that has been absent for a long cargo theft. Because of this, we need to look at STORE LEVEL EVEN time. For example, in the area of employee new solutions. We tried a number of things in the MORE IMPORTANT, theft, because we have RFID on a product, industry for decades and, over the last few years, BECAUSE WE KNOW we now see that product as it enters the one of the possible solutions has been RFID. backroom of the store. We can now cycle Using ORC as an example, RFID can help CONSUMERS HAVE count very quickly in the backroom, so we to uncover patterns of theft in terms of product MANY CHOICES know what inventory we have back there. category, quantity, time of day, et cetera, TODAY, AND IF IT’S We see it as it moves from the backroom which is incredibly helpful. At the store level NOT AVAILABLE IN to the sales floor, so we get that visibility. we see a number of potential benefits with We see it once it’s on the sales floor by RFID. One of the big challenges, especially A STORE, WE DON’T cycle counting or zonal monitoring there in specialty retail, is balancing merchandising KNOW WHERE THEY’RE with RFID, so that we understand when flexibility with traditional EAS systems, which GOING TO BUY IT NEXT. it’s on the sales floor. That provides us with have limited protection for open entrances SO, WE HAVE SOME visibility into the operations that we haven’t and for putting merchandise close to the had before, and a big surprise about how front door. Merchants want to put product in GREAT OPPORTUNITIES things actually work in the stores versus how locations so that customers barrel right into it, WITH RFID FROM THE we thought things were working. but if we can control that active bubble with OPERATIONS SIDE OF Now, if we pull that down to the loss RFID-based EAS, we now can protect open THE BUSINESS AND prevention environment, it gives us that entrances, put product closer to the door, and insight into the operation so that we can tune the system in a way that will prevent IN THE LOSS close those gaps that make it easy for false alarms. We also can use differentiated PREVENTION SPACE. employees to steal. One of the things it alarms, so that basic replenishment items that allows us to do is start looking for patterns might be commonly missed in the deactivation or scenarios or anomalies. Consider a process will sound an alarm differently situation where we see 100 pairs of jeans come into the back than high-targeted items. Think about handbags or Levi’s room, but only 94 were eventually taken to the sales floor and jeans or other hot items that are carried in stores. there’s no inventory of those other six in the backroom. We We also see potential benefit from return fraud. This isn’t know they made it into the back room, but they never made necessarily widely deployed today, but imagine a day when a it to the sales floor. Another scenario we may see is 100 pairs customer comes back in the store with a return and you know read as they left the distribution center. But when they were exactly when and where the item was sold. If that item was unloaded at the store, only 94 were received. Therefore, those not deactivated and you start to see some trends, you can use six pair went missing somewhere between the DC and the time that they were unloaded into the back room. continued on page 58

continued from page 54

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NOVEMBER – DECEMBER 2012

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PEOPLE I PROPERTY I REPUTATION March 10-13, 2013 Pointe Hilton Tapatio Cliff I Phoenix, AZ. PARTICIPATE IN INTERACTIVE WORKSHOPS & ROUNDTABLE DISCUSSIONS, GET INSPIRED BY THE INDUSTRY’S LEADING EXPERTS, AND GAIN TOOLS AND RESOURCES TO PROTECT YOUR COMPANIES BOTTOM-LINE. FIND OUT HOW TO TACKLE YOUR BIGGEST CHALLENGES: • Asset Protection • Effective Auditing • Fraud Mitigation • Shortage Controls • Safety • Risk Management • Business Continuity • Environmental Compliance • Crisis Management • Workers Comp • Professional Development Discover how this one-of-a-kind educational opportunity will lead to innovative thinking and motivation to make an immediate and profound impact on your company’s financial well-being. REGISTER ONLINE TODAY! For more details, visit www.fmiassetprotection.com

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RFID IN RETAIL

continued from page 56

analytics to differentiate a problematic situation versus an honest customer that is returning merchandise.

HARDGRAVE: Most retailers looking to adopt RFID are already familiar with EAS tagging and using portals, so the transition to RFID becomes very natural for them. The key difference, of course, is that RFID is a multiuse technology. RFID can give you visibility from source to shelf. Thus, when you consider the return on investment (ROI), you need calculate the aggregate ROI based on many use cases, not just the loss prevention piece. Also, if a retailer is already using EAS tags, they can factor that in when calculating ROI for RFID. For example, if they are already paying three cents for EAS, because RFID takes the place of the EAS tag, the three cents can be used as a subsidy for RFID tags that would be used for loss prevention, reducing out of stocks, locating product, and so forth. RACETTE: In other words RFID provides much

SOME OF THE THINGS YOU SHOULD THINK ABOUT AS YOU’RE CONSIDERING RFID REVOLVE AROUND TAGS. DO YOU USE A DUAL TAG, EAS WITH AN RFID TAG, OR JUST RFID? DO YOU USE A SOFT TAG OR A HANG TAG? DO YOU SOURCE TAG AND BUILD THE TAG INTO THE CLOTHING ITSELF? DO YOU USE A HARD TAG, SO THAT THERE’S VISUAL DETERRENT, BECAUSE IF YOU JUST USE A HANG TAG, THAT MAY BE TOO EASY TO REMOVE? DO YOU REMOVE IT AT POINT OF SALE? THOSE ARE ALL CONSIDERATIONS THAT ONE HAS TO LOOK AT AS WE USE RFID IN LOSS PREVENTION.

more useful information than EAS alone. You can store a lot of relevant data on an RFID tag, and it also allows you to uniquely identify each and every single item with an electronic product code or UPC number. Using RFID-based EAS instead of traditional EAS allows you to know exactly what and how many left your store. With traditional EAS, you just know that something left your store; it doesn’t give you any specifics. This means you can now update your perpetual inventory and preserve its accuracy. Another great feature is the reduction of false alarms when you use RFID. I recently was at the RFID forum in Arkansas and asked members of the audience to raise their hand only if they had never falsely set off the store’s antitheft system when leaving a store. Not one single person raised his or her hand. That’s a really big problem, because eventually the integrity of the solution can start to be compromised. False alarms exist today because of failure to deactivate security tags at the POS. When that happens, you’ll set off an alarm when leaving a store or going into another store that might have the same security system if you happen to be in a mall environment. False alarms also occur from stray tag reads, like when clothes get merchandised too close to the exit or a shopper walks by the exit door, but not out of the store carrying an EAS-tagged item. RFID helps in both

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of these situations. If an RFID tag doesn’t get deactivated and a shopper carries it into another store that has an RFID system, the system will read the tag, but because the tag’s ID number is not in the store’s database, it will not alarm the system. And with respect to stray tag reads, there are RFID-based EAS solutions today that can identify a tag’s location and direction of travel, and, therefore, have the smart sense to only alarm on actionable data.

CAN YOU ELABORATE MORE ON ORC PREVENTION?

HARDGRAVE: RFID can provide insight into key patterns to detect ORC. For example, consider a scenario where fifty DVDs are stolen at one time, perhaps put into a bag and walked out the front door. Using non-RFID technology, we may know that something was stolen—the alarm would likely sound—but we likely would not know that it was fifty DVDs. With RFID we would know that it was fifty DVDs. With that information, you might determine there is organized retail crime in the area, and you could then alert stores in the area to be on the alert for this type of activity.

WHAT OTHER LP BENEFITS ARE THERE IN THE RETAIL STORE BEFORE MERCHANDISE REACHES THE EXIT DOOR? LAROCCA: With RFID issues of vendor fraud

can be easily tracked. We know exactly what the vendor shipped and, with the right controls of tags and sequencing and serialization, we potentially can identify problems in the supply chain very early on, such as cargo theft from the manufacturer to the DC and the DC to the store. We know that this is charged back to the carrier, but if you really look back and try and go down that black hole and find the money, I’m pretty confident it’s not in the LP budget. So, if we can prevent these cargo thefts and prove the merchandise accuracy, while reducing any potential shrink issues along the way, we make some great strides there in the supply chain. Stores hate getting shipments and having absolutely no clue what’s inside. And while some retailers have made great advances here and have true merchandise visibility, many store managers today dread receiving shipments. They don’t know what size, color, product, or fashion is inside a box. Retailers often don’t know if a new shipment is going to clog the back room or can be used on the sales floor. With RFID they can potentially scan the box, scan the pallet, and

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THERE’S NO ONE ELSE LIKE YOU. s we enter the holiday season, we are reminded of the great privilege it is to serve you. Were it not for your ongoing pursuit of excellence within the loss prevention community, such outstanding relationships could not be forged. Just as no two snowflakes are alike, no two clients’ needs are alike. And it is an honor to know each and every one of you individually — not only as clients, but as friends. We thank you for your loyalty and wish you the very best of the holidays.

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

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RFID IN RETAIL

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ARE THERE CONSIDERATIONS LOSS PREVENTION SHOULD HAVE WHEN IMPLEMENTING RFID?

certainly find the items in the backroom quickly and efficiently to display on the store shelf.

HARDGRAVE: In numerous RFID pilots, we put readers near the employee entrance and exits. We have observed employee theft by employees taking products out those doors. We have also seen where employees throw things into the trash compactor or the garbage, for example, so they can retrieve them later, either on their way home or after the store has closed. If you put RFID readers on entrance to the trash compactor, you can see if they are throwing things in there that do not belong. For customer theft, we can also look for patterns of theft as a means of detection. For example, a customer takes two identical items into a dressing room. More than likely, if someone takes two identical items in a dressing room, it’s because they’re going to steal one of them and then bring one of them back out of the dressing room. With readers in the dressing rooms, we would be able to detect that type of thing. It’s all about looking for patterns of theft.

WHAT IS LP’S ROLE IN RFID INVENTORY MANAGEMENT PROJECTS?

HARDGRAVE: Everything centers around inventory accuracy. It affects replenishment, out of stocks, forecasts, and, ultimately, customer satisfaction and sales. We can correct our inventory accuracy with RFID by taking frequent cycle counts or by continually monitoring the inventory. We can keep our inventory updated much more accurately than we can with traditional methods. But, shrink is one of the main causes of inventory inaccuracy. Ultimately, we want to eliminate the causes of inventory accuracy, rather than just correcting the counts. With RFID we can start attacking the root cause and solve the problem. Thus, the impact of shrinkage on inventory accuracy affects everything else.

HARDGRAVE: Some of the things you should

YOU CAN STORE A LOT OF RELEVANT DATA ON AN RFID TAG, AND IT ALSO ALLOWS YOU TO UNIQUELY IDENTIFY EACH AND EVERY SINGLE ITEM WITH AN ELECTRONIC PRODUCT CODE OR UPC NUMBER. USING RFID-BASED EAS INSTEAD OF TRADITIONAL EAS ALLOWS YOU TO KNOW EXACTLY WHAT AND HOW MANY LEFT YOUR STORE. WITH TRADITIONAL EAS, YOU JUST KNOW THAT SOMETHING LEFT YOUR STORE; IT DOESN’T GIVE YOU ANY SPECIFICS. THIS MEANS YOU CAN NOW UPDATE YOUR PERPETUAL INVENTORY AND PRESERVE ITS ACCURACY.

think about as you’re considering RFID revolve around tags. Do you use a dual tag, EAS with an RFID tag, or just RFID? Do you use a soft tag or a hang tag? Do you source tag and build the tag into the clothing itself? Do you use a hard tag, so that there’s visual deterrent, because if you just use a hang tag, that may be too easy to remove? Do you remove it at point of sale? Those are all considerations that one has to look at as we use RFID in loss prevention. You also have to look at it from a data perspective. Where does that data reside? Does it reside on the tag or in a database? It can do both, and we’ve run tests to determine whether when somebody’s walking out a door through a portal, you have enough time to look something up in the database and know if it was stolen. It depends upon one’s system architecture, but, yes, we’ve seen you can do that. Or it could just be one little bit on a tag that is changed. Say, for example, that bit 9 is on. That may mean that item hasn’t been sold. That is something still being worked on. In fact, GS1 is working on some standards around that right now. From an infrastructure perspective, LP has to decide if they use dual portals that do traditional EAS and RFID, or if they use RFID-only portals. They also need to decide if they put RFID just at the exit door or at various points in the store, including the dressing room and backroom. The key really is the use of data to help prevent loss rather than just knowing about loss. Some of the things we do now are theft deterrents, but we really want to move to theft prevention and true loss prevention. Because by the time the item goes through the exit door, in many cases, it’s too late.

Listen to the Archived Webinar To hear these speakers further discuss “RFID in Retail: What LP Leaders Need to Know” and see their PowerPoint slides, visit the magazine website at LPportal.com. Individuals who register for the webinar will also receive a booklet entitled “RFID for Loss Prevention Planning Guide.” The webinar and planning guide are sponsored by Checkpoint.

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SOLUTIONS SHOWCASE CHECKPOINT SYSTEMS

Checkpoint’s Infinite Solutions Giving Retailers What They’ve Asked For…Providing Customers What They’re Looking For

etailing has always been a tough business; even more so these days. Shoppers are increasingly demanding and fickle, putting constant pressure on retailers to streamline operations and ensure availability of merchandise. Items must be refreshed more often—and anything that gets in the way of having products on the shelf, when shoppers are ready to buy, must be prevented or eliminated. That’s why shrink remains a major concern for retailers, who demand innovative and efficient ways to promote store merchandise in high-traffic settings, where the threat of theft is highest. So when several large retailers came to Checkpoint Systems with a common need—cost-effective visual deterrence—this leading supplier of solutions (think shrink management, merchandise visibility, and apparel labeling) responded with an uncommon answer—Infinite Solutions or, the Checkpoint® iS Series. This new product line, closely developed with input from industry-leading retailers, adds an additional layer of protection to merchandise that otherwise might be left unprotected against shoplifting. “Infinite” because applications of iS Series products are, in a word, limitless.

Hard-Tag Look with a Disposable’s Price Point

There are currently three products in the iS Series lineup, with additional entries in the pipeline. All three products are designed to work with all Checkpoint EAS Security Systems. The iS Pro Tag is the first mid-density electronic article surveillance (EAS) solution. A natural fit for high-profile, high-risk items, such as jeans, jewelry, shoes, shirts, bags, and belts, it attaches easily to merchandise with a simple clip, applied in-store or at-source. The tag keeps items secure until purchase, is deactivated at point of sale (POS), and removed by the consumer at home. The iS Surround Tag is designed for high-risk items stocked on open shelves, primarily boxed goods, from gift-boxed perfume and accessory packages to shoeboxes and small electronics. This disposable version of the Spider Wrap® solution from Alpha, a Checkpoint division, provides double security—its cord positions easily and noticeably around the package, pulling tight for a snug fit, and the permanent adhesive on the fixed EAS attachment (the alarm sounder) ensures that even if the strings are cut or tampered with, EAS protection remains securely fastened to the box. The iS Surround Tag gets deactivated—not removed—at POS, speeding things along there, too. Once home, the paying consumer can (excuse the expression) cut the cord.

“…the visual deterrence of a hard tag, the efficiency of a disposable tag, and the benefit of increased on-shelf availability…”

The iS Peg Hook Tag is ideal for high-risk, single-hole rack items, such as packaged cosmetics, jewelry, small electronic accessories, and razor blades. It keeps products visible and easily accessible on the shelf, where customers can help themselves without assistance from store personnel. Like the other iS Series products, the iS Peg Hook Tag saves time at POS, where it’s quickly deactivated after purchase.

Exceeding Expectations in Tests and in the Field During pre-launch tests, participating retailers specifically applauded the iS Series’ performance—increased speed at POS, improved on-shelf availability metrics on protected merchandise, and increased customer satisfaction with having merchandise available on open display. “Working closely with our retail customers yielded this new iS product line, which offers fresh and much-needed solutions for these challenging environments,” says Farrokh Abadi, Checkpoint Systems’ president and chief operating officer for shrink management solutions. “These EAS products offer added flexibility to protect merchandise with the visual deterrence of a hard tag, the efficiency of a disposable tag, and the benefit of increased on-shelf availability of protected merchandise.” The new iS Series from Checkpoint Systems certainly delivers, giving retailers what they’ve asked for in-store while providing customers with what they’re looking for on the shelves.

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SOLUTIONS SHOWCASE CHECKPOINT SYSTEMS

RFID-Based EAS Up and Running in 90 Days Ensure your products are on the shelf when customers are ready to buy, know exactly which products are being stolen, reduce out-of stocks, reduce working capital, and increase sales.

Tom Racette

Following is a chat with Tom Racette, Vice President, Business Sales Merchandise Visibility Solutions, Checkpoint Systems.

How have RFID technologies evolved?

RFID is now much easier than ever before to implement and prove the ROI. We have out-of-the-box solutions available to help retailers improve inventory accuracy to 99 percent, increase sales by 5 percent, and even leverage RFID as a loss prevention solution.

Tell us about Checkpoint’s RFID Overhead EAS solution.

A major specialty retailer rolling out our RFID Overhead solution started out with a store in Chicago and tagged all their apparel merchandise with a Combo 4.5Mhz AM/RFID hard tag. They wanted a dual AM/RFID tag, so for the stores that only had traditional EAS, the AM antennas would still detect the anti-theft device placed on the garment. They installed the RFID Overhead at the store entrance so that it would be visible when you walk in, but very discreetly located on the ceiling. Though most retailers recognize the value of using RFID for merchandise visibility purposes, now they can also use it for EAS. The great advantage is that you only need one single tag for both inventory and loss prevention benefits. In addition, source tagging with a dual EAS/RFID tag allows retailers to install all of their new stores with the Overhead solution, and leverage the RFID component of the tag, while still supporting current stores equipped with AM or RF. This is ideal for the migration to RFID and perfect for the LP program.

What are the benefits of the RFID Overhead for an apparel store?

This same specialty apparel retailer was first interested in the EAS function of the RFID Overhead, so we started with the point-of-entry and then looked at in-store visibility with RFID. The RFID Overhead

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enables retailers to know exactly what was stolen, quantity, size, color, and dollar value, helping them to maintain shelf availability, and also differentiate organized retail crime from regular theft, which is key to taking appropriate action. With that, the retailer can restock accordingly to maintain shelf availability for honest shoppers. Another advantage is the Wirama Radar™ technology. Now retailers can merchandise close to the exit door and shoppers can walk near the door with merchandise in their hands without false alarms, because Wirama Radar reduces stray reads by distinguishing a tagged item’s movement and direction of travel.

How easy is the RFID Overhead and tagging implementation?

You don’t need any work or redecoration to install an RFID Overhead. It can be either suspended from the ceiling or concealed within it, providing an open entrance. You can tune and install in a day. As for the overall RFID-based EAS project, we can make it happen in 90 days.

How about ROI?

For the earlier example, the retailer saw clear improvements in detection, false alarms, and ability to replenish over their old system. They know that traditional EAS has a strong ROI, but now, with a single tag for inventory management and loss prevention, and a single antenna at the exit door, they are proving that RFID delivers additional benefits as an EAS solution. Checkpoint Systems (www.checkpointsystems.com) is a global leader in shrink management, merchandise visibility, and apparel labeling solutions. Checkpoint enables retailers and their suppliers to reduce shrink, improve shelf availability, and leverage real-time data to achieve operational excellence. For additional information, please contact Racette at Tom.Racette@checkpt.com or at 312-479-0040.

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SOLUTIONS SHOWCASE THE RETAIL EQUATION

Shrink Exposed:

New Studies Show Return Rate Impacts Shrink By David Speights, Ph.D., Daniel Downs, Ph.D., and Adi Raz, MBA The link between return fraud and shrink is an ongoing point of discussion in retail, but to date, there has been little scientific research examining the specific connection. In 2011 alone, shrink cost retailers $34.5 billion according to the National Retail Security Survey findings. Employee theft, shoplifting, administrative error, vendor fraud, and return fraud are to blame…among other things. There are countless solutions marketed as ways to reduce shrink, including high-tech security cameras, in-depth screenings for employees, and exception-based software systems to reduce human error. And there is some research that exists that shows the relationship of these solutions to shrink. However, one area that hasn’t garnered a lot of attention is the return counter, which has too often been overlooked in the battle against shrink…until now. This article presents the results of two large-scale studies illustrating strong relationships between returns and shrink: 1. The relationship of return rate and shrink, and 2. The potential impact a return fraud prevention system can have on shrink reduction. The two studies are part of an ongoing research effort by The Retail Equation to better understand and create more

actionable metrics to address the causes of shrink and how to prevent it. It has long been understood that mishandled and/or fraudulent returns and exchanges would impact shrink negatively—since merchandise is both entering and leaving the store in a poorly recorded manner—but the retail industry lacked empirical proof of the magnitude of the impact and how much the available solutions in the market could help in the reduction.

Study 1—Relationship of Return Rate and Shrink A recent in-depth study of seven major retailers and more than 7,400 stores indicated that as return rate increased, shrink also increased. The stores represented a cross section of retailer types and covered all fifty U.S. states. Shrink information was collected by store for 2011 from each retailer. The shrink data included the shrink losses and the retail sales that were associated with the shrink measurement period. The shrink information was combined with data for each store and its return rate percentage for 2011. In the study stores were divided into four groups based upon their shrink percentages, such as stores with less than 1 percent, stores with 2 to 3 percent, and so on. Within each

Return Rate by Shrink Results from Seven Major U.S. Retailers Across 7,400-Plus Stores

Store Return Rate (2011)

20%

15%

10%

5% <1%

1% to 2%

2% to 3%

3% to 4%

>4%

Store Shrink (2011) 25th Percentile

Average

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75th Percentile

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SOLUTIONS SHOWCASE THE RETAIL EQUATION group, the average, 25th percentile, and 75th percentile were calculated. As expected, the results showed a direct and positive relationship between return rate and shrink, meaning as shrink went up, the stores had a higher return rate. And stores with lower return rates had lower shrink. In fact, stores with a 4 percent and higher shrink had a return rate that was fifty percent higher than stores with a 1 percent or lower shrink.

Study 2—Impact on Shrink from a Return Authorization Solution

A second study was conducted on four major retailers to evaluate the effect on shrink from a return authorization system, in this case The Retail Equation’s Verify-2®. The Verify-2 system is a real-time, consumer-based return authorization system that uses predictive algorithms and statistical models to approve all valid returns and distinguish and deter fraudulent and abusive return behavior. The research was conducted by comparing shrink in stores with Verify-2 before and after the solution’s rollout. In three of the four cases, the trend in stores with Verify-2 was compared to the trend in control stores without the program to eliminate effects from other sources. Below is a snapshot of the shrink impact on these four randomly selected retail clients. The implementation of Verify-2 return authorization to

manage returns showed a substantial reduction in absolute shrink, which was consistently between 0.09 and 0.42 percent lower relative to control group stores. Note that this is the actual decline in real shrink percentage; a -0.5% absolute change in shrink means that shrink would, for example, have dropped from 2 to 1.5 percent. Across the study retailers averaged 0.32 percent absolute reduction and 12 percent relative reduction to shrink. Moreover, implications of the detailed results from the study suggest the impact on shrink increases over time. Universally, it has always been assumed that return rates and retail fraud produce shrink, but this is the first study that substantiates the magnitude by which shrink can potentially be reduced using a return authorization system (see the “Annual Shrink $ Reduction” column in the table below).

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What Does This Mean to Retailers?

The two studies presented substantiate that return rate and return fraud are closely tied to shrink. They further show that if a retailer takes actions that prevent return fraud and abuse, shrink can be reduced by a significant amount. This suggests that paying close attention to return fraud detection and prevention is a powerful weapon in your company’s arsenal to combat shrink.

Client

TRE Shrink Impact Absolute Change in Shrink

TRE Shrink Impact Percent Change in Shrink

Client 1

-0.40%

-10.71%

$4.2 M

Client 2

-0.09%

-16.61%

$1.0 M

Client 3

-0.42%

-11.24%

$14.4 M

Client 4

-0.38%

-9.79%

$5.3 M

Average Impact

-0.32%

-12.09%

$6.2 M

Annual Shrink $ Reduction

ABOUT THE AUTHORS: David Speights, Ph.D., is the chief statistician, Daniel Downs, Ph.D., is a statistical criminologist, and Adi Raz, MBA, is director of modeling and analytics for The Retail Equation, the industry leader in retail transaction optimization solutions. The company’s applications use statistical modeling and analytics to predict consumer behavior and turn each individual shopper visit into a more profitable experience. This yields immediate financial payback, increasing store comps by as much as 2 percent, with significant return on investment. The Software-as-a-Service applications operate in more than 20,000 stores in North America, supporting a diverse retail base of specialty apparel, footwear, hard goods, department, big box, auto parts and more. For more information, visit www.theretailequation.com.

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INDUSTRY NEWS 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.

Old Navy Promotes Child Safety in Retail Stores

ld Navy partnered with the National Center for Missing & Exploited Children (NCMEC) and the Canadian Centre for Child Protection for a child-safety event from September 13 – 16 with the goal of helping families make their children safer in retail stores and at home. More than 600,000 free kids safety kits were distributed to Old Navy families containing child IDs, safety tips for children of all ages, and ideas for how to talk to children about safety. Additionally, the event allowed customers to receive a 10 percent discount by donating $5 or more, which raised more than $380,000 for child safety. “We were all thrilled to host an event that focused on enhancing child safety in the communities we serve,” said Chris Nelson, vice president of loss prevention at Old Navy. “NCMEC was a perfect partner for Old Navy. We all feel so fortunate to work with NCMEC again and to work for a company that is so invested in those around us. Our founder, Don Fisher, always told us, ‘We should do more than just sell clothes,’ and this gave us a chance to make those words come alive.” John Walsh, host of America’s Most Wanted and co-founder of NCMEC, was a partner in promoting the event. “I am so grateful to Old Navy for partnering with the National Center for Missing

Old Navy stores throughout the U.S. and Canada hosted a child-safety event in September where local law enforcement personnel handed out educational information to help prevent child abduction and exploitation.

& Exploited Children to make this event a huge success,” he said. “Child safety is incredibly important to me, and it means so much to find others who are doing their part to help keep kids safe.” By engaging every store in the Old Navy fleet, the event allowed the organizations to reach families nationwide and in Canada with potentially life-saving information. Customers even had opportunities to learn about safety in their communities

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from local law enforcement, military, and other local heroes who were invited to attend the event’s in-store safety fair. “Educating children about what to do when they find themselves in risky situations is a critical part of our efforts to prevent child abduction and exploitation,” said John Ryan, CEO of NCMEC.

Best Buy Tests Benefit-Denial Technology Best Buy is conducting an initial trial of a new anti-theft technology designed to deter shoplifters and dishonest employees by utilizing the concept of “benefit denial.” The test, which has been conducted over the past couple of months, was announced at the Loss Prevention Research Council’s (LPRC) Impact Workshop held in mid-October in Gainesville, Florida. The initial merchandise target is newly released video games—a high-loss item. A specially designed locking device is affixed to the hub of the game package, locking the optical disc to its case. At the point of sale, the package is placed on a deactivation device that first authenticates the sale, and then decouples the lock from the case by transmitting a wireless signal. Best Buy’s customer simply removes and discards the lock when the case is opened for the first time. The lock is built to withstand tampering, so the disc will likely be damaged or broken in an unauthorized removal, thus denying any benefit to a thief by rendering the video game unusable or unsalable. To date, the new technology has been used on four new videogame titles supplied by multiple video game producers. The objectives of this single-store evaluation are to ensure that the technology operates properly and suitably in the Best Buy environment, and to assess the consumers’ and the store associates’ experiences with the product. Tim Fisher, Best Buy’s director of asset protection operations, noted that the initial experience was positive, and that inventory shrinkage for the tagged titles had fallen. Best Buy is considering expanding more broadly by adding more new releases to the tagged list, and then by adding more stores. The technology is designed and manufactured by ProTeqt Technologies of Massachusetts.

Larry Nicholason Succumbs to Lengthy Illness Long-time loss prevention executive Larry Nicholason, CPP passed away November 8th after a long illness.

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“It is with deep sorrow we share that our dear friend and co-worker, Larry Nicholason, passed away this morning after a long illness. Larry was a good friend to all who knew him and will truly be missed,” said Fritz Hirchert, vice president, loss prevention/safety for Navy Exchange Service Command (NEXCOM). Nicholason joined NEXCOM in 1999 as a district LP and safety manager in Pensacola. He transferred to Naples, Larry Nicholason, CPP Italy, in 2005 to manage the European district. In the spring of this year, Nicholason and his wife, Cindy, moved to the Norfolk, Virginia, area where he was the LP and safety manager of the Northeast distribution center. Nicholason began his professional career as a deputy sheriff with the Orange County Sheriff’s Department with an emphasis on criminal investigations. While working there, he earned his bachelor’s degree in criminal justice from the University of Central Florida. In 1981 he entered the retail loss prevention industry as a regional LP manager for Little General Stores in Tampa. Over his 32 years in the industry, he held executive positions with a number of retailers, including Byron Stores, Enstar Specialty Retail, Silo, Goody’s Family Clothing, and Thorn Americas. “Those of us who knew Larry recognized him as an outstanding loss prevention professional,” said O. Keith Wanke, vice president of LP, audit, and firearms compliance at Dunham’s Sports. “But I will also remember Larry for his wit, sense of humor, and the joy he took in performing his ‘magic tricks.’ To this day the trick that I do not know was real or not was the magic bean

trick where Larry would place a bean into the corner of his eye and produce that darn bean right out of his nose. I guess I will have to wait to see Larry in heaven to find out for sure.”

The Next Big Security Headache—Mobile Payments More than a dozen high-profile U.S. retailers, including Sears, Best Buy, Walmart, Darden Restaurants, and 7-Eleven, have joined forces and announced their intention to form a mobile payment network called the Merchant Customer Exchange (MCX). The stated goal listed on the organization’s website is to “offer consumers a customer-focused, versatile, and seamlessly integrated mobile-commerce platform.” It will be available through virtually any smart phone, according to a press release. MCX will enter an increasingly crowded U.S. market for mobile payments using near-field communications (NFC) and other methods. The two main competitors for MCX are Google Wallet and Isis, which is backed by AT&T Mobility, T-Mobile USA, and Verizon Wireless. Others are expected to enter the space, including Apple, with an NFC “app” that can be used with the new iPhone 5. According to a recent article in Computerworld by information security expert Kenneth van Wyk, president and principal consultant at KRvW Associates LLC, security issues surrounding the mobile barcode reading and concomitant transmission of a customer’s financial information are crucial to the large-scale success of the payment network. The article suggests that network developers must continued on page 68

RFID in Retail: What LP Leaders Need to Know It’s well known that RFID is taking hold in retail for inventory management and shelf availability. What are the implications for LP? With RFID integration planned for many new stores and remodels over the next eighteen months, LP considerations need to be part of the overall strategy. This webinar will provides real-world examples with hard data and expert advice, including: ■ The key factors LP leaders need to know when driving the LP agenda for RFID projects, ■ Real-world LP RFID case studies and ROI analysis, and ■ RFID deployment considerations for LP. Webinar participants will receive an “RFID for LP” planning guide. Visit the Webinar page on the magazine website, LPportal.com, or scan the QR code below.

Speakers

Joe LaRocca

Vice President of Loss Prevention, RetaiLPartners

November - December 2012

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