November - December 2016 by Loss Prevention Magazine

NOVEMBER–DECEMBER 2016 | V15.6 LOSSPREVENTIONMEDIA.COM 2017 PRODUCT SHOWCASE AND RESOURCE GUIDE PAGE 51

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TABLE OF CONTENTS 6 EDITOR’S LETTER

Politics and Loss Prevention By Jack Trlica

Beyond Shrinkage: Introducing Total Retail Loss

8 EDITORIAL BOARD 10 RETAIL SPONSORS 12 INTERVIEWING Uniformity?

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

A new way of thinking about retail loss

24 CERTIFICATION

By Adrian Beck, University of Leicester

Adding Depth to Your Retail Knowledge Interview with Tracy Fleming, LPC, Walmart

36 SUPPLY CHAIN

Supply Chain’s New BFF—The Omni-channel Experience

By Maurizio P. Scrofani, CCSP, LPC

Building an LP Department Focused on People

48 FUTURE OF LP

Going Beyond the Gut: Fact-Based Research By Tom Meehan, CFI

A conversation with David Shugan of Carter’s

SPECIAL SECTION

2017 Product Showcase and Resource Guide

76 EVIDENCE-BASED LP

By James Lee, LPC, Executive Editor

Painting Pictures Is Never Easy By Read Hayes, PhD, CPP

78 SOLUTIONS SHOWCASE

- American Public University System - Axis Communications - CEC - Checkpoint Systems - Industrial Security Solutions - Protection 1 - The Retail Equation/Sysrepublic

Predictive Data Analysis

Untangling inventory variance to identify fraud at 7-Eleven

87 LPM DIGITAL

Strategies, Messages, and Attitudes

By Ben Grisz, Alexandria Nguyen, Molly Wolfe, and Michael Zhang, University of Texas McCombs School of Business

By Jacque Brittain, LPC, and Kelsey Seidler

92 INDUSTRY NEWS

- Largest LPRC Conference Concludes in Advance of Hurricane Matthew - 7th Annual CLEAR Conference Held in Reno, Nevada

93 CALENDAR 94 ANNUAL INDEX 95 PEOPLE ON THE MOVE 96 ADVERTISER DIRECTORY 97 VENDOR SPONSORS 98 PARTING WORDS

Fifteen Years of Loss Prevention

Looking at yesterday, today, and tomorrow through the eyes of the magazine By Bill Turner, LPC, Contributing Writer

THE MIDDLE YEARS 2007 THROUGH 2011 By Bill Turner, LPC

NOVEMBER–DECEMBER 2016

When You Deserve It, You Deserve It By Jim Lee, LPC

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EDITOR’S LETTER

Politics and Loss Prevention

y the time you read this article, the presidential election will be over—thankfully by most people’s comments. This election cycle has been one of the strangest in history, one that I personally hope we don’t repeat any time soon. But this is not a commentary about national politics. Rather it’s about how the retail loss prevention industry works together for the benefit of our retail companies and the industry as a whole—in stark difference to how politicians seem to go out of their way to not accomplish much these days.

A Different Perspective

In the twenty-five years I’ve been associated with retail loss prevention, one of the more significant observations I’ve noticed is how incredibly well LP professionals work with their retail peers in operations and elsewhere in the enterprise; how individuals even from competing companies offer their insights into problems and solutions that impact each other’s business; and how incredibly generous most people in our profession give of themselves to their friends, families, and communities. Like any collection of human beings, our industry has a diverse point of view on the many topics of human endeavor—from Cubs versus White Sox to rock versus opera to religion, race, sexual orientation, and, yes, certainly politics. Even in our work environment, it is often

readily apparent that many of our coworkers and outside partners have viewpoints that diverge significantly from our own. Sometimes these differences speak directly to deeply held beliefs that define our personal identities—differences that in another context would likely cause us to shy away from interacting with that person at minimum and possibly totally reject them at worse. However, rarely, if ever, have I observed individuals or groups in our industry who let such differences get in the way of working together for the good of the store, the team, the company, or the industry. Have you? Have you experienced loss prevention professionals who refuse to compromise their personal beliefs to the point that they will not work with a colleague, who will not sit on the same committee with someone they dislike? David Shugan said in our interview on page 27 that even when he has called the police on someone he is interviewing, he wants not just the best for his company, but also the best result for the accused. You may think that this is simply how everyone performs in the work environment. But I don’t think so. I think there is something about those people attracted to our profession who have a different insight into other people. Or maybe the executives and managers in loss prevention are good at weeding out those who would allow their personal feelings to effect their jobs.

NOVEMBER–DECEMBER 2016

We certainly are not a perfect profession without differing points of view and without struggles with one another. However, I believe we’ve been able to go beyond those issues to work with each other in positive ways to everyone’s benefit. If only our elected officials could look at the loss prevention industry to see how compromise and mutual respect can contribute to getting positive results for the benefit of everyone.

Thank You

On a totally different subject, I want to take this opportunity to thank everyone on the LPM team, our advertising partners, the RILA Asset Protection Leaders Council, the Loss Prevention Foundation, and the many retail supporters who came together in Sanibel, Florida, in late September to help celebrate the magazine’s fifteenth anniversary. Our annual meeting has grown from a handful of editorial board members who sat around a conference table to talk about editorial ideas to one of the most anticipated events each year. We are truly grateful for the ongoing support and look forward to the years ahead.

Jack Trlica Managing Editor

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EDITORIAL BOARD Jim Carr, CFI Senior Director, Global Loss Prevention, Rent-A-Center

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

Ray Cloud Senior Vice President, Loss Prevention, Ross Stores

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

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

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

Charles Delgado, LPC Vice President, Asset Protection, Meijer Scott Draher, LPC Vice President, Loss Prevention, Safety, and Operations, Lowe’s Scott Glenn Chief Security Officer, Sears Holdings Tim Gorman Divisional Vice President, Loss Prevention, Asset Protection, and Business Continuity, Walgreens Barry Grant Chief Operating Officer, Canadian Images Bill Heine Senior Director, Global Security, Brinker International Frank Johns, LPC Chairman, The Loss Prevention Foundation Mike Lamb, LPC Vice President, Asset Protection & Safety, Walmart Stores US

LOSS PREVENTION MAGAZINE

EXECUTIVE EDITOR James Lee, LPC JimL@LPportal.com

MANAGING EDITOR, DIGITAL Kelsey Seidler KelseyS@LPportal.com

Randy Meadows Senior Vice President, Loss Prevention, Kohl’s Melissa Mitchell, CFI Director of Asset Protection and Retail Supply Chain, LifeWay Christian Stores Dan Provost, LPC Vice President, Global Loss Prevention, Staples

CONTRIBUTORS Dave DiSilva Read Hayes, PhD, CPP Richard C. Hollinger, PhD Walter Palmer, CFI, CPP, CFE Tom Meehan, CFI Gene Smith, LPC Shane G. Sturman, CFI, CPP Bill Turner, LPC David E. Zulawski, CFI, CFE CHIEF OPERATING OFFICER Kevin McMenimen, LPC KevinM@LPportal.com

Tina Sellers, LPC Director of Loss Prevention, Delhaize America

DIRECTOR OF MARKETING Merek Bigelow MerekB@LPportal.com DIRECTOR OF DIGITAL OPERATIONS John Selevitch JohnS@LPportal.com SPECIAL PROJECTS MANAGERS Kat Houston, LPQ Justin Kemp, LPQ Karen Rondeau

Mark Stinde Vice President, Asset Protection, 7-Eleven

DESIGN & PRODUCTION SPARK Publications info@SPARKpublications.com

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

CREATIVE DIRECTOR Larry Preslar ADVERTISING MANAGER Ben Skidmore 972-587-9064 office, 972-692-8138 fax BenS@LPportal.com

Robert Vranek Vice President, Loss Prevention, Belk

SUBSCRIPTION SERVICES

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

NOVEMBER–DECEMBER 2016

MANAGING EDITOR Jack Trlica JackT@LPportal.com

EDITORIAL DIRECTOR, DIGITAL Jacque Brittain, LPC JacB@LPportal.com

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

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

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INTERVIEWING

Uniformity?

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

ver wonder what it would be like if every time we opened a bottle of our favorite cola it tasted different? Would we be pleased with the new taste, glad of a taste adventure, or would we long for our old favorite cola? There is something about the adventure of something new that helps us grow and develop, which is appealing for sure. However, from a branding standpoint, meeting expectations is what keeps the customers coming back and certainly reduces customer complaints. It would be a management and organizational nightmare if every district or region operated differently, or if each market had different inventory control, auditing guidelines, refund policies, or ordering procedures. It would introduce new and more difficult problems. Companies for years have counted on uniformity to allow scalability and make controlling the large organization somewhat manageable.

The reduction in training costs alone must be significant, not to mention storing parts and managing the availability of them. With every plane being the same, flight crews are ready in an instant if a plane is removed from service and replaced with another of the same model. If there is a slight difference in seating configuration, no problem at Southwest—you board by groups and sit where you please. Other airlines have to struggle with reissuing boarding passes and the disgruntled customers who lost an aisle seat and are now stuck in the middle. With Southwest, just pick a new seat and off you go. Rather than using large hubs, most of Southwest’s flights are point to point, which allows them to avoid delays and cancellations that other airlines experience if their hubs are dealing with bad weather or have slowdowns. These issues do not affect Southwest’s whole system. Uniformity and simplicity seems to equal profitability.

Uniformity for Profitability

For over 40 years, Southwest Airlines has been profitable in the difficult airline industry, which has been done largely by using simplicity and uniformity of operations to overcome the difficulties faced by the other carriers. Simplicity means there are fewer things that can go wrong fouling the whole process. While other airlines may employ the use of a dozen different types of planes, Southwest generally uses only one type: the Boeing 737. That’s uniformity. The advantages of this are many. Stocking parts for repairs is just for a single plane, and mechanics need only to know how to repair that one plane.

After Interview Training

So let’s consider the management of an organization’s interviewers. How many people do you have that are allowed to conduct an employee interview? What are the criteria for allowing them to be selected to interview an associate? How are they evaluated? If you only manage a few interviewers, it is probably not a big deal if there is no uniformity in the interview process. When it was just Doug Wicklander and Dave Zulawski, it was easy for them to know what was going on in the interview room right there in the office. As the company began to grow and expand geographically, it was time to change. We often hear supervisors say, “When they come back from your interviewing course, I just tell them to take what WZ says and use what feels right to them.” That would be like having us work on your brakes—got a few extra parts leftover, but we’re pretty sure it will stop when you press on the brake pedal. Sometimes we also hear, “OK, that’s what they said, but here is what I do.” Either way, the training you have chosen for your staff is going to be less effective. Add to that what people forget, and the problems escalate. Much of the research on memory and its retention by a student can be disheartening from a training standpoint. Research on memory indicates that upwards of 70 percent of the information presented in a training environment is

Research on memory indicates that upwards of 70 percent of the information presented in a training environment is lost in the first twenty-four hours. However, when the learner is asked to recall information in the days following the learning experience, they are capable of remembering more of the information for a longer period of time. 12

NOVEMBER–DECEMBER 2016

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

continued on page 14 |

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knowledge, thereby retaining more of the teachings focused on the learning objectives. Additionally, the people assigned to monitoring and measuring performance have only one set of benchmarks to measure performance against, making a more useful uniform critique of the interviewers’ efforts. Companies are doing a number of things to support the uniformity of the interviews within the organization. A number of organizations administer a test within a month of attending the program to encourage the learner to review and retain the information. The test makes the retention of the material important to remember and serves as a benchmark of performance, allowing the learner to move to the next phase of actually conducting an interview. Other organizations have mock practice sessions with supervisors who evaluate the performance against the desired interview method.

continued from page 12

lost in the first twenty-four hours. With all we have to remember, such as where we put our keys, the brain does not know what information is important to retain and what can be dumped. However, when the learner is asked to recall information in the days following the learning experience, they are capable of remembering more of the information for a longer period of time. In fact, Professor Henry Roediger and his laboratory at Washington University in St. Louis conducted a study where students were asked to read several essays. Afterward, some were asked booster questions forcing them to recall the material, and some were asked to reread the essays. Those who were asked to reread the essays did significantly poorer in retention of the material than those who were tested using the review questions. There are hundreds of additional studies clearly showing that using the material in the weeks after training can dramatically improve a learner’s retention of the material. So what happens when the learner returns from a seminar? Is there a monitoring and measuring program in place to test the learner’s knowledge and retention? Is the material put into practice right away? This focus on the material after the program tells the brain the material is important and needs to be retained for future use. What happens when the learner returns from training under the guidance of a supervisor who does not remember the material or is using some watered-down modified version and evaluating the learner or, in this case, the new interviewer? A lot of those called on to evaluate interviewers within an organization are long removed from the field, and their initial training in interviewing is probably dated. So are they reinforcing the class’s learning objectives or passing on some potentially bad habits? If we examine some of the top sports camps in the world, there is a lesson we can learn. These camps focus on doing the basic fundamentals correctly, which leads to success. We have several people who come back to our interview classes annually because they work alone and want to refresh what they used to do or had forgotten. Essentially, they lost their golf swing. Another reason to monitor training is to minimize liability. Over the years interview training has gone from the extreme of no training whatsoever to mentoring with a senior interviewer followed by in-house training, then external training, and ultimately monitoring and measuring performance supporting the interview training. Plaintiffs’ attorneys have a moving target on training over the years, and we now face the question of how we are sure learners are actually applying the methods taught in class. How would your organization answer this question?

If the company can support and test its employees after they return from the class, their retention of the material will improve, and the quality of their performance should exceed expectations. Some companies use conference calls or meetings to focus on the training and refresh the material in everyone’s mind. We have several companies that teleconference monthly meetings inviting WZ instructors to help problem-solve or work on difficult areas to improve performance of their interviewers. Other supervisors use columns or articles such as this one as a discussion point to keep the information fresh and reinforce its importance to the company. Continuing education such as webinars can be an important part of keeping the skill set of interviewing in the limelight. The International Association of Interviewers offers free webinars to its members along with an online publication focused on interviewing. Many companies also subscribe to LP Magazine as a means of keeping staff apprised of important issues in loss prevention. If you haven’t done this yet, get your group on the list to receive LP Magazine. It’s free and is an easy way to develop your people. We do our best to deliver interviewing skills to those who attend our programs, but it is the attendees who can make or break the learning process. Some of the best interviewers we have met spent the time and effort on their own to hone the skills through independent practice. In our organization we train to the standard of our non-confrontational method and benchmark our interviewers’ performance against the model in videotaped interviews. This takes time and effort but has built excellent interviewers. If the company can support and test its employees after they return from the class, their retention of the material will improve, and the quality of their performance should exceed expectations.

Uniformity for Memory Retention

Let’s consider the uniformity of the interview style preferred by the organization. Selecting one style gives you the Southwest advantage—uniformity and simplicity. Selecting an interview approach allows each person to speak and use the same equipment. People can evaluate each other offering suggestions from what they remember and forming a collective body of

NOVEMBER–DECEMBER 2016

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FEATURE

BEYOND SHRINKAGE INTRODUCING TOTAL RETAIL LOSS By Adrian Beck

BEYOND SHRINKAGE

major new report published by the Retail Industry Leaders Association (RILA) puts forward a dramatically different way of thinking about the problem of retail loss and how it might be defined and measured in the future.

The Situation

There is little consensus on what constitutes “loss” within the retail world nor how it should be measured. The terms “shrinkage” and “shortage” have been loosely applied to encapsulate some of the areas that generate loss, but they are not terms enjoying a clear and agreed-upon definition across the sector. Equally, measuring losses at retail prices is probably the most common method adopted to capture the scale of the problem, but again,

it is not without its critics. While the term “shrinkage” has been used for probably the last hundred years of retailing, there continues to be wide variance on what is included and excluded when this term is used, with some retailers using it to describe only those losses captured through identified discrepancies in inventory counts, while others add in additional types of loss recognized through other forms of recording practices. The inclusion or exclusion of losses associated with the retailing of items such as food adds further ambiguity. Should products that have been recorded as going out of date be included as shrinkage? What about those items that have been reduced in price to encourage a sale due to oversupply or a change in consumer demand, or

NOVEMBER–DECEMBER 2016

products that have been damaged in the supply chain? Even more variability exists when the losses associated with what are sometimes called “process failures” are considered. Should those losses that are generated by mistakes within the business be included in the overall shrinkage figure, such as product set-up errors, non-scanning at the till by members of staff, the reduction in sales caused by products being out of stock, or shelves not being replenished accurately? In addition, there is increasingly a tranche of losses that can be associated with discrete and purposeful decisions made by retail organizations as part of pledges and guarantees to consumers, such as price matching, compensation for poor service, and guarantees of product availability. Should these be included in a definition of

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BEYOND SHRINKAGE

While the term “shrinkage” has been used for probably the last hundred years of retailing, there continues to be wide variance on what is included and excluded when this term is used, with some retailers using it to describe only those losses captured through identified discrepancies in inventory counts, while others add in additional types of loss recognized through other forms of recording practices. retail loss? Finally, the growing breadth and complexity of the retail landscape is putting stress on the applicability of traditional shrinkage definitions. How might losses associated with online and so-called omni-channel retailing be measured and understood?

Researching Total Retail Loss

It is within this context that both RILA and the ECR Community Shrinkage and On-shelf Availability Group decided to support a research project not only to explore how retailers currently view the problem of loss, but also to work toward developing a new definition and typology that might better capture how losses are impacting their businesses. The research utilized a number of different methodologies—an extensive literature review; a questionnaire to a group of large European retailers; 100 face-to-face interviews with senior directors in ten of the largest retailers in the US, representing 27 percent of the total retail market; and a series of workshops and focus groups with loss prevention representatives from a range of European retailers and manufacturers.

The Limitations of “Shrinkage”

Consensus is actually very hard to find on what the term “shrinkage” means and what should be included and excluded when it is being calculated.

Some regard it as a catchall for a wide range of losses suffered by retailers, including both crime-related events, such as staff and customer theft, and errors incurred as part of the process of retailing, such as incorrect pricing, changes in price, damaged products, and food items going out of date, while others only seem to use it to refer to variance in the value of expected and actual inventory. The review of the existing literature on how shrinkage is defined and understood can be summarized as follows: ■ T here is no agreed definition of what constitutes shrinkage. ■ M ost published estimates of shrinkage are based primarily on measures of unknown loss where the root cause is unidentifiable. ■ T he focus of most definitions of shrinkage typically relate only to the loss of merchandise. ■ I n most surveys the measurement of shrinkage is requested at store level—the retail supply chain rarely features. ■ T here is relatively little consensus on how shrinkage should be measured although most surveys collect information at retail prices. ■ E xpressing shrinkage as a percentage of total sales is the most commonly used method to illustrate the scale of the problem. ■ T he categorization of shrinkage is confusing and often relies on catchall phrases that lack firm definitions or seem LP MAGAZINE | NOVEMBER–DECEMBER 2016

■

incapable of capturing the various types of risks associated with an increasingly complex retail environment. T he terms “retail crime” and “shrinkage” are sometimes used interchangeably with the former including the costs of responding to losses, while the latter may or may not be based on known and unknown losses.

Developing Total Retail Loss

Among the difficulties of benchmarking any retail business using the indicator of shrinkage are the problems associated with understanding what categories of retail loss are included or excluded, particularly under the rather catchall terms of administrative error/process failures. Some companies taking part in this research adopted very strict criteria—shrinkage is only the value of their unknown losses based on the difference between expected and actual stock number/values, with anything else being regarded as known and therefore not included in the calculation. Other companies were much more inclusive, incorporating a number of other types of loss ranging from damages, wastage, spoilage, and price markdowns to the costs of burglaries, robberies, and even predicted losses from organized retail crime (ORC). Some of the respondents, however, were increasingly concerned about the continuing applicability of the term “shrinkage” in a modern retail context. One respondent said, “Listen, I think the word has become obsolete because loss prevention has evolved into asset protection, and now it’s asset profit and protection, and God knows where it’s going to be three years from now. The names have changed, the roles have changed, the roles have gotten significantly wider, but we still hang on to this word that we’ve been using that describes something that we did a hundred years ago.” Part of this definitional variance seemed to be based on how respondents interpreted the difference between what could be regarded as a loss compared with a cost, the latter being viewed as everyday planned and necessary expenditure in order for the business to achieve its goal of making a profit. However, a considerable number of respondents made a key distinction between the value of the outcome and

BEYOND SHRINKAGE

how this differentiated costs from losses: “Costs—they bring value to the business, they are incurred because there is a perceived positive purpose in having them, they are part of the revenue generation process, and without them profits would be negatively impacted. Losses are things, which if they didn’t happen there would be no negative impact upon profitability; they do not offer any real value to the business and simply act as a drain on profitability.” It was also instructive to hear how some respondents adopted a process of normalizing what some considered to be losses into costs: “We plan a lot of those costs [possible types of losses], so when we’re looking at it from a planning perspective, we have that built in. Anything that we can account for and process and know what it is, we take more so as a cost rather than a loss, when we’re defining it.” Another respondent talked about how the planning and budgeting process enabled many losses to be redefined as costs: “If it goes above budget, then it becomes a loss; otherwise, it’s a cost.” Interestingly, one respondent reflected on the dangers of this approach of “hard baking” losses into costs: “People always viewed

[workers’ compensation] as a cost of doing business, but I think we’ve been incredibly innovative, and we’ve shown that, no, you can really change the way we do things. … When you view it as a cost to doing business, that’s when you lose innovation and when you lose really looking at how do you prevent [it]. We’ve done some incredibly strategic things around here in that area. In particular, I can just remember the conversations when we were doing it—it was like, a lot of people thought don’t mess with that. That’s just going to be what it’s going to be; it’s just going to gradually increase every year.” This is a good example of how labeling something as a cost can begin to drive particular behaviors. And this can be particularly the case when a budget or target is set for a given cost/loss. It is also worth noting that many respondents adopted a much more accepting tone when types of expenditure were described as the cost of doing business—a reassuringly benign phrase, which seemed to absolve them of taking responsibility for the consequences: “We try and convert as much of [these losses] to costs. It’s then not on my agenda anymore—I deal with shrink.”

NOVEMBER–DECEMBER 2016

Defining Total Retail Loss

From the interviews with senior US retail executives and feedback from the roundtables held in Europe, the following definitions of costs and losses were developed: ■ C osts—expenditure on activities and investments that are considered to make some form of recognizable contribution to generating current or future retail income. ■ L osses—events and outcomes that negatively impact retail profitability and make no positive, identifiable, and intrinsic contribution to generating income. Using these definitions, various types of events and activities can begin to be categorized accordingly. For example, incidents of customer theft can clearly be seen to be a loss—the event and outcome play no intrinsic role in generating retail profits. It makes no identifiable contribution whatsoever, and were it not to happen, the business would only benefit. Alternatively, incidents of customer compensation, such as providing a disgruntled shopper with a discounted

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BEYOND SHRINKAGE

One respondent said, “Listen, I think the word has become obsolete because loss prevention has evolved into asset protection, and now it’s asset profit and protection, and God knows where it’s going to be three years from now. The names have changed, the roles have changed, the roles have gotten significantly wider, but we still hang on to this word.” price, can be seen to be a cost. In this case, the business is incurring the cost because it believes that by compensating the aggrieved consumer they are more likely to shop with them again in the future. The policy of compensating is regarded as an investment in future profit generation and is therefore categorized as a cost and not a loss. (That’s not to say it shouldn’t be recorded and monitored for review.)

Another example of a potential loss is workers’ compensation, where a retailer will cover the legal, medical, and other costs associated with an accident at work, such as a member of staff being hurt falling off a ladder. There is no intrinsic value to the business of a member of staff incurring an injury while at work. If it had not happened, the business could only benefit through not having to pay out for the

consequences of the event. It is therefore a loss, and while a number of respondents to this research argued that it is a predictable and recognizable problem that can and is budgeted for, it still remains an event that ideally the retailer would prefer not to happen as it impacts negatively on overall profitability. In contrast, expenditure on, for instance, loss prevention activities and approaches, such as employing security guards or installing tagging systems, can be seen as a cost. The retail organization has committed to this expenditure because it feels there will be some form of payback from the investment—hopefully lower or acceptable levels of loss that in turn will boost profits. What these examples focus on is not whether an activity or event can be controlled or not, or where the incurred cost was planned or unplanned, but on its fundamental role in generating current or future retail income. When a clearly identifiable link can be made between an activity and the generation of retail income, then it should be regarded as a cost, whereas all those activities and events where

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BEYOND SHRINKAGE no link can be found should be viewed as losses.

Categorizing Total Retail Loss

There is little point developing a typology made up of a series of categories that are either impossible or implausibly difficult to measure or once measured offer little benefit to the business undertaking the exercise. It is also worth noting that while use of the term “total retail loss” might better capture the range of losses occurring across the retail landscape, the associated typology does not necessarily encompass every form of loss that a retailer could conceivably experience. The word “total” is being used in this context to represent

a much broader and more detailed interpretation of what can be regarded as a retail loss, rather than necessarily claiming to be a reflection of the entirety of events and activities that could constitute a loss. For instance, there are a number of potential losses not included such as those associated with brand reputation, lost sales associated with counterfeit goods and the grey market, and lost sales that may arise from stolen product being sold on Internet auction sites. While some of these types of losses are beginning to be better understood and measured, as yet they remain, for most retailers, highly problematic to calculate with any degree of confidence. No doubt in the future the scope and range of total retail loss will change to accommodate new forms

of loss, and this is to be welcomed. Like retail itself, the world of loss prevention needs to continually adapt to meet the demands of a highly dynamic sector of the global economy. In such a short article, it is not possible to go into any great detail describing the various elements of the proposed typology. A fuller, more detailed description is available in the RILA report. But as can be seen in the diagram, the typology is firstly organized around a series of centers of loss: the store, the supply chain, e-commerce, and corporate. The losses in stores and the supply chain are then separated into those that are known and unknown, with the latter being the category that most closely resembles many of the current definitions

The Total Retail Loss Typology successfully recovered and can be sold at full value at a later date, there is no financial loss associated with this incident. While the retailer may still want to record the fact that an attempted theft took place and was successfully dealt with, it would not be recorded in the total retail loss typology. In this respect the typology is recording the value of retail losses and not their prevalence.

It is important to note that the typology design enables the value of retail losses to be calculated and not necessarily the number of events. Where an associated value cannot be calculated or there is no loss of value associated with an incident, this should not be included. For instance, if a shoplifter is apprehended leaving a retail store and the goods they were attempting to steal are

Total Retail Loss

NOVEMBER–DECEMBER 2016

LOSSPREVENTIONMEDIA.COM

BEYOND SHRINKAGE of shrinkage. All losses are then broken down into two types: malicious and non malicious. The former brings together types of loss associated with criminal activity, while the latter focuses on losses often regarded as process or administrative in nature. The typology then goes on to propose thirty-one types of known loss covering a wide range of losses across the retail enterprise and incorporating events and outcomes beyond just the loss of merchandise. There are of course a multitude of root causes that make up each of the proposed core categories of loss. These will vary depending upon the retailer, but it is hoped that those selected provide sufficient macro-analytical capacity to provide value when it comes to understanding the broad landscape of loss within a business. The purpose of the typology at this stage is not to offer micro-level identification of all causes of loss but more to act as an organizational tool to compare the distribution of core categories of loss across a business, which in turn could then stimulate deeper analysis

of any given category warranting further investigation. This list of known causes is still a work in progress, and it is hoped that future research and application of the proposed typology will enable it to be further fine-tuned and amended to ensure it has as high a degree of applicability across as many types of retailing as possible.

Total Retail Loss: Helping Your Business Make Good Choices

It is clear that the proposed total retail loss typology is a radical departure from how most retail companies have understood and defined the problems of loss within their companies—moving away from a definition focused primarily on unknown stock loss, mainly in physical retail stores, to one that encompasses a broader range of risks across a wider spectrum of locations. While there is a simple elegance about the approach adopted in the past, based on the traditional four buckets of loss (internal theft, external theft, administrative errors, and vendor frauds), it is increasingly recognized that these rather broad-brush

LP MAGAZINE | NOVEMBER–DECEMBER 2016

and often ambiguously defined categories are no longer capable of accurately capturing the complex risk picture now found in modern retailing. As increasingly rich veins of retail data become available, it is becoming more apparent that most retail losses are a product of business choices—the scale of many losses are directly related to decisions made about how a retailer wants to operate. For example, introducing customer self-scan checkouts is a choice. It has some clear benefits associated with it, such as lower staffing costs, but it also has some very clear risks, such as increased levels of loss associated with non-scanning or missed scanning of product. Deciding on the overall value of these retail choices requires high-quality data on both sales and all possible losses, and they must be viewed together rather than in isolation. The interplay between sales and losses needs to be viewed in the round and not as a series of cross-functional trade-offs where losses and profits are allocated separately, inevitably driving behaviors that do not benefit the business as a whole.

BEYOND SHRINKAGE Within this context, the proposed total retail loss typology can bring value. By identifying as many of the manageably measurable categories of loss across the entire retail business as possible, it will enable greater transparency to be achieved and better avoid the shifting of losses/ costs between one category and the next, depending on whose interest it best serves. By agreeing what should and should not be defined as a loss, the proposed typology will help to inform decisions that are in the interest of the business as a whole and not just certain key stakeholders.

Helping to Develop the Role of Loss Prevention in the Future

The total retail loss typology combines data from across a wide range of business functions. It has the potential to offer a unique macro overview of how all forms of loss are affecting a business and from there provide an opportunity to reflect on how an organization’s resources are being allocated. In many respects it could provide current and future loss prevention practitioners with an even greater opportunity to make a significant and lasting contribution to maintaining and improving the overall profitability of their businesses. As levels of what might be described as traditional shrinkage begin to reach levels where it increasingly becomes either uneconomic to reduce further (because the required investment is not justifiable based upon the likely return to the business) or positively counter-productive to reduce (because of the negative impact required interventions will have on sales and profits), then it makes sense for loss prevention practitioners to use their resources and established skills to better effect on other problems faced by the business. After all, the goal of loss prevention is not necessarily to reduce losses to zero—this could easily be achieved by a series of draconian measures that would likely induce bankruptcy in most retail companies. The goal is to achieve a level of loss that, based on the operational choices made by the business, optimizes the profitability of the organization. Dealing with unknown loss, which is what most loss prevention practitioners typically focus on (given they have

For a free copy of the full report, go to the Asset Protection tab at RILA.org. For questions about the report findings, contact Professor Beck at bna@leicester.ac.uk. responsibility for shrinkage), is probably one of the hardest challenges faced by a management team in retailing, requiring them to develop a high level of analytical and problem-solving capability. Trying to solve problems where the cause is typically unknown is at the hard end of the management spectrum—it requires creative thinking, imaginative use of data, and considerable experience. Imagine if these capabilities were put to use on the broader range of known problems encapsulated in the total retail loss typology. The impact could be profound. This is not to say that a loss prevention team should not continue to ensure that unknown losses (as defined in this document) remain at an acceptable level for their business and try and convert as much of them as possible to known losses. But the typology could provide them with an opportunity not only to become the agents of change for the better management of loss throughout the business, but also to take on new challenges that use their considerable established skill set. As one respondent to this research said, “I don’t own ‘damage.’ I could really make

a difference [to it]. It would be a walk in the park compared with dealing with ORC!” In effect, the loss prevention team of the future could become the drivers of a total retail loss group, marshaling data on losses across the business, coaching and encouraging other retail functions to better manage the problem, and using their problem-solving skills to help the business sell more through managing losses more effectively. It would enable the loss prevention team to reimagine their role within the business, providing them with an opportunity to remain a relevant, agile, and highly valued function in a rapidly changing retail landscape.

Total Retail Loss: Next Steps

Moving from something as established as “shrinkage” as a core measure of how loss is generally understood to one described in this document is never going to be easy. Roles, functions, surveys, indeed an entire industry has evolved using this word to describe retail loss. The current research set out not only to better understand how modern retailing is thinking about the issue of loss—how it is defined and measured—but also to begin to put together a more comprehensive typology that it is hoped will add value in the future. Through enabling businesses to view the big picture of loss, across their entire retail landscape, the typology potentially offers an analytical tool that can be used to better understand how losses are impacting business profitability and how current resources are being allocated. Through a process of engagement, further testing, and refinement, it is hoped that the total retail loss typology will begin to add value to retail companies, enabling them to better understand how all forms of loss impact their capacity to make customers happy and their businesses profitable.

ADRIAN BECK is a professor in the criminology department at the University of Leicester in the UK where he is primarily focused on research on retail crime and shrinkage issues. Since 1999 Beck has been an academic advisor to the ECR Community’s Shrinkage and On-shelf Availability Group. He is widely published as well as a frequent speaker at loss prevention conferences in Europe and the US. To read other articles in LP Magazine by Professor Beck, visit LossPreventionMedia.com. Beck can be reached at bna@le.ac.uk.

NOVEMBER–DECEMBER 2016

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CERTIFICATION

Adding Depth to Your Retail Knowledge T

Interview with Tracy Fleming, LPC Tracy Fleming, LPC, is the asset protection strategy manager for Walmart based in Bentonville, Arkansas. Fleming started with Walmart in 1993, worked in operations for several years before transitioning to LP, served as regional AP manager from 2001 to 2015, and then moved to the current position. Fleming has a bachelor’s in criminal justice from Anna Maria College in Paxton, Massachusetts.

his is another in a series of interviews with working LP professionals who have earned their LPQ or LPC certifications from the Loss Prevention Foundation (LPF). Hear in their own words why they pursued certification and how it benefited their careers.

There wasn’t any one specific thing that was eye-opening, but the overall depth and scope of material was impressive. I was surprised by how many topics were covered and the depth at which they were covered.

What benefits have you seen from taking the course? When did you get LPC certified?

I have been able to talk to peers about the benefits of the certification. I also think there is a certain status you enjoy by having a professional, industry-recognized certification.

February 2013.

Why did you decide to pursue certification? Was there something specific that influenced your decision?

If you could offer one key takeaway to someone currently considering getting certified, what would it be?

Getting a professional certification in your chosen field is always a benefit. It helps keep you up-to-date on what is going on in loss prevention, helps with networking, and fosters an understanding that you take your professional development seriously.

The amount of knowledge you gain by getting the certification is well worth the time spent on the process itself.

Do you think getting certified will help make you a better LP professional?

Was the course what you expected?

I do. I think it is helpful in networking, as well as resume building. You may have a leg up on the job competition by having a professional certification that your job competitors may not have.

I was surprised by the depth and breadth of material. Quite frankly, I was expecting to read a few paragraphs on a topic, answer a couple of questions, and that was it. The scope of the topics and the detail was quite surprising.

Would you recommend certification to others? Certainly. The material is applicable, and a professional certification is a benefit in enhancing your skills at your job, as well your future career aspirations.

Tell us more about the process of going through the courses and taking the exam. I found that the easiest way for me to go through the material and compile my notes was to dedicate a specific amount of time each week to read sections and take the quizzes. I generally spent the last thirty minutes of the work week to complete sections. With so much going on from a work/life balance standpoint, having a dedicated time to work on my certification worked for me.

Is there anything else that you would like to share regarding the learning experience? Dedicating specific time to go through the material, rather than rushing through to meet a deadline or putting it off, was extremely beneficial to me. I was able to absorb the material without worrying about running out of time before I took the final exam. Also, for those going through the certification process, take good notes.

Looking at your own personal development, what information within the course helped you the most?

Newly Certified

There are certain topics that I have not delved deeply into—pharmacy and logistics, for example. And the certification process allowed for an increased understanding of those pieces of the business.

Following are individuals who recently earned their certifications.

Recent LPC Recipients Nathan Bradfield, LPC, CFI, Lowe’s Angela Branstrom, LPC, Walgreens Shannon Clausen, LPC, Lowe’s

What was the most eye-opening information that was part of the curriculum? 24

NOVEMBER–DECEMBER 2016

LOSSPREVENTIONMEDIA.COM

Mark Conachen, LPC, Rent-A-Center Justin Dietel, LPC, ShopRite Kenneth Edwards, LPC, Lowe’s Steven Farmer, LPC, Walmart Stores Craig Gassert, LPC, Lowe’s Brian Gross, LPC, Kmart Gary Holland, LPC, Lowe’s Lisa Kane, LPC, Sears Holdings Scott Ketelhut, LPC, New York & Company Randy Lima, LPC, CFI, CFE, CORCI Anthony Maddox, LPC, CFI, Hibbett Sporting Goods Harold McIntyre, LPC, CFI, Bloomingdale’s James Perillo, III, LPC, Sears Holdings Aaron Pisors, LPC, Sears Holdings Joshua Power, LPC, Goodwill Industries of Seattle David Rivera-Santiago, LPC Brigham Roberts, LPC, Lowe’s Dustin Ross, LPC, Walgreens James Runyon, LPC, Lowe’s Robert Seibel, LPC, Lowe’s Kevin Shaw, LPC Duane Smith, LPC, Sears Holdings Rocco Speziale, LPC, Sears Holdings Robert Thompson, LPC, CFI, HomeGoods Matthew Trader, LPC, Weis Markets Paul Tucker, LPC CFI, Lowe’s David Valentine, LPC, Walgreens Michael Young, LPC, Belk Department Stores

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The Analytics Ecosystem © Verisk Analytics, Inc. 2016 Verisk Retail is a Verisk Analytics Business

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INTERVIEW

BUILDING AN LP DEPARTMENT FOCUSED ON PEOPLE A CONVERSATION WITH DAVID SHUGAN OF CARTER’S By James Lee, LPC, Executive Editor

INTERVIEW EDITOR’S NOTE: David Shugan, CFI, is the senior director of loss prevention for Carter’s based in Atlanta. Prior to taking over the leadership role at Carter’s, he was manager of investigations at Cracker Barrel Old Country Store. Before that he held LP management positions with Pacific Sunwear and Chernin’s Shoes. Shugan was honored in the Top 20 Under 40 list in 2009 by Security Director News. He is on the National Retail Federation (NRF) LP Advisory Council and is a frequent speaker at the NRF annual conference. EDITOR: For those who may not know, tell us about Carter’s. SHUGAN: Carter’s is a children’s clothing

company that has been around since Abraham Lincoln was president. We celebrated our 150th anniversary last year. We are a company that believes in giving our customers the top quality in children’s wear. We joke about it with each other, but here’s the reality—I wore it as a baby, you probably wore it as a baby, our grandparents wore it as babies, and here it is generation after generation still the most recognizable brand in children’s apparel. Carter’s and OshKosh are just iconic. EDITOR: Is that OshKosh B’Gosh? SHUGAN: That’s right. Carter’s bought

OshKosh about eleven years ago. Before that, Carter’s Retail Inc. was primarily a wholesale company that had an outlet mall presence. They had maybe a couple of hundred stores. About nine years ago they expanded their retail strategy as the outlets were doing impressive business, so they saw an opportunity to grow. That’s when they started moving into more conventional retail outside of the outlet arena. EDITOR: And how many stores do you have today? SHUGAN: We are currently at about 900

stores in the US and about 170 stores in Canada. But wholesale is still a huge part of what we do. Our clothing is sold by a number of name-brand retailers in about 100 different countries and in over 17,000 points of distribution worldwide. EDITOR: What does a Carter’s store look like? SHUGAN: There are a couple of different

models. A typical Carter’s store will be about 4,000 square feet and merchandised from infant to size eight. An OshKosh stand-alone store will look similar, but stocks apparel in sizes from infant to size fourteen. So when we look at it in terms

of age ranges, Carter’s is from birth until about school age, and OshKosh extends until about middle school ages. About four years ago, we opened up the first of what we call the side-by-side model, which was having a Carter’s and an OshKosh store right beside each other. But you had to leave one store to go into the other. Then in one New Jersey store, we piloted the new concept where we literally cut a hole through the wall. This allows mom to shop in Carter’s, pass into OshKosh, and check out on either side. That model has grown rapidly, and now we have approximately 150 of these side-by-side locations. Our newest model, of which we have about a half dozen, is what we’re calling a shop-within-a-shop. There’s one front door, with Carter’s in the front and OshKosh in the back. We have both brands, our best outfits, our best looks, all in one store. EDITOR: When did you first get involved with Carter’s? SHUGAN: May 2008. From day one,

I have reported into our senior vice president of operations, George Kingsmill. About six months after he joined the company, I joined the organization to create our LP department. Shrink was a concerning factor, and George had the foresight to begin a department early and prior to expansion of stores to ensure a culture was created from day one. As we all know, if you have internal theft, external theft, or operational issues and that product is not there, your customers get frustrated and may not return. So the opportunity to improve the experience for the shopper, for the mom, and also control shrink along the way was our main concern from the start. I want to add that working with George has been gift. He has taught me to be a corporate leader. He has trusted me, from day one, to create, build, and lead a team that has created a culture that grows sales and reduces shrink through

NOVEMBER–DECEMBER 2016

partnership. He leads with respect and challenges with professionalism. EDITOR: So you started the program from the beginning? SHUGAN: Yes. On day one it was just

me, myself, and I. But as we grew from a couple hundred stores to over a thousand stores, the loss prevention department has expanded to include six regional loss prevention managers who manage about 150 stores each (John Mattera, Matt Rowland, Heidi Haugh, Grace Latour, Eric Koopmeiners, and Andy Palomino), three fraud analysts (Josh Hamilton, Keri McCulty, and Spencer Smith), our Canadian LP manager (Roma Daigle), and distribution LP and safety manager (Tom Davis). EDITOR: Eight years later, what expectations do your boss and the company have of you and your team? SHUGAN: From the loss prevention

standpoint, I’ve always been about sales first and shrink second. I also want to ensure the environment is customer friendly. We are very pro-sales, pro-marketing, pro-visual, pro-real estate. And if we get the buy-in of all our sales associates and our management team, it allows us to create an environment where the customer comes in and simply enjoys the experience. To me, this is the formula for success. The great thing about being in the children’s apparel business—and I see this so often—is that there may be a grandmother coming in to buy that outfit she’s going to take with her when she meets her grandchild for the very first time. Or a mom who’s late in her pregnancy coming in to shop because she wants to pick out that outfit to bring her baby home from the hospital in. It’s just exciting; it’s a real treat. One thing for sure—you have to love kids to be in this business. We create an environment that gets a mom excited when she comes in. We’re excited to see her and want to help her. And one of the ways we help her is doing everything we can to ensure the product is in stock, it’s where it should be, and it’s readily available. And of course we make sure it’s at a great price, so the lower

LOSSPREVENTIONMEDIA.COM

INTERVIEW

we keep our shrink numbers, the better the value is for the customer, and most importantly the better the experience. EDITOR: So is shrink your team’s predominant objective? SHUGAN: That’s the true measurement, I

believe, of any loss prevention department, and certainly that is the case here. But the mindset for the team is to be in the stores to train and educate our associates on how to increase the profitability of our business. I need the team to understand what the blueprint of the store should look like, where the product should be merchandised, and what current sales promotions are available to our customers. In addition,

are the marketing signs correct? Are the floors clean? Because if we do these things correctly, we know shrink declines organically. At the end of the day, we do have employees doing things that they shouldn’t. And we have customers doing things that we don’t want them to do, and we certainly make that a high priority from an analytical standpoint and from a field perspective. EDITOR: What processes or programs have you implemented that you’ve seen success with? SHUGAN: We focus on proactive

programs and have several programs here LP MAGAZINE | NOVEMBER–DECEMBER 2016

that achieve that approach. I use the phrase “loss prevention” with its literal meaning in mind, which is to prevent loss versus being a loss-reactive department. One example: we created a program here several years ago called “LP EveryDay.” The team calls thirty stores every single week—five per region—and we ask them an LP trivia question. Only sales associates are allowed to participate. We post the trivia question and the answers in our weekly newsletter that goes out through our communication department. So this is an open book test. We ask them things like: Do you know what your shrink is? Do you know what our LP program model is? Do you know what is your

INTERVIEW In addition, we have our LP function review, which is our view to ensure compliance. This allows our field teams to go in and interact with all levels of employees from sales associate to store manager. A few other mainstays that we have include a high-shrink focus program, an employee hotline to report concerns, an employee-driven LP calendar, and LP tips and topics of the week. As I mentioned, one of our exciting programs is our loss prevention calendar. We ask for submissions of original artwork that is LP thought provoking. We have a committee that votes on them, and then we create a calendar for the stores that they can use whether it’s to mark time off, celebrations, birthdays, or other things going on in their locations. They’re just simple reminders that LP also drives their business in-store. EDITOR: Have you implemented any new technology programs? SHUGAN: During the first few years, like

The team calls thirty stores every single week—five per region—and we ask them an LP trivia question. Only sales associates are allowed to participate. If they get it right, they get entered in a drawing to win a gift card at the end of the month. If they get it wrong, we have that opportunity to train them. But they get excited when they’re called; it’s almost like a call-in radio show. store’s highest-shrink item? If they get it right, they get entered in a drawing to win a gift card at the end of the month. If they get it wrong, we have that opportunity to train them. But they get excited when

they’re called; it’s almost like a call-in radio show. The following month, we print the winners in our communications newsletter. It’s a way to keep LP alive and breathing every single day.

NOVEMBER–DECEMBER 2016

many new departments, we focused on the low-hanging fruit. About four years ago we decided we wanted to create a predictive shrink model. I always had the notion that if we look at the highest-shrink stores, there probably was a common denominator in the cause of shrink. Whether it’s shrink, customer complaints, payroll control, square footage, demographic, or geographic factors, there should be some type of common denominator. My opportunity was trying to move from a white-board idea to a working model. Fast forward: this led to our hiring of our LP fraud analyst, Josh Hamilton. Today, we have a program called CAPS—Carter’s Application for Predicting Shrink. We run a predictive pool with over 400 variables that assists us in identifying shrink before it happens. You’ve probably heard Jeff Foxworthy’s bit about you might be a redneck. Well, here we say you might have a shrink problem if…you’re getting a large amount of consumer complaints…you have an inability to control payroll…you’re not spending your payroll effectively, which means you have leftover income on the floor. These examples can mean you have a lack of discipline, and if you have a lack of discipline, you may have a shrink problem.

LOSSPREVENTIONMEDIA.COM

INTERVIEW So there are many “ifs” that you can have, and CAPS allows us to analyze those “ifs” to see a shrink problem before it occurs. That allows us to be much more strategic and laser-focused in our approach to reducing shrink and more financially responsible in travel. As I mentioned, we have six regional prevention managers with around 150 stores each, and with the shift in retail from brick-and-mortar to e-commerce, our travel needs to be very strategic. No longer is it about going to visit a district or a market or a store just because it’s on the list and we haven’t been there in a while. Now if our CAPS program is predicting shrink in a specific market, we can go there and hopefully attack the shrink before it ever happens based on the variables that our predictive model has shown.

felt we could invest differently. From a CCTV standpoint, we’ve grown our CCTV substantially. This investment has been made for a couple of reasons—certainly from a shrink perspective, but also from a safety standpoint. EDITOR: Do you have any direct safety responsibilities in the company? SHUGAN: Safety responsibilities fall under

everyone’s umbrella. We have a very strong partnership with our risk management and human resources departments. We do a very good job of educating our employees, whether it’s with ladder safety, heavy-lifting safety, and everything from changing out lightbulbs to changing outfits on a mannequin.

EDITOR: Do you utilize any EAS or CCTV analytics? SHUGAN: Yes to CCTV and no to EAS.

EDITOR: Does Carter’s see much in the way of ORC (organized retail crime) activity? SHUGAN: Remember that I joined in May

When we acquired OshKosh, they were an EAS company. However, when we started loss prevention, we reviewed the ROI and

2008, and just to put that in perspective, that coincided with the real estate and financial crash that precipitated the

LP MAGAZINE | NOVEMBER–DECEMBER 2016

recession. During that timeframe, one thing became very clear—moms and dads may slow down on purchasing for themselves, but when it comes to their children, they don’t hold back. Due to that, baby clothes are a high-theft target for organized retail crime. Our merchandise is small, easy to conceal, and has high resell value. You don’t need a lot of market space or real estate if you’re going to fence it, whether it’s at a flea market or online. So, yes, we do see ORC activity. EDITOR: How much has your company jumped into the e-commerce side of the business, and what role do you play? SHUGAN: When I first started here,

we didn’t have an e-commerce presence. However, approximately five years ago we launched Carters.com and OshKosh.com, both of which took off at an incredible rate and continue to be a big part of our world and the entire retail landscape. My team does partner with our e-commerce group on fraud awareness and opportunities. We discuss the programs

INTERVIEW

Safety responsibilities fall under everyone’s umbrella. We have a very strong partnership with our risk management and human resources departments. We

do a very good job of educating our employees, whether it’s with ladder safety, heavy-lifting safety, and everything from changing out lightbulbs to changing outfits on a mannequin. on a regular basis, and we recently hired our first e-commerce fraud analyst. Along the way we’ve also created an in-store loyalty program, which has allowed for amazing value for the customer. But from the LP department standpoint, it has also created new opportunity when it comes to loyalty fraud. EDITOR: You’ve done a lot since 2008. How important is it to have a so-called seat at the table when it comes to getting things done? SHUGAN: I think one of the reasons

our department has been successful is that I have had a seat at the table from day one. As I mentioned, I report into the operations department, which has allowed avenues to being a true business partner at the table and presenting value to address opportunities. Our executive leadership team is very pro loss prevention. As always, you need to be strategic in your business case and have a reason to do something to create value. We meet on a weekly basis with our visual teams, our merchandisers, and the merchants. We have once-a-month meetings with our real estate team to

look at new opportunities for storefronts. Loss prevention is involved in that store-selection process. So whether it’s marketing, visual, real estate, HR, finance, or inventory control—loss prevention is a business partner. EDITOR: If a peer in the industry asked you to tell them how to get a seat at the table, what would you say? SHUGAN: First of all, don’t go in on day

one asking for everything. Get some small victories under your belt to build trust and confidence. I still remember a conversation I had after I was about ninety days in position. I sat with our president who asked me to give him a list of ten things that I would like to get accomplished. I put together, in my opinion, a great presentation, and it was very well received. Then he said, “Now, if you were to break this down, what are the top five most important things?” So I picked five, but I didn’t see where he was headed. Then he asked, “If you had to pick just three things from those five, what would you want to do?” So I picked out my top three. It was at

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that point I realized what he had in mind as he said, “Alright, cross off the other seven, go fix those three things, and let me know when you’re done.” That allowed me to have some early wins. After those early wins, I was able to return to the leadership table and present additional opportunities, and the team had confidence in my approach. So my message is don’t go out and try to fix everything on day one. Get small wins to build confidence and trust in your business partners. Allow things to happen organically. And lastly, don’t try to play in peoples’ sandboxes that you don’t need to be involved in. EDITOR: Let’s shift gears and talk about how your loss prevention career started. SHUGAN: Back in the early ‘90s, I was

shopping for shoes at a shoe store in Chicago. I happened to see a want ad in the back of the store for an internal auditor. At the time my background was more financial, and I was looking to do something in the mathematics world. However, I saw this opportunity and spoke to the store manager. Unbeknownst

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INTERVIEW to me, the company was utilizing Wicklander-Zulawski (WZ) as consultants. From what I recall, part of their services back in the early ‘90s was providing loss prevention consulting for retailers. Doug Wicklander and Dave Zulawski made the recommendation to Chernin’s Shoes that they needed an internal person, and I was lucky enough to get the job. This was an hourly position in Chicago, and my job was to be an internal auditor and review exception reports. Now keep in mind, this was back before there were computers. Somewhat early in my tenure, and being curious I asked, “When I find something that doesn’t make sense, what do you do with it?” My partner from WZ was Wayne Hoover. Wayne probably explained how he would investigate the matter. When I requested to tag along and after watching some investigations, I realized that I had more interest to be in the field than always behind a desk. So I attended multiple WZ seminars and learned how to conduct proper interviews. Over the years, I am very proud of the fact that I was personally trained in every facet of loss

prevention from audit to being in the field to interviewing and collecting a statement to civil recovery by the team at WZ, for which I am forever grateful. For that matter, I would like to thank Doug, Dave, Wayne, Shane Sturman, and others for what they provided me from a professional standpoint and for our friendships today. I spent about eight years at Chernin’s and went from internal auditor to their director of loss prevention. Unfortunately, after almost 100 years in business, Chernin’s went out of business. This provided me an opportunity to expand my knowledge and perspective into mall-based retail loss prevention. That is when I joined Pacific Sunwear as their mid-west regional loss prevention manager. In August 2000, I joined Cracker Barrel Old Country Stores. Cracker Barrel was just starting their LP program, and I was very excited to be part of a department led by Joe Hardman. That’s what really propelled my career in loss prevention— being mentored by Joe. Approximately one year after I began my career at Cracker Barrel, he presented me the opportunity to

be the manager of investigations and lead the field team. When I left Cracker Barrel after an amazing eight years, we had built an entire loss prevention program that was involved with not only retail shrink but also restaurant food costs. Joe has taught me that people are the business. Early on in loss prevention, I think it’s easy to get a mentality of cops and robbers. But in order to be successful today, it has to be about the people. And Joe taught me how to network, how to respond, how to write thank-you notes, how to present, and how to be a leader both in the field and in the office. He not only taught me a great deal about loss prevention, but more importantly taught me how to be a good person. Joe is a true gentleman, a loving husband, and an amazing father. The opportunity he gave me to balance work-life with family is something I’ll never forget and will always appreciate. EDITOR: What have you enjoyed most about your career in loss prevention?

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LP MAGAZINE | NOVEMBER–DECEMBER 2016

INTERVIEW

We joke about it with each other, but here’s the reality—I wore it as a baby, you probably wore it as a baby, our grandparents wore it as babies, and here it is generation after generation still the most recognizable brand in children’s apparel. Carter’s and OshKosh are just iconic. SHUGAN: This is going to sound goofy,

but I’ve always had the idea of just wanting to make people better than they are today. One of my goals in life has been to help people. My extracurricular activity through most of my adult life and when my kids were young was coaching. Whether it was a coach on the football field, the baseball field, the basketball court, even soccer. I love making people realize that they can do more. I’ve taken that same approach in loss prevention. Whether I’m interviewing a district manager candidate to join our company or doing an interview for fraudulent activity, my goal at the end of the day is to shake the person’s hand—to shake the hand of the candidate who came in for a position or of the employee I just interviewed for retail theft whom I may have already called the police on. It’s just helping them get to wherever they want to get. The reality is that none of us are perfect, and we all make mistakes, but those mistakes don’t have to define us. What can define us is what we do with them. So I take a tremendous amount of pride in helping people, in making a difference. And to make a difference, you have to be willing to share—whether it’s making a difference in someone’s life to get them to where they want to go or making a difference in the LP industry through a presentation, a connection, or a committee. For example, since we created our predictive analytical model, we’ve had three companies come to us curious about it how to create a similar program. Now,

some of our results from the model may be confidential, but the process and how we accomplished it, I’m more than willing to show anyone because I want them to win, so we can win together. We don’t need to be recirculating the bad actors out there. We need to be working together to prevent those things from happening again. EDITOR: From a hiring perspective, what have you learned from building your team? SHUGAN: I believe that when you hire

someone, it’s got to be someone whom you can enjoy working with. I don’t need the best investigator. I don’t need the best analyst. What I do need is someone who is part of a team. Maybe it’s the coach in me, but I could have the best player in the world on my team, but if he doesn’t get along with his teammates, our team will not be successful. The team I have here is one of the best teams I’ve ever been a part of. We work very well together, we laugh together, and we have fun together. They are people I hang out with outside the workplace. The big thing is we trust each other. Also, I try to hire people smarter than me. I know what my limitations are. I know what I can and can’t do. I’ve never been afraid to hire somebody who can do more than I can. Like I said, my job is to help people get to where they want to go. If one of my regionals want to be a director someday, then I’m going to do everything I can to help him or her become a director. And in the eight-plus years I’ve been at Carter’s, two of my regionals have gone on

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to become directors. Those are the things that I’m proud of. I hated losing them, but I’m much prouder of what they’ve become and what my team continues to accomplish. EDITOR: Where do you see yourself in five, ten, or fifteen years? SHUGAN: I want to make the loss

prevention industry even more desirable. I recently had the opportunity to join the NRF Loss Prevention Advisory Council. I think we need to start seeing the future of LP with a much broader lens than we see it currently. I think there’s a great opportunity to use new technologies to help the industry. I want to create more windows and doors for networking. I think there is still a huge opportunity to get people involved (and share information) in the industry. Mainly I just want to make a difference in the LP world, and I truly believe this is an amazing profession—one that is evolving and changing. Who knows where brick and mortar will be five or ten years from now. I believe there’s an opportunity to take advantage of technology, increase partnership, and share data so that no matter where retail goes, loss prevention will be ready for it. Over the years, I have been able to listen, learn, and partner with some incredible industry leaders who have not only mentored me but also changed the landscape of loss prevention—from Joe LaRocca who has mentored me more than I can express gratitude to Walter Palmer who has guided me through some career challenges. We need to pay it forward and help others.

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SUPPLY CHAIN

Supply Chain’s New BFF—The Omni-channel Experience W

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

leading companies are developing business models that focus on maximizing customer satisfaction by achieving an optimal balance between performance (accurate fulfillment), cost (minimizing transportation expense), and risk (providing safe, uninterrupted transport and brand-positive products). Companies may source from new suppliers as a stop-gap measure when facing supply shortages and may inadvertently expedite products of inferior quality, thereby increasing the risk of product returns even though cost and service objectives may have been met. Brand reputation risks, recall costs, and any additional regulatory scrutiny would likely outweigh any benefits derived from the product sales. Assuring the supply of goods entails far more than providing the correct products at the right time via the requested channel at the desired margins. Identifying, assessing, and managing strategic risks that can disrupt your supply chain and erode consumer (not just customer) trust in your brand are critical components of an omni-channel strategy. Developing a supply-chain risk-management program that incorporates the use of supply-chain network optimization and risk-quantification techniques will assist in designing an optimal omni-channel supply chain that balances cost, performance, and risk.

ith the growing significance of digital advertising and the advent of viewer customization and data mining, marketing to the same person in multiple touch points is a must for businesses today. While almost all of the tech-savvy retailers have decided to embrace multi-channel marketing, few take full advantage of the specific characteristics of each channel and the interaction between them. In our world of supply-chain asset protection (SCAP), the tentacles continue to extend outwardly. What we call “omni-channel” marketing is known for creating a consistent, interdependent customer experience across several channels. It is what every company aiming to succeed in an omni-channel world should strive to achieve. Each channel must be able to meet the customer demand and be cost-effective, and so should the SCAP program. Nevertheless, one can venture into some particular channels so that overall customer/consumer experience can improve. Increased pressure from the pure online retailers have made traditional brick-and-mortar businesses fashion strategies to retain market share without minding the cost implications and how it will affect their day-to-day activities.

Supply-Chain Risk-Management Program A supply-chain asset protection and risk-management program should include mitigation plans that help decrease the severity of supply disruptions throughout the value chain and provide the analytical insights required to develop a flexible supply chain to support each 24/7 channel. A supply-chain network design that doesn’t take into consideration assurance of supply strategic risks will be considered sub-optimal and can result in: ■ Excessive safety stock resulting in potential obsolescence, additional carrying costs, and sub-optimal use of working capital. ■ Over-reliance on costly airfreight logistics due to lack of flexible demand fulfillment. ■ Inefficient use of resources or capital applied toward one channel over another. ■ Supply disruptions of longer duration or severity. ■ Loss of sales (order cancellations) or increased cost of sales (expediting orders). ■ Damage to brand reputation resulting from unsatisfied customers. ■ Excessive spend of human capital and variable expense resources. ■ The ability to manage performance, cost, and risk becoming ever more complex as omni-channel businesses strive to meet the expectations of the modern consumer.

Priority of the Omni-channel Strategy Regardless of the reasons, customer satisfaction and increased sales remain key priorities. It can only be achieved through a properly designed supply chain that mitigates disruption risks and allows the sufficient flow of supply to meet demand. As a result,

The recommended approach is to embrace the new reality of omni-channel while also investing in more in-depth analysis on consumer demand and aligning supply-chain asset protection objectives with corporate strategy to create a competitive advantage. 36

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continued on page 38 |

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average customer, which is someone who frequently uses and views multiple forms of media digitally and in person. Sold, foundational multi-channel tactics include: ■ Using the media channels most appropriate to the target demographic. ■ Leveraging the unique attributes of different digital and print advertisements. ■ Tracking sales and leads through surveys and visitor statistics. ■ Placing both informative content and persuasive advertisements strategically. ■ Understanding the purpose and utility of each channel—some may lead directly to purchases, while others will persuade customers to visit other channels before they buy. Retailers can build upon these tactics with the following omni-channel strategies to better leverage the channels they have created and provide a more consistent customer experience: ■ Create continuity between standard and mobile websites. For example, use a login system that saves viewers’ carts and recently viewed items, so they can view those same items on their phones when they visit your stores in person. ■ Consistently advertise the same sales and specials at the same time in newsletters, on websites, and in stores. Customers may be more likely to make a purchase if they’ve seen one ad several times, rather than several different ads for different products or services. Use consistent phrasing or even identical copy when communicating the attributes of your brand. ■ Allow for online ordering and in-store pickup via multiple digital channels, and use similar interfaces for each one. You will eliminate a great deal of learning and decision-making challenge from the purchasing process, making it more likely for your existing customers to keep buying. Generally, the primary purpose of employing omni-channel tactics is to make it seem as if one person or brand is working as an individual with each customer. Comparing it to an uncoordinated multi-channel and disparate approach, this is a strategy that will surely give the present and prospective customers a connection that is highly interactive with your company or brand. Clearly the moving parts and pieces are almost one to the supply-chain asset protection professional. It is in our best interest to align with the merchant group and most importantly tie in the marketing data scientists who have access to the data that allows our area to thrive and catapult past the horizon of the shoplifter or dishonest employee. We need to see what they see and plan by channel a strategic, layered program that feels “marketing-esque” but is SCAP through-and-through.

The evolution of omni-channel shopping is having a significant impact on how supply chains are designed, driving a greater need to understand cost-to-serve and to protect margin erosion as channels and SKU assortments increase. Demand fluctuations during seasonal peak or promotional periods are particularly challenging and taxing on supply chains, requiring networks to be designed with greater flexibility and control. It is my humble opinion that consumer businesses should place an increased focus on transforming supply-chain networks to align with their omni-channel strategies. The harsh reality is that omni-channel is rapidly moving away from something to be considered to being a must-have for surviving and thriving businesses. The recommended approach is to embrace the new reality of omni-channel while also investing in more in-depth analysis on consumer demand and aligning supply-chain asset protection objectives with corporate strategy to create a competitive advantage.

Differences between Multi-channel and Omni-channel Marketing The differences between multi-channel and omni-channel marketing are subtle, and the two strategies often overlap. But understanding their benefits is crucial for businesses looking to stand out in an economy in which customers are constantly bombarded with ads. Here are a few of the most important purposes and tactics of multi-channel and omni-channel marketing, as well as examples of companies successfully reaching customers through a variety of media. Goals and Purposes. In simple terms, the purpose of multi-channel marketing is to reach customers through a variety of means, both digital and physical, including in-store advertisements, websites, fliers, email newsletters, mobile apps, and more. Most customers require multiple touch points with a brand before they’ll consider making a purchase. And the more avenues you use to reach them, the better. Done properly, multi-channel marketing also leverages the unique attributes of each type of communication—a particularly important step for the digital channels today. For instance, websites accessed via laptops, tablets, and other large-screen formats might be more content-rich and allow for more exploration of a brand’s content and offerings, while simpler, uncluttered mobile sites may allow for swiping, pinch-zooming, and other touchscreen-enabled features. Even when leveraging all of these unique features, retailers often fail to create a consistent experience throughout multiple channels. This is where omni-channel marketing comes into play. Instead of displaying different ads in their newsletters, on their websites, and in their stores, for instance, retailers with effective omni-channel strategies will send identical or complementary messages across each channel. This approach allows for more consistent branding and personalized communication with each customer. Strategy and Tactics. The overarching goal of both multi-channel and omni-channel marketing is to create a better customer experience that leads to greater brand loyalty and a higher likelihood of purchases. A solid multi-channel strategy can go a long way in accomplishing this goal. An omni-channel approach will build upon that strategy to create a more cohesive, continuous experience for the

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A Renaissance for LP Professionals The renaissance continues for the supply-chain asset protection professional. As I see it, years ago, I would not have seen or understood the layers of multi-channel outlined, let alone the phrase “omni-channel retailing.” Today, there is a great deal of zeal when approached by non-operators asking the supply-chain asset protection professional to contribute to the risk mitigation plans for the next phase of the consumer omni experience. It sure feels as though the best is yet to come. |

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FEATURE

PREDICTIVE DATA ANALYTICS UNTANGLING INVENTORY VARIANCE TO IDENTIFY FRAUD AT 7-ELEVEN By Ben Grisz, Alexandria Nguyen, Molly Wolfe, and Michael Zhang

PREDICTIVE DATA ANALYTICS

n the 2015 US Retail Fraud Survey, retailers across the country identified analytics and monitoring as the number one area of need. With the average US retailer experiencing shrinkage at a level comprising 1.3 percent of total sales (resulting in an annual $60 billion loss industry-wide), it’s no wonder that businesses are looking to analytics and big data to help limit this loss. Given this increased focus on analytics, for the 2016 Retail Industry Leaders Association (RILA) Asset Protection Conference, 7-Eleven partnered with the University of Texas Master of Science in Business Analytics (MSBA) program to better understand the relationship between inventory loss and fraudulent activity. Over the course of four months, our student group worked closely with asset protection experts at 7-Eleven to better understand the intricacies of the business model, formulate hypotheses about store-level fraudulent activity, and evaluate findings from the data analysis to make business recommendations.

Exploratory Research First, we knew we needed to gain a solid understanding of 7-Eleven’s business before we could use analytics to identify fraudulent activity. After several visits to different 7-Eleven stores to observe inventory audits and perform cycle counts, we discussed the data available to us for analysis with our mentors at 7-Eleven. 7-Eleven currently uses sales reducing activity (SRA) levels as an identifier for fraud. SRA covers a wide range of store activities that are a part of the standard business operations for a 7-Eleven store, including aborts, item voids, price overrides, transactions with discounts, and so forth. While many of the occurrences of these SRA are not tied to fraudulent activity, a store with abnormally high levels of SRA indicates that certain transactions are being misused and abused at that store. Next, we wanted to collaborate with our mentors at 7-Eleven to come up with hypotheses about how

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different fraudulent activities could be reflected in the data. Besides SRA, what other metrics could we look at to identify fraud? Through our discussions, we determined that inventory variation and cash purchases could both be used as fraud indicators. Inventory variation is the periodic difference between the book value of inventory and the actual value of inventory in the store. Inventory shortages (negative inventory variations) can be due to fraud. Cash purchases are inventory purchases by a 7-Eleven franchise on products outside of the standard 7-Eleven assortment. They allow a franchise store to personalize its inventory assortment to its local market. For example, a 7-Eleven store located near the University of Texas at Austin campus may decide to stock University of Texas sports apparel. Because of this unique business model, cash purchases can be used to commit fraud. For example, a franchisee may

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PREDICTIVE DATA ANALYTICS

% leave gross profit off the books by underreporting or not reporting at all certain cash purchases. Additionally, because franchisees bear the full burden of inventory shortages, they can commit fraud by covering up inventory shortages with misreported cash purchases. However, it is important to note that similar to SRA, not all instances of inventory variation and cash purchases are a result of fraud.

Figure 1

Transform and merge data sets

Approach Because not all SRA, inventory variation, and cash purchases are tied to fraudulent activity, we needed to take a methodical approach to untangle the complexities of the problem and better understand how all of these factors interrelate. Most importantly, we wanted to ensure that the results of our analysis made sense within the context of the business. Specifically, we wanted to filter and hone in on the instances of inventory variation that are caused by fraudulent SRA and the associated cash purchases used to cover them up. To do this, we transformed and merged multiple data sets from 7-Eleven that contained two years of financial and SRA data for stores located in the Texas market. Financial data included store-level sales, profits, inventory levels, cash purchases, and so forth on a monthly basis. SRA data included store-level counts of sales reducing activities, the dollar values associated with these transactions, and the percent of total transactions for each SRA. In total, this amounted to over two million data points. Using techniques such as LASSO and logistic regression in R and Python, we explored the relationship between SRA, inventory variation, and cash purchases and their effects on sales and profitability (see figure 1). Then, we visualized our results using Tableau.

Build regression models

Determine significant factors

Analyze results

Findings First, we wanted to quantify the financial impact of fraudulent activity LP MAGAZINE | NOVEMBER–DECEMBER 2016

on the profitability of 7-Eleven stores. Next, we wanted to untangle the relationship between SRA and inventory variation. Specifically, we aimed to separate the seventy different SRA measures into significant and not significant factors in terms of their correlation with inventory shortage. Using a LASSO (least absolute shrinkage and selection operator) regression, we were able to eliminate factors whose coefficients quickly converged to zero. Out of the original seventy SRA measures, ten were found to be the most important to focus on for identifying fraudulent activity (see figure 2). After looking at the relationship between SRA and inventory variation, we wanted to understand how all of these risk metrics relate to the sales of a 7-Eleven store. In our attempts to model the sales of a 7-Eleven store, we wanted to be sure to include traditional drivers of sales. Based on our exploratory research, we divided these drivers into two categories: store-specific and month-specific characteristics. Store-specific characteristics included things like location, age, and size of the store, as well as whether the store sold gasoline and/or alcohol. For example, take two stores that are identical in every way except one is located at a busy intersection and the other is located in a more remote area. We would expect the sales of the store at the busy intersection to be higher than that of the store in the remote area. Month-specific characteristics included things like seasonality of the business, the economy, weather, and company-wide promotions. For example, we would expect to see the sales of stores to be higher in the months in which the economy is doing well and consumers are spending more. To include all of these sales drivers in our regression model in an efficient way, we used a lagged sales variable to account for store-specific

PREDICTIVE DATA ANALYTICS

Coeffients

Figure 2

Regularization Penalty

Actual Sales

Figure 3

Predicted Sales 42

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PREDICTIVE DATA ANALYTICS

Average Sales Loss

Figure 4

Infrequent but large

Frequent and large

Infrequent and small

Frequent and small

Number of Fraudulant Months characteristics and time dummy variables to account for month-specific characteristics. From our regression modeling exercise, we were able not only to confirm our hypothesis that inventory variation, cash purchases,

and SRA all have negative effects on the overall sales of a 7-Eleven store, but also to quantify exactly how much these risk metrics are correlated with a drop in sales. We felt confident in our findings since the model was able to

predict the sales of a 7-Eleven store on a monthly basis with a 3 percent margin of error (see figure 3). Finally, we shifted our focus to how we could use the analysis to help make business recommendations. Given the fact that 7-Eleven spends a significant amount of time, effort, and money on detecting fraud and taking the appropriate next steps with its asset protection teams, it is important to optimize the AP investment. One way to do this is by prioritizing the fraudulent stores that the 7-Eleven AP teams should pursue. We looked at fraudulent stores in two aspects—the number of months they were believed to have committed fraud and the average associated sales loss when they did commit fraud (see figure 4). When we do this, we see that stores fall into one of three quadrants: ■ Stores that committed fraud infrequently resulting in large sales losses;

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Significance Non-Scanned Refunds Items Voided Scanned Refunds Non-Scanned Sales Aborted Transactions

Figure 5

PLU Lookups Inventory Variation Negative Transactions Cash Purchases Price Overides Penny Rings

S tores that committed fraud infrequently in small amounts; and ■ Stores that committed fraud frequently in small amounts. No stores fell in the quadrant that committed fraud frequently at large levels of sales loss. This exercise clearly shows that 7-Eleven should focus its AP investment on the stores that fall into the first and third quadrants, stores that commit “infrequent but large” fraud and stores that commit “frequent but small” fraud. However, in this case, we are classifying fraudulent stores after the fact. To predict which stores are likely to commit particularly flagrant fraud before they do it, we created a logistic regression model that finds the difference between the stores in the quadrants of interest and the stores ■

not in the quadrants of interest. Using this model, we were able to identify the top predictors for our priority fraudulent stores. These predictors include, unsurprisingly, inventory variation, cash purchases, and a subset of SRA measures. Figure 5 shows these predictors ranked in order of their ability to predict whether a store is likely to partake in particularly costly fraud.

Conclusions By working closely with our mentors at 7-Eleven, our student group was able to leverage big data to find some promising insights into the relationship between inventory loss and fraudulent activity. These insights allowed us to make recommendations on how to prioritize AP spending by

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focusing on the costliest fraudulent activity. As is the case for all types of analysis, it is important to validate our findings with more data. Over the course of four months, our student group gained invaluable experience learning how to tackle a significant business problem outside of the classroom using the business analytics skills acquired from our master’s program. As we move forward in our careers, we take from this project a few important learnings—successful data analysis relies on upfront effort to truly understand the intricacies of the business context, the tight-knit collaboration between analysts and business decision makers, and the creativity and resilience to solve the inevitable data issues that arise.

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PREDICTIVE DATA ANALYTICS

Real-World Experience with Real LP Challenges for these students. In addition to presenting their semester-long capstone project insights—which included applying analytics skills to a data set of over 2 million points of information—the students attended the entire 2016 RILA Asset Protection Conference in April. Top asset protection professionals from retail, including the largest retail chains, met to exhibit, network, and learn with an all-time record attendance of 1,200 participants. The conference provided attendees unprecedented opportunities to connect with peers on the most pressing issues facing the industry today and learn about the innovative technologies transforming asset protection. The Student Mentor Program’s findings were presented to a packed house of highly interested retail asset protection professionals that included numerous inquiries into both the master’s program and how they might go about hiring one of these freshly minted data scientists. Big data and especially the application of prescriptive analytics was a major theme at this year’s RILA conference. The convergence of e-commerce activity and data-driven business decisions is a major challenge of retailers today all over the world. “As a major area of interest by our customers, enterprise asset intelligence is being pioneered by Zebra Technologies in order to help make businesses smarter in this connected world we live in,” said Ed Tonkon. “The partnership with RILA, 7-Eleven, Zebra Retail Solutions, and the students from McCombs enabled the conference participants to see the powerful ability harnessing big data can have on a retailer’s business decision making.”

The Retail Industry Leaders Association (RILA) Student Mentor Program was established to combine skills and insights from academia, a prominent retail chain, and a retail supplier into a semester-long project focusing on a major area of interest for retail loss prevention professionals. For its sixth year, the program focused on various suspected fraudulent activities that occur in 7-Eleven stores and determining their relationship and impact on reducing profit in those stores. Based in Dallas, Texas, 7-Eleven is the world’s largest convenience store. The retail supplier involved this year was Zebra Retail Solutions, a subsidiary of Zebra Technologies. And the academic partner was the Master of Science in Business Analytics (MBSA) program at the University of Texas McCombs School of Business. Individuals involved included: ■ Mark Stinde, Vice President of Loss Prevention, 7-Eleven ■ Davina Stevens, Asset Protection Manager, Analytics, 7-Eleven ■ Brent Smercynski, Corporate Asset Protection Manager, Operations and Investigations, 7-Eleven ■ Art Lazo, Director of Asset Protection, 7-Eleven ■ Ed Tonkon, President, Zebra Retail Solutions ■ Ben Grisz, MBSA student ■ Alexandria Nguyen, MBSA student ■ Molly Wolfe, MBSA student ■ Michael Zhang, MBSA student ■ Lisa LaBruno, Senior Vice President of Retail Operations, RILA ■ Kelly Foelber, Manager of Retail Operations, RILA Michael Hasler, PhD, director of the master’s program at McCombs, has supported the RILA Student Mentor Program for three years. But this year, he made the program a capstone project

BUSINESS ANALYTICS

The authors of this article presented the findings of the study at the 2016 RILA Asset Protection Conference in April. Shown from left are: Davina Stevens, AP manager, analytics, and Brent Smercynski, corporate AP manager, operations and investigations, from 7-Eleven; McCombs masters students Ben Grisz, Michael Zhang, Molly Wolfe, and Alexandria Nguyen; Ed Tonkon, president of Zebra Retail Solutions; and Mark Stinde, vice president of AP, and Art Lazo, director of AP for 7-Eleven.

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PREDICTIVE DATA ANALYTICS

BEN GRISZ is originally from Dallas, Texas. He received his undergraduate degree in economics from Duke University. Prior to joining the Texas Business Analytics program, he pitched in the Washington Nationals’ farm system for three years. At the University of Texas, he has been particularly interested in learning more about the applications of machine learning to complex tasks. After graduation, he is looking forward to joining IBM’s Global Business Services as an analytics consultant.

ALEXANDRIA NGUYEN is originally from Houston, Texas. She received her undergraduate degree in supply-chain management from the University of Houston and then worked in the energy industry overseeing various aspects of the supply chain. At the University of Texas, she has focused on augmenting her supply-chain skills with data analytics and visualization. After graduation, she is excited to join Parallon, a healthcare business services firm, as a financial analyst.

MOLLY WOLFE is originally from Atlanta, Georgia. She received her undergraduate degree in industrial engineering from the Georgia Institute of Technology. Prior to joining the Texas Business Analytics program, she worked as a technology consultant at Accenture. At the University of Texas, she has been particularly interested in social media and marketing analytics, and she looks forward to applying her analytical skills at Home Depot after graduation.

MICHAEL ZHANG is originally from Houston, Texas. He received his undergraduate degree in psychology from Duke University and then worked at Target.com as an inventory-planning analyst and at Olson, an advertising firm, conducting marketing analytics. At the University of Texas, he has been particularly interested in using data to better optimize the consumer experience. After graduation, he is joining McKinsey as a digital and analytics consultant.

Greater Inventory Accuracy and Visibility Helps Retailers Win in the New Omnichannel Landscape On hand inventory accuracy becomes more important than ever before - Zebra can help. For more information, please visit us at www.zebra.com/selfdirectedinventory FULL STORE PHYSICAL INVENTORY SOLUTIONS

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RFID SOLUTIONS 47

FUTURE OF LPVIEWPOINT ACADEMIC

Going Beyond the Gut: Fact-Based Research

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

intelligently than arbitrarily assigning new technology to your top-shortage stores. There are many ways to test a new product to come up with valid conclusions, but it essentially falls into two main categories: pre/post (crossover) testing and comparable-store (parallel) testing. Crossover testing occurs in two time periods—before and after the technology is introduced. This is the most powerful study design because we can see how our metrics change with the introduction of a new technology in a store. Before the tech is installed, we get to see what baseline activity is like for a particular metric, and after the tech is installed we can see its direct impact on our metrics of interest. This also allows us to use significantly smaller sample sizes when compared to a parallel design.

magine starting your day off receiving budget approval for new loss prevention equipment to protect your high-shrink departments in ten different stores. You are thinking of unrolling this technology to other departments based on the performance in shortage reduction, but how do you measure it? Do you measure the stores equally even though there were different starting days for installation? Does the technology perform differently across markets? Across different departments? What measurements will you rely on to assess the technology’s effectiveness? Does it have diminishing effectiveness over time? With ever-increasing justification needed to get diminishing budget allocations, the need grows to properly and accurately quantify the impact of technology and add credibility to future requests. This brings us to today’s topic: fact-based research. As an industry, we are moving away from gut reactions and anecdotal evidence to more scientific approaches, or at least I believe we should be. Understanding the scientific method and designing your own proof of concepts in house will lead you to be better equipped to evaluate products, as well as see where vendor white papers may be fudging the numbers. With information as richly available as it is today, you’d be remiss not to take it into consideration when you calculate a return on investment. With better data, LP practitioners can get a more robust view of where certain technology can be more effective and the financial impact it can have on not just shortage, but also operational and customer experiences as well.

Crossover testing occurs in two time periods—before and after the technology is introduced. This is the most powerful study design because we can see how our metrics change with the introduction of a new technology in a store. The main drawback to this type of design is that it can be a lengthy process to collect information in both periods. Additionally, with this longer timeline, temporal effects may confound your conclusions. The most obvious impact of this effect would be during the holiday season. Did your sales increase due to the new clothing tag allowing for more stock to be available on the shelves, or is it a hot-ticket item? You can compare the results to those from the same period last year for a better comparison since business trends are more similar year to year than month to month.

Testing Methods Consider the use of electronic article surveillance (EAS) tags; it may vary in effectiveness due to the type of theft risk in particular locations. Sure, EAS tags will likely scare off the opportunistic shoplifters, but will it have the same impact on organized retail crime (ORC) offenders? By taking a look at data for your locations, you can invest capital more

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

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

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

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

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

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on investment would mean to our bottom line. As I’ve mentioned previously, you can teach a data scientist about LP with relative ease compared to teaching an LP person data science.

Parallel testing occurs in one time period and compares test stores to untested stores. This allows for a shorter testing period and can help mitigate some of those seasonal effects mentioned before. Again, if we look at a new clothing tag in one store, we can look at the increase in sales and compare that to our control store. However, parallel designs are more subject to external factors that may influence your data. If you have one high-risk store getting a new package wrap and compare it to a similar store that doesn’t have the wrap, there may be major differences between how the stores already protect their packages that could influence the outcome. On top of this, there’s always the Hawthorne effect, where once your store managers realize you are paying extra attention to a particular item, they may go above and beyond to mitigate loss for that item, which impacts all research studies. Did you have to reread those last few paragraphs once or twice to get the gist of it? Designing pilots and testing new technology can be difficult. Thus, there may be a need to bring people on your team who understand the nuances of assessing various treatments in a real-world setting. At my company, we brought on Kyle Grottini, who made sure we could measure a technology’s impact in a scientifically valid manner. This allowed us to predict our shortage reduction and what that return

The Right Personnel As data becomes more omnipresent, having a person on your team who can discuss different methods to leverage available information into business insights is invaluable. In addition to using different data sources, they can also work on data visualization, automated reporting, and dashboards for everyone from store associates to the CEO. Having them focus on the data piece not only provides you with new insights, but also allows them to take an objective look at information that may have been treated subjectively otherwise. Although fact-based research is important, rooting research within the practical constraints of your business will be where people with LP experience can exert some guidance for the data people. Being able to forecast loss is much more powerful than reacting to a year-end inventory. Working with the Loss Prevention Research Council, we consider the role of data in the LP industry in both the LP Innovations Working Group and Data Analytics Working Group. The intertwining of fact-based research, data, and LP is coming at you faster than ever before. Do you have the right people in place to deal with the changing tide?

RETAIL SHOPLIFTING IS INCREASING REALITY AT AN ALARMING RATE

SLOW DOWN THEFT WITH THE SPEED OF SOUND USING SONIQ SONIQ™ protects your store’s bottom line without robbing customers of a pleasant shopping experience.

Learn more about SONIQ™ at www.intelligentlossprevention.com 50

NOVEMBER–DECEMBER 2016

800.747.4665 or 815.877.7041 www.southernimperial.com

LOSSPREVENTIONMEDIA.COM

FEATURE

THE MIDDLE YEARS 2007 THROUGH 2011 By Bill Turner, LPC

FIFTEEN YEARS OF LOSS PREVENTION

elcome to the second of three installments covering the first fifteen years of Loss Prevention magazine. I hope you enjoyed the first part in our September–October issue. We will now look at trends and changes in the industry through the eyes of the magazine beginning in 2007 up through 2011. The final installment will be in the January–February 2017 issue. In it we will cover the most recent years, look at current concerns, review technology advances, and take a look at what the future may hold for the retail LP industry. For this article we will stay with the same format as before and look at changes and developments in the industry focusing on some of the mainstay subjects that have appeared in the magazine over and over again.

Shoplifting and Organized Retail Crime January – Febuary 2007 LPportal.com

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As we saw previously, organized retail crime has been the subject of numerous articles in the magazine. From the cover story by King Rogers in the very first issue through today, ORC continues to be a huge concern to most retailers. A recent 2016 statistic indicated that “professionals” were responsible for 3 percent of all shoplifting and 10 percent of all shoplifting dollar losses. I would bet that most retail loss prevention professionals who regularly deal with ORC would think those statistics are too low. ORC, once again, made the very first cover of the second five years, the January–February issue of 2007. In that

feature article, the first in a two-part series, John Talamo of Limited Brands gave a historical view of the subject. He also talked about ORC in specialty retail and outlined Limited Brands’ strategy to attack it. Talamo concluded his article in the March–April 2007 issue and discussed the training of Limited’s ORC team, investigation strategy and tactics, and partnerships with law enforcement.

In the same issue, Bob DiLonardo talked about the formation of the Law Enforcement Retail Partnership Network (LERPnet). LERPnet was designed to be a national database aimed at fighting ORC and was a combination of the Retail Industry Leaders Association’s (RILA) InfoShare and the National Retail Federation’s (NRF) RLPIN. The FBI also collaborated on the project. The November–December 2007 issue indicated that, according to the 2007 National Retail Security Survey (NRSS), 463,682 shoplifters were arrested in 2006, up 11.2 percent from the prior year. In the January–February 2008 issue, Karl Langhorst called for the need to enact more and stronger legislation to fight

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the growing ORC problem. The feature interview in the next issue, March–April 2008, saw Brad Brekke, then vice president of asset protection at Target, discussing the company’s forensic lab and overall response to ORC. September – October 2008

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ORC

LEGISLATION

Addressing Loss Prevention or Competition Prevention?

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ORC was once again on the cover in the September–October 2008 issue. In that article, Jack Trlica talked about the seven-year lobbying effort that resulted in significant legislation introduced to the US Congress. This legislation was designed to criminalize ORC and associated activities. Articles dedicated to ORC slowed a bit in 2009. But the subject was back again in the January–February 2010 issue where Mike Marquis questioned how to determine the actual dollar loss caused by ORC. He talked about loss number estimates being all over the board, probably the result of how ORC is defined in various places. He then quoted the federal government’s official description of ORC. The March–April 2010 issue featured a discussion on boosters versus fences, their link to ORC, and which is the greatest threat to shrink. The trend of having very few columns or articles dedicated to simple shoplifting continued. But in the July–August 2010 issue, a study at the University of Leicester in the UK was quoted as identifying common characteristics of shoplifters. They were commonly male, unpleasant, anti-social, disorganized, and unreliable. Who knew, right? In a feature article in the January–February 2011 issue, Millie Kresevich discussed the importance of

LOSSPREVENTIONMEDIA.COM

FIFTEEN YEARS OF LOSS PREVENTION partnering with law enforcement to fight ORC and how one of these partnerships helped to dismantle an ORC operation in Florida. In the same issue, RILA’s Lisa LaBruno discussed shoplifting apprehension risks such as malicious prosecution and defamation. She also talked about the importance of individual integrity, restraint, and respect for others. THE VOICE OF LOSS PREVENTION LPportal.com | V10.3 May – June 2011

MAGAZINE

THE EVOLUTION OF DATA SHARING IN RETAIL’S BATTLE AGAINST ORC

Looking back at Hurricane Katrina and re-capping an earthquake in China and the Myanmar Typhoon, the July–August 2008 cover story by Ed Minyard questioned whether retailers were truly ready for the next big disaster and offered tips on how to prepare.

THE CAREER JOURNEY OF JCPENNEY’S STAN WELCH LEVERAGING VIDEO ANALYTICS THROUGHOUT THE ORGANIZATION BE A GREAT WORKPLACE CITIZEN

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The cover story of the May–June 2011 issue written by Jack Trlica once again stressed the importance of data sharing between retailers and law enforcement to fight ORC and the importance of LERPnet in that effort. Flash mobs were described in the July–August 2011 issue as a new and growing trend in retail theft. In the September–October 2011 issue, Bob DiLonardo talked about a recently published book titled The Steal: A Cultural History of Shoplifting by Rachel Shteir. He thought it was well worth the read. The second five years of the magazine’s coverage of ORC and shoplifting closed out with a cover story in the November–December 2011 issue. It talked about the formation of the Los Angeles Area Organized Retail Crimes Association (LAAORCA) resulting from a partnership between retailers and law enforcement and described the success it was having. The menacing shark depicted on the cover was a clever take on the LAAORCA acronym.

Crisis Management

The subject of crisis management got off to a bit of a slow start during the second five years of Loss Prevention magazine. This

January – February 2008 LPportal.com

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is probably attributed to the fact that so much was written about it in the previous five years after 9/11. In the March–April 2007 issue, William Alford discussed the avian flu (bird flu, H5N1) epidemic and questioned whether it was a looming global crisis or another Y2K. At the time, potential death toll estimates totaled almost 1,800,000. Actual death totals recorded worldwide between 2003 LP MAGAZINE | NOVEMBER–DECEMBER 2016

and 2014 totaled only 407 according to the World Health Organization. William didn’t know it at the time, but it turned out to be closer to a Y2K scare.

The next big crisis made the cover of the January–February 2008 issue. It was Wendy’s “finger in the chili” incident. In the article, Chris Manning of Wendy’s detailed how the company managed the crisis step-by-step and discussed the company’s lessons learned. As most will remember, this incident turned out to be a total fraud. The husband and wife perpetrators were both found guilty of grand theft, and each received a prison sentence of more than nine years. Looking back at Hurricane Katrina and re-capping an earthquake in China and the Myanmar Typhoon, the July–August 2008 cover story by Ed Minyard questioned whether retailers were truly ready for the next big disaster and offered tips on how to prepare. Another kind of crisis made the cover of the November–December 2008 issue. This time it was the ongoing economic crisis. In the article, Jack Trlica talked about having to do more with less and gave some statistics coming out of a recent Loss Prevention Research Council (LPRC) meeting survey. Assessing the workplace violence risk to your business was a feature article in the September–October 2009 issue. It discussed risk vulnerability and the potential impact of a major incident on a business. The March–April 2010 issue saw the Food Marketing Institute (FMI) discussing its recently released Supermarket Security and

FIFTEEN YEARS OF LOSS PREVENTION Loss Prevention report, which explored the breadth and sophistication of crisis planning in the industry. In the September–October 2010 issue, Dr. Richard Hollinger of the University of Florida described a workplace violence shooting in Connecticut that killed nine people. He discussed lessons to be learned from that particular incident. He also called for increased attention to the growing workplace violence trend.

The growth of online fraud in Europe and countermeasures to guard against it was the subject of an article in the March–April 2011 issue. It was apparent from the article that online fraud had become a major worldwide issue.

talked about e-commerce risks in an international global economy, including spam, phishing, and examples of data theft. He also described the increasing fraud rates from card-not-present transactions. Further discussion on the prevention of online order fraud occurred in an article from the May–June 2010 issue. The author listed red flags often present in fraudulent online transactions and described each one in detail. Tips on investigating fraudulent online transactions were also included. The growth of online fraud in Europe and countermeasures to guard against it was the subject of an article in the March–April 2011 issue. It was apparent from the article that online fraud had become a major worldwide issue.

The National Retail Security Survey (NRSS) and Employee Theft

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Closing out the crisis management subject for this period was the September– October issue of 2011—ten years after 9/11. In it, many of the loss prevention industry leaders discussed where they were on the morning of 9/11/2001 and their reactions to the tragic events of that day. In the same issue, Jack Trlica discussed the impact of 9/11 on the loss prevention industry ten years later. He talked about everything from business continuity and employee communications to public-private partnerships and travel safety. The final crisis topic discussed in that issue centered on the training of mall security around how to respond to terrorist threats.

Fraud

Fraud, an ongoing major concern of all retailers, got its fair share of coverage in the magazine’s second five years, although seemingly at a reduced pace. One of the first major articles on fraud appeared in the January–February 2009 issue and discussed credit card skimming. In it, Catherine Penizotto from Kmart talked about its definition, the growing problem, where and how it occurs, and its impact on retailers.

MANAGING E-COMMERCE RISK in an Interconnected Global Economy

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She also offered suggestions to protect individuals and businesses from it. The battle against online payment fraud was a feature article in March–April of 2009. It outlined a case study from Urban Outfitters. Various steps to prevent online payment fraud were suggested including examining chargebacks, adjusting thresholds, adopting best practices, and using state-of-the-art technology. The September–October 2009 cover story was written by none other than Tom Ridge, the first Secretary of the Department of Homeland Security. Ridge

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In the second five years of the magazine, just like the first five, Richard Hollinger, PhD, continued writing his column focusing on employee dishonesty and publishing the yearly National Retail Security Survey (NRSS). And the Wicklander-Zulawski team continued to write an interview and interrogation column in every issue. In the January–February issue of 2007, Dr. Hollinger reversed the question of why retail theft is so high and asked, “Why isn’t it higher?” He went on to describe eleven myths that most shoppers and employees think are true. Beliefs such as “most people think they will get caught” and “CCTV cameras really work” made the list. It is very interesting reading. In the July–August 2007 issue, Millie Kresevich was back exploring the theory that a bad corporate culture may be the cause of increased employee dishonesty. She offered tips on creating a culture of integrity and trust. In the November–December 2007 issue, Dr. Hollinger gave an overview of the 2006 NRSS results to which 151 retailers responded. Overall average shrink percentage was reported as being 1.57 percent of sales, down slightly from the 1.59 percent of 2005 but higher than the all-time low of 1.54 percent in 2004. In the 2006 survey, retailers attributed 47 percent of loss to employee theft and 32 percent to shoplifting.

LOSSPREVENTIONMEDIA.COM

FIFTEEN YEARS OF LOSS PREVENTION The November–December 2008 issue revealed the 2007 NRSS results. Participation dropped slightly to 134 retailers who reported an average shrink of 1.44 percent of sales, a new all-time low. Employee theft was listed as causing 44 percent of loss (down from 47 percent), while losses from shoplifting rose to 34 percent (up from 32 percent). The results from the 2008 NRSS survey recapped in the September–October 2009 issue showed participation slightly down, possibly due to industry consolidations during the recession. Overall shrink inched up to an average of 1.51 percent of sales. Internal theft percentage continued to go down (to 42.7 percent) and external theft continued to grow (to 35.6 percent). The January–February issue of 2010 included the results of the Global Retail Theft Barometer for the period June 2008 through June 2009. Just over 1,000 retailers from 41 countries participated in the survey, which showed an overall average shrink percentage of 1.43 percent of sales. Both North America and the rest of the world showed overall internal theft percentages shrinking and external theft percentages rising. Fast forward to the results of the 2010 NRSS. Overall shrink was 1.49 percent of sales. Employee theft as a cause of shrink came in at 45 percent, and 31 percent was attributed to shoplifting, reversing the trend in the past few surveys.

analyze where loss was occurring. She also discussed the value of exception reporting to other departments beyond LP. The discussion of RFID returned in the July–August 2007 issue where Bob DiLonardo described efforts to use RFID technology to create “benefit denial”

Fast forward to the results of the 2010 NRSS. Overall shrink was 1.49 percent of sales. Employee theft as a cause of shrink came in at 45 percent, and 31 percent was attributed to shoplifting, reversing the trend in the past few surveys.

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Loss Prevention Technology

Articles featuring or discussing loss prevention technology continued to be plentiful from 2007 through 2011. The March–April issue of 2007 noted that the Japanese government was joining with several high-tech companies and retailers to test RFID tags, Wi-Fi, and Bluetooth technologies in an attempt to enhance security and provide shoppers with information as they strolled through Tokyo’s fashionable Ginza district. In the May–June 2007 issue, Rite-Aid’s Cathy Langley wrote the cover story on exception reporting. She described the development and rollout of Rite Aid’s front-end tool and pharmacy analysis tool. She discussed the importance of developing key performance indicators (KPIs) to

EXCEPTION REPORTING Finding the Rotten Straw in the Field of Haystacks

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deterrents for highly theft-prone DVDs. The September–October 2007 issue’s cover story outlined Zale Corporation’s aggressive use of an in-house remote video monitoring system to help both loss LP MAGAZINE | NOVEMBER–DECEMBER 2016

prevention and operations. In the same issue Bob DiLonardo admitted that he was a little tired of hearing about RFID but thought it was inevitable that it would become a fact of life. He referenced a newly published book where the authors described all the basic components of RFID in understandable language. September – October 2007 LPportal.com

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In January–February 2008, DiLonardo reported that a Silicon Valley company announced the creation of a new process that allowed production of RFID circuits for a fraction of the cost of conventional technology. Items targeted included item-level tagging in retail, consumer products, health care, and transportation. The May–June 2008 issue reported that a new organization was formed between numerous US and European companies interested in promoting a so‑called “electronic product code” (EPC), an RFID-based replacement for the barcode. In the July–August 2008 issue, the statement was made that the overall demand for electronic security products and systems was expected to grow at a rate of 7.8 percent a year and reach $15.6 billion in sales by 2012. The Great Recession was just ending when Lee Pernice asked the following question in the March–April 2009 issue: “How can we use technology to stretch paper-thin budgets even further?” She talked about emerging technologies in video cameras, digital recording, video analytics, remote monitoring, and of course, last but not least, RFID, which she predicted was “still coming.”

FIFTEEN YEARS OF LOSS PREVENTION In the July–August 2009 issue, it was announced that two more European fashion retailers made news by announcing item-level RFID deployments. In the same issue, Bob DiLonardo included the following quote in his column: “Intelligence is going to be ubiquitous, connecting the supply chain directly to the sales process, tying merchandise to the employee who sold it and the customer who purchased it.” DiLonardo noted that the quote was published twelve years earlier and, as of 2009, we were basically still waiting. In the November–December 2009 issue, GAP’s loss prevention finance director talked about making the right EAS decision for your stores. The advantages and disadvantages of in-store tagging versus source tagging and soft tags versus hard tags were discussed. In the end, GAP landed on a blended solution in an attempt to maximize the benefits of each option. March – April 2010 LPportal.com

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is interesting to note that RFID was not mentioned once in the interview. RFID was back in Bob DiLonardo’s column in the May–June 2011 issue. In it he reported that item-level RFID was emerging from the proof-of-concept and pilot stages and was gaining momentum all over the world. He indicated that a recent poll found that 57 percent of retailers were using or planned to use RFID at the item level. In the July– August issue of 2011, American Apparel said it would add another fifty stores to its item-level RFID program. For the final installment in this series, to appear in the January–February 2017 issue, I will do some research in order to report on where retailers really are today regarding the RFID subject.

“Intelligence is going to be ubiquitous, connecting the supply chain directly to the sales process, tying merchandise to the employee who sold it and the customer who purchased it.” Bob DiLonardo noted that the quote was published twelve Shrink Reduction and years earlier and, Loss Prevention Programs as of 2009, we were In the March–April issue of 2007, basically still waiting. Paul Stone from Best Buy described the company’s effective four-part approach to reducing shrink: (1) a specific and detailed shrink plan; (2) store managers talking about shrink every day; (3) numerous cycle counts; and

BIOMETRIC ACCESS CONTROL The Next Great Thing to Reduce Shortage SHEDDING LIGHT ON AN LP CAREER FROM A REGIONAL’S PERSPECTIVE INVESTIGATING IN FACEBOOK AND OTHER PARLOR TRICKS BOOSTERS VS. FENCES—WHICH IS THE DIRECT LINK TO SHRINK?

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Biometric access control was heralded as “the next great thing to reduce shrink” in the March–April 2010 cover story. Kevin Plante described the benefits in detail, how it could be used, and the hardware and software needed to make it happen. While most articles on technology sung its praises and extolled its value, Bob DiLonardo, in his July–August 2010 column, questioned whether technology was actually affecting people negatively. Addiction to the Internet was called out as the biggest threat, and psychologists indicated that excessive use of technology was causing behavioral changes in people ranging from impatience, forgetfulness,

separation anxiety, and escapism to out-and-out addiction. In the September–October 2010 issue, Jim Lee interviewed Brand Elverston of Walmart. They discussed the search for new loss prevention tools and the need to develop next-generation technology. It

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(4) store general managers involved in hiring interviews. In the July–August 2007 issue, Mike Keenan, then at Mervyn’s, described an auditing program to monitor operational compliance as being a critical part of any successful loss prevention program.

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FIFTEEN YEARS OF LOSS PREVENTION In September–October 2007, Adrian Beck and Colin Peacock wrote about common practices of low-shrink US retailers. Some of these practices included senior management commitment, ensuring organizational ownership, embedding loss prevention commitment in the business, providing strong leadership, constantly talking shrink, and not being afraid of innovation and experimentation. Next we jump to the September–October issue of 2008 where Ken Cornish of Kroger described Kroger’s partnership with the Loss Prevention Research Council. Together they formulated very specific and documented product-protection approaches that were formally tested and rated to see which methods proved most effective in deterring theft while not negatively affecting sales.

An article in the May–June 2010 issue titled “Thou Shall Not Steal” featured Melissa Mitchell of LifeWay Christian Stores talking about her company’s loss prevention program that consistently produced one of the lowest shrinks in the industry. Mitchell talked about a culture of honesty and concern for people as driving forces behind LifeWay’s shrink success. In a July–August 2011 interview, Gary Johnson, then at Vitamin Shoppe, talked about the importance of people over technology as the key component of an effective shrink-reduction program. In fact, when asked by Jim Lee what anti-shrink technology had been implemented at Vitamin Shoppe, Johnson’s response was, “We haven’t implemented any, and that’s by design.”

It’s interesting to note that there was a very serious and spirited discussion at a recent Loss Prevention Foundation board of directors meeting around holding all executives in our industry accountable for making improved diversity a reality. People, Education, Everyone present and Diversity As mentioned in the first article committed to making in this series, no discussion about the that happen. retail loss prevention industry would be

In the November–December 2009 issue, Adrian Beck and Colin Peacock were back talking about their new book New Loss Prevention where they challenged existing ideas about shrink and emphasized operational failure as a major contributor of loss.

complete without a focus on its people, its educational efforts, and the continued need to improve the diversity of its population. In the January–February 2007 issue, Ed Rehkopf offered up the thought that an organization with a service-based leadership style produced happier and more productive employees. Some parts of that leadership style include continuous recognition of employees, an open flow of ideas, highly regarding both risk and innovation, prestige derived LP MAGAZINE | NOVEMBER–DECEMBER 2016

from performance instead of title, and employees who are made to feel they are a part of a team. In a May–June 2007 article, Bruce Tulgan talked about the pitfalls of getting so busy that you forget your people. According to Tulgan’s theory, the first person you need to manage is yourself, and then manage everyone else. He also opined that team meetings are fine but are no substitute for genuine one-on-one interactions. The March–April 2008 issue found Dan Poelstra describing his thoughts on how LP managers can become retail executives. Poelstra outlined some basic building blocks of that journey, such as setting priorities, knowing the retail business, getting a higher education, networking, and polishing up your communication skills. A focus on people continued to be front and center when, in the July–August 2008 issue, David Katz, CEO of the Global Security Group, discussed protecting international business travelers. Katz talked about the importance of increased awareness, making sure you are not being followed or watched, avoiding routine patterns, basic vehicle safety measures, and pre-travel research and planning. Appropriately at the end of the Great Recession, a May–June 2009 article talked about having an unemployed contingency plan. Author Jason Jakus offered up four critical thoughts or

FIFTEEN YEARS OF LOSS PREVENTION lessons: (1) don’t take it personally; (2) ask questions and know your rights; (3) dive into your finances; and (4) start your job search yesterday. In the September–October 2009 issue, Bruce Tulgan was back with tips on how to manage generation Y in an article titled “Not Everyone Gets a Trophy.” To effectively manage those born in the 1980s and 1990s, Tulgan offered many tips including being selective, trying to scare them away before hiring and keeping the ones who didn’t run, getting them committed to your mission, not fighting their lust for high tech, giving them structure and boundaries, and finally, doing whatever it takes to hold on to the best and the brightest. In his feature article that appeared in the July–August 2010 issue, Jim Lee talked to regional and district-level LP executives about their perspectives on climbing the corporate ladder. Things like being an effective coach, getting a higher education, being willing to be the cause of change, mastering the skills needed at every level, not job hopping too much, and trying hard to balance personal and work life were discussed at length. In the November–December 2010 issue, Bob DiLonardo offered up a very insightful and educational article on “Basic ROI Knowledge for Front Line Management.” He described net present value, internal rate of return, and shortage reduction benefit calculations, and talked about how to use them. Another very useful and instructional article came from Liz Martinez in the November–December 2011 issue. Martinez wrote about the “Ten Steps to Training Employees to Write Good Reports.” Some of the things she talked about were explaining the purpose, knowing the audience, painting a picture, being accurate in language and punctuation, and including feeling.

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Speaking of education, 2006 saw the Loss Prevention Foundation become a reality. But it was between 2007 and 2011 when it truly came of age with the launching of the LPQ and LPC certification programs. Every issue from 2007 through 2010 included a column talking about the continued development of not only the foundation itself but also the philosophy behind it and the importance to the industry of LPQ and LPC certification. Jim Lee’s feature interview in the July–August 2009 issue found Loss Prevention Foundation President Gene Smith talking about its mission, the journey, LPQ and LPC certifications, how they were created, and the importance of continuing education to the LP industry. And then, the cover story of the January–February 2010 issue proclaimed “LP Certification Is Now a Reality.” In that article, Jack Trlica talked about the certification development process being a total industry effort and went on to describe the specific components of both the LPQ and LPC. He also talked about the board members, costs, and available scholarships. All issues of the magazine in 2010 and 2011 featured a column on certification, often written by someone from the industry talking about the importance of getting certified.

We have talked more than once about the need to continue to push for a more diverse retail LP industry. By the time 2007 came along, Mimi Welch, who had written a diversity column in every issue of the magazine during the first five years, had moved on. But Jim Lee has often talked about the subject in his Parting Words column over the years. Also, four very high-ranking women LP professionals were the subject of interviews or feature articles from 2007 to 2011. They included Carol Martinson, VP of asset protection at SUPERVALU in January–February 2007; Joan Manson, VP of LP, payroll, benefits and legal at the Container Store in November–December 2009; Melissa Mitchell, director of LP and inventory control at LifeWay Christian Stores in May–June 2010; and in March–April of 2011, Monica Mullins, VP of asset protection and safety at Walmart, who at the time oversaw the biggest retail LP organization on the planet. But, yes, we know we can do better. To that end, it’s interesting to note that there was a very serious and spirited discussion at a recent Loss Prevention Foundation board of directors meeting around holding all executives in our industry accountable for making improved diversity a reality. Everyone present committed to making that happen. And many people in that room also serve on the editorial board of Loss Prevention magazine. Thanks for taking the second part of this journey with me. As mentioned before, in the upcoming third installment we will review the last five years of the magazine, do a reality check on RFID and some other LP technology, and take a look at the future of our industry. Again, most of the articles mentioned here are available at LossPreventionMedia.com, the magazine’s website. PDFs are available by contacting editor@LPportal.com.

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

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EVIDENCE-BASED

Painting Pictures Is Never Easy

by Read Hayes, PhD, CPP Dr. Hayes is director of the Loss Prevention Research Council and coordinator of the Loss Prevention Research Team at the University of Florida. He can be reached at 321-303-6193 or via email at rhayes@lpresearch.org. © 2016 Loss Prevention Research Council

sure what we collect is (3) correct or accurate. And all data needs to be (4) coded so we can analyze them. Data should be numerical rather than text whenever possible by using drop-down boxes. It is very difficult to quantitatively analyze text information on a large scale. Every LP/AP team needs to think through priority crime and loss events and how they play out. From that exercise, we determine what variables we should collect and in what format to paint our picture in order to ultimately reduce problems and bad outcomes.

oss prevention and asset protection decision-makers need clearer pictures of the causes and dynamics of their crime and loss issues. Precise, cost-effective solutions addressing specific parts of a defined problem are much better than shotgunning fixes at blurry issues. For example, if we determine specific crews are targeting particular stores to burglarize for Apple products by entering at certain points to disable alarms on preferred days of the week at select times, we can now devise more focused deterrent and high-impact offender arrest tactics.

2016 Impact Conference

Our latest Impact experience is in the books and set more attendance records, including 300 registrants from 45 retail chains. But most importantly, the group was able to discuss many of the twenty-two LP research projects the Loss Prevention Research Council (LPRC) has conducted this year to date. All studies were given to Impact participants on thumb drive, with more to come. Our LPRC board of advisors chair, John Voytilla of Office Depot/Max, has stressed enhancing the tie-in between LPRC and the University of Florida (UF), and this really seemed to happen this year. Dean David Richardson of UF’s largest college, the College of Liberal Arts and Sciences, welcomed the large group to campus and described how the university is working to produce a formalized LP internship program to funnel bright, capable student talent to retailers and solution partners, as well as online LP/AP certificate programs to be launched in April 2017. UF also had multiple students serving as conference guides wearing trademark lab coats, while several faculty members from retailing science, supply chain engineering, criminology, survey research, and cyber security interacted with LP practitioners. All eleven working groups conducted planning breakouts and the annual poster session where all participants move through the hall listening to retail executives from each working group describe the results of a project and their groups’ future directions. Panels discussed best methods and future opportunities with retailer-solution research and development

Every LP/AP team needs to think through priority crime and loss events and how they play out. From that exercise, we determine what variables we should collect and in what f ormat to paint our picture in order to ultimately reduce problems and bad outcomes. Data Rules

We continue to add detection, definition, deterrence, and documentation capability. And I’ve repeatedly mentioned before how we help paint our diagnosis picture with data since it is so important. Remember the four Cs. We strive to (1) collect the right variables (offender, event, and environmental characteristics) in order to (2) completely gather these data for all incident attempts, not just some of them. We also increase our accuracy and minimize errors by checking to make

NOVEMBER–DECEMBER 2016

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A panel of ORC investigators included (from left) Carol Frederick of the Florida Department of Law Enforcement, Ronnie Faircloth of Broward County (FL) Sheriff’s Office, and John Chiue, special agent with the FBI, spoke at the Impact conference. Key takeaways included the movement of gangs toward focusing on identity theft because of the low risk/high reward and the impact of a lack of knowledge of ORC among judges and prosecutors.

partnerships; local, state, and federal law enforcement organized retail crime (ORC) investigators, and the UF/ LPRC Innovation Lab and working groups. Great session speakers included Tarleton State University Criminologist Tara Shelley, PhD, discussing her extensive armed-robber decision-making research findings and LTAS Technologies’ Allen Atamer discussing the deep/dark web. Participants rotated between six Learning Lab breakouts spending twenty-five minutes discussing recent research and efforts in the five zones of influence. Finally, Monday evening was spent networking and touring the upgraded Innovation Lab to discuss the over seventy deployed technologies in the zones of influence. Tuesday evening networking took place in the Swamp stadium playing tailgating games and posing with Gator cheerleaders and Albert the Alligator. We hope to work with even more of you next October 2–4 at UF as we expand the Learning Labs, experience a “zones zone,” and much more.

LP Magazine

I want to acknowledge and rave about LP Magazine’s fifteen years of huge contributions to our industry. Jim Lee, Jack Trlica, and the rest of the crew have built and steadily improved LP practice, professionalism, and results through their magazine, newsletter, online resources, and annual meeting to mention just a few of their innovations. I am always honored to be able to work with LP Magazine.

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SOLUTIONS SHOWCASE AMERICAN PUBLIC UNIVERSITY SYSTEM

Addressing the Growing Threat of Workplace Violence By Tatiana Sehring, Director of Corporate & Strategic Relationships, Center for Applied Learning at American Public University System

orkplace violence incidents have tripled in the last decade, and it’s now the fastest-growing category of murder in the US. It’s also the second leading cause of death for women in the workplace according to 2014 data from the US Bureau of Labor Statistics. In fact, the rates of murder and other violent incidents have intensified to the point that the US Tatiana Sehring Department of Justice declared the workplace as one of the most dangerous places to be. It’s an escalating concern for employees and employers nationwide, with many cases going unreported. According to the Occupational Safety and Health Administration (OSHA), 2 million workers in America are victims of workplace violence each year.

organizations is $4.50 per employee annually. There is opportunity for improvement with regard to workplace violence training, preparation, and prevention. Employers can adopt these effective steps to lessen the risk and safeguard the lives of their employees: 1. Identify workplace risk and vulnerability factors. Organizations should perform a realistic and comprehensive risk assessments to identify the security vulnerabilities of their businesses and facilities to an active-shooter event. 2. Use security controls. These safeguards may include coded card keys and employee photo ID badges for access to secure areas, camera surveillance systems, on-site guard services, and other appropriate security measures such as metal detectors. 3. Foster a culture of respect and trust amongst workers and between employees and management. Companies must eradicate a bad culture of bullying or harassment by creating Active-Shooter Incidents Rising a zero-tolerance workplace violence policy. The policy should An active shooter represents one of the worst examples of be plainly worded and specify how the employer classifies workplace violence. The years 2013 to 2015 saw the worst rate workplace violence, the conduct the policy prohibits, methods for of deaths due to active shooters in a two-year span. From 2000 to reporting violations, and how these reports will be investigated. 2015, over 1,000 active-shooter casualties occurred in the workplace. 4. Develop a workplace violence prevention program. This According to an analysis by CNN, the US accounted for program can stand alone or can be integrated into your injury 31 percent of all public mass shootings between 1966 and and illness prevention program. Regardless, it’s essential that all 2012 in the world, despite the US only having 5 percent of the employees, including managers and supervisors, become familiar world’s population. with the company policy and program. Active-shooter incidents have tripled in the last eight years, with 5. Provide regular workplace violence prevention training. an event occurring in the US once every three weeks. Alarmingly, Simply put, it’s every employer’s duty of care to protect you are eighteen times more likely to encounter workplace violence and safeguard their employees by training them to respond and an active-shooter situation than a fire. appropriately to active shooters. Seventy percent of active-shooter incidents occur in businesses versus campuses. Training Financial and Insurance Ramifications conducted before such an incident actually occurs will help to No amount of training, security guards, and warnings can totally bolster prevention protocols at your workplace. eliminate the chance of an active shooter launching an attack. No 6. Perform regular active-shooter drills. Drills should be employers are 100 percent immune to this phenomenon, nor can established and conducted in such a way so as not to frighten they totally prevent it. And the financial costs are staggering—from or alarm employees. They should have an education focus and $6 billion to $35 billion annually. be designed to aid employees in retaining information that may According to the Workplace Violence Research Institute, save lives. neglectful hiring and negligent employee retention out-of-court The American Public University System (APUS) Center for disbursements due to workplace violence lawsuits averaged more Applied Learning (CAL) provides a wide range of online training than $500,000. Jury rulings in these cases averaged $3 million. and educational solutions to help public and private organizations Workers’ compensation policies usually omit coverage for acts attain their workforce development and performance goals. of lethal force or the threat of lethal force. You need separate Learn more at apus.edu/center-applied-learning/ or email coverage to shelter you against the aftermath of workplace violence. One option is active-shooter insurance. This coverage provides cal@apus.edu. additional financial security for businesses.

What Companies Should Do to Prepare

Despite the escalating numbers associated with violence in the workplace, the average spend on workplace violence prevention by

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SOLUTIONS SHOWCASE AXIS COMMUNICATIONS

No Product Left Behind with Axis

RC Willey saves millions, reduces shrink 170 percent below industry average by adding Axis network cameras to its inventory tracking system.

n order to fulfill its promise of same- or next-day delivery, home furnishings retailer RC Willey manages $500 million of inventory in warehouses and stores throughout the western US. With millions of dollars of product in constant motion, tracking inventory discrepancies and investigating shrink was a challenge without video support. The company installed analog cameras to document the inventory flow, but when that system reached the end of its life, RC Willey began searching for a high-resolution IP video surveillance system that could deliver better video with greater forensic value.

Solution

After lengthy on-site testing of fifteen IP camera vendors, RC Willey selected Axis network cameras to track inventory in transit from its distribution centers, retail stores, and delivery trucks. Alphacorp, a systems integrator and Axis partner based in West Valley City, Utah, was selected to undertake the installations. Advanced imaging features, such as wide dynamic range and dynamic capture, provide the company with sharp, identifiable details under widely diverse lighting conditions—from vast warehouse racks to open dock bays, retail stockrooms, and will-call pick-up centers. RC Willey stores the video locally at each site where it can be accessed remotely by loss prevention staff and other authorized personnel through a Genetec video management system.

Result

Since the Axis cameras were installed, inventory shrink has dropped significantly to 0.01 percent, a full 170 percent below the home furnishings industry average. The cameras have helped the company pinpoint the root causes of inventory discrepancies and take steps to correct their procedures. The cameras also help the company improve warehouse management best practices to prevent future inventory from going astray. “I attribute most of our phenomenally low inventory shrinkage to the way we use our Axis cameras in conjunction with our warehouse management and point-of-sale systems,” said Rod Mosher, director of loss prevention at RC Willey.

Tracking Inventory in Transit

RC Willey has been selling home furnishings, household appliances, consumer electronics, and more for over eighty years. The company stands out in the home furnishing world by offering same- or next-day delivery of its merchandise, an unusual commitment in an industry where six to eight weeks is the norm. To provide such fast delivery, RC Willey must maintain over $500 million in inventory at distribution centers and retail stores across Utah, Nevada, Idaho, and California. Between $20 and $30 million in inventory is in transit at any

LP MAGAZINE | NOVEMBER–DECEMBER 2016

SOLUTIONS SHOWCASE AXIS COMMUNICATIONS given time. “Keeping track of all the inventory in constant motion is one of our biggest challenges,” said Mosher. Like most retailers, RC Willey tracks inventory by integrating standard warehouse management and point-of-sale systems. However, before they installed cameras, if an item failed to reach its destination and the location data was incorrect, the LP team found it difficult to determine where the breakdown in inventory flow occurred. “We needed an inventory verification tool that could help us stem our losses,” Mosher said. He decided to install analog cameras to document a product’s journey, and when that system reached the end of its life, he wanted to upgrade to the increased resolution and functionality of IP cameras. Working with Alphacorp, a security systems integrator and Axis partner, RC Willey selected Axis network cameras for their high image quality and wide range of features. “We needed cameras that could handle constant motion without blur and deliver high-quality, usable video in diverse lighting conditions,” said Mosher. With the IP-based system, when RC Willey has an inventory discrepancy, the corporate LP team will retrace a product’s path from warehouse to delivery with their warehouse management and point-of-sale systems. Since the cameras monitor each step along the way, the LP team can pull video with their Genetec video monitoring system to visually verify that the product did in fact go where the reports indicated.

ninety days of video. Because the Axis camera parameters are easy to adjust, RC Willey can fine-tune frame rates and resolution to meet bandwidth and storage constraints without compromising image quality.

Getting to the Root Cause of Loss

The video recordings let RC Willey analyze the root causes of inventory discrepancy and change their protocols to avoid discrepancies in the future. “We use the video hundreds of times a day. We’ve been able to correct a lot of procedural issues that we were never aware of before,” Mosher said. As shrink drops, customer satisfaction rises. “Nothing is more frustrating for a customer than to show up when they are told and not have their purchase arrive,” Mosher said. The ROI on the investment has been rapid and huge. When Mosher joined RC Willey nine years ago, the company was losing millions of dollars a year to shrinkage. Today shrinkage is down to about 0.01 percent, compared to an industry average of 1.7 percent. “That ROI is phenomenal in our industry,” said Mosher. “I attribute most of our success to the way we use our video systems.” Visit Axis online at axis.com.

Clear Images in All Lighting Conditions

Alphacorp typically installs between sixty and seventy cameras per location for the retailer. Because of the diverse lighting challenges at their warehouses, such as when the sun streams in through the loading dock door, RC Willey relies exclusively on the AXIS P3384-V and P3384-VE fixed-dome network cameras with wide dynamic range (WDR) with dynamic capture. The WDR feature can balance the contrasting bright and dark areas to provide full detail throughout the entire scene. The five-megapixel AXIS P3367-VE fixed-dome network camera provides more robust image detail over long ranges, such as parking lots, and they use AXIS P3354 fixed-dome network cameras for store interiors and general surveillance. The company is also field-testing the outdoor-ready AXIS Q3505-VE fixed-dome network camera with advanced wide dynamic range with forensic capture. WDR with forensic capture uses advanced algorithms to reduce noise in an image and displays every detail in a scene as best as possible. Depending on the location, RC Willey installs between 100 and 300 terabytes of onsite storage to hold about

© 2015 Axis Communications AB. Axis is a registered trademark of Axis Communications AB. All other company names and products are trademarks or registered trademarks of their respective companies. We reserve the right to introduce modifications without notice.

NOVEMBER–DECEMBER 2016

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SOLUTIONS SHOWCASE CEC

Total Motivation and Its Effect on Employee Theft

mployee theft results when three areas intersect—opportunity, stress, and rationalization. When employees are not fully engaged with the success of their company, their coworkers, and their careers, they are more likely to engage in anti-social behavior such as theft.

Lowering shrink due to employee theft is less about creating a zero-tolerance environment and hyper-awareness of the consequences of employee theft and more related to how motivated an employee is about their company and the work they are doing. This can be a challenge for retailers since many store-level positions are entry-level, low-wage jobs. However, with leadership and the right tools, a culture shift can occur among all employees. The husband and wife team of Lindsay McGregor and Neel Doshi speak to a total motivation (ToMo) culture in

their book Primed to Perform: How to Build the Highest Performing Cultures Through the Science of Total Motivation and their company Vega Factor. ToMo is the psychological driver of adaptive performance. More simply, it’s a way to measure the reasons people work, which can predict how well they work. In their research they have found key factors that drive a ToMo culture, including such things as how enjoyable employees find their work, their understanding of the larger mission of the company, and their recognition of career-growth opportunities. Other motives to come to work, such as economic pressures, inertia to stay at the same company, and social pressure, although real, can detract from overall employee engagement. A high ToMo culture is a great indicator of employee performance, turnover rate, and yes, dishonesty. This is not a one-and-done activity but is reinforced through multiple channels. However, it must begin somewhere. CEC’s employee performance tool, CEC RetainTM, brings a new approach that assists businesses in building a ToMo culture. CEC Retain is an employee performance tool that helps businesses drive: ■ Employee retention ■ Employee engagement ■ Personal performance To learn more about CEC, visit correctiveeducation.com.

LP MAGAZINE | NOVEMBER–DECEMBER 2016

SOLUTIONS SHOWCASE CHECKPOINT SYSTEMS

Holiday Season Presents Retail Shrink Challenges

The cost-loss burden for the retailers surveyed is expected to be $132 per person, of which $50 (about twice as much as in other calendar quarters) is expected to be incurred in this holiday season. These increases in losses place an enormous burden on retailers and, ultimately, on honest consumers who pay for it in higher prices. Apparel, children’s toys, electronics, and electronic accessories are expected to be the most stolen items this holiday season. Apparel. The fashion industry is one of the fastest-moving consumer-driven businesses, and apparel retailer chains and department stores need to have flexible end-to-end solutions like Checkpoint EAS and RFID solutions to support high-impact branding, secure their merchandise, and provide real-time feedback on product availability throughout a complex supply chain. Electronics. Electronics stores stock highly sought-after and costly merchandise. Checkpoint EAS and high-theft security solutions help protect expensive merchandise that is tempting to shoplifters while providing easy access to shoppers looking to compare models and features. Drug Stores. Pharmacies and drug stores have a variety of high-risk merchandise, such as razor blades, medications, cosmetics, food, beverages, and electronics. Checkpoint helps these retailers by protecting merchandise while increasing on-shelf availability.

ccording to the recently published 2016 Retail Holiday Season Global Forecast, retailers will experience both the heaviest sales volumes and the weakest performances (specific to margin rate) during this holiday season. As such, the National Retail Federation (NRF) predicts retail sales in November and December (excluding autos, gas, and restaurants) will increase 3.6 percent over last year, which translates to a cloudy forecast specific to margins for this most crucial sales quarter of the year. The forecast, which was underwritten by an independent grant from Checkpoint Systems, employs data from last year’s Global Retail Theft Barometer (GRTB) study and public financial data to assess applicable financial metrics performance based on reported earnings.

Why Profitability Strains?

Strains on profitability manifest during the holiday season largely because of increased shrink and theft from internal sources (primarily employee theft and other sales reducing activities, or SRAs) and external factors (shoplifting and organized retail crime). These are exacerbated during the season when retailers typically build up inventory levels to accommodate holiday shoppers. In addition, increased store foot traffic correlates with more shoplifting of high-risk items.

What Can Retailers Do?

Checkpoint Systems provides a full range of solutions to address these and other high-risk merchandise segments during the holiday season, including EAS systems comprised of hardware, consumables, and software; high-theft security solutions; and RFID solutions, including hardware, software, tags and labels, and services and installation support. Checkpoint’s end-to-end EAS and RFID solutions are complemented by global field service expertise in worldwide implementations, maintenance, and monitoring of solutions.

Spotlight on Report Findings

Some 37 percent of the annual shrink loss for retailers is expected to occur in only three months, October through December. In fact, the US retail shrink rate for this holiday season is expected to be almost double that of the prior two quarters.

NOVEMBER–DECEMBER 2016

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SOLUTIONS SHOWCASE INDUSTRIAL SECURITY SOLUTIONS

Discover the ISS Difference in Custom Product Development

ndustrial Security Solutions (ISS) specializes in providing a complete range of EAS and CCTV products and services that focus on cost-effective solutions catered to each unique retailer. By manufacturing tags and systems in both AM and RF frequencies, ISS is able to offer competitive pricing on the most specific of solutions. Customers may even choose from an impressive range of refurbished products. With partnership as a keystone in the ISS business philosophy and the ability to install and service in all fifty states, no retailer is left behind.

The ISS Difference

Industrial Security Solutions understands that with the evolving retail industry the importance of maximizing profits for brick-and-mortar stores is at its highest. Unfortunately, these profits are lost daily to internal and external theft of the store’s inventory. Only the most specific of solutions can offer the least loss, and ISS is prepared to customize solutions for a range of complicated needs. Many potential customers have been in business for decades and often find EAS solutions that worked in the past are now obsolete. ISS has the services needed to address these issues, including but not limited to: ■ Upgrading outdated EAS systems ■ Refurbishing EAS systems ■ Service and maintenance of EAS systems ■ Tag trade-out/recycle programs

Product Development

Over the past few years, the product development team at Industrial Security Solutions has been working to increase the variety of new EAS systems offered to our

clients. The Aegis Door, Concealed Floor, and Door Loop systems offer many short-term and long-term benefits. First, installing a concealed system removes the need for bulky floor-anchored pedestals. Each system creates a more inviting atmosphere for customers. Since the Concealed Floor Loop can cover entrances of up to fourteen feet, it is a great alternative for mall locations that do not allow pedestal systems. The ISS Door Loop system is installed directly into the doorframe and can cover any size entrance up to ten feet. Second, concealed EAS systems offer a reduced over-range. With a typical pedestal system, the alarm range extends into the store almost six feet in all directions, not just in between the pedestals. When a concealed system is implemented, the range is reduced to less than three feet, so the additional space at the entrance allows room for more products. Finally, all systems can connect to the ISS Ecomm Module, which allows ISS technicians to service the EAS system from anywhere in the country. This feature can save any loss prevention program thousands without having to spend the time and labor to schedule in-person service calls. ISS also takes on the challenge of innovating old solutions that have since been abandoned. In order to change the industry standard for providing customers with cumbersome ink tags, the product development team has created a small and effective alarming ink tag. The Triangle Ink Tag is no wider than one-and-a-half inches and alarms AM frequency systems. This tag revolutionizes the way loss prevention and visual merchandisers look at ink tags. This provides not only a visual deterrent to shoplifters, but also a physical deterrent that prevents forceful removal. Doesn’t your loss prevention program deserve a custom solution to fit your specific needs? Contact Industrial Security Solutions today at 800-466-4502 to discover the ISS difference.

LP MAGAZINE | NOVEMBER–DECEMBER 2016

SOLUTIONS SHOWCASE PROTECTION 1

Securing the Luxury Retail Market from Rodeo Drive to Madison Avenue

Customized Solutions

ll retailers are susceptible to losses due to theft and fraud, but maybe none as much as the luxury-branded retailer. Its high-priced, highly desirable merchandise is subject not only to theft, but also to counterfeiting and ultimately damage to the brand and the company’s reputation. Luxury-branded retailers rely on secure manufacturing facilities, a very limited distribution channel, and a protected inventory at store level to help elevate demand and secure top dollars for their products. Add the threat of a data breach, and retailers face the burden of losing their customers’ trust.

When designing security systems for luxury retailers, aesthetics is key. Often, store-planning personnel are as involved in the process as loss prevention teams. And in most cases, no two locations are built and designed the same, making each project a custom application. Protection 1 works with various architects and store-planning personnel to ensure its systems are effective yet not obtrusive. They have custom painted cameras to match surroundings, color-matched alarm keypads, and even encased access control readers into imported granite walls. The company even custom designs intrusion detection systems using state-of-the-art motion detectors that are often found in highly secured areas such as airports.

A Multi-faceted Approach

Preventing Data Breaches

Protection 1’s approach to helping protect this vulnerable class of retailer is multi-faceted. It provides advanced solutions, from high-definition video systems and cloud-based access control to state-of-the-art intrusion detection and life-safety systems. In addition, the company’s managed services platform offers its clients the ability to have a private, secure IT network solely for the asset protection technology components. Video systems have been a mainstay of retailers’ security platforms. With the advancement in IP technology and the ease of remote access, video solutions now deliver even greater benefits to asset protection teams, as well as other departments within the retailers’ operations. In many cases, retailers will use video for remote investigations, which saves both time and money through the reduction of travel time and expenses. Protection 1 offers electronic access control solutions for sensitive areas, including cash rooms, managers’ offices, and in the case of luxury-branded retailers, back office, display cases, or warehouse locations where the coming seasons’ sample products are secured. Electronic access control, particularly those that deploy advanced features such as biometrics, ensures there is an audit trail available. Protection 1 also offers a cloud-based solution giving retailers the ability to track movement and control access to sensitive areas through an easy-to-use secure web portal, no longer requiring expensive dedicated computers that require software maintenance and upkeep.

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More and more, retailers are prohibiting devices and software associated with systems like video surveillance and HVAC management from sharing the same network as point-of-sale systems.

Other benefits for separating IT systems include higher bandwidth availability, speed, and access to the network for LP teams while not impacting business-critical systems. Protection 1 is uniquely positioned to offer these services as the only security company to hold Cisco Premier, Cisco Cloud, and Managed Services Express Partner Certification status. Express Cloud and Managed Services certification recognizes companies that have attained the expertise in the preparation, planning, designing, and implementation phases for selling and supporting cloud or managed services based on Cisco platforms. The company’s engineers are also Meraki and Sonicwall certified. Protection 1 monitors the systems and can alert its clients if there is an attempted breach or the potential for failure of any device on the network, along with managing all the software updates, ensuring the latest versions are always available. A well-planned, comprehensive approach is key to securing a company’s assets, associates, reputation, and ultimately the trust of its customers. Visit Protection 1 online at protection1.com.

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SOLUTIONS SHOWCASE THE RETAIL EQUATION /SYSREPUBLIC

Integrating Retail, Social Media, and Incarceration Data with Artificial Intelligence for Next-Gen Threat Prevention By David Speights, PhD, Chief Data Scientist, The Retail Equation/Sysrepublic Adi Raz, MBA, Senior Director of Data Sciences, The Retail Equation/Sysrepublic Vishal Patel, PhD, Senior Data Scientist, The Retail Equation/Sysrepublic

In the past ten years, the explosion of data and parallel computing has produced leaps forward in machine learning, deep learning, and other AI methods that are beginning to change the world. The Retail Equation and Sysrepublic are working to bring this technology to retail security. year in more than 2,300 local jails, county jails, and departments of correction from 48 states, providing a rich source of known offenders for retail shoplifting and other types of related crimes. In addition to this data, there are billions of social media posts daily that provide clues to emerging threats. To use this data, the data sciences team—composed of doctorate-level experts in computer science, machine learning, criminology, and advanced analytics—at the newly combined company is applying the latest advances in AI to bring threat detection and prevention to a new level. In the past ten years, the explosion of data and parallel computing has produced leaps

etail security professionals are continually striving to fend off threats. They face a never-ending battle. A solution is implemented only to have offenders circumvent it within days or months. Appriss has joined The Retail Equation and Sysrepublic as one company to bring threat detection and prevention to a new level using the latest methods in artificial intelligence (AI), vast combined data, and expertise from the three organizations. For years, each company individually pioneered advanced analytical methods and amassed data from both retailers and criminal justice. On any given day, The Retail Equation and Sysrepublic process between 20 and 30 million retail transactions with more than 40 billion transactions in total. Retailers track thousands of known threats using Sysrepublic’s case management solution. Appriss monitors more than 10 million incarcerations per

forward in machine learning, deep learning, and other AI methods that are beginning to change the world. The Retail Equation and Sysrepublic are working to bring this technology to retail security.

Combining Big Data and Artificial Intelligence

By combining data sources, machine-learning algorithms look for patterns in the retail and social media data that are associated with known cases of shoplifting, employee fraud, organized retail crime, and so forth. This process forms the backbone of the next generation of return authorization, employee fraud detection, shrink forecasting, and a number of other retail security tools. Traditionally, each new case of fraud or abuse leads a security team to study the patterns and to look for similar patterns in the data to catch similar cases. Those patterns are usually searched for using an exception-reporting query. This approach will catch cases, but it is not as accurate and timely as using methods based on machine learning, which can analyze thousands of factors simultaneously to root out the factors that are most accurately related to a threat. With the number of new cases and fraud techniques emerging daily, it would be impossible for traditional methods to keep up. This is where AI methods kick in. While machines will not do our

LP MAGAZINE | NOVEMBER–DECEMBER 2016

SOLUTIONS SHOWCASE THE RETAIL EQUATION /SYSREPUBLIC thinking for us any time soon, there are many advances in this field that improve fraud-detection capabilities vastly. Following are a few of the techniques that provide an overview and glossary of this important field.

Machine-Learning Algorithms

Machine learning is an advanced analytics tool that can automatically analyze hundreds or thousands of variables (known as features) about an employee or consumer to find hidden relationships between those features and an outcome or outcomes of interest, such as known cases of shoplifting or employee fraud. The algorithms use advanced mathematical structures to represent these complex relationships without input from the analyst. The Retail Equation and Sysrepublic are applying these algorithms to detect both retail return fraud as well as employee fraud. When the algorithms are fit (or learn) dynamically versus statically, it is referred to as online learning. An online learning routine will take new cases of fraud at some periodicity and learn a new relationship automatically. The “learning” refers to the mathematical process that allows the algorithm to most accurately represent the relationship between the variables.

this area include a computer that can compete on Jeopardy, play games like chess or Atari, and read medical journals and determine likely paths for treatment of a patient. AI can apply to retail security by (1) automatically learning new types of employee or consumer fraud and abuse, detecting, and preventing that emerging threat; (2) determining shifts in social media that are related to increases in shrink and reported in-store incidents; and (3) forecasting next year’s shrink in real time as new events in and around the store unfold. One recent success in this area used social media data to predict store shrink. The Retail Equation analyzed a feed from Twitter that included between 20,000 and 100,000 tweets per day. More than 10 million tweets were collected in total. Tweets that occurred near a retail location were converted into metrics that determined tweet sentiment and the presence of key topics of interest using text analytics assigning the tweets mathematical values. The company was able to forecast shrink with similar accuracy found in similar multivariate shrink-prediction models used by retailers. Unlike crime reports, social media data is updated in real time and is far more broadly based on the voice of the shopper. The Retail Equation and Sysrepublic actively use techniques from AI and are currently increasing the adoption of more-advanced techniques from this new area to augment their existing methods. This introduces a new level of threat protection for retailers.

Deep Learning

Deep learning is a concept in the AI world that takes machine learning one step closer to true artificial intelligence. In the preceding machine-learning discussion, the machine-learning algorithm is presented with hundreds or thousands of variables. Typically, a human will have to encode these variables about the employee or consumer. The variables may be things like the number of transactions, the population density surrounding a store, or the number of hours an employee has worked in the past ten days. With deep learning, the algorithm will work off of raw pieces of information, such as transactions, and the algorithm will create the variables automatically in successive layers in what is referred to as a deep network. At each layer, more specific information is created. For example, the first layer may contain all raw transactions, the second layer may contain the average basket amount for an employee, and the third layer may contain the deviation of that average from the other employees in the store. The key to deep learning is that the algorithm figures out these variable constructs automatically by learning what is important for achieving a certain goal like detecting gift-card fraud.

Artificial Intelligence

Machine learning and deep learning are subsets of artificial intelligence. AI is a general area of research that encompasses a variety of applications where intelligent machines or algorithms are programed and created to make automatic decisions or classifications when presented with data. AI can be broadly classified into general AI and narrow AI. General AI includes systems that more resemble a human and can think on their own, while narrow AI is designed to solve specific problems. Most experts agree that general AI is decades away. Narrow AI includes solutions like self-driving cars, facial-recognition technology, or automated fraud-detection systems. Some of the latest advances in

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LPM DIGITAL

Strategies, Messages, and Attitudes T

his LPM Digital department serves to remind our readers that LP Magazine goes beyond the world of print. In fact, we have a comprehensive array of content available at LossPreventionMedia.com. Following are summaries of some of the original content published daily on our website that is available free to our digital subscribers. You may sign up for free using the Subscribe Now button on our home page. Your one-time sign up gives you ongoing access to all of our website content. You can also find us on Facebook (search LP Voices), Twitter (@LPMag), or LinkedIn.

Police Superintendent-in-Chief Sends Powerful Message By Jac Brittain, LPC

“I’m proud to have you as part of my family.” That was the tone and the message shared by Superintendent-in-Chief William Gross of the Boston Police Department as he addressed the audience at the fifteenth anniversary meeting for LP Magazine. The first African-American chief in the history of the Boston Superintendent-in-Chief Police Department, Gross shared William Gross his personal story as a police officer and how the department has worked with the community—often those in depressed areas who have historically maintained a conflicted relationship with the police—to create a winning culture and a strong, positive relationship between the community and the police department. Gross talked about the department sending ice cream trucks with free ice cream into depressed neighborhoods, community policing partnerships, licensed clinical social workers, peace walks, “shop with a cop” events, and “Father Clint Eastwood” into the community to strengthen the relationships and bridge the gap between police officers and the community. He discussed “cadet” programs that bring young men and women into the police academy to help

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

build a more positive impression of the police and what they do, and the impact that the program has had on those that have participated. He boasted of an officer who helped compile a “black history book” that was distributed in city neighborhoods. Every program and every approach discussed emphasized “the voices of logic versus the ignorance of destruction” and how these innovations and attitudes have improved relationships throughout the city of Boston. But Gross also brought a similar message to the members of the audience, providing several examples underscoring the power of cooperation between the retail community and the police department. For example, many of us are aware that retail surveillance cameras helped to identify the suspects in the Boston Marathon bombing. But Gross further revealed the outpouring of support from Target corporation in the form of batteries, flashlights, medical supplies, water, food, Gatorade, and “anything we needed” to support police and first responder efforts both during and following the tragic event. He touted the Macy’s “Unity in the Community” program in the city and how Burger King surveillance cameras helped support police in the wake of another dangerous crime. He stressed some of the different ways that all of us can get involved and make a difference when we work together. In a time when our nation is facing a wave of tragic incidents and civil unrest, it energized the audience to hear progressive, proactive, and productive solutions to real problems. Rather than finger-pointing and excuses, we heard real stories of unity, action, and hope. Gross and the Boston Police Department have provided a map for how the retail community can get involved, how we’ve successfully contributed in the past, and how we can make a difference moving forward. To satisfy the cynics looking to poke holes in a positive message, we can agree that not every problem can be solved with ice cream or Clint Eastwood. But efforts and attitude can lead to positive change. We need both innovation and cooperation to help us move forward, and the programs in Boston are definitely a step in the right direction.

LP MAGAZINE | NOVEMBER–DECEMBER 2016

Active-Shooter Training: Not Just for Adults Anymore

The statistics are alarming, and active-shooter incidents seem to be on the rise. But active-shooter response techniques are evolving to reflect what has actually proven successful in real-life situations. More and more, school children are taking part in drills to lessen their chances of becoming victims.

By Bill Turner, LPC

When it comes to active-shooter incidents, there is no question; we are seeing more and more cases of active shooters than ever before. Some are terrorist related, but many are not. Just recently, a fourteen-year-old boy in South Carolina shot and killed his father and then went to an elementary school and shot a teacher and two students. One of those students was a six-year-old boy. Recent active-shooter statistics are sobering: ■ Between 2000 and 2013, the FBI identified 160 active-shooter incidents in the United States that killed a total of 486 people and injured 557 more. And since those statistics were compiled, two of the deadliest active-shooter incidents in US history have occurred. ■ Statistics show that about 70 percent of active-shooter incidents identified occurred in a school or business setting, and 60 percent of them ended before police arrived. ■ Twenty-seven of these incidents, or nearly 17 percent, occurred at schools, resulting in 57 deaths and 60 injuries. Of the 20 active-shooter incidents at high schools and middle schools, all but three were carried out by students. ■ In 64 incidents in which the duration of the active shooting was proven, 44 (69 percent) of them ended in five minutes or less, with 23 (36 percent) ending in two minutes or less.

Controlling Retail Shrink in Stores with No Loss Prevention By Jac Brittain, LPC

A question frequently asked by the typical retail customer—and even some loss prevention professionals just getting started in their careers—involves many of the smaller stores where they shop and how shoplifting and other retail shrink concerns are managed in retail stores with no loss prevention team. There are very few retail companies that actually attempt to manage their stores with no loss prevention program. Considering the significant impact that retail shrink can have on the business, most retailers recognize the crucial need to manage merchandise losses and protect all of the various assets of our retail stores. As a result, a loss prevention program often exists, but is managed in a different way than might be expected in a traditional department store setting where resources are devoted to loss prevention personnel who are specifically charged with identifying and apprehending shoplifters.

Active-Shooter Training and Drills

Similar Expectations But a Different Approach

Recently, shots rang out in the hallway of the Upper Grade Center in Bourbonnais, Illinois. This time, however, the shots weren’t meant to hurt anyone—they were blanks. The local police were conducting an active-shooter drill at the school. School Resource Officer Travis Garcia arranged the active-shooter training to teach his middle school and faculty the best way to survive an attack. Garcia stated, “Traditionally, students and teachers have been told to lock down and put their trust in a wood or metal door. We’re not doing that anymore. We’ve seen what’s been going on in the world around us, and we’ve evolved to empower, to make sound decisions that will decrease their chances of becoming victims. Now, instead of just hiding and hoping, teachers and students are taught barricading techniques, throwing objects, and swarming—anything to slow the shooter down. Then they are taught to escape as soon as they can safely do so.” In Bourbonnais’s case, they learned the acronym ALICE: alert, lock down, inform, counter, and evacuate. ALICE is one of the leading active-shooter response methods based on what has worked for survivors of active-shooter incidents. One eighth grader said it made her feel that “no matter what the situation, we could band together and do anything to protect ourselves.” Another eighth grader said the training gave them “a sense of power and the confidence to respond.” One of the teachers observed that the training “gives you a different perspective when you have a classroom full of kids. Their safety comes first.” That same teacher said she felt “empowered to respond” if an actual active-shooter incident occurred.

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In many of the smaller, “specialty” stores, it may appear to the untrained eye that these retailers manage the stores with no loss prevention. However, most of these companies have many different programs in place that are intended to help the store manage merchandise theft and other losses. Often the program is locally managed by having loss prevention personnel cover multiple store locations. The focus of the loss prevention initiatives in these settings is often placed on prevention and deterring theft and other incidents before they happen rather than utilizing store resources to actively attempt to apprehend shoplifters. From an asset management standpoint this will involve several different levels of deterrence. ■ Physical security tools ■ Managing the various operational controls ■ I nvestigative measures ■ The ability to teach and train

Complement the Culture

Different types of retail require different types of management, and the loss prevention culture must be modified to best meet the needs of the business. It’s not simply a matter of the size of the building or the product being sold. It’s about the countless other factors that can and will influence the way that the business operates. One type of program isn’t necessarily better than any other. But they are different, and that should be our focus. Whether learning something for the first time or revisiting fundamental |

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concepts of the business and the profession, all of us must adapt in order to remain relevant. An education in retail loss prevention is an ongoing process, but in many ways constants are just as important as change. The fact remains that every successful retail organization must have an effective loss prevention culture in order to be successful. Some of the best loss prevention practices are invisible. Whether shopping in these stores or considering a career move in loss prevention, embracing that mindset might take your professional development in a new direction. Keep in mind that it’s often just as important to understand what we don’t see, and how that might ultimately change our perspective and a loss prevention career path.

LPRC Zones of Influence Introduction Series By Brittany Griffin, LPRC

The Loss Prevention Research Council (LPRC) supports retailer chains in two very distinct ways: by developing and improving asset protection strategy and processes, and developing and improving asset protection techniques and technologies. Crime and loss control strategies tend to work best when deploying evidence-based efforts to influence offender decisions. The three primary ways this works is to: ■ Increase Effort. Make it appear very difficult to successfully commit a crime. ■ Increase Risk. Make it appear highly probable the offender will be detected and sanctioned. ■ Decrease Potential Benefit or Reward. Make it appear the crime will not be worth the time, effort, or potential consequences.

See, Get, Fear

A major aspect of influencing offender decisions is accomplished through situational awareness. Situational awareness is the ability to identify, process, and comprehend the meaning of critical elements of information with respect to what is happening around us with regard to our mission. More simply stated, it’s knowing and understanding what is going on around us at any particular time. ■ See. We must help offenders notice or know about our efforts. ■ Get. We must help offenders understand how our efforts will disrupt or document their actions. ■ Fear. We must make our efforts appear very credible to offenders. The LPRC’s Zones of Influence vision further emphasizes how we establish sensors in, as well as deliver, efforts in concentric zones. These Zones of Influence have been identified as: ■ Zone 1—Specific points or assets ■ Zone 2—Specific interior category areas ■ Zone 3—Store entry and overall interior ■ Zone 4—Parking lot entry and interior ■ Zone 5—Cyber and surrounding build/social communities

Through this concentric zone model, the LPRC research and development vision articulates that retailers require more and better situational awareness (diagnoses) and a tightly focused intervention (treatment) housed within these zones to more effectively deter and mitigate crime and loss threats and events.

Pioneering Loss Prevention Technology Is an Attitude By Jac Brittain, LPC

“Leading the way” has become an overused catchphrase for all kinds of products and services. So when we hear about solution providers “leading the way” toward new loss prevention technology solutions, our expectations are often jaded by past experiences and broken promises. In a profession often driven by our suspicious nature, we want more than a colorful promotion or flashy sales pitch to convince us that our financial and human resources are being invested in genuine solutions. We want partners that are willing to invest more in a relationship than simply providing a product. We need something more—something legitimate and authentic to validate our decisions. As a result, we have raised the bar for our solution providers. Innovation must be captured as an approach to the business rather than just a new concept or product design. “Leading the way” has to be more than a catchphrase—it must be an attitude.

A Different Landscape

We live in a time where change has become the status quo, an era driven by innovation and creativity that urges us to take the next step—and the one after that—as we search for answers and set the tone for what lies ahead. As the retail industry adapts to the brisk pace and escalating demands of the new-age retail customer, the landscape is shifting. There are evolving roles and responsibilities. But there are also new threats. Opportunities for loss exponentially increase with the mounting prospects for growth, change, innovation, and profits. There is a greater demand that has been placed on the loss prevention professional of the new millennium. Over the past decade and a half there has been a social and professional shift compelled by the mountains of change that have forever altered the way that we live, work, shop, and communicate. We have new roles and responsibilities coupled with greater expectations to protect and serve the retail community and the retail customer—often with limited resources and manpower to accomplish all of the many tasks that have been thrust upon us. This shift has been acknowledged and largely welcomed as the role has matured and our place firmly planted in the retail infrastructure.

An Industry Imperative

Technology is seen as a primary driver that will impact the role of the loss prevention profession in the years to come. This includes preventing the exposures that new technology may afford, as well as how to best leverage loss prevention technology solutions to combat retail shrink and loss from all

LP MAGAZINE | NOVEMBER–DECEMBER 2016

More on LossPreventionMedia.com For more original news content, see the following articles: ■

ruzione Offers Loss Prevention Career E Advice: “Check Your Ego at the Door”

■ The

LPM 15th Anniversary Meeting in Sanibel, Florida Our EyeOnLP video team covered the meetings and events in Sanibel, Florida, when over 150 industry leaders took part in three days of activities at the LP Magazine annual meeting. Go to our EyeOnLP page to view the recap video and read the story.

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RFID Wallets: Are They Necessary?

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Is Warehouse Burglary Becoming an Epidemic?

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xactly What Is a Shoplifter and E How Much Do You Know?

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How to Calculate Shrinkage in Retail

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iversity in Loss Prevention: An Interview D with Sara Mays of Barnes & Noble

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argest LPRC Conference Concludes in L Advance of Hurricane Matthew

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LPM at Walmart’s AP National Meeting

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P Magazine Celebrates 15 Years with a Glimpse L at the Past but a Focus on the Future

■ The

sources. It then makes it a mission-critical objective for loss prevention professionals to embrace and utilize these tools in order to impact the many different aspects that are a part of protecting the retail business, our employees, and our customers. As a result, the ability to have solution providers that can help the loss prevention practitioner to best use these resources and educate our teams will be at a premium. Solution providers need to be experts in next-generation technologies and experts in next-generation loss prevention. This expertise must be fully explored to meet and anticipate the needs of retail clients by providing tools that are cutting edge and continually evolving. Collaborative thought leadership that helps us to better understand the tools changing the retail landscape is an essential aspect of future development, and solution providers are critical to assisting practitioners on emerging trends. Those that proactively adapt to these trends will lead the industry, drive innovation, and add value. Industry leaders and solution providers who see the landscape and forecast where retail is headed will be the ones that will have the greatest long-term success. However, it is an industry imperative that both industry leaders and solution providers are willing to take the steps to broaden their understanding of this tidal shift in retail. It’s just as important for loss prevention teams to be willing to reach across the table to work together and take action. Has your organization truly taken the opportunity to fully understand and appreciate the other side of our partnerships? Have you? Taking the time to both share and listen will help complement the technology with effective protection strategies and better working relationships. This is critical for retailers in order to get the results that they are looking for. This will be paramount for solution providers so that they can tailor their products and service offerings based on what’s truly needed to help take the next steps.

Fundamentals of Credit Card Skimmer Fraud

10th Annual New England LP Expo

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Celebrating 10 Years with the LPF

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Data Protection: Yours

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Maintaining Data Security on Social Media Apps

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amily Members Add to the Excitement F Surrounding the 2016 Annual Meeting

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ffective Crisis Communications: Is E Your Organization Ready?

Professional Development ■

I s Accepting a Counter Offer a Viable Option for Your Loss Prevention Career?

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Maturing into Your Loss Prevention Career

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LP101 Loss Prevention Investigations

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LP101 Inventory Shrinkage Reconciliation

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reparation Helps Set You Apart P During the Job Interview

■ What ■

Does a Loss Prevention Associate Do?

Do Retailers Need to Increase Foot Traffic?

LPM Voice ■

dvice for Prepping Systems Now for A the Upcoming Holiday Season

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ave You Done Your Part to Get Workers to H Do Their Part to Reduce Cyber Risk?

■ Will

Seasonal Workers Cause Your Shrink Rates to Rise this Holiday Season?

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Intimate Partner Violence Poses Unique Threat to Retail, but There Are Ways to Prevent a Tragedy

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INDUSTRY NEWS

Largest LPRC Conference Concludes in Advance of Hurricane Matthew O

ver 260 loss prevention professionals, solution providers, and retail manufacturers gathered at the University of Florida (UF) in Gainesville October 3–5 for the annual Loss Prevention Research Council (LPRC) Impact Conference—the largest event in the organization’s sixteen years. This year’s conference featured presentations on current research results, retail - law enforcement joint ORC investigations, cyber crime, working group discussions, and multiple networking events. A Monday evening reception was held at the LPRC’s innovation lab just off campus where over thirty technologies are installed in a simulated retail environment. Funded by Tyco Retail Solutions, the innovation lab functions as a demonstration facility where retail teams can see various asset protection technologies in action. The lab is open to LP organizations year-around to hold team meetings and work with LPRC scientists on issues related to their specific companies. The full day of presentations began Tuesday morning with a welcome from David Richardson, dean of the College of Liberal Arts & Sciences, who told attendees that the UF’s largest college, which includes criminal justice, is emphasizing providing practical experience to students through internships and other partnerships with the private sector. The keynote address was provided by Tara Shelley, PhD, of Tarleton (TX) State University who presented results from her research into pharmacy robbery and burglary in which she interviewed forty-eight offenders convicted of stealing controlled substances for either personal use or drug diversion. She provided an interesting profile of pharmacy offenders who break into three groups—pure addicts (46 percent) who steal to get high, hybrids (44 percent) who are sometimes users who also sell on the street, and entrepreneurs (10 percent) who are more violent robbers who steal solely to make money. A panel discussion on organized retail crime (ORC) investigations featured representatives from local, state, and federal law enforcement. Ben Dugan, Walgreens’ ORC investigations manager, moderated the discussion with Ronnie Faircloth of Broward (FL) County Sheriff’s Office, Carol Frederick of the Florida Department of Law Enforcement, and John Chiue, special agent with the FBI (see photo page 77). Key takeaways from the panel included the movement of gangs toward focusing on identity theft because of the low risk/high reward. The investigators also

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talked about the impact of a lack of knowledge of ORC among judges and prosecutors. Allen Atamer of LTAS Technologies offered attendees a very interesting tutorial of “Exploring the Deep and Dark Web” where illicit products are sold and bartered among criminals. He provided specific instructions for accessing the alternate Internet for retailers interested in seeing how their brands and merchandise are represented. Due to the advance of Hurricane Matthew off the coast of Florida, many attendees had to leave early. About half of the original number of attendees present on Wednesday heard a panel of Rick Peck of TJX and Brent Onan of USS, plus Kevin Larson of Kroger and Stephanie Mitchell of Avery Dennison discuss how the retailers partner with solutions providers both inside and outside the LPRC framework to solve specific issues inside their companies. Emy Johnson of Target moderated. Apart from the educational sessions, attendees had multiple opportunities to meet with solution provider members of the LPRC as well as network with other attendees. The Tuesday night dinner was hosted atop the UF football stadium with drinks, barbecue, and games. For more information about the LPRC or the Impact conference, contact Dr. Read Hayes at rhayes@lpportal.com.

7th Annual CLEAR Conference Held in Reno, Nevada The Coalition of Law Enforcement and Retail (CLEAR) held their 7th Annual ORC Training Conference in Reno, Nevada, |

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October 25–28. This year’s conference boasted an outstanding agenda, exceptional presentations, and active participation from 200 loss prevention and law enforcement professionals from the US and Canada. Some of the presentation topics included: ■R eturn fraud ■L essons from a defense attorney ■C redit card fraud ■ I dentity theft and mobile phone fraud Det. Mike Garcia ■A natomy of a critical incident ■O RC trends panel ■O pen-source investigations There was also a presentation by the Las Vegas Metro “RAP” Team and an update on legislative action on organized retail crime.

Awards

In addition, CLEAR gave out awards for Retail Loss Prevention Investigation of the Year as well as the Law Enforcement Investigator of the Year. These awards are presented based on nominations from the loss prevention and law enforcement communities to honor those that have shown outstanding service. The CLEAR board of directors then chooses the final recipients following in-depth review and discussion. Outstanding Loss Prevention Investigation of the Year. This award went to the Toys“R”Us national investigations team including Ed Fuentes, Amanda Hobert, Mike Flanagan, Dennis Dixon, BJ Day, Tyson Roberts, Larry Evangelista, Scott Tassinari,

Members of the Toys“R”Us national investigations team

Winston Goreen, and Jay Tubaugh. The team identified and tracked down a group traveling the country using rental vehicles and targeting high-end electronics stores. They coordinated with their counterparts and law enforcement from coast to coast to locate and apprehend four suspects who had stolen tens of thousands of dollars of merchandise in five days. They were also able to partner with law enforcement to intercept shipments and recover $20,000 in stolen merchandise. Law Enforcement Investigator of the Year. Detective Miguel “Mike” Garcia of the Miami-Dade Police Department was recognized for his work on the successful investigation of the theft of over 8 million dollars in plastic delivery containers from numerous Florida retailers. Next year’s conference will be held October 16–19, 2017, at the Menger Hotel in San Antonio, Texas. For more information about CLEAR, visit clearusa.org.

CALENDAR November 16–17, 2016 ISC East Javits Center North New York, NY isceast.com January 15–17, 2017 National Retail Federation Big Show Convention & EXPO Jacob K. Javits Convention Center New York, NY nrfbigshow.nrf.com February 12–15, 2017 Retail Industry Leaders Association Retail Supply Chain Conference Gaylord Palms Resort and Conference Center Orlando, FL rila.org

March 20–22, 2017 Food Marketing Institute Audit, Safety, Asset Protection (ASAP) Conference Rosen Shingle Creek Orlando, FL fmi.org April 4–7, 2017 ISC West Sands Expo Las Vegas, NV iscwest.com April 9–12, 2017 Retail Industry Leaders Association Retail Asset Protection Conference Hyatt Regency New Orleans (LA) rila.org

June 26–28, 2017 National Retail Federation NRF PROTECT Gaylord National Harbor Washington, DC nrf.com July 30–August 2, 2017 Restaurant Loss Prevention & Security Association Annual Conference M Resort Las Vegas, NV rlpsa.com September 25–28, 2017 ASIS International 63rd Annual Seminar and Exhibits Dallas, TX asisonline.org

For more information about these and other industry events, visit the Events page at LossPreventionMedia.com. LP MAGAZINE | NOVEMBER–DECEMBER 2016

ANNUAL INDEX January/February 2016 The State of Video by Rob Borsch, Skyview Insights, and Colin Peacock, ECR Europe (p. 15) The Top Challenges Retailers Face by Jumbi Edulbehram, Oncam Grandeye (p. 39) The Soft Skills Gap and Generation Z by Bruce Tulgan, RainmakerThinking (p. 51) March/April 2016 Analytics: Where Big Data Is Taking LP and the Retail Enterprise by Chris Trlica, Contributing Writer (p. 15) Rethinking Loss Prevention and Shrink Management by William “Bill” Titus and Suni Shamapande, PricewaterhouseCoopers (p. 41) Netflix’s Making a Murderer by David Thompson, CFI, Wicklander-Zulawski (p. 55) May/June 2016 RFIC in Retail: The Journey to Adoption by Lee Pernice, LPC, Contributing Writer (p. 15) Readying Retail for Terrorism’s New Battleground by Garett Seivold, Contributing Writer (p. 45) Watch and Learn: Time Is Money, and Money Is Time for Fossil’s Global Ambitions by John Wilson, LP Magazine EU (p. 61) July/August 2016 Data Analytics Pyramid: Understanding What Is Happening in Your Stores by Johnny Custer, LPC, CFI, Sears Holdings (p.15) Amplifying Risk in Retail Stores by Adrian Beck, University of Leicester (p. 37) Supply-Chain Shortage Control by Erik Nelsen, JCPenney (p. 49) September/October 2016 Fifteen Years of Loss Prevention by Bill Turner, LPC, Contributing Writer (p. 15) Crisis Management: What Walgreens, 7-Eleven, and Other Crisis-Prepared Retailers Have in Common by Garett Seivold, Contributing Writer (p. 45) ORC and Diverters: Closing the Loop That’s Putting Stolen Goods Back on Retailers’ Shelves by Chris Trlica, Contributing Writer (p. 59) November/December 2016 Beyond Shrinkage: Introducing Total Retail Loss by Adrian Beck, University of Leicester (p. 15) Predictive Data Analytics: Untangling Inventory Variance to Identify Fraud at 7-Eleven by Ben Grisz, Alexandria Nguyen, Michael Zhang, and Molly Wolfe, University of Texas (p. 39) Fifteen Years of Loss Prevention: The Middle Years by Bill Turner, LPC, Contributing Writer (p. 67) 2016 Product Showcase and Resource Guide (p. 51) Interviews by James Lee, LPC, Executive Editor Walmart’s Neighborhood Market Grocery Business with Gary Smith (Jan/Feb 2016 p. 27) Changing Roles and Challenges in Loss Prevention with Stacie Bearden, The Home Depot; Tim Belka, Walgreens; Art Lazo, 7-Eleven; and Brian Peacock, Rent-A-Center (Mar/Apr 2016 p. 29) Forty Years of Researching Retail Loss Prevention with Professor Dick Hollinger (May/Jun 2016 p. 33) From Corporate Security to Restaurant LP and Safety with Rob Holm, McDonald’s (Jul/Aug 2016 p. 27) The Magazine, Certification, Baseball, and C-Suite Arrogance with Jim Lee, LPC (Sep/Oct 2016 p. 31) Building an LP Department Focused on People with David Shugan, Carter’s (Nov/Dec 2016 p. 27) Academic Viewpoint by Richard C. Hollinger, PhD Outplaced: Committing Loss Prevention Suicide? (Mar/Apr 2016 p. 24) 2016 NRSS Key Findings (Jul/Aug 2016 p. 26) The Container Store Fifteen Years Later (Sep/Oct 2016 p. 28) Ask the Expert Alternatives for Preventing Retail Theft with Dr. Lucia Summers, Texas State University (May/Jun 2016 p. 56) The Importance of Continuing Education for LP Professionals with Stuart Levine, The Zellman Group (Sep/Oct 2016 p. 44) Certification Adding Certification to a Master’s Degree with Jennifer Schaefer, MA, LPC, McDonald’s (Jan/Feb 2016 p. 46)

Helping LP Professionals in Their Time of Need by Gene Smith, LPC (Mar/Apr 2016 p. 50) Certification Benefits Both Retail and Non‑Retail Segments with Zuzana Crawford, LPC, PayPal (May/Jun 2016 p. 26) The Benefits of Certification for College Graduates with Marcy Smith, LPQ, Weis Markets (Jul/Aug 2016 p. 24) Drive Better Results in Your Company and Career with Weston Pate, LPC, Kmart (Sep/Oct 2016 p. 26) Adding Depth to Your Retail Knowledge with Tracey Fleming, LPC, Walmart (Nov/Dec 2016 p. 24) Diversity in LP by Mimi Welch and Nicole Rogers Infusing Wisdom into Potential (Sep/Oct 2016 p. 68) Editor’s Letter by Jack Trlica Magazine Expands its Industry Support (Jan/Feb 2016 p. 6) The Future of Retail Loss Prevention (Mar/Apr 2016 p. 6) Growing the Magazine Staff (May/Jun 2016 p. 6) Ongoing Contributions from LP Professionals (Jul/Aug 2016 p. 6) Thanks for Fifteen Great Years (Sep/Oct 2016 p. 6) Politics and Loss Prevention (Nov/Dec 2016 p. 6) Evidence-Based LP by Read Hayes, PhD, CPP Loss Prevention Leaders Must Win (Jan/Feb 2016 p. 36) Watch Trends to Plan for the Future (Mar/Apr 2016 p. 52) Working Together against Violent Crime (May/Jun 2016 p. 70) Go Big or Go Home (Jul/Aug 2016 p. 46) Be All You Can Be (Sep/Oct 2016 p. 42) Painting Pictures Is Never Easy (Nov/Dec 2016 p. 76) Future of LP by Tom Meehan, CFI What Is Big Data? (Jan/Feb 2016 p. 24) EMV: Not the End of Fraud, but a Helpful Tool (Mar/Apr 2016 p. 26) LP Associates of the Future (May/Jun 2016 p. 28) Bridging the Gap between Cyber Crime and ORC (Jul/Aug 2016 p. 35) Going Beyond the Gut: Fact-Based Research (Nov/Dec 2016 p. 48) Interviewing by David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP “I Don’t Remember.” (Jan/Feb 2016 p. 12) Take Some Notes (Mar/Apr 2016 p. 12) To Record or Not to Record: Part 1 (May/Jun 2016 p. 12) To Record or Not to Record: Part 2 (Jul/Aug 2016 p. 12) What Has Changed in Fifteen Years of Interviewing (Sep/Oct 2016 p. 12) Uniformity? (Nov/Dec 2016 p. 12)

Legends in LP by John Velke Revisiting the Legends in Loss Prevention (Sep/Oct 2016 p. 56) LPM Digital by Jacque Brittain, LPC, and Kelsey Seidler How Will Retail Respond to a New Wave of Cyber Crime? (Jan/Feb 2016 p. 60) In Terms of Professional Development, Relevance Is a Product of Evolution (Mar/Apr 2016 p. 68) No One Winning Approach to LP Culture (May/Jun 2016 p. 76) “All Thumbs” Has Taken on New Meaning (Jul/Aug 2016 p. 60) The Daily Pulse of Loss Prevention (Sep/Oct 2016 p. 78) Strategies, Messages, and Attitudes (Nov/Dec 2016 p. 00) My Turn Data Analysis: The Key to Good LP and a Great Career (Mar/Apr 2016 p. 65) Developing Your Own LP Professional Brand by Kevin J. Thomas, CFE, CFI, CBCP, PGA TOUR Superstores (Jul/Aug 2016 p. 54) Parting Words by Jim Lee, LPC Fifteen Years of Growth and Change (Jan/Feb 2016 p. 66) The Audacity (Mar/Apr 2016 p. 74) It’s Good to Be an Observer (May/Jun 2016 p. 82) Thinking About Things I’ve Been Thinking About (Jul/Aug 2016 p. 66) The Next Fifteen Years of LPM by Merek Bigelow and Kevin McMenimen, LPC (Sep/Oct 2016 p. 90) When You Deserve It, You Deserve It (Nov/Dec 2016 p. 98) Perspectives by Claude R. Verville, LPC Retirement and Thanks (Mar/Apr 2016 p. 48) It’s Never Personal; It’s Business (May/Jun 2016 p. 42) Partnering with Retailers by Dave DiSilva How eBay Works with Law Enforcement (Jan/Feb 2016 p. 26) Law Enforcement, Retailers Meet at Fusion Center (Jul/Aug 2016 p. 48) Strategies Grasping the Future and Today: A Balancing Act by Steve Sell, USS (Mar/Apr 2016 p.62) Using Social Media to Predict Shrink by David Speights, PhD, The Retail Equation (May/Jun 2016 p. 54) Transitioning Analytics When Stores Become Showrooms by Shannon K. Stilwell, CPP, CFE, Sysrepublic (Jul/Aug 2016 p. 36) Supply Chain by Maurizio P. Scrofani, CCSP, LPC Cargo Theft and Its Impact on the Retail Community (Jan/Feb 2016 p. 48) Supply Chain’s New BFF—The Omni-channel Experience (Nov/Dec 2016 p. 36)

Statement of Ownership Publication title: LossPrevention Filing date: 10/1/2016 Issue frequency: bi-monthly No. of issues annually: 6 Mailing address of office of publication: 700 Matthews Mint Hill Rd, Ste C, Matthews, NC 28105 Mailing address of headquarters: same Name and address of publisher, editor, and managing editor: Jack Trlica, same address as above Corporate owner: Loss Prevention Magazine, Inc., 10433 Pullengreen Dr., Charlotte, NC 28277 Stockholders: Jim Lee, 10433 Pullengreen Dr., Charlotte, NC 28277; Jack Trlica, 7436 Leharne Dr., Charlotte, NC 28270 Publication title: LossPrevention Issue date of circulation data below: July-August 2016 Avg. No. Copies No. Copies of Single Each Issue During Issue Published Preceding 12 Months Nearest to Filing Date Total no. of copies 26,667 27,000 Outside county paid/requested subscriptions 18,600 19,156 In-county paid/requested subscriptions 0 0 Other paid/requested distribution outside USPS 6,105 6,134 Requested copies distributed by other mail classes through USPS 0 0 Total paid and/or requested circulation 24,705 25,286 Outside county nonrequested copies 114 0 In-county nonrequested copies 0 0 Nonrequested copies distributed by other mail classes through USPS 0 0 Nonrequested copies distributed outside the mail 1,376 1,615 Total nonrequested distribution 1,490 1,615 Total distribution 26,195 26,901 Copies not distributed 472 99 Total 26,667 27,000 Percent paid and/or requested circulation 94.3% 94.0% Name and title of publisher: Jack Trlica, Editor and Publisher Date: 10/1/2016

NOVEMBER–DECEMBER 2016

LOSSPREVENTIONMEDIA.COM

PEOPLE ON THE MOVE Joshua Vote is now a District Manager of AP at Abercrombie & Fitch.

Jonathan Grogan, CFI is now a Regional LP Manager PBM at CVS Health.

Shawn Tolbert is now National Logistics Investigator LP at L Brands.

Charles Delgado, LPC has been named Regional VP of Store Operations for Academy Sports and Outdoors.

Cliff Rodriguez‎has been named Director of LP, Operations & Crisis Management at David Yurman.

Jason Guiste, LPQ was promoted to ORC Market Manager at Lowe’s.

Mark Odell was promoted to Director of LP at Advance America.

Chad Barnhill, CFI, LPC is now a District LP Manager at DICK’s Sporting Goods.

Daniel Perkins is now a Regional LP Manager at LP Innovations.

Mason Willard, CFI is now Regional LP Manager at Aeropostale.

Timothy Hatten is now a Regional LP Manager at Dollar General.

Brian Thompson was named Director of LP at A’GACI LLC.

Jordan Rivchun, MBA was promoted to Director of LP at DSW, and Linda Campbell is now a Regional LP Manager at DSW.

Chad Mackiewicz was promoted to Divisional LP Manager at AutoZone. Rosamaria Sostilio has been named VP of LP for Barnes & Noble. David Della Fave is now Sr. Manager of LP at Bed Bath & Beyond. Vijay Patel was recently named Corporate LP and e-Commerce Analyst at bebe stores. Deane Benedetti was promoted to Regional AP Manager at BCBG Max Azria Group. Matt Barnett was promoted to Regional LP Manager at Belk.

Casey Wright, CFI was promoted to Director of Warehouse Operations at Eby-Brown Company.

Amye Segura Goady was promoted to Manager of Investigations, and John Watson, LPC and Jessika Gordon Fields are now District AP Managers at Stage Stores. Rick Peck has been promoted to Sr. VP, Director of LP at Marmaxx, Ahmad Lightfoot has been promoted to VP, LP Director at T.J.Maxx, Chad Fischer, LPC and Jeremy Henderson were promoted to Regional LP Managers, Briana Burgess, CFI, LPC is now a District LP Manager at Marshalls, and Rachael Shelton is now a District LP Investigator at The TJX Companies.

John Slutz is now a Regional LP Manager at Family Dollar.

Al Aguirre is now a Regional LP Manager at New York & Company.

Jim Kallin is now Regional LP Manager at Finish Line.

Corey May, CFI, LPC was promoted to Sr. Manager, Global LP Operations, and Jennifer Thomason, CFI was promoted to Director of LP–Emerging Markets at Nike.

Alessandro Zanichelli was promoted to District LP Supervisor at TJX Canada/Winners.

Donald Lynch was promoted to Market LP Manager at Old Navy.

Blue Montez was named Director of LP at Torrid.

Jim Hosty is now Regional Director of LP at Paradies Lagardère.

Randy Sargent, CFI is now a Regional AP Manager at Toys“R”Us/Babies“R”Us.

Yonatan Olsha has been named Managing Director of EMEA at Profitect.

John Goldyn has been named LP Director, Store Operations at Ulta Beauty Stores.

Matt Cooper was promoted to Sr. Director, Centralized Operations, Johnny Galarza was promoted to Director Integrated Applications Systems, and Candi Gray is now National Account Manager at Protection 1.

Alex Melo has been named Director of Sales in the Security Systems and Integration (SSI) division, and Mike Campbell has been named a National Account Manager at USS.

Bryan O’Brien was promoted to VP of LP at Banana Republic, Athleta, and Intermix, and Jerry Oppedisano was promoted to District LP Manager at Gap Inc.

Tracey French, CFI has been named Director of LP at Boddie-Noell Enterprises.

Kathleen Avariano was promoted to Area LP Manager at Hermès of Paris.

Merrissa Nacht named Director of Investigations and Compliance at Century 21.

Brenton Smith is now a District LP Manager at Hi-School Pharmacy.

Anthony Gabino, CFI was promoted to Corporate LP & Security Manager and Erica Carroll to Manager of Digital LP for Chico’s FAS.

Brian Rhue was promoted to Sr. Investigator CIT Western Division, John Lee was promoted to Central Investigator, and Bryan Miller was promoted to Northern Division Internal Investigator at The Home Depot.

Michael Piotrowski, CFI is now a Regional LP Manager at Crate and Barrel.

Scott Wancus is now a District LP Manager at NAPA Auto Parts.

Aldo Lopez CFI, CFE, PI is now a Regional LP Manager at Spirit Halloween.

Michael Oren, CFI was named Director, LP and IA at Natural Markets Food Group.

Ali Hatipoglu was named Director of Security–North America with Gucci.

Cem Colpan is now a Regional LP Manager at Cotton On Group.

Jason Knight was promoted to Supply Chain Regional AP Manager, and Jeff Bevins is now a District Manager of Investigations at Macy’s.

Paul Evans is now a Multi-District AP Manager at Southeastern Grocers.

Oscar Mejia is now a Regional LP Manager at Equinox.

Joy Baucom, MBA has been named Director of LP for BevMo!

Lisa Low was promoted to Sr. Regional AP Manager at Coach Leatherware.

Steve Kang, CFI was promoted to Director of AP Operations and Analytics at lululemon athletica.

Tim Humble is now a Regional LP Manager at Smart & Final.

Reginald Hightower was named Sr. Director, Global Security, Kishalyn Martin was named Sr. Director of AP–North, Randy Allen, CPP and Tommy Walters are now Regional Directors of AP, and Jeff Lyons and Corey Finke are now Area AP Managers at JCPenney.

Matt Quealy was named Zone AP Manager for Rent-A-Center. Chris Holbert was named Sr. Manager of LP Operations in Distribution and Logistics at Ross Stores. Jacquelinne Aderhold, CFI is now AP Team e-Commerce Fraud Manager at Sears Holdings. Jessica Lynn Martinik and Calandra MacGregor are now District LP Managers at Sephora.

Mohamed Tazedait is now a Regional LP Manager at T-Mobile.

Steve Womer has been promoted to Director of Network Design at Vector Security. Bart Fuller was named Director, AP at Walgreens. Ryan Cutsforth was promoted to Market AP Manager at Walmart. Marlene Weber was promoted to Director of LP Global at Williams-Sonoma.

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

LP MAGAZINE | NOVEMBER–DECEMBER 2016

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LP MAGAZINE | NOVEMBER–DECEMBER 2016

PARTING WORDS

When You Deserve It, You Deserve It I

n the last sixty days, the LP industry had two senior executives announce their retirements. One was Karl Langhorst of Kroger. Jack Trlica and I had the privilege of visiting with Karl a few years ago in the Kroger offices in Cincinnati. We spent an evening and a day conducting an interview for the magazine. Karl was as open and honest as anyone we had ever interviewed. We did the interview, walked a few stores with him, and listened to many on his staff make presentations to us on the internal strategies and programs in place at Kroger. We were treated with a special respect that was memorable. Karl was a regular attendee at the magazine’s annual meeting and always had a smile on his face, kind words for others, and was always a contributor. He is a true gentleman and consummate professional. The other retirement was Bob MacLea, senior vice president of loss prevention at TJMaxx. I have known Bob for over twenty-five years. It would be very easy to just say “none finer,” but he deserves a few call outs to give you a perspective on the man. Bob cares about people. He has always wanted those in his organization to be successful and grow professionally as well as financially in the industry. He was a founding member of the magazine’s editorial board and a great supporter of education for LP’s young people. He was also a founding member of the LP Foundation and sat on the executive committee. As TJMaxx grew to the massive company it is today, Bob grew the internal structure of the LP team into a group committed and loyal to the brand. He built a premier organization of outstanding leaders and practitioners. And when not on the job, he was devoted to giving his time and money to others through a myriad of charitable groups—always trying to give others a hand up. He will be missed. Here’s a word to those who know these two individuals. If you care about good people, stay in touch with both of them. Tell them how much you appreciate their work as well as them as people. Let’s not forget those who made sacrifices to help others. When you deserve it, you deserve it.

NOVEMBER–DECEMBER 2016

Jim Lee, LPC Executive Editor

We recently celebrated out fifteenth year of publication in print and online. We are so grateful for your support. One group we just can’t thank enough and often does not get as much credit as they deserve are our advertisers and sponsors. I did not use the term “vendor” purposely. Vendor is often a term that describes someone who is trying to sell you something. They are much more than that. We have an advisory board that sponsors the magazine through their advertising and their presence—presence in the magazine, at our meetings, in the industry with LP professionals, and in the community. They truly represent this industry well and give more than they get back. Yes, they are in business to market products and services, but they do it with respect and honesty. When you deserve to have kind words written or spoken about you, you deserve it. Lastly, I wish to thank Merek and Kevin for filling in for me by writing the Parting Words column in the last issue. I was proud to have been the featured interviewee in the fifteen-year anniversary issue. I received some nice comments on the interview. Thank you. Those who did not care much for it did not comment to me. Thank you for that as well. There are a lot of items I want to comment on that we just do not have the space or time for here. Hopefully, we can approach those with articles in the future—things like was it so much different thirty years ago? What has been lost or gained along the way. Where are we getting the young people today to become the leaders of tomorrow? How does LP continue to play a key role in driving profit for your company? Will data become so important that people are forgotten? How do we become experts in the other functional areas of the company? And the list goes on. When you deserve to hear some of these thoughts and answers, you deserve it. NOTE: Just prior to press time, Karl announced he was engaged by the Latin American-based company ALTO to help it open operations in the US. We wish him the best.

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