LPPORTAL.COM | V13.2 MARCH - APRIL 2014 Think like a Chief Visibility Officer
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LOSS PREVENTION
MAGAZINE THE VOICE OF LOSS PREVENTION
IOBSE
A MESSAGE OF INCLUSION AND LEADING WITH PURPOSE ALIGNING LOWE’S LOSS PREVENTION WITH THE CUSTOMER EXPERIENCE PART 2: EAS SOURCE TAGGING 20-PLUS YEARS OF INNOVATION MEET GENERATION Z: THE NEXT WAVE OF RETAIL WORKERS
To all of those who have been with us along the way, the team at Protos Security would like to say...
Thank You
We have several new surprises in store and we can’t wait to present them to you in 2014!
866.403.9630 • www.protossecurity.com Visit us at the Retail Industry Leaders Association (RILA) Conference. Booth #421, Indianapolis Indiana, April 6-9. The Android robot is reproduced or modified from work created and shared by Google and used according to terms described in the Creative Commons 3.0 Attribution License.
CONTENTS
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A Message of Inclusion and Leading with Purpose
6 PUBLISHER’S LETTER Retail Consultant Symposium By Jack Trlica 8
Three decades of the IOBSE
10
By Jacque Brittain, LPC, Editorial Director, Digital
RETAIL SPONSORS
12 INTERVIEWING Does It Pass the Smell Test? By David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP
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24 ACADEMIC VIEWPOINT 2012 NRSS Executive Summary By Richard C. Hollinger, Ph.D.
Aligning Loss Prevention with the Customer Experience
50 EVIDENCE-BASED LP Making Things Happen By Read Hayes, Ph.D., CPP
The organizational restructuring at Lowe’s
62 CERTIFICATION Will Certification Benefit Solution Providers? By Gene Smith, LPC
By James Lee, LPC, Executive Editor
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65 SOLUTIONS SHOWCASE - Checkview
EAS Source Tagging: 20-Plus Years of Innovation
66 DIGITAL DIALOGUE Managing Industry News: Are You Staying Informed? By Jacque Brittain, LPC
Part 2 of the history of this important LP technology By Robert L. DiLonardo, Contributing Editor
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PRODUCT SHOWCASE
71
CALENDAR
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PEOPLE ON THE MOVE
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ADVERTISER DIRECTORY
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VENDOR SPONSORS
74 PARTING WORDS Make up Your Mind to Be Happy By Jim Lee, LPC
Meet Generation Z: The Next Wave of Retail Workers The second generation within the giant “millennial” cohort
By Bruce Tulgan, RainmakerThinking
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ON THE WEB
MARCH - APRIL 2014
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11 10 of the top 50 retailers
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PUBLISHER’S LETTER
Retail Consultant Symposium
I
’ve written before about attending users’ conferences sponsored by a solutions provider to discuss new developments and promote interaction among their clients. I was invited to a slightly different vendor-sponsored meeting recently that is worth mentioning. Tyco Integrated Security and Tyco Retail Solutions invited a group of industry consultants to their headquarters in Boca Raton, Florida, for a two-day meeting billed as a “retail consultant symposium.” There were consultants representing the loss prevention practices at Grant Thornton, KPMG, and PricewaterhouseCoopers, as well as industry executives from eBay and PCG Solutions. We sat around the conference table with Steve Sell, Kevin Lynch, Kim Warne, Randy Dunn, Ned McCauley, Brian Boyle, and numerous other Tyco executives, engineers, and support staff. The purpose of the meeting was a broad discussion of the mega-trends that were driving change in the retail industry and the services, products, and strategies needed to address the implications of these emerging trends. Tyco also used the opportunity to show the group not only what the latest products they currently have on the market, but also to provide a glimpse at what was still in research and development in the engineering labs back in the white-coat areas of the sprawling complex. It was fascinating to me to hear this collection of bright, articulate executives delineating both things I was aware of as well as things new to me. The discussion was very enlightening, at times very blunt and pointed, with the invitees providing both positive and negative input for the Tyco team. This was the first time I had been privy to a solution provider opening their door to a group of outsiders for the purpose of seeking direction on where the company should be headed to meet the needs of the industry. Sure, we often talk about a vendor asking a customer what their needs are, but this was a step far beyond. I applaud Tyco for putting this meeting together. Both sides of the table seemed
MAGAZINE
genuinely pleased with the two days. Personally, I thank Tyco for including the magazine. In addition, I recommend to other solution providers that you consider hosting something similar. You will likely find it most valuable.
Best B2B Magazine
Everyone likes a pat on the back. We are no different. The same week I was in Boca Raton, Fabi Preslar of SPARK Publications was accepting the award for Best Business-to-Business Magazine of the Year for the May-June 2013 issue of LP Magazine. The award was sponsored by Niche Media, which is a publishing-industry association focused on magazines that serve vertical business and consumer segments or niches; everything from dog groomers to aquatic farmers to, yes, loss prevention professionals. The presentation acknowledged the magazine’s industry relevance, commitment to meeting the needs of our readers, our ever-expanding digital presence, and the outstanding editorial and production quality. It really is an award that is shared by not just the magazine staff, but all the many writers and contributors to the content, the editorial and vendor advisory boards who help provide our industry direction, as well as the team at Spark who make the magazine look so great. Hopefully, you the readers will take some pride in the fact that your industry magazine received national recognition for chronicling what you as loss prevention professionals do every day.
Jack Trlica Editor and Publisher
LossPrevention, 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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700 Matthews Mint Hill Rd, Ste C Matthews, NC 28105 704-365-5226 office, 704-365-1026 fax EDITOR AND PUBLISHER Jack Trlica JackT@LPportal.com EXECUTIVE EDITOR James Lee, LPC JimL@LPportal.com EDITORIAL DIRECTOR, DIGITAL Jacque Brittain, LPC JacB@LPportal.com CONTRIBUTORS Robert L. DiLonardo Dave DiSilva Read Hayes, Ph.D., CPP Richard C. Hollinger, Ph.D. Walter Palmer, CFI, CPP, CFE Gene Smith, LPC Shane G. Sturman, CFI, CPP David E. Zulawski, CFI, CFE CHIEF OPERATING OFFICER Kevin McMenimen, LPC KevinM@LPportal.com DIRECTOR OF MARKETING Merek Bigelow MerekB@LPportal.com DIRECTOR OF DIGITAL OPERATIONS John Selevitch JohnS@LPportal.com SPECIAL PROJECTS MANAGERS Kat Houston Justin Kemp Karen Rondeau DESIGN & PRODUCTION SPARK Publications info@SPARKpublications.com 704-844-6080 CREATIVE DIRECTOR Larry Preslar ADVERTISING
ADVERTISING MANAGER Bonnie Dodson 828-479-7472 office 704-943-5797 fax BonnieD@LPportal.com WEST COAST REP Ben Skidmore 972-587-9064 office 972-692-8138 fax BenS@LPportal.com SUBSCRIPTION SERVICES
NEW OR CHANGE OF ADDRESS myLPmag.com POSTMASTER Send change of address forms to Loss Prevention Magazine P.O. Box 92558 Long Beach, CA 90809-2558 LossPrevention aka LP Magazine (USPS 000-710) is published bimonthly by Loss Prevention Magazine, Inc., 700 Matthews Mint Hill Rd, Ste C, Matthews, NC 28105. Print subscriptions are available free to qualified loss prevention and associated professionals in the U.S. and Canada at www.myLPmag.com. The publisher reserves the right to determine qualification standards. International print subscriptions are available for $99 per year payable in U.S. funds at www.LPportal.com. For questions about subscriptions, contact circulation@LPportal.com or call 888-881-5861. Periodicals postage paid at Matthews, NC, and additional mailing offices.
© 2014 Loss Prevention Magazine, Inc.
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This is just one way Axis’ IP solutions help retail stores minimize loss and maximize profits. Be the first to know how to stay one step ahead. Visit www.axis.com/retail
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EYEONLP Powered by LP Magazine
EDITORIAL BOARD
The magazine’s video news channel, EyeOnLP, continues to expand. Watch for daily recaps during the Retail Industry Leaders Association Asset Protection Conference April 6 - 9.
LP Magazine’s annual editorial board and vendor advisory board meeting brings together the top retail and solutions provider executives for business, networking, and a little fun. Check it out.
Leo Anguiano, LPC Senior Director, Asset Protection Rite Aid
Karl F. Langhorst, CPP, CFI Corporate Director, Loss Prevention, The Kroger Co.
Jim Carr, CFI Director, International Loss Prevention, Rent-A-Center
Bob MacLea Senior Vice President, Loss Prevention, TJX
Francis D’Addario Emeritus Faculty Member, Strategic Influence and Innovation, Security Executive Council
John Matas Vice President, Loss Prevention, Investigations, & Technology, Macy’s
Charles Delgado, LPC Vice President, Asset Protection, Meijer Patti Felz Vice President, Loss Prevention, Polo Ralph Lauren Tim Gorman Divisional Vice President, Loss Prevention, Asset Protection and Business Continuity, Walgreens
Hear Maurizio Scrofani, LPC, of Macy’s and Jim Carr, CFI, from Rent-A-Center talk about their passion for professional development and growing their asset protection teams.
Barry Grant Senior Vice President, Operations & Loss Prevention, CPI Corp
The LP Magazine App for both iPhone and Android Devices
Bill Heine Senior Director, Global Security, Brinker International
Our team continues to work around the clock to not only search for the most relevant news items impacting the loss prevention industry, but writing original content as well. It’s a commitment to a level of excellence, integrity, and education for the industry that separates us from the pack and provide you a level of quality that is unmatched.
Sonya Hostetler Vice President, Asset Protection & Safety, Walmart Stores U.S.
Have you downloaded the app yet? Our industry-first news app is now available for both iPhone and Android devices. The latest version includes notifications alerting you of breaking news. Download it today from your app store.
Frank Johns, LPC Chairman, The Loss Prevention Foundation
LinkedIn Group
Gary Johnson Vice President, Loss Prevention, Vitamin Shoppe
Powered by LP Magazine LinkedIn is not only a place for networking and connecting with individuals across our profession, but it’s also a forum for group discussions. So, let’s get talking, sharing ideas, and collaborating. Our group, Powered by LP Magazine, is growing daily. Join in the conversation. We want to hear from you.
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Paul Jones, LPC Senior Director, Global Asset Protection, eBay
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Chris McDonald Senior Vice President, Loss Prevention, Compass Group NA Randy Meadows Senior Vice President, Loss Prevention, Kohl’s Dan Provost, LPC Vice President, Global Loss Prevention, Staples Tina Sellers Director of Loss Prevention, Delhaize America Mark Stinde Vice President, Asset Protection, 7-Eleven Paul Stone, LPC Vice President, Loss Prevention and Risk Management, Best Buy Claude Verville, LPC Vice President, Loss Prevention, Safety & Hazmat, Lowe's Stanley E. Welch, LPC Vice President, Director of Loss Prevention, JCPenney Keith White Senior Vice President, Loss Prevention and Corporate Administration Gap Inc.
IT’S NEVER TOO LATE TO FINISH YOUR DEGREE 42% of security practitioners have some college education, but didn’t finish.*
In partnership with the:
Through partnership with the Loss Prevention Foundation, AMU will accept 3 semester hours of academic credit for LPCertified and LPQualified certifications. Combined, that’s a total of 6 semester hours (2 classes) towards your undergraduate degree.
AMU makes it easy to return to school: • 100% online convenience.
• Classes start monthly and are offered in 8 and/or 16-wk sessions. • Book grant offered for undergraduates enrolled in courses for credit. • Academic programs shaped with input from industry leaders. • Prior Learning Assessment (PLA) offered for experience and prior learning.
Visit PublicSafetyatAMU.com/security today and take the next step in completing your degree.
American Military University is part of the regionally accredited American Public University System and certified to operate by SCHEV. *The Security Industry Report submitted by the U.S. Dept of Justice, Dec 2010 (Cites 2008 O*Net survey data)
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RETAIL SPONSORS
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Join these great companies as an LP Magazine corporate sponsor. Email JackT@LPportal.com for more information. LP MAGAZINE | MARCH - APRIL 2014
11
INTERVIEWING
Does It Pass the Smell Test? S
ometimes the “smell test” will just not let you rest. You know, those situations when you listen to a story or a business practice and something just plain stinks. On the surface nothing appears to be wrong, but there is a smell just below the surface that makes you think, “This is spoiled milk.” We don’t have to taste it to know that it’s bad. A quick sniff, a glance at the label on the side of the bottle, the floating lumps, and our decision is made. Our last several cases failed the smell test because there were so many red flags. There were problems and circumstances that should have been further explored, yet they were overlooked. Occasionally, the smell test is wrong. But over the years we have seen that when the red flags appear, they consistently confirm that the milk was spoiled. Let’s take a look at the red flags we have found to be most useful in ferreting out the dishonest associate. We should note that there are great differences between an employee who is a thief, and one who is a fraudster or embezzler. While both types may be stealing from the organization, their methods are often very different, as are the red flags indicating dishonesty. In this column we will look at the characteristics of a fraudster. In the next edition we will discuss the red flags associated with the thief.
Lack of Internal Controls
Fraud can take many forms, from simple refund schemes to large-scale embezzlement to kickback cases. Fraud differs from simple theft in that it is intended to be an ongoing means to divert company money or assets. Fraud also tends to result in a larger dollar loss to the organization due to the duration. A thief, on the other hand, often commits an impulsive act because circumstances allow him to do so. Regardless of whether we are investigating a simple theft or a complex white-collar scheme, there will be red flags indicating an investigator should take a closer look at the individual. Large-scale frauds and embezzlements tend to be more costly to an organization because they often remain in place, diverting assets for years. Not surprisingly, we have found that some of the larger frauds occur in small businesses with fewer internal controls and audit structure. Those organizations that are in a growth mode where sales and expansion overwhelm the organization’s infrastructure
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by David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP
Zulawski and Sturman are executives in the investigative and training firm of Wicklander-Zulawski & Associates (w-z.com). Zulawski is a senior partner and Sturman is president. Sturman is also a member of ASIS International’s Retail Loss Prevention Council. They can be reached at 800-222-7789 or via email at dzulawski@w-z.com and ssturman@w-z.com. © 2014 Wicklander-Zulawski & Associates, Inc.
are extremely susceptible to fraud. The seduction of increased sales often causes smaller organizations to leave behind infrastructure and controls during rapid growth, giving rise to the opportunity for fraud. In many of the larger cases we have investigated, the fraudster was able to continue his scheme due to the lack of internal controls. Sometimes this was as simple as having one person responsible for both accounts payable and accounts receivable, allowing that individual the means to embezzle significant amounts of money. Another case involved a company that allowed a father to supervise the first shift and his son the second shift with no additional office oversight. Since many of the employees were Spanish-speaking, the office personnel could not effectively communicate with the employees and had no idea who was working on either shift. The father and son handed out payroll checks at the end of each week to their employees. Office personnel later discovered by accident that the father and son had failed to mention that an employee had quit, leaving the men with the ex-employee’s check. Rather than turn the check back in, they took the check to a local bar and cashed it. As the scheme escalated over years, we found that 10 percent of the company’s workforce was part of a ghost payroll operation benefiting the father and son team. It was surprising no one realized that labor costs had increased so dramatically over the past several years, but then good sales can cover a variety of problems.
Characteristics of Fraudsters
For a fraud scheme to work, an individual has to be able to manipulate accounting data or make decisions about purchasing or operations. As a result most fraud schemes are discovered in the accounting function with management personnel. One consistent aspect we have discovered over the years is the fraudster typically does not have a criminal background and has not been terminated for cause. Unlike the thief, this generally results in a longer-term employee who has successfully moved up the ladder with successive promotions and increased responsibilities. Interestingly, the majority of our large cases were detected through a tip or by accident, rather than continued on page 14
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through internal audit. Some of these cases resulted in tips from another vendor or more often, from employees who had become suspicious of their coworker. Age. The individuals involved in fraud, embezzlement, and kickbacks generally tend to be older, ranging from their late 30s to mid-50s. Many have been in the workforce for fifteen or more years, successfully moving to positions with increasing responsibility until they reached the point where they could manipulate the organizational controls. Another general aspect of these schemes is their duration. In most cases we have investigated over the years, the scheme lasted one to two years in duration before it was discovered. Because the individual has successfully reached a position of authority he or (less often) she is typically married with children. In several cases the spouse actively participated in the fraud by operating a front company that was used as part of a phony billing scheme.
Frauds differ from simple theft in that they are intended to be an ongoing process to divert company money or assets. They also tend to have a larger dollar loss to the organization because of their duration. A thief, on the other hand, often commits an impulsive act because circumstances allow him to do so. Personality. The fraudster’s management style is often autocratic, with an “It’s my way or the highway,” attitude. They often bully, demand, and manipulate their way through the business. Rules and controls are made for others. “I do what’s necessary to get the job done,” they say. Many of these people are master manipulators, turning conversations around, spreading rumors, stealing credit for another’s work, and convincing others to break the rules so “business can get done.” In this person’s world they are the sun, and the rest of us are minor planets revolving around their grandeur. Psychologists refer to these types as narcissists, who are the ultimate manipulators. They lack empathy for others and are so self-centered they feel entitled to act as they choose. They may butter someone up to get their way
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or guilt others into doing their bidding. They may bully or repeat a request over and over to get another to do something and then later selectively forget doing so. In a recent fraud case the senior executive scored “off the scale” on persuasion in his personality profile. But when you add a lack of empathy to that, persuasion becomes manipulation. He had gotten away with his tactics for so long he would look people in the eye and make up lies believing no one would ever check. After all, they never had before.
Motivated by Greed
What is the primary motivation to embezzle or commit a fraud? Most often it is simple greed. The greed motivation may manifest itself with several red flags. Since most fraud and embezzlement cases generate substantial amounts of money over time, the investigation should follow the money. The investigation generally begins by looking at a net-worth computation that estimates the individual’s salary against expenditures. When the expenditures outweigh the person’s salary, there is another source of income in play. Generally, this means that the fraudster is living beyond his means—one of the most common red flags associated with embezzlements, frauds, and kickbacks. This may reveal itself through lavish dinners, fine wine, multiple properties, frequent trips, or other lavish purchases. Sometimes the excessive spending will translate into financial difficulties that initiate the fraud or embezzlement. The person believes or has a perceived need for extravagant items, which push the employee’s financial situation into a difficult place that, in turn, motivates the establishment of the fraud scheme. Added to the financial spending, many fraudsters have a wheeler-dealer mentality that encourages risk-taking behavior. Our investigations have revealed many instances where this wheeler-dealer personality manifested itself as a risk-taking gambler. While any gambler may have a string of wins, eventually the house recoups its losses, which contributes to the dire financial straits the fraudster has found himself in through his extravagant purchases. In those instances where we have investigated collusion with an outside vendor or company, the losses have always been substantially higher. When collusion occurs, it is often the wheeler-dealer mentality playing loose and fast with the rules and internal controls that contributes to the decision to defraud the organization. Fraud and long-term embezzlements often have a much higher loss than those caused by the simple thief. The red flags accompanying high risk individuals have proved to be a good indicator whether to invest in what might prove to be a complex investigation. These individuals tend to be older, longer tenured, possess a wheeler-dealer mentality, and a love for the good life even when they might not be able to afford the purchases. Pay attention to the red flags, then have a good sniff at the business practices and decide whether the milk is spoiled.
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COVER FEATURE
IOBSE
A MESSAGE OF INCLUSION AND LEADING WITH PURPOSE By Jacque Brittain, LPC, Editorial Director, Digital
IOBSE
T
he tremendous diversity of our country has provided a foundation for our unique strength, prosperity, and resilience. We are a nation built on the promise of inclusion and acceptance, where every individual has the opportunity to find their place and make a difference. Realistically, this has been an evolving concept, with the culture of an entire country developing on a persistent pace with the maturation of our views on tolerance, adaptability, variety, and change. None of us needs a reminder of the hurdles that we’ve faced along the way, but we’ve learned through history and sacrifice that a blended but unified culture is one of our most important assets, laying the groundwork for some of our greatest achievements. Embracing diversity is becoming more and more important as the world continues to shrink and the demographics of our society transform in a global environment. This is just as important in the workplace, where we have come to recognize the value of an employee population that respects and supports our human differences. By learning to better understand each other we can better appreciate the unique contributions that people with variable backgrounds and experiences can bring to the workforce; creating a positive and nurturing work environment that maximizes the potential of all employees.
to the many challenges that we face. Company-wide strategies are then executed more effectively; resulting in higher morale and greater productivity. When the subject is diversity, the message should be one of inclusion. Our differences should help bring us together; finding common ground that lays the foundation for what is yet to come. This not only encompasses how we perceive others, but also how we perceive ourselves. But change is a process, not simply a destination. Inclusion shouldn’t be perceived as a goal; it should be accepted as a core component of our team dynamic. While we have made great strides, there are still additional steps that we can take. We need to continue to build a culture of acceptance and mutual respect where both attitudes and actions will encourage understanding; creating an environment where people of all attributes and backgrounds are valued, where every voice has a chance to be heard, and every individual has an equal opportunity to be successful.
Bringing Ideas to Action
Great things are often built on basic principles. Sometimes it just takes a group of extraordinary individuals to set things in motion. Once those ideas are brought to action, progress can be hard to stop.
“We were all aware that there were very few people of color in technical, management, and other leadership positions in professional security and loss prevention. All of us knew that we wanted to make a difference, but understood that it wouldn’t be an easy road and a lot needed to be done. We committed to making it happen. I never envisioned where it might go.” - George Logan As an industry, loss prevention has made significant strides in addressing diversity and inclusion in the workforce. We have learned that there is an essential value that comes from those with different backgrounds and points of view that can be vital to the overall success of an organization. Respecting individual differences encourages flexibility and the ability to adapt to the ongoing changes in the retail world. It can provide a larger pool of ideas, insights, and experiences, leading to more effective business strategies. A diverse workforce also tends to be more adaptable; potentially offering a greater variety of solutions
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Late one afternoon in September 1982, six security professionals had a chance meeting in the city of New Orleans. While each knew someone else in the group, not one of them knew everyone. All were in the city for a shared event—the American Society for Industrial Security (ASIS) annual conference. After several days of meetings and seminars, they were simply looking for an escape from the week’s activities. Their agenda was no more complicated than to take advantage of an opportunity to meet some new friends with common interests and expand their professional networks. Instead, they formed a bond |
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IOBSE that would change the lives of thousands of young men and women for decades to come. Berele S. Brereton, Curtis Hayes, George Logan, Marshall Thomas, Oliver Wainwright, and Stonewall Scott were all seasoned leaders in the security industry. Serving with prominent companies such as Smith-Corona Marchant (SCM), Sun Company, General Mills, Traveler’s Insurance, Mobile Oil, and Guardsmark, these men had impressive backgrounds that included doctorate-level degrees, extensive military service, and diverse experience in the field. They had all taken different roads to get to the top of their profession, working hard and making sacrifices to reach their goals. They all knew that they wanted to share their experiences with others and raise awareness of the opportunities that are found in the profession. But they all had something else in common, and held a shared concern. The conference halls and sessions had been filled with professionals from all over the country. Thousands had participated in this national conference. However, these six men were the only African-Americans that were in attendance. As they explored all of the various reasons why there appeared to be such limited diversity in these top positions, there were many difficult questions that needed answers. Still, the conversation remained constructive
and professional. Rather than disparaging the hurdles, questions focused on searching for solutions. How can we create additional opportunities? Are minority candidates aware that these types of jobs are available to them? Do our young professionals have sufficient mentors that will provide the guidance and direction they need to lead them down this potential career path? What is the best way to reach these individuals? Are we providing them with the resources that they need to make informed decisions about their career opportunities? “We were all aware that there were very few people of color in technical, management, and other leadership positions in professional security and loss prevention,” recalls George Logan. “All of us knew that we wanted to make a difference, but understood that it wouldn’t be an easy road and a lot needed to be done. We committed to making it happen. I never envisioned where it might go.”
Building a Plan
“We knew that if we were going to be effective, we needed to have a clear plan,” says Curtis Hayes. “Our message needed to be positive and constructive. Many simply didn’t realize that these jobs existed. Students were coming out of college looking for positions in law enforcement, and they didn’t understand that they had other options. Others were looking to extend their careers
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IOBSE beyond law enforcement and needed guidance to put them on the right track.” “We needed to raise awareness of the possibilities,” states Oliver Wainwright. “We wanted to build through networking and gain visibility through education. That’s how we started the International Organization of Black Security Executives, or IOBSE.” Once the mission was defined, the pieces began to fall in place. By the time they met the following year in Atlanta, they had a plan and had identified clear objectives. ■ They would address high-ranking law enforcement personnel, sharing information with prominent departments across the country to enlighten officers of a career path following their service with the police department or other agency. ■ They would target corporations, identifying other minority leaders from across the country to support their efforts, provide additional leadership and direction, and mentor those looking to enter the career field. They also looked for opportunities to discuss additional gateways with company leadership to help open doors and invite participation.
endless possibilities with the different types of jobs that you can explore.” “We also wanted to stress the necessity of being well-rounded and well-educated,” adds Hayes. “We would develop topics based on student needs and interests, but emphasize the importance of learning as much as possible.” “Having substantive information makes you more effective and efficient both personally and professionally,” states Wainwright. “It helps you gain visibility, and contributes to credibility as well as learning.” The message that took root during that chance meeting in New Orleans began to grow and gain momentum. While there were challenges to be faced along the way, commitment and dedication was rewarded with membership, and then results. Together, these men held the right combination of professional maturity and personal fortitude to get the job done. With a positive message and a professional tone, others began to listen, and then lead.
Passing the Torch
“I remember attending a conference years ago and coming across a young man that worked for Marshall
“We knew that if we were going to be effective, we needed to have a clear plan. Our message needed to be positive and constructive. Many simply didn’t realize that these jobs existed. Students were coming out of college looking for positions in law enforcement, and they didn’t understand that they had other options. Others were looking to extend their careers beyond law enforcement and needed guidance to put them on the right track.” - Curtis Hayes They would identify colleges and universities with prominent minority enrollment, visit those campuses, and provide seminars for the student population to educate them about the opportunities in security and loss prevention. It was important that the students were viewed as the focal point of the program. As tomorrow’s leaders, their involvement was essential. “We had clear messages,” states Logan. “We wanted to introduce them to the world of security and loss prevention, while making it clear that they had options. There are different areas within LP and security, and ■
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Field’s in Chicago. He was carrying a bag of golf clubs and was on his way to a local course,” recalls Hayes. “I told him that he needed to put his clubs down and talk with me. He said that he wanted to golf; but I persisted, telling him that he could golf anytime, and I just wanted a couple minutes. He responded by saying ‘No one talks to me like that except my father,’ and I replied ‘Well, today we both have the same goals in mind for you.’ I guess it got his attention, and it turned out to be a very important conversation for us. He agreed to sit down and talk with me, and eventually helped take IOBSE to another level.” |
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IOBSE That young man was Keith White. At the time, White was the loss prevention manager at the flagship store for Marshall Field & Company in downtown Chicago. Today he is the senior vice president of loss prevention and corporate administration for Gap Inc. Hayes credits White and “a group of exceptional leaders that supported, and then followed him” with “raising the bar even higher” for IOBSE. Men and women who are leading loss prevention and security programs from across the country are now actively involved in continuing the initiatives that began more than thirty years ago, providing education, learning opportunities, job opportunities, networking, mentoring, and professional development. Today, IOBSE holds two primary events each year—a Fall networking reception, networking booth, and educational program that coincides with the ASIS International conference, and an annual Spring conference that focuses on learning, education, and the development of tomorrow’s leaders. “Our primary mission is to impart professional resources, provide education and training, and facilitate the exchange of information, ideas, knowledge, and experience,” states Will Baker, senior director of LP for Ross Stores and current president of IOBSE. “Our message is one of inclusion rather than separation; with the fundamental goal to broaden the thought processes of our teams. We are
focused on the identification and development of talent, and helping to develop the leadership skills that translate to success in the business environment.” For the past several years the IOBSE Spring conference has been hosted by leading retailers across the country. In addition to the member events, a select group of thirty to forty college students are invited to attend the event and participate in educational programs, guidance and learning exercises, and a networking reception. Workshops are also held with subject-matter experts from various companies that share strategies for communication, networking, resume building, and job interviews. For several months prior to the event, committee members will visit a number of colleges and universities, speaking with professors, holding seminars, and evaluating students in order to hand-select the participants that will be chosen to attend. Committee members will consider a variety of factors in the vetting process to include academic performance, character, enthusiasm, community service, leadership, and other qualities that exemplify a winning attitude. Individuals can also apply for inclusion through the IOBSE website. Candidates are then selected and brought to the event with their expenses paid through the IOBSE. Following the event, scholarships are awarded to three students, each in the amount of $1,500, to help support their
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IOBSE college education. Many of the students have been hired by retailers immediately following the event. Further, the Loss Prevention Foundation donates ten LPQualified certification courses, including the exam fees. Successful completion of the LPQ courseware can also be submitted for college credits. “IOBSE does a superb job of identifying talented young professionals and bringing them to the conference,” says Gene Smith, president of the Loss Prevention Foundation. “We are proud to be a part of these efforts. Offering the LPQ scholarships is our way of supporting the program and educating the students on the benefits found in retail loss prevention. The LPQ designation will further set them apart and make them more marketable in the job market.”
Industry Support
A common thread throughout the success of the organization has been the support offered by the various companies, conferences, and service providers over the years. From the very beginnings of the program, Hayes, Logan, and Wainwright all spoke of the tremendous cooperation that they received from their companies, providing the time and resources that allowed the IOBSE the opportunity to grow and flourish. That same support is found today, with companies providing financial resources to make these programs successful, and offering additional
path. It is a growth industry with tremendous opportunities and mobility.”
This Year’s Event
College visits and student evaluations are currently underway across the country. With more than 120 industry leaders expected to attend this year’s conference along with the students, company representatives, and other participants, the event should underscore the vision that came to life during a chance meeting over thirty years ago. “We’ve seen this grow into a terrific organization,” states Logan. “We’re all very proud of how far we’ve come.” With good reason. This year’s Spring conference will be held at the Ross Stores corporate offices in Pleasanton, California, from April 30 to May 2. For more information on the conference or the IOBSE, please visit their website at iobse.org, or you can call 925-222-0552.
Supporting Diversity in the Workplace
Successful organizations and successful people are flexible, adaptable, and open to change. As our society has continued to become more diverse, our views and approach must continue to diversify as well. The complexity of our society and the cultures reflected by the people within the community must be incorporated into our business
“We needed to raise awareness of the possibilities. We wanted to build through networking and gain visibility through education. That’s how we started the International Organization of Black Security Executives, or IOBSE.” - Oliver Wainwright
assistance by inviting the conferences into their facilities. The 2014 Spring conference sponsors include Walmart, The Home Depot, Limited Brands, Cracker Barrel, Ross Dress for Less, Gap Inc., Sears Holdings, and solution provider Tyco Integrated Security. Recent IOBSE conferences have been held at the corporate facilities for Walmart (2011), Sears Holdings (2012), Limited Brands (2013), and Ross Dress for Less (2014). “These companies have always shown tremendous support,” states Wainwright. “This only further validates that there is a genuine reason why these talented individuals should consider loss prevention and security as a career
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models. We must focus on managing change; developing and supporting the work environment to make it more inclusive. Team motivation, satisfaction, and productivity can often hinge on our ability to appropriately and effectively lead a diverse team, improving the overall climate of the workplace, reducing conflicts, and improving retention. This can also enhance awareness and encourage our team members to be more innovative and responsive. All of this requires a commitment throughout retail leadership and at every level of management. It should be an integrated component of business planning and continued on page 22 |
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We should also focus on retention and finding ways to make all team members want to remain with our team. Embracing our differences and working together requires that we look for ways to assess people for who they are rather than what we see. As loss prevention professionals, we should make every effort to champion diversity efforts by example and in practice. A spirit of inclusion and acceptance should be reflected in the way that we approach our working relationships and the way that we interact with each other. Our LP departments should encourage and accept a balanced and diverse workforce. Our teams should be represented by both men and women, promoting an environment that welcomes individuals from all races, cultures, creeds, ethnicity, and any and all diverse backgrounds. We should provide an environment where all opinions and ideas are welcome, and all individuals feel comfortable, accepted, and appreciated. EDITOR’S NOTE: To read more about promoting diversity in the workplace, see “The Many Faces of Loss Prevention: Making Diversity Work in Your Organization” by Mimi Welch in the May-June 2002 issue. The article is available online at LPportal.com. ■
management initiatives, directly tied to key business processes, objectives, and operational decisions. We have to understand the value of inclusion and provide an environment where diversity is not only welcome, but one where every member of our team can flourish. ■ Information is the driving force behind understanding. Ownership is important, and employees are much more likely to support programs that they understand and believe in. ■ We have to be able to identify potential mentors within our organizations that can provide leadership and support. ■ We should continue to look for creative ways to help recruit talent into loss prevention. Recruiting functions, job fairs, websites, and other media channels that support various diversity groups should be explored as a means to bring talent to the forefront. ■ We must provide a work environment that is conducive to a diverse work force; where every member of the team feels welcomed and comfortable. ■ We have to learn to be more sensitive to different perspectives. This may refer to team dynamics, work/life/ family issues (for example, a sick child and family care), and other factors that can accentuate our differences.
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ACADEMIC VIEWPOINT by Richard C. Hollinger, Ph.D.
2012 NRSS Executive Summary
Dr. Hollinger is professor and chair of the Department of Sociology and Criminology & Law at the University of Florida, Gainesville. He is also director of the Security Research Project, which annually conducts the National Retail Security Survey. Dr. Hollinger can be reached at rhollin@ufl.edu or 352-294-7175. © 2014 Richard C. Hollinger
I
f you are a regular reader of our report, you already know that there are always more similarities in the National Retail Security Survey (NRSS) findings from year to year than differences. This is to be expected in a stable, mature industry that does not fluctuate dramatically in its loss prevention practices and asset protection procedures. However, there are some notable differences this year from the previous year’s results. Despite the fact that we are still mired in sluggish economic times, this year we can report that 93 retail corporations sent in questionnaires. Not all surveys were fully completed, which caused some missing data problems. This response level is down from the number of firms that participated last year, which is a disturbing trend. Despite the turbulent retail environment, many loss prevention executives, directors, and managers believe in the importance of this research effort and support it annually. For this we are quite appreciative. While the data are reported anonymously, we can assure the reader that corporations that have responded to our survey represent the vast majority of the top 100 major retailers in the country.
Overall Shrink Rate
This year the overall inventory shrinkage rate of 1.47 percent was somewhat higher than reported in last year’s survey. Despite this slight increase over last year, the reader should note that over the past few years, inventory shrinkage continues to remain at the very lowest levels observed in the nearly two-decade history of this survey. We believe that this is remarkably good news and demonstrates clear and consistent progress in the war on reducing retail losses in spite of the present economic slump and the threat of organized retail crime (ORC). The news is not all good, however. Although the shrinkage percentages are at significantly lower levels than observed during the very early years of the survey, the dollar value that this loss represents continues to remain at record levels due largely to an increase in U.S. gross retail sales. In other words, this huge $44 billion dollar loss is more likely the result of moderate growth in the retail economy, not the result of significant increases in inventory shrinkage percentages.
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High-Shrink Segments. Five retail segments reported significantly higher than average shrinkage levels: ■ Crafts and hobbies ■ Supermarket and grocery ■ Children’s apparel ■ Men’s and women’s apparel ■ Women’s apparel This result is largely due to the especially high desirability of items sold in these particular chains, making theft much more attractive to ORC gangs, amateur shoplifters, and employees. Low-Shrink Segments. Alternatively, the lowest shrinkage stores generally have the most sophisticated security systems and more often require customers to pay for merchandise before they are allowed to physically acquire purchases: ■ Discount stores ■ Department stores ■ Sporting good and recreational products ■ Drug store and pharmacy ■ Specialty accessories ■ Liquor, wine, beer, or tobacco products ■ Shoes ■ Jewelry and watches ■ Books, magazines, and music ■ Electronics, computers, and appliances Shrink by Location. Stores that are typically located in enclosed malls had a below-average shrink rate of 1.09 percent. Those located primarily in standalone stores reported an above average shrink rate of 1.56 percent as did those located in strip centers or strip malls, who reported 1.73 percent.
Sources of Loss
Stability was seen once again in the respondent’s assessment where they attributed the source of their retail inventory losses. In fact, both employee theft (41%) and shoplifting (33%) reported similar proportions to those in last year’s survey. Employee theft was the highest in the following segments: ■ Liquor, wine, beer, or tobacco products ■ Discount stores ■ Department stores ■ Women’s apparel ■ Drug store and pharmacy ■ Children’s apparel ■ Men and women’s apparel continued on page 26 |
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Shoplifting was the highest in the segments below where the number of sales associates available to deter this crime is often the lowest: ■ Specialty accessories ■ Sporting goods and recreational products ■ Electronics, computers, and appliances ■ Women’s apparel ■ Men and women’s apparel ■ Children’s apparel ■ Crafts and hobbies Every year retailers incur staggering monetary losses as a result of employee theft, shoplifting, administrative error, vendor fraud, and cash, check, and credit card chargebacks. Last year was no exception, with $44.247 billion of lost profits forfeited to inventory shrinkage alone. The two largest problems continue to remain employee theft at $18.1 billion and shoplifting at $14.6 billion. Response to Theft. When we looked at the most likely causes of inventory shrinkage, both sales associate turnover and heavy reliance on a part-time workforce are again the two most obvious correlates. As in past years’ research, the NRSS examined the formal response to those detected for internal dishonesty and external crime. Termination is the most common response to employee theft. While prosecution is threatened in most every firm, this year actual criminal prosecutions decreased. More rapid detection of dishonest employees seems to be keeping the reported dollar loss totals down from last year. As for shoplifting, apprehensions and civil recovery are still the most common responses reported. Gift Cards. This year, we again tried to collect baseline data on gift card losses with marginal success. Missing and incomplete information continues to be a serious problem. Although the dollar losses were higher than in past years, there is still a lot of fluctuation and missing data. Therefore, we will continue to track the changes and wait for additional annual data to get more stable comparison numbers before we can suggest any trends. Burglary and robbery are still major concerns and very dangerous sources of financial loss. Burglary cases result in more average dollar loss to retailers each year and outnumber robbery cases (0.79 burglaries versus 0.50 robberies per $100 million in sales), though this year marks a decrease in incidents reported on the NRSS.
LP Budgets
Fortunately, this year we can report a slight increase in LP budgets as a percent of total sales. Specifically, we found that 0.38 percent of retail sales were earmarked to fight the battle against loss, with most of this money going to fixed payroll expenses. With limited LP budgets and even less money for high-tech countermeasures, more of the day-to-day responsibility for loss prevention
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MARCH - APRIL 2014
is being shifted to overworked store managers, untrained sales associates, and inexperienced LP personnel. Diversity. The diversity of LP personnel this year appears to be decreasing, most notably among women and African-Americans. However, diversity among Latinos and Asian-Pacific managers is increasing. The percentages of women, racial, and ethnic minorities are still well below national averages across the entire retail LP industry. Budget Allocation. Efforts are still being committed to pre-employment screening of applicants. During the coming year the “hottest” screening countermeasure is expected to be criminal history checks, followed by multiple interviews, honesty testing, and computer-assisted interviews. Employee loss prevention awareness is also receiving increased attention using the latest media and technology. Use of web-based communications with associates, and CD-ROM or Internet loss prevention training strategies are expected to be the hottest awareness programs this year. Technology-based asset control measures remain an integral part of all loss prevention programs. POS exception reporting and refund control are the hottest two techniques planned for increased use in the coming year. As was the case last year, the newest countermeasures technique against loss is the implementation of sophisticated computerized exception-reporting software systems, many linked to high-speed broadband IP-monitored CCTV cameras. The hottest new LP technology to be utilized in 2013 is IP analytics. Among the various LP technologies available, the switch to digital CCTV cameras and recorders is all but complete. Remote IP-based CCTV video and POS exception-based CCTV interface systems are also hot technology slated to see increased usage in 2013.
Read the Full Report
In summary, the financial losses inflicted on the retail industry remain even more significant in their size and scope. One only can speculate how much more profitable this industry could be if these many sources of inventory shrinkage and other forms of financial loss could be significantly reduced. Given the declining percentages of annual retail sales dedicated by senior management to fight this war on retail crime, the professionals in loss prevention and asset protection have a daunting task as they continually try to leverage technology and deal with reduced staffing. Clearly this report demonstrates conclusively that companies that commit more resources to pre-employment screening, staff awareness programs, asset controls, and loss prevention systems will be those who have the best chance to win the growing war against retail crime. For those who wish to read the full report, the link to the 2012 National Retail Security Survey Final Report is soccrim.clas.ufl.edu/files/nrssfinalreport2012.pdf. Use the password nrss2012. |
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INTERVIEW
ALIGNING LOSS PREVENTION WITH THE CUSTOMER EXPERIENCE THE ORGANIZATIONAL RESTRUCTURING AT LOWE’S By James Lee, LPC, Executive Editor
INTERVIEW
Lowe’s LP and Safety Leadership Team
Art Barraza, LPC Divisional Director, South
Sandy Hinson, LPC John Doggette, LPC Scott Draher, LPC Director of LP Process Director of LP Director of LP Operations Merchandising/Vendor and Strategy Shrink Solutions and Analytics
EDITOR’S NOTE: Claude R. Verville, LPC, is vice president of loss prevention, safety, and hazmat at Lowe’s Companies, Inc. He joined Lowe’s in 1993 and was promoted to his current position in 1998. Verville started his LP career in California at Robinson-May, a subsidiary of The May Company, where he worked thirteen years, leaving as director of investigations. Verville is a leading voice in the LP industry as a member of the Loss Prevention Foundation board of directors, LP Magazine editorial board, and Retail Industry Leaders Association steering committee. EDITOR: Believe it or not, it was 2003 when we last interviewed you for the magazine. Obviously, a lot has gone on in the past decade. Tell us about some of the more significant changes at Lowe’s. VERVILLE: Probably the most significant change has occurred over the past three years. Lowe’s underwent a major reorganization that established two chief officer positions—the chief customer officer and chief operations officer. This reorganization was meant to ensure that strategically everything we do is designed around the customer experience. To reach that goal, we had to establish a completely new decision model as well as break down barriers that prevented collaboration internally. The result is that the majority of the final decision on new programs resides with the chief
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Hank Jones, LPC Director of Safety and HazMat
customer officer. Operations has to execute what they propose. Everyone has to align with the strategy, so the reorganization ensures that everyone has a voice in the process. EDITOR: How does that process work? VERVILLE: The chief customer officer has various teams who innovate, design, and ultimately optimize an omni-channel sales platform to meet a strategic objective. As part of the operations team, we ask questions like, is it executable without giving up controls? Is it cost prohibitive? What changes are necessary at the store level to deliver and execute effectively? EDITOR: Can you provide a concrete example of what you’re talking about? VERVILLE: Let’s take mobile POS, which obviously is a hot topic right now. That’s one of the few recommendations from the customer experience team that we’ve had to say, we’re not ready for just yet. Here’s why. Our stores have four exits. It’s not uncommon for people to boldly walk out carrying power tools, Dyson vacuums, or other expensive merchandise. Our front-end team is trained to watch for that and ask to verify the receipt. That happens hundreds of times a day for us and represents tens of millions of dollars in preventions per year. If you add mobile POS to that environment, you would impose significant challenges to the front-end MARCH - APRIL 2014
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Curtis Leininger, LPC Dave Roberts, LPC Divisional Director of Director, West Investigations
Terry Sullivan, LPC Divisional Director, North
teams. Plus, it would negatively impact the customer experience for the vast majority of our legitimate customers if we’re questioning their purchase. So, we have to make some operational changes before we’re ready for mobile POS. EDITOR: So loss prevention is part of the operations team? VERVILLE: Since I took over the department, I have reported to various people, including the chief administrative officer, the chief financial officer, and the chief risk officer. Today, I report to Rick Damron, our chief operating officer. Rick has been an operator for over thirty years with background in merchandising, logistics, and operations. He is really in tune with the role of loss prevention and safety in the corporation. He fully understands and supports the investments we make to reduce accidents and prevent shrink. He just gets it, which gives me an unbelievable seat in the house. Incidentally, Rick will be the keynote speaker this year at the RILA asset protection conference in April, so the conference attendees will get a chance to hear his views on the role LP plays in today’s corporate structure. [See page 25 for more information about the RILA conference.] EDITOR: How has this new structure changed what LP is doing today that you might not have done five or ten years ago?
INTERVIEW VERVILLE: Like many retailers, our sales on dot-com have been going vertical the past several years. Customers place their order online and either have it sent to their home or pick it up at their local store. For us, the vast majority of customers chose to pick up at the store, which obviously is the customer experience they want. But it also creates some challenges. EDITOR: How so? VERVILLE: When the customer buys something online, our system says we have it. Let’s say you bought five widgets. The system showed we had five in inventory. At the same time, someone could be standing in line to purchase two of the widgets. So, when you arrive at the store, there are only three. You’re not going to be happy. The accuracy of what is on the shelf has never been more important than it is today because of dot-com. Loss prevention has always played a significant role in ensuring inventory integrity for investigative purposes,
Probably the most significant change has occurred over the past three years. Lowe’s underwent a major reorganization that established two chief officer positions— the chief customer officer and chief operations officer. This reorganization was meant to ensure that strategically everything we do is designed around the customer experience.
and now it is even more critical in preserving the customer experience. What that means is we have to leverage technology and align our initiatives to improve the accuracy rate of our inventory. EDITOR: How will you do that? VERVILLE: Today at the stores, employees basically have a clipboard and are asked to count specific assortments within their departments. They enter their top-selling items, the second-tier sellers, and the items that may only sell every three or four weeks. One of our new technology initiatives replaces that paper-and-pen program so that now employees will not only be prompted to look at the various top-sales items, but also the top shrink items, because they may be the reason your stock level is not accurate. We’ll also add the promotional items that need to be in the pipeline as well as the top-selling dot-com SKUs. All this will allow us to ensure that our in-stock is extremely accurate; meaning what we
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INTERVIEW say we have in our system at any one point is actually on the shelf. EDITOR: Has the reorganization changed the structure of your LP organization? VERVILLE: Absolutely. A few years ago, the company downsized from five operating divisions to three and from twenty-one regions to fourteen. That meant that I had to displace two divisional directors and seven regionals. It was a very difficult time. But a lot of good things came out of the restructuring. For example, because the company was getting more and more strategic, I was involved in lots of internal meetings; more than I could attend. So I sent whoever wasn’t traveling to sit in for me in a lot of those meetings. Or we just weren’t represented in a meeting. I’m talking twenty to thirty meetings a week. It wasn’t the ideal operating model. One of LP and safety department’s greatest supporters, Dennis Knowles, EVP of operations, was in a lot of those meetings and always covered our back. If we weren’t in the meeting, he would tell them to be sure to review the initiatives and the impact to our controls and operating procedures by our team. He pulled me aside one day and told me I had to figure out how to ensure consistent representation in these strategic meetings. Thanks to his prodding, I created a new position, director of strategic planning and strategy for LP, and put one of the divisionals who was displaced by the reorg in that position; a young man named Scott Draher. His role is to effectively engage with all these design and planning meetings to ensure that we align with the strategy. It’s one of the smartest things I ever did, thanks to Dennis. The result is we are more integrated today than ever before. EDITOR: How else has your organization changed? VERVILLE: If you go back to the last time you interviewed me, only two of the eight direct reports I had back then are still with me. Many have moved on to run their own organizations,
30
like Jeff Fulmer, Cornell Catuna, Leo Anguiano, Jon Grander, and Jesse Stanley. Others have crossed over into store operations. The two remaining are Art Barraza and Dave Roberts. Art is a divisional director, and Dave is director of investigations. Jill Evans retired, and Sandy Hinson is now the director of LP operations. Hank Jones is now my director of safety. John Doggette, who was the other divisional displaced in the restructuring, in now director of LP merchandising/vendor shrink solutions and analytics. EDITOR: Who are your three divisional directors? VERVILLE: Art Barraza has the south division. Terry Sullivan, who
The accuracy of what is on the shelf has never been more important than it is today because of dot-com. Loss prevention has always played a significant role in ensuring inventory integrity for investigative purpose, and now it is even more critical in preserving the customer experience. What that means is we have to leverage technology and align our initiatives to improve the accuracy rate of our inventory.
is actually in his twelfth year, has the north division. And Curtis Leininger has the west. EDITOR: That’s a lot of changes over the years. VERVILLE: It is. Nobody, other than Terry, has had the same role over the last five, seven, ten years. I have intentionally cross-trained all my direct reports multiple times; moving them and interchanging them frequently. EDITOR: Why did you do that? VERVILLE: It’s meant to broaden their horizons, to grow their knowledge base, to give them greater value as part of our succession plan, and to promote collaboration. Let me explain why I’ve done this. Our divisional directors were flying around in the corporate jet with the senior VP of operations as their primary partner. They walk through stores to validate the execution of our programs. The divisional directors manage the district managers of LP, who manages the LPs in the stores. So division directors are generalists and didn’t always understand or appreciate the other roles on the team. When they come back from their travels and attend my staff meeting on Monday, they hear my director of safety and hazmat talk for five minutes about the twenty-six meetings he went to that week. Our director of investigations talks about all the dot-com fraud, the credit card fraud, the important investigations, and all the ORC investigations in five minutes. The director of merchandising shrink controls talks about the countless meetings this time of the year with the nursery vendors. Why? Because nursery shrinkage, which is a perishable, is the number one shrinkage category. Not tools. Not fashion plumbing. Not outdoor power equipment. Sandy Hinson, who manages all of our budgets, talks about all continued on page 32
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INTERVIEW continued from page 30
of the company initiatives. For example, we’re currently upgrading all 1,700 stores with Verint video management software. Scott Draher talks about the innovations and strategic teams he’s involved with. There’s all kinds of technology getting ready to roll out, like H3 Lite; FaceFirst, which we’re going to test; exception-based reporting. Five minutes in our staff meeting can’t do it all justice. In order to continue to develop the entire team and ensure a high-level of collaboration, I felt it necessary to continually rotate individuals through various positions from generalist to specialist and specialist to generalist in order to provide them with a different LP or safety perspective, to broaden their horizons, and to give them an enterprise focus. The end result has been to bring the team closer together personally and professionally with an increased appreciation for the various roles each team member plays. EDITOR: That’s a great management lesson. VERVILLE: It’s another example of some of the changes over the past several years. It’s called servant leadership. Every executive in Lowe’s has been challenged and trained to provide servant leadership for their teams; meaning it’s not about us, it’s not about me. It’s about all those individuals who make us successful day in, day out. It’s about their development; their level of engagement. It’s about their future. As servant leaders we’re supposed to work selflessly to provide the recognition, the rewards, the encouragement, and the motivation to make others successful. As managers, we’re just the benefactors of everything that others are doing. So when you get your bonus check, you should thank your regionals, your area managers, and the people in the stores because they’re doing the hard work. The servant leadership model is something that is now part of the culture at Lowe’s.
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Here’s our message— safety is where nothing happens. Personal safety is our highest priority. When nothing happens, you get to go home and attend your child’s soccer game or recital. You get to go home and enjoy the reasons why you work. When your employees believe you truly mean that, their engagement is better; their morale is better; they’ll follow you anywhere.
EDITOR: Despite all the changes and downsizing, I suspect the overall objectives of your department are very similar to what they were ten years ago. VERVILLE: Our four key business objectives today are the same as they were years ago in this order—safety, hazmat, and environmental compliance controls; shrink controls; zero liability as a result of our LP programs; and expense control/ROI. EDITOR: Why do you put safety as your first objective? VERVILLE: My epiphany about safety came in my first year at Lowe’s. I got a call from a regional out of South Carolina. An employee was deployed on a forklift up on the top shelf pulling an appliance, and for whatever reason he untethered himself and fell to his death. That day I realized that I was no longer at May Company MARCH - APRIL 2014
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anymore; this was not soft lines. Then about a week later a forklift operator wasn’t using an escort, meaning there was no employee walking in front of it, and ran over a women’s leg. When I became the VP, I was adamant that we would be recognized as having a best-in-class safety program. Now, everything begins with safety—every conference call, every business discussion, every metric that we measure, and every store visit. EDITOR: How did you achieve that objective? VERVILLE: We do a daily safety and hazmat review of our stores that gives us the analytics by department to allow us to know where we should focus in each department. Back in the day, we had the opening store manager walk the entire building with a clipboard and a checklist. The problem was we were depending on one person to check the entire store. Plus, we were excluding hazmat as well as non-selling areas, such as receiving, delivery, parking lot, and it wasn’t department-specific. Today, every person who manages a department is accountable to complete the reviews daily. This gives us timely, department-specific data on the exposures we need to focus on by store, by market, by division, and company-wide. EDITOR: Give us an example of how you use the department-specific information. VERVILLE: As you might imagine, the exposures in paint are far different than exposures in lawn and garden, which in turn is different from lumber or flooring. Now, based on the daily audit, using analytics we know the three things that drive claims in each department. Take lawn and garden, for example. We require that all palletized bag goods shipped to us must be shrink-wrapped. We examine those shipments to ensure that the shrink wrap is intact and properly securing the product. If we identify a problem, our corporate continued on page 34
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INTERVIEW continued from page 32
safety team will get involved with our merchant and vendor to ensure that future shipments are corrected. Our daily electronic reporting allows us to be proactive in preventing incidents. EDITOR: Where does that information go on a daily basis? VERVILLE: It goes into our store managers’ case management database. It’s our portal for our entire book of business. I recall when we first rolled this out after doing a test in one region, I made a presentation to our VPs and market directors of operations. I called on one VP to stand up and said, “Bill, do you know what the compliance levels are in all 100-plus stores in your region, and what they have done as far as the safety review? It’s 11:00; it should be good by 9:00 a.m.” He looked puzzled and asked, “How would I know?” So, I asked the same question of the
safety is our highest priority. When nothing happens, you get to go home and attend your child’s soccer game or recital. You get to go home and enjoy the reasons why you work. When your employees believe you truly mean that, their engagement is better; their morale is better; they’ll follow you anywhere.
VP from the test region. He stood up and said, “Yes, I have it right here.” He pulls out his iPad and says, “At this point my stores are 80 percent compliant. The top three departments are bam, bam, bam.” That’s the new world we all live in. Information is available at all times. We’ve taken the technology LP has traditionally used for shrink, but leveraged it towards safety as well.
EDITOR: Your second objective is shrinkage. Talk about what you’re doing in that area? VERVILLE: The challenge today is we are delivering more product than ever before. We have the second largest delivery fleet in the country. Dot-com has changed the landscape with customers ordering online for store pick up. Even with those changes we are still very focused on the operational basics. As far as shrink goes, I believe that 40-plus percent of our losses are front-end shrinkage, with the vast majority of that, contrary to popular belief, simply inadvertent mis-scanning
EDITOR: What have been the results of this focus on safety? VERVILLE: Over the last decade we’ve reduced our injury rate by over 50 percent. The most important part of our focus on safety is we’re communicating to our employees that we care about them. It’s about our employees. If our employees can keep each other accountable, if our employees care enough about each other as human beings, the customers will be safe by default. Here’s our message—safety is where nothing happens. Personal
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INTERVIEW issues by cashiers, rather than intentional internal theft. EDITOR: That’s different than what industry surveys state. What makes you believe that? VERVILLE: Here’s how I quantify that. We did a LaneHawk test a couple of years ago in several of our stores. As you know LaneHawk uses cameras and software that integrates with your POS to monitor items that are in the cart that are not scanned. After the transaction is complete, it gets reconciled electronically and produces a report. For our test, we determined a percentage error rate of X percent and, from that, a ratio of transactions to errors. We took the average dollar value of those errors times the 80 million transactions we do per year chain-wide. The resulting number was exactly 40 percent of our shrinkage at the time. For various reasons, we did not rollout LaneHawk. So today, we do cart testing. Every month, every store
loads up a cart with items hidden inside other boxes, items with barcodes switched, things like that. They put the register in test mode, and the cashier scans everything. The cashier knows it’s a test, but they still make errors. Right now, we lose about $16 a cart. If I go back to the LaneHawk error rate, that equals about 40 percent of my shrinkage today. Front-end loss is my focus and cashier training is constant. EDITOR: What about shoplifting? VERVILLE: We average only one-and-a-half shoplifter detentions per store per year. But we average over 120 recoveries without detentions (RWDs) per store per year, which by the way are not done by our LP personnel. They are done primarily by our front-end cashiers. We don’t allow our LP staff to stop customers who blow past the front end unless they have seen the person come in without the product, take the product, and leave without paying; basically the
LP MAGAZINE | MARCH - APRIL 2014
industry’s required five elements for apprehensions. But the cashiers can stop them for the purpose of executing a receipt validation, which all retailers do. So, those 120 RWDs more than make up for the one-and-a-half shoplifters per year completed by our in-store LP/safety personnel. Our learning organizational effectiveness department has done a terrific job putting together training curriculum for our front-end personnel. EDITOR: What other shrink issues are you seeing? VERVILLE: There is nothing more complicated than do-it-yourself. That’s not just me saying it. Ask Mike Lamb. There are all types of operational complexities—returns, repairs, special orders, installations, delivery, lumber, lawn and garden. Like I said earlier, our number one shrinkage category is nursery plants. It’s not theft. It’s failure to scan plants and it’s perishables; dead plants that we have to write off because
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INTERVIEW we don’t manage inventory levels appropriately. All these complexities are part of shrinkage. Our shrink program is an operational-based program that’s resulted in a 50 percent reduction in our shrinkage rate over the past decade. EDITOR: The third objective you mentioned was zero liability. What do you mean by that? VERVILLE: Liability exposure from apprehensions at Lowe’s is no different than it is at Walmart or anywhere else. Yet execution-wise it can be very different. We have always had very specific detention guidelines and measurements to ensure compliance to those guidelines. The measurements help us identify when we have cowboys in our organization who have difficulty with our guidelines. We measure infinitely and analyze the root cause. One of our core metrics is the number of altercations as a ratio to shoplifter apprehensions. How many apprehensions have some form of altercation? How many injuries have occurred as a result of shoplifter apprehensions? If you have a high propensity of those metrics, you are likely going to get false arrests. We measure that. And the last thing we measure is the number of questionable detentions reported as a percent of total apprehensions. Everyone throughout the LP organization from top to bottom all know how we measure these things and are all on the same playbook. At last year’s RILA conference I co-presented with Jesse Stanley on a new program called “Addressing Disruptive Behaviors,” which provided a tool or verbal methodology for our in-store LP personnel to utilize in quickly recognizing potential violent behaviors or tendencies when conducting a detention of a shoplifter. We went from basically a reasonable-force guideline to a full-disengagement guideline that reduced our number of altercations by more than 50 percent and the
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number of injuries by 66 percent. Although the team was a bit apprehensive initially, we reminded them that historically at Lowe’s only a small percentage of the shoplifter’s become combative while the vast majority cooperate. We were not backing away from shoplifting in general, we were merely providing them a training tool to better equip them to identify potentially behaviors before they escalated and injuries occurred. Because what are we all about at Lowe’s? It’s about safety.
Every executive in Lowe’s has been challenged and trained to provide servant leadership for their teams; meaning it’s not about us, it’s not about me. It’s about all those individuals who make us successful day in, day out. It’s about their development; their level of engagement. It’s about their future. As servant leaders we’re supposed to work selflessly to provide the recognition, the rewards, the encouragement, and the motivation to make others successful.
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Safety includes our LP and safety personnel, other Lowe’s personnel, the customers in the area, as well as the subject who shoplifted. EDITOR: The fourth objective was expense control. VERVILLE: Every year, we have kickoff meetings in February where we cascade the message over what the wins were in the past year, and what the expectations are for the next year. We review all these metrics and our successes, and what we did well, and what the opportunities are. I show them our total operating expenses as a department—general operating expenses, store operating expenses, all store equipment repairs, background checks, salaries, and capital. Based on all this we can quantify that as a department we pay for ourselves on almost a one-to-one ratio of total cost versus what we prevent and bring to the bottom line. Only world-class organizations can say that. Still, I emphasize to our team that they cannot forget that we are a sales support group. We have to continually find ways to evolve and add value to the organization. And we do. EDITOR: You’ve been an industry leader in establishing certification in loss prevention. Now you are pushing certification through your organization. VERVILLE: Correct. We are funding the cost to LPC certify fifty people a year. As of the start of 2014, all my direct reports have completed their LPC. All fourteen of our regional LP and safety directors are LPC certified. And a large percentage of our 118 area LP and safety managers are certified. Ultimately, the vision is to have all the remaining area managers certified as well as all the corporate management staff. In addition, we pay for certification coursework as incentives to our top store-level LP and safety personnel each year. It’s an important career-development program for our department.
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PARTNERING WITH RETAILERS
By Paul Jones
Stopping a Multi-million Dollar ORC Family From time to time we like to share the results
of the collaborative partnership that eBay and our retailers partners have worked toward over the last five years. We have made tremendous progress in identifying and preventing bad actors from getting on our platform to try to sell stolen goods. We utilize the tried-and-true concept of exception reporting. The case below began with one of our first retail partners, Barnes & Noble. The recent arrests of a suburban Chicago family accused of stealing millions in merchandise from retailers across the county over the past decade made national news. The story brings into focus the damage professional shoplifters inflict upon retailers. The father and alleged ringleader of this alleged ORC team is reported to be an illegal Yugoslavian immigrant. Together with his wife and daughter, the Bogdanov family routinely traveled on multistate shoplifting runs that afforded them a lavish lifestyle. Their $1.3 million home and twelve vehicles, undoubtedly the proceeds of their nefarious activities, have many retailers asking, “Did they steal from our stores?” A more important question is, why did it take ten years to uncover their activity? As retailers look to improve profitability, a controllable expense such as shrink should be part of the equation. Focusing on store awareness is an important step. Associate awareness and communication can be a game changer when dealing with professional shoplifting teams. Though they may not be caught at the time, the report of the activity may play an integral part leading to the eventuality. When first contacted by Barnes & Noble’s investigative team, they had assembled a compelling case. Stores hundreds of miles apart had experienced massive losses of the same product, American Girl mini dolls. Pivotal to the case, Glenn Justus, a senior Barnes & Noble investigator searched online selling platforms and identified five eBay accounts based out of the Chicago area listing American Girl mini dolls and other high-theft items. Four of the accounts in question were linked directly to the Bogdanov family. Justus worked with field LP directors to build the case and gather additional evidence, including similar incidents reported via incident management with related CCTV images. This effort paid off with identification of the three individuals later determined to be the Bogdanov family. 38
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The activity displayed by this group in stores, coupled with selling account history and product mix, further suggested the work of an ORC group targeting several retailers. Barnes & Noble reviewed the facts and assumptions of the case with our PROACT investigators. Our experienced investigators worked directly with them and were able to link accounts and identify significant merchandise listings confirming their activity. Using linking software and platform tools, it became evident that this was a significant case.
Barnes & Noble collaborated with eBay, which led to further collaboration with other retailers. This case stands as an example of how PROACT and retailers can effectively work Paul Jones, LPC is Senior Director, Global Asset Protection. Contact him at pajones@ebay.com.
together to bring closure to a professional shoplifter ring.
The PROACT team coordinated a conference call with other retailers likely targeted by the Bogdanov family based on product line and branded items. Together the retailers and eBay decided how best to resolve the case. It was turned over to the U.S. Secret Service in Chicago who closed the case within several months. Over the years we have forged excellent working relationships with many of today’s top retail brands. Barnes & Noble collaborated with eBay, which led to further collaboration with other retailers. This case stands as an example of how PROACT and retailers can effectively work together to bring closure to a professional shoplifter ring. Be sure to check us out on our LinkedIn page—eBay Partners with Loss Prevention Professionals. Email us at PROACT@ebay.com for more information.
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FEATURE
EAS SOURCE TAGGING 20-PLUS YEARS OF INNOVATION PART 2 By Robert L. DiLonardo
EAS SOURCE TAGGING
E
very so often, a simple idea catches the imagination, fervor, and engagement of a group of people and is developed into a successful practice that revolutionizes a business. Electronic article surveillance (EAS) source tagging is definitely one of those. In Part 1 of this two-part article in the January-February edition, we looked back at the beginning of this story in 1994 when The Home Depot executed the first contracts for EAS labels affixed directly by manufacturers in their packaging, rather than by in-store labor. At that time there were three companies jockeying for control of this segment—Knogo, Sensormatic, and Checkpoint. Each marketed different technologies, which motivated retailers to push for a single industry standard, which is where the second half of this story begins.
Attempts at a Standard
In those early days, none of the EAS manufacturers wished to cede its technology to an open standard; even if theirs had been selected. Each wanted to control its own destiny, maximize the value of its advantages, and capture the entire market. But there were attempts by various retail trade groups to obtain a consensus on a single standard within specific merchandise categories. National Association of Recording Merchandisers. The first of these efforts was organized by the National Association
my twelve-year odyssey and participation in working to achieve the source tagging of prerecorded entertainment products.” Excerpt from “How EAS Source Tagging Rewrote Shrinkage History in the Music and Video Sector” by O. Keith Wanke in the May-June 2002 edition of LossPrevention magazine. “Their product wasn’t picked, so now they’re doing a lot to try to sabotage our effort.” Quote by Michael E. Pardue, former chief operating officer at Sensormatic in a New York Times article titled “Putting the Tag on Shoplifters” published in May 1993. In the late 1980s music retailers were major users of anti-theft devices. Their merchandise was desirable, easily concealed and the customer base included shoplifters. Much of pre-EAS security involved cardboard “longbox” packaging. Facing pressure from ecologists, the industry agreed to eliminate them by April 1993. A move toward source tagging was a logical solution. In preparation for the longbox conversion, NARM tested EAS systems with the intention of establishing a standard. Of the four participants in the testing—Checkpoint, Sensormatic, 3M, and Knogo—only Checkpoint was wedded to a single technology—RF. The others, especially Sensormatic, could more easily adjust if NARM ruled out AM or EM in favor of RF. Thus the stakes for Checkpoint were extremely high, even though it was likely that the winner would license its technology to the other companies.
“In the market where it was tagged and accessible, the sales rate was much greater and the shortage was virtually nonexistent. It certainly proved our point to the manufacturer that source tagging will both increase sales and reduce shoplifting.” King Rogers, then vice president of asset protection for Target as quoted in a 1993 New York Times article after a four-month store test. of Recording Merchandisers (NARM). A couple of direct quotes will give a sense of the tension level of the times. “In 1987 the original NARM source-tagging committee was poised to recommend electromagnetic (EM) technology as the standard. Before this recommendation was adopted, the committee was made aware that the maximum width between pedestals using EM technology was 34 inches, and that most mall landlords would prohibit the installation of multiple pedestals at a store front. This near faux pas caused NARM to form a new loss prevention committee…whose charter was to evaluate the feasibility of selecting a single EAS technology. It was at this point that I began
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As 1992 ended, NARM’s decision was imminent, but its announcement delayed. Checkpoint released a full-page ad in the January 9, 1993, issue of Billboard magazine claiming that certain magnetic deactivation systems could distort the audio quality of audio and videotapes. While Sensormatic was not named in the ad, the AM technology it criticized was proprietary to Sensormatic, and based on NARM’s published selection criteria was the only logical alternative to RF. Sensormatic immediately filed suit against Checkpoint for false and misleading advertising, seeking $35 million in damages. |
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EAS SOURCE TAGGING In February 1993 rumors that the NARM subcommittee had recommended the Sensormatic system sent Checkpoint stock tumbling, losing a third of its value in two days. Then, in March NARM announced its decision to go with Sensormatic’s AM, only to discover through further testing that the system’s deactivation process did, indeed, cause deterioration in the sound quality of some lower quality “Type 1” cassettes. The news sent Sensormatic’s stock down, while Checkpoint’s rebounded. While Sensormatic rushed out new deactivation devices that it maintained corrected the issue, Checkpoint again trumpeted the studies that led to the original suit, as it tried to pressure NARM to reopen its selection process. But the decision stood. NARM’s selection of AM established the technology as the standard for the entire record industry and by implication for the mass merchants, discounters, drugstores, and other retailers what sold cassette tapes, compact disks, and related products. The stakes were high indeed. On June 26, 1993, Sensormatic agreed to drop its suit against Checkpoint, when the companies agreed not to criticize one another in advertisements. As part of the settlement, however, Sensormatic discontinued its agreement to sell Checkpoint products in Europe. The next month, to forestall a loss in European sales, Checkpoint acquired Dutch makers of security products and services, ID Systems International B.V. and ID Systems Europe B.V. The NARM controversy continued to fester in the marketplace. Checkpoint and Target Stores, an RF EAS user
and high-volume seller of music products, filed an anti-trust lawsuit against NARM. In 1996 when PolyGram Group Distribution began to source tag according to NARM recommendation, Checkpoint and Target sued them as well. In August of 1996 a court dismissed several of those lawsuits in exchange for PolyGram’s voluntary suspension of its source-tagging operation, with the duration of the suspension to be determined solely by PolyGram. PolyGram’s President James Caparro said at the time, “We are confident our method of analyzing and choosing the available technology was well-executed and clearly within the law. While we are still convinced about the merits of source tagging and committed to EAS implementation, we are adopting this temporary suspension in light of the confusion and friction which followed our announcement.” Caparro noted that PolyGram retained the ability to adopt any program it deemed in the best interest of the company. The settlement of the lawsuit did not change NARM’s recommendation of the AM technology. The music distribution companies still needed to embrace source tagging immediately and work with other NARM members who were not AM users to facilitate source tagging with the technology of their choice. Consumer Products Manufacturers Association. Toward the end of the 1990s, there was another organized attempt to establish a global standard under the auspices of the Consumer Products Manufacturers Association (CPMA), founded in 1999 by Eastman Kodak, Johnson and
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EAS SOURCE TAGGING Johnson, The Gillette Company, and Procter & Gamble. The stated purpose of the association was to provide focus to the evolving needs of products and product packaging in three areas—electronic article surveillance, product authentication, and identification. The membership believed that global standards were critical to establishing an efficient response to incorporating new technology in the market place. Hindsight proves that a standard would have been beneficial. Unfortunately, by this time the competing EAS technologies had successfully grown well beyond critical mass, and the EAS vendors were still unwilling to relinquish the control they had amassed. In the late 1990s, the CPMA proposed that the consumer packaged goods (CPG) industry consider both a “tag-centric” and a “tower-centric” approach to developing a global consensus for product security in retail. The adoption of a single standard would simplify the source-tagging and inventory-management exercise for manufacturers, reduce costs, and result in more manufacturers’ cooperation with source-tagging initiatives.
pedestal. Tower-centrism means one EAS system detects all tags, irrespective of technological base. While, the CPMA acknowledged that each of the EAS tag technologies can demonstrate superiority in combination with certain types of packaging, they suggest, by an extension of logic, that a single EAS system containing multiple technologies would allow merchandise manufacturers and packagers the opportunity to insert the best, most cost-efficient EAS tag into the item. This idea was completely unfeasible—worse than the first—and also died a quick death. “Dual technologies made progress difficult. It gave the consumer-product manufacturers an excuse not to engage at the beginning,” said Kevin Dowd, former president and CEO of Checkpoint. Many people in the EAS industry agreed with Dowd, and thought that the CPMA was organized as a tactic to delay participation in source tagging as long as possible. Once the industry figured out how to identify and measure the benefits for all constituencies, and realized that a single standard was already too late, everyone just got to work.
“We organized many meetings, including the RF source-tagging conferences with retailers, manufacturers, and packagers. It took some ‘arm twisting’ by the retailers for manufacturers to appreciate their opportunity because they made money on reorders generated from theft.” Dave Shoemaker, former group vice president responsible for source tagging with Checkpoint.
The first idea was to develop some performance-based standards around the tag. Besides the EAS component, this tag would contain anti-counterfeiting properties, such as a hologram, and would accommodate the future inclusion of RFID. For CPG manufacturers and packagers, tag-centrism would be ideal because it would supply all security needs with a single style of tag, rather than having to supply the appropriate EAS technology on a customer-by-customer basis. But, retailers would not be free to choose the type of EAS pedestal technology that best suited their needs. Tag-centric meant selecting one of the three current EAS technologies as a standard. As discussed in Part 1, retailers choose a particular EAS technology because of the unique benefits provided by a technology. So, this idea quickly turned into a “dud.” In August 1999 the CPMA changed tactics and proposed the industry take a “tower-centric” approach to the problem. A tower is the CPMA’s jargon for an EAS
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Early Adopters and Landmark Customers
In the beginning there were willing, even anxious early adopters among EAS vendors and retailers. Intrepid, enlightened merchandise manufacturers took risks in exchange for more visibility, including Black & Decker, Texas Instruments, Victorinox Swiss Army, PolyGram Group, Rayovac, Phizer, and Estwing Manufacturing to name a few. Here is a sample of the early action. Checkpoint. In the late eighties Checkpoint announced formal efforts to develop and promote source tagging. It took several years, but under Ted Wolf’s vision, leadership, and focus, the marketing team stimulated two small-scale tests. One situation evaluated a new product idea, while the other blossomed into a landmark chain-wide rollout for the Checkpoint source-tagging program. continued on page 44 |
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dankie faleminderit merci shukran Barak Allahu fiik chnorakaloutioun ta çox sag olun a ni kié eskerrik asko dhanyabaad a ni kié hvala trugéré merci kyay tzu tin pa te gràcies salamat do jeh xiè xie grazie hvala deh-ku-yih tak dank u wel dankon tänan akpé takk fyri vinaka kiitos merci dankewol gracie gracias danke ef-har-rih-stowe aguyjé aabhar mèsi mahalo toda dhanyavad köszönöm takk terima kasih go raibh maith agat grazie arigatô tanemirt dhanyavadagalu murakoze kamsah hamnida sobodi tenki spas khob chai gratias ago paldies choukrane aciu bedankt merci blagodaram misaotra terima kasih nanni nirringrazzjak aabhari aahe bayarlalaa tahk grandmercé danki motashakkeram dziękuję obrigado najis tuke mulţumesc spah-see-boh faafetai lava gratzias tapadh leat hvala marahaba waita meharbani stuutiyi dakujem hvala gracias asante tahkk salamat po mauruuru nandri rahmat kop khun kha yekeniele tesekkur ederim tau diakuiu shukriya merci gråces diolch mèsi djiere dieuf a dank o sheun ngiyabonga siyabonga ngiyabonga kakhulu dankie faleminderit merci shukran Barak Allahu fiik chnorakaloutioun ta çox sag olun a ni kié eskerrik asko dhanyabaad a ni kié hvala trugéré merci kyay tzu tin pa te gràcies salamat do jeh xiè xie grazie hvala deh-ku-yih tak dank u wel dankon tänan akpé takk fyri vinaka kiitos merci dankewol gracie gracias danke ef-har-rih-stowe aguyjé aabhar mèsi mahalo toda dhanyavad köszönöm takk terima kasih go raibh maith agat grazie arigatô tanemirt dhanyavadagalu murakoze kamsah hamnida sobodi tenki spas khob chai gratias ago paldies choukrane aciu bedankt merci blagodaram misaotra terima kasih nanni nirringrazzjak aabhari aahe bayarlalaa tahk grandmercé danki motashakkeram dziękuję obrigado najis tuke mulţumesc spah-see-boh faafetai lava gratzias tapadh leat hvala marahaba waita meharbani stuutiyi dakujem hvala gracias asante tahkk salamat po mauruuru nandri rahmat kop khun kha yekeniele tesekkur ederim tau diakuiu shukriya merci gråces diolch mèsi djiere dieuf a dank o sheun ngiyabonga siyabonga ngiyabonga kakhulu dankie faleminderit merci shukran Barak Allahu fiik chnorakaloutioun ta çox sag olun a ni kié eskerrik asko dhanyabaad a ni kié hvala trugéré merci kyay tzu tin pa te gràcies salamat do jeh xiè xie grazie hvala deh-ku-yih tak dank u wel dankon tänan akpé takk fyri vinaka kiitos merci dankewol gracie gracias danke ef-har-rih-stowe aguyjé aabhar mèsi mahalo toda dhanyavad köszönöm takk terima kasih go raibh maith agat grazie arigatô tanemirt dhanyavadagalu murakoze kamsah hamnida sobodi tenki spas khob chai gratias ago paldies choukrane aciu bedankt merci blagodaram misaotra terima kasih nanni nirringrazzjak aabhari aahe bayarlalaa tahk grandmercé danki motashakkeram dziękuję obrigado najis tuke mulţumesc spah-see-boh faafetai lava gratzias tapadh leat hvala marahaba waita meharbani stuutiyi dakujem hvala gracias asante tahkk salamat po mauruuru nandri rahmat kop khun kha yekeniele tesekkur ederim tau diakuiu shukriya merci gråces diolch mèsi djiere dieuf a dank o sheun ngiyabonga siyabonga ngiyabonga kakhulu dankie faleminderit merci shukran Barak Allahu fiik chnorakaloutioun ta çox sag olun a ni kié eskerrik asko dhanyabaad a ni kié hvala trugéré merci kyay tzu tin pa te gràcies salamat do jeh xiè xie grazie hvala deh-ku-yih tak dank u wel dankon tänan akpé takk fyri vinaka kiitos merci dankewol gracie gracias danke ef-har-rih-stowe aguyjé aabhar mèsi mahalo toda dhanyavad köszönöm takk terima kasih go raibh maith agat grazie arigatô tanemirt dhanyavadagalu murakoze kamsah hamnida sobodi tenki spas khob chai gratias ago paldies choukrane aciu bedankt merci blagodaram misaotra terima kasih nanni nirringrazzjak aabhari aahe bayarlalaa tahk grandmercé danki motashakkeram dziękuję obrigado najis tuke mulţumesc spah-see-boh faafetai lava gratzias tapadh leat hvala marahaba waita meharbani stuutiyi dakujem hvala gracias asante tahkk salamat po mauruuru nandri rahmat kop khun kha yekeniele tesekkur ederim tau diakuiu shukriya merci gråces diolch mèsi djiere dieuf a dank o sheun ngiyabonga siyabonga ngiyabonga kakhulu dankie faleminderit merci shukran Barak Allahu fiik chnorakaloutioun ta çox sag olun a ni kié eskerrik asko dhanyabaad a ni kié hvala trugéré merci kyay tzu tin pa te gràcies salamat do jeh xiè xie grazie hvala deh-ku-yih tak dank u wel dankon tänan akpé takk fyri vinaka kiitos merci dankewol gracie gracias danke ef-har-rih-stowe aguyjé aabhar mèsi mahalo toda dhanyavad köszönöm takk terima kasih go raibh maith agat grazie arigatô tanemirt dhanyavadagalu murakoze kamsah hamnida sobodi tenki spas khob chai gratias ago paldies choukrane aciu bedankt merci blagodaram misaotra terima kasih nanni nirringrazzjak aabhari aahe bayarlalaa tahk grandmercé danki motashakkeram dziękuję obrigado najis tuke mulţumesc spah-see-boh faafetai lava gratzias tapadh leat hvala marahaba waita meharbani stuutiyi dakujem hvala gracias asante tahkk salamat po mauruuru nandri rahmat kop khun kha yekeniele tesekkur ederim tau diakuiu shukriya merci gråces diolch mèsi djiere dieuf a dank o sheun ngiyabonga siyabonga ngiyabonga kakhulu dankie faleminderit merci shukran Barak Allahu fiik chnorakaloutioun ta çox sag olun a ni kié eskerrik asko dhanyabaad a ni kié hvala trugéré merci kyay tzu tin pa te gràcies salamat do jeh xiè xie grazie hvala deh-ku-yih tak dank u wel dankon tänan akpé takk fyri vinaka kiitos merci dankewol gracie gracias danke ef-har-rih-stowe aguyjé aabhar mèsi mahalo toda dhanyavad köszönöm takk terima kasih go raibh maith agat grazie arigatô tanemirt dhanyavadagalu murakoze kamsah hamnida sobodi tenki spas khob chai gratias ago paldies choukrane aciu bedankt merci blagodaram misaotra terima kasih nanni nirringrazzjak aabhari aahe bayarlalaa tahk grandmercé danki motashakkeram dziękuję obrigado najis tuke mulţumesc spah-see-boh faafetai lava gratzias tapadh leat hvala marahaba waita meharbani stuutiyi dakujem hvala gracias asante tahkk salamat po mauruuru nandri rahmat kop khun kha yekeniele tesekkur ederim tau diakuiu shukriya merci gråces diolch mèsi djiere dieuf a dank o sheun ngiyabonga siyabonga ngiyabonga kakhulu dankie faleminderit merci shukran Barak Allahu fiik chnorakaloutioun ta çox sag olun a ni kié eskerrik asko dhanyabaad a ni kié hvala trugéré merci kyay tzu tin pa te gràcies salamat do jeh xiè xie grazie hvala deh-ku-yih tak dank u wel dankon tänan akpé takk fyri vinaka kiitos merci dankewol gracie gracias danke ef-har-rih-stowe aguyjé aabhar mèsi mahalo toda dhanyavad köszönöm takk terima kasih go raibh maith agat grazie arigatô tanemirt dhanyavadagalu murakoze kamsah hamnida sobodi tenki spas khob chai gratias ago paldies choukrane aciu bedankt merci blagodaram misaotra terima kasih nanni nirringrazzjak aabhari aahe bayarlalaa tahk grandmercé danki motashakkeram dziękuję obrigado najis tuke mulţumesc spah-see-boh faafetai lava gratzias tapadh leat hvala marahaba waita meharbani stuutiyi dakujem hvala gracias asante tahkk salamat po mauruuru nandri rahmat kop khun kha yekeniele tesekkur ederim tau diakuiu shukriya merci gråces diolch mèsi djiere dieuf a dank o sheun ngiyabonga siyabonga ngiyabonga kakhulu dankie faleminderit merci shukran Barak Allahu fiik chnorakaloutioun ta çox sag olun a ni kié eskerrik asko dhanyabaad a ni kié hvala trugéré merci kyay tzu tin pa te gràcies salamat
Billion Reasons to Say Thank You Thank you for trusting Sensormatic� to protect your business. By working together, our source tagging program has safeguarded over 50 billion items from theft worldwide — and this is just the beginning. With customers like you on our side, we can’t wait to see what we can accomplish next. For more information on our source tagging program, visit www.tycoretailsolutions.com Safer. Smarter. TycoTM
EAS SOURCE TAGGING continued from page 42
Tools Plus, a Waterbury, Connecticut, hardware store, tested Checkpoint’s “activatable” label in 1991 in collaboration with Black & Decker. At that stage Checkpoint had yet to perfect the RF label roll formatting that would withstand the rigors of a high-speed source application process. “Tagging killed 70 percent of the labels,” recalls Checkpoint’s Seth Strauser. “So we disabled the label during the application process and provided an activator to turn it back on once it arrived in the store.” This concept proved workable for some retailers, but large-scale demand for this type of product never materialized in the marketplace. The landmark deal incubated during the same year with a test in a 60-plus store, Detroit-area hardware chain called ACO Home & Garden Hardware. Bill Aiken, the CEO, immediately grasped Checkpoint’s vision and was convinced that source tagging would be a “game changer” for his organization. He solicited Victorinox Swiss Army to collaborate on a test that featured tagging in ACO’s distribution center. On the strength of the results, ACO gladly took a very big risk and agreed to an immediate EAS rollout
The test ran four months. When interviewed in 1993 by the New York Times, Rogers said, “In the market where it was tagged and accessible, the sales rate was much greater and the shortage was virtually nonexistent. It certainly proved our point to the manufacturer that source tagging will both increase sales and reduce shoplifting.” Academics might opine that the Target test sample was statistically insignificant, but the methodology has become extremely important to the retail loss prevention industry in the big picture. Just look at the groundbreaking work that the Loss Prevention Research Council and others have done over the past few years. Checkpoint considers The Wiz to be its first full-fledged source-tagging rollout. This New York-based electronics chain reached its peak of 94 stores and about $1.3 billion in annual sales. The deal was consummated in 1995. There were two key drivers in this effort. The first was efforts by Wiz management to push CD and DVD replicators to affix labels. More importantly to the Wiz, however, was a requirement that Checkpoint figure out a way to integrate scanning and deactivation, which they did.
“The initial high-risk, source-tagging targets were cameras, film, consumer electronics, and recorded media. Shrink reductions were so positive in electronics that management said ‘let’s accelerate the rollout to twenty-four months,’ which we did with the help of second-tier suppliers who grabbed an opportunity to secure more shelf space.” Jeff Powers, former global account manager responsible for Walmart at Sensormatic. in all stores, with the intention to source tag further back in the manufacturing process. After years of work honing the sales pitch and developing the program, Checkpoint had found the formula. More success followed quickly. Target Stores, under the capable guidance of King Rogers, then vice president of asset protection, conducted a landmark test in 1992 that included a small, randomized control trial with a formal analysis of the economic benefits of source tagging. Target and Texas Instruments (TI) wanted to find the best way to secure hand-held calculators without resorting to locked fixtures that would inhibit sales. They collaborated on a three-store test in which TI inserted RF EAS labels into the packaging of two types of calculators to be displayed on open peg hooks in a Detroit store. An Indianapolis store was the control, where calculators were hung on peg hooks without EAS tags. A Minneapolis-area store was set up with untagged calculators under glass and lock and key.
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Over the next couple of years, Checkpoint announced other chain-wide rollout deals with Eckerd Drug Stores, Rite Aid, Walgreens, Thrift Drug, and Big V Drugstores, covering high-risk products manufactured by the “who’s who” of consumer-products manufacturing. Source tagging with RF EAS had more than reached critical mass. The Eckerd Drug Store case introduced new innovations in the way source tagging could be managed. Eckerd’s LP department was the first to assign an executive to establish strong working relationships with buyers and the manufacturers from whom they procured merchandise. “The goals were to get everyone to understand the benefits of source tagging,” recalls Elliot Rosenblatt, Eckerd’s original holder of the position, “and to make certain that the manufacturers understood it was a very high priority of Eckerd’s. We had the authority to insist on source tagging, or the product was going behind the counter.” |
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EAS SOURCE TAGGING Rosenblatt also used POS exception reporting to help identify the high-loss items to be included in the program. The other innovation was called “fractional tagging,” whereby only every second or third item was source tagged. Labels at this point were mainly concealed on the inside of packaging, so skipping some labels to save cost was worth the risk. Thieves couldn’t tell which items were tagged. Sensormatic. The first rollouts by Sensormatic also emanated from successful tests. In 1992 Edward A. Wolfe, Home Depot’s vice president of loss prevention, organized a three-store test of AM EAS in tool corrals, where the shortage was “double digit.” After six months, the shortage in the tagged categories dropped by about 80 percent, but losses “migrated” outside of the corrals. Wolfe wanted to expand to exit coverage, but he had some issues to contend with. A couple of them were technology related, but the bigger issue was financial. Wolfe’s boss wouldn’t allocate a single penny for tagging labor. The potential savings were compelling enough that the boss suggested that Wolfe lobby buyers of high-loss merchandise for support for source tagging. Wolfe knew that the buyers had never collected a bonus based upon their shortage performance. So, he asked for a meeting to offer them a proposition—the promise of a bonus in exchange for support for the program and direct assistance engaging merchandise manufacturers in the tagging process. “Based on the test results, I was pretty certain that the shortage would drop low enough to earn the bonus,”
Wolfe recalled. “But they agreed.” And his boss did, too. So Wolfe formulated a plan to source-tag 1,500 SKUs. Sensormatic solved the technological issues, Home Depot signed a contract, and the buyers earned their first bonuses. Around 1994 convincing manufacturers to source tag presented other problems for Home Depot. The inventory shortage in batteries was astronomical, to the point where the category gross margin had to have been breakeven at best. The major brands didn’t see the wisdom in tagging at first. But after an enterprising second-tier brand volunteered, and shelf space allocations were altered in their favor—drastically in a couple of cases—the major brands got the picture. “The battery story certainly underscored the tension as well as the opportunity,” mused Wolfe. Walmart signed its first contract with in-store tagging with Sensormatic for AM EAS around April 1991, before the introduction of proximity deactivation. In the summer of 1998, Walmart signed a chain-wide rollout agreement with about 500 installations per year for five years. A key ingredient in the sale was the improvements Sensormatic made to its AM label size and performance, and the introduction of improved deactivators called “Rapid Pads.” “The initial high-risk, source-tagging targets were cameras, film, consumer electronics, and recorded media,” said Jeff Powers, Sensormatic’s global account manager responsible for Walmart at the time. “Shrink reductions were so positive in electronics that management said ‘let’s accelerate the rollout to twenty-four months,’ which
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LP MAGAZINE | MARCH - APRIL 2014
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EAS SOURCE TAGGING we did with the help of second-tier suppliers who grabbed an opportunity to secure more shelf space.” Kmart signed its first agreement for AM EAS with Sensormatic in 1993. In 1995 the agreement was expanded to include more stores, and the inclusion of Rapid Pad II proximity deactivation to facilitate a future move toward source tagging. In late 1996 Kmart and Sensormatic agreed to another expansion covering over 1,000 remaining locations. CVS, a Sensormatic user since 1987, announced a chain-wide installation of AM and an upgrade to proximity deactivation in early 1996. At that time merchandise manufacturers were source tagging about 500 SKUs for CVS. Plans called for an aggressive expansion of the program. Years later, CVS converted from AM to Checkpoint-supplied RF technology. As source tagging grew in size and scope, entrepreneurial valued-added resellers fashioned profitable opportunities in support roles. Jobbers, distributors, replicators, and packaging companies affixed labels. Purveyors of retail trim products, such Paxar Corp., Avery Dennison, B&G Plastics, and A&H Company invented disposable products that helped secure source-tagged merchandise. Other entrepreneurial people introduced solutions to specific high-loss situations as they arose. Knogo. In mid-June 1993, Knogo planned to announce that Sonopress, the manufacturing division of the Bertelsmann Music Group of Germany, had selected two Knogo theft-detection products that would be embedded directly into recorded materials like cassette tapes and compact disks, according to people familiar with Knogo’s plans. One product was the previously mentioned Superstrip, a thin strip that can either be embedded into a product or applied to packaging. The other was a round version specially designed by Knogo for Bertelsmann to fit the center of a compact disk. The controversy over NARM’s selection of a preferred EAS technology completely overshadowed Knogo’s efforts. Knogo’s non-North American operations were acquired by Sensormatic the next year. The remaining entity, Knogo North America, kept promoting the Superstrip and battled to participate in the source-tagging market for a few more years.
Convincing the Doubters
Consumer-Products Manufacturers. In the beginning the consumer-products manufacturers, in general, saw little vested interest in accommodating source tagging. All the financial metrics were negative for them. The major issues facing them revolved around the money that would have to be invested to design, build, and manage the new tagging processes. It wasn’t as simple as changing the artwork on the outside of packaging. There were legitimate concerns that the endeavor would have a negative impact upon
Source Tagging Milestones All-Tag Americas Inc. ■ Over 4 billion RF EAS labels sold in support of source tagging. ■ Second largest supplier of RF EAS labels in the world. ■ Continuous support of global source tagging initiatives since 1995. Checkpoint
■ 1994—First
orders for source tagging in over-the-counter drug remedies for Eckerd Drug Stores and Rite Aid. ■ 1995—Source-Tagging Evaluation Laboratory opens to all vendors. ■ 1997—Introduces EAS integrated jewelry card. ■ 2001—Perfects PSG label format technology that matches speeds of production and packaging lines. ■ 2003—Launches “sewn in” security for apparel. ■ 2005—FDA-compliant products for tagging food and microwave operation. ■ 2006—Introduces “postage stamp” size label. ■ 2008—Introduces reverse-logistics program called Hard Tag @Source to recycle reusable EAS tags for apparel. ■ 2012—Emphasizes “visible tagging” to improve deterrent quality with a lock symbol indicating security. ■ 2014—To date over 25 billion products have been source tagged from all sources. Sensormatic million AM labels sold for source tagging. ■ 1994—Some of the earliest name-brand manufacturers to begin tagging included Stanley Tools, BernzOmatic, and Estwing for DIY; Schering Plough (Maybelline), Pfizer (Advil), Rayovac, Ever Ready, Magnivision, Kodak, and McNeil (Tylenol). ■ 1997—Over 1,000 consumer-products manufacturers and packagers provide source-tagged merchandise. ■ 1999—Label unit volume reaches 1 billion per year due to Walmart’s source-tagging ramp up. ■ 2000—The focus of merchandise manufacturing shifts to Asia. Source-tagging customers procure and tag in Asia, but ship tagged merchandise to the developed world. ■ 2005—The explosion in the sales of DVDs and multimedia merchandise helps drive label unit volume to 4.5 billion per year. ■ 2014—To date, over 50 billion products have been source tagged with disposable labels and “sewn in” disposable or reusable visible source tags (VST) on apparel. Over 5,300 manufacturers, packagers, and value-added resellers (VARS) are actively tagging. VST annual unit volume is expected to reach 1 billion. ■ Future in apparel source tagging fueled by Auto-ID/RFID applications. ■ 1994—70
Wallace Computer Services by Sensormatic to build and sell AM labels for high-speed, automatic applications at a rate of over 1 billion per year. ■ 2014—Cumulative label unit volume surpasses 3 billion. ■ 1998—Licensed
continued on page 48
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EAS SOURCE TAGGING continued from page 46
reorder rates. The perceived benefits stream—less theft—was largely hypothetical, unmeasured, hence unproven. The specter of locking up merchandise or losing shelf space was a big decision driver. A positive return on investment (ROI) was little more than an illusion. The list of issues faced by the consumer-products manufacturers was daunting: ■ Costs—The costs to manufacturers went well beyond just the cost of acquiring the security labels. Affixation costs included investment in design, manufacturing process changes, automated equipment, and labor. Finished goods inventory management and carrying costs included distributing the appropriately tagged merchandise to the retail stores. Given there were four possible stocking permutations for each high-risk SKU—un-tagged, AM, RF, or EM—inventory management was challenging. Could some or all of these costs be successfully passed onto the wholesale cost of the merchandise? ■ Benefits—The benefits accruing to the manufacturers were hard to measure. In theory less theft means a better “sell through.” A reorder triggered by a sale is “more beneficial” than one triggered by a theft. Providing products with a value add strengthens the partnership between retailer and supplier. A major inducement was the promise of additional shelf space with its immediate impact on sales. Open merchandising opportunities would be either lost or gained. Simply stated, source-tagged items would be open merchandised, while non-tagged products were locked up or threatened with removal. “We organized many meetings, including the RF source-tagging conferences with retailers, manufacturers, and packagers. It took some ‘arm twisting’ by the retailers for manufacturers to appreciate their opportunity because they made money on reorders generated from theft,” said Dave Shoemaker, former group vice president responsible for source tagging with Checkpoint. Rebalancing the ROI. For retailers at the time, EAS was far from a unanimous choice as an anti-shoplifting countermeasure. Source tagging demanded a chain-wide rollout, while loss prevention executives were investing their capital in high-risk locations. Microprocessor-controlled CCTV systems were the rage, and a number of retail vertical markets, such as supermarkets, preferred video solutions over EAS. Source tagging would have failed without net positive economic benefits for all participants. Retailers were losing money without it. Manufacturers were faced with high “buy-in” costs to participate. The economic seesaw needed to be rebalanced. The scenario can be explained this way—Retailers tried to execute their sales plans. They went into the market and bought merchandise, applied an initial mark up, put the goods out for sale, sold some at regular price, marked most of it down, had some stolen, and liquidated what was left. “The key was in proving the business models and rebalancing the profit sharing for all the
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partners,” said Joe Ryan, Jr., former vice president of global source tagging for Sensormatic. Two things ruined the gross margin for the retailer. First was the replenishment costs added to the inventory by the reorders made because items had been stolen rather than sold. Second was the gross margin hit from the shrinkage reconciled and booked at fiscal year-end. The retailer paid the price, and the consumer-products manufacturers weren’t economically affected. As retail merchandise statistics got more detailed and reported much closer to real time, the CFO got a better handle on the depth, breadth, and scope of these drains on item-level profitability. The merchants saw this in the form of low gross margin and promptly started negotiating “allowances” to offset shrinkage losses. Why would the manufacturers agree to forsake the replenishment gravy train and take on a process that had the potential to add significant costs and disruption to production and control of finished goods inventory? As time passed and the data included all the relevant statistics to the SKU level, gross margins were so bad for certain high-risk items that something had to be done. Allowances were rarely sufficient. Frustrated retailers began to tell their brand partners, “I’m getting killed here. We can’t afford to stock your product anymore. You either source tag, or I’m going to allocate your shelf space to someone who will.” This scenario happened several times in a variety of markets and is a major factor in the ultimate success of source tagging. The early source-tagging adopters benefitted almost immediately. Far less inventory was stolen and more of the residual inventory was sold without “help” from reorders. Gross-margin statistics improved dramatically. Merchandise was preserved from theft and ultimately sold, relieving the inventory and generating a reorder. The profitable partnership between retailer and supplier was rebalancing. It took the better part of two decades to get this all figured out. The real beneficiary of this journey is the Auto-ID industry and the retailers pursuing RFID as an inventory-control strategy. They recognized from the outset that RFID required a proven, measureable return on investment for all constituents. “EAS will be here longer than people anticipate. Source tagging’s history is the roadmap for RFID,” said Powers.
ROBERT DiLONARDO is a wellknown authority on the electronic article surveillance business, the cost justification of security products and services, and retail accounting. He is the principal of Retail Consulting Partners, LLC (retailconsultingllc.com), a firm that provides strategic and tactical guidance in retail security equipment procurement. DiLonardo can be reached at 727-709-6961 or by email at rdilonar@tampabay.rr.com.
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EVIDENCE-BASED LP by Read Hayes, Ph.D., CPP
Making Things Happen I
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. © 2014 Loss Prevention Research Council
’ve worked with a lot of loss prevention executives over the years. They all have their own styles, their own skills, and their own productivity levels. But I’ve never worked with anyone so focused, organized, and productive as Bill Titus. Bill volunteered to serve as the LPRC’s board of advisors’ chair some five years ago, and since that time has spent countless hours providing wise counsel and helping build the group’s membership from twelve major organizations to over ninety. My personal perspective is Bill combines old-fashioned focus and the ability to drive results with creativity and a healthy thirst for knowledge and fresh ideas. Bill is now moving from the traditional retailer leadership role at Sears Holdings to leading an LP practice at PricewaterhouseCoopers. On behalf of the LPRC’s board of advisors, research team, and membership, I would like to publicly thank Bill Titus for his many years of amazing service helping the LP industry move to a more evidence-based process via collaborative, rigorous research.
Therefore, the LPRC Violent Crime Task Force (VCTF), made up of both retailers and solution partners, is working with our team on ways to make good people feel safer while making bad people feel less safe. Working with the LPRC Video Solutions Working Group, the VCTF is deploying different deterrent countermeasure types and variations in a T.J.Maxx parking lot to start; with much more to come as we conduct more research and development (R&D) in multiple locations.
Our LP mandate is to support the retailing mission; and a huge part of that mission is growing profitable sales year-on-year. We typically focus on trying to maintain open selling, as well as keeping desirable product on the shelf so shoppers can readily buy what they want or need right then and there. But we also believe it’s important to help customers feel safe and comfortable.
2014 Strategy Meeting
MeadWestvaco hosted LPRC’s annual strategy planning meeting in Richmond, Virginia, with multiple LP executives and solution partners participating. The group outlined 2014 research focus, priorities, and specific projects. Employee awareness; employee deviance prevention; anti-theft process and technology development and enhancement; and mapping and measurement led the way. Our research team has already begun planning and initiating multiple projects for our working groups and action teams.
Parking Lot Crime Research
Our LP mandate is to support the retailing mission; and a huge part of that mission is growing profitable sales year-on-year. We typically focus on trying to maintain open selling as well as keeping desirable product on the shelf so shoppers can readily buy what they want or need right then and there. But we also believe it’s important to help customers feel safe and comfortable. All the product protection in the world is for naught if good customers don’t feel safe shopping when and where they’d like. Studies repeatedly show fear of crime often leads to avoidance behavior; which means staying away or making a really quick store visit. Avoidance behavior literally kills sales.
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ORC Research
The LPRC Organized Retail Crime (ORC) working group is developing a series of short interview formats to help more quickly and accurately detect, deter, and document ORC activity. Their efforts are set to improve timeliness when collecting actionable intelligence, evidence, impactful countermeasures, and other pertinent information. The group is also sponsoring surveys to better measure the financial impact of ORC. |
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Employee Deviance Research
LPRC and University of Florida (UF) researchers are working on a new data-collection instrument and effort to collect employee deviance event information for analyses. Our team has collected over 200 workplace dishonesty studies to look for action research opportunities. The team will then turn to interviewing dishonest offenders to add depth to survey data prior to field-testing countermeasure variations.
LPRC’s Innovation Lab and StoreLab Program Update
The LPRC Innovation Lab is scheduled to open in the University of Florida Innovation Square area in early April. The lab will provide a great brainstorming venue for individual retailers or other members, while conducting tightly controlled offender experience experiments. All LPRC members, working groups, and action teams will be able to schedule team meetings at the lab. The UF Innovation Square program involves the university populating a 40-acre area next to the campus with large incubator lab buildings designed to commercialize university-derived inventions (see innovationsquare.ufl.edu for more information). The LPRC was provided a choice location in the heart of UF Innovation Square to facilitate rigorous R&D and impact evaluation research. The location also enhances collaboration with UF psychology, supply-chain logistics, smart machine
and robotics, retailing, cyber protection, food protection, and many other scientists and graduate students, as well as emerging start-up companies. Please let me know if you and your team have interest in using or visiting the lab and surrounding innovation stores and DCs.
Industry Conferences
Rhett Asher and the Food Marketing Institute (FMI) team put on another successful asset protection conference in Jacksonville, Florida, in early March with a lot of good sessions and collaborative discussions. The LPRC team looks forward to talking to you and your team at the April 6 – 9 Retail Industry Leaders Association (RILA) and June 11 – 13 National Retail Federation (NRF) conferences. LPRC’s 10th Annual Impact Conference hosted on campus by the University of Florida October 13 – 15 is well into the planning stage. Toys‘R’Us and Babies‘R’Us loss prevention executive Chris Gillen is heading the conference’s development. Chris and his team are laying out an even more interactive experience for all participants. Please let me know if you would like to learn more about this event. Our UF and LPRC teams are working diligently to support the LP industry. Please let us know your thoughts and suggestions at rhayes@lpresearch.org. Also, please join almost 2,000 other LP professionals on our LinkedIn page as well.
LP MAGAZINE | MARCH - APRIL 2014
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As a member of The Loss Prevention Foundation, you join an association founded by and for loss prevention professionals. With access to an elite network of fellow industry professionals, development tools tailored specifically to our industry to help you advance your career and other great member benefits such as exclusive access to elite savings and discounts on thousands of products and services nationwide. Your membership is not only a demonstration of industry leadership; it’s a commitment to the profession and to your own professional development. Elevating the Industry, One Leader at a Time. For more information, visit losspreventionfoundation.org or call (866)433-5545
FEATURE
Z MEET GENERATION
THE NEXT WAVE OF RETAIL WORKERS By Bruce Tulgan
MEET GENERATION Z
S
Our research indicates that Generation Z represents the greatest generational shift the workplace has ever seen. The bleeding edge of Gen Zers—today’s 16 to 23 year olds—is already entering the retail workforce. By 2015, they will be 20 million strong, 25 million by 2017, and 30 million by 2019.
ince my first book Managing Generation X came out in 1995, our clients, including many in the retail sector, have turned to us for help dealing with generational change in the workplace. Given the high percentage of young people in retail organizations, it should not be a surprise that this usually means they need help understanding and bringing out the best in the latest group of young workers entering the workplace. First it was Generation X, who were born from 1965 to 1977. Next it was Generation Y, born 1978 to 1989. Now it is Generation Z, born 1990 and later—the newest “new” young workers, who are today between the ages of 16 and 24. We have been tracking young people in the workplace steadily since 1993. Since 2008 we have been tracking the emergence of Generation Z. Gen Zers, born in the ‘90s and raised in the 2000s during the most profound changes in at least a century, represent the watershed generational shift of our era. The 22-year-old members of the baccalaureate class of 2012 were born in 1990, the first birth year of Generation Z. The bleeding edge of Generation Z—today’s 16 to 23 year olds—is already more than 11 million strong or nearly 7 percent of the North American workforce, and their numbers will grow dramatically over the next few years. By 2015 they will be 20 million; 25 million by 2017; and 30 million by 2019. This is the new emerging workforce, and they will fill up a new “youth bubble” in the workplace in the next seven years, just as roughly 30 million aging Baby Boomers will retire. Generation Z represents the greatest generational shift the workplace has ever seen. Generation Z will present profound challenges to leaders, managers, supervisors, HR professionals, and educators in every sector of the workforce.
Defining Generations
How do we recognize a new generation when we see one? Demographers, sociologists, historians, and other “experts” often debate this very question, just as experts differ about the exact parameters of each generation. I’ve been conducting in-depth interviews with young people in the workplace since 1993. Back then, the youngest people in the workplace were the leading edge of Generation Y. While a general consensus has emerged that 1978 is the first birth year of Generation Y, the last birth year has remained an open question for more than a decade. Many demographers argue that all those born between 1978 and 2000 belong in the same generation, one gigantic “Millennial Generation.” They argue, rightly, that the technology revolution on a macro level and the helicopter-parenting revolution on a micro level are two of the most important formative influences of anyone born in the Western world during these years. Nonetheless, this time frame is simply too broad to define just one generation, because the 1990s and the 2000s are two distinct eras. How could today’s 13 year olds be part of the same generation as today’s 35 year olds, especially if a generation is defined, not just in biological reproductive terms, but also as
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an age cohort with a shared historical perspective? Looking at technology alone, the acceleration from the 1990s to the 2000s—wireless Internet ubiquity, tech integration, and the rise of handheld devices—amounts to historic change. On the micro level, even the helicopter-parenting phenomenon has redoubled qualitatively in its intensity, from the 1990s late Boomer parenting focus on self-esteem to the 2000s Gen Xer parenting focus on safety and cultivation. The result is that those children of the 2000s simultaneously grew up way too fast and never grew up at all. They are privy to everything from a dangerously young age. Their access to information, ideas, images, and sounds is completely without precedent. At the same time, they are isolated and scheduled to a degree that children never have been. Their natural habitat is one of physical atomization and relative inactivity, but total continuous connectivity and communication. They are used to feeling worldly and precocious—highly engaged in a virtual peer ecosystem—while enjoying the discourse at least of protection and direction from parents, teachers, and counselors. But this story is about much more than the acceleration of technology and helicopter parenting.
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MEET GENERATION Z Throughout the boom years of the 1990s, we monitored, measured, and documented the shift from Generation X to Generation Y. The ‘90s were to Gen Y what the late ‘70s and early ‘80s were to Gen X. So we were able to see changes in attitude and behavior among the youngest Gen Yers, even when they were just teenagers trickling into the workplace. The workplace of the ‘90s was plentiful with opportunity. Unlike today, back then legions of older, more-experienced workers were not competing with teenagers for entry-level jobs in retail and food service. The boundless optimism and self-confidence of Gen Yers in their teenage years, especially their enthusiasm for institutions, was in marked contrast to the cynical loner ethos of Generation X. Then we followed the first wave of Gen-Y college graduates into the workforce—the class of 2000. Things were great. The dot-com boom had not yet burst. Enron had not yet collapsed. Unemployment was at 3.9 percent. The NASDAQ was over 5,000. The United States was positioned as the sole global superpower; the BRIC countries—Brazil, Russia, India, and China—had not yet broken through. The West was riding high on nearly a decade of peace and prosperity. It was that thriving ethos of the 1990s that shaped the mindset of Generation Y—irrepressibly high continued on page 56
This is Julie, mother of two, shopping in aisle four. In three minutes she will experience Sudden Cardiac Arrest...
Is your organization ready to save her life?
Generation Z will present profound challenges to leaders, managers, supervisors, HR professionals, and educators in every sector of the workforce. It will be increasingly important to understand where they are coming from and key strategies for bringing out the best in this emerging young workforce.
Be Prepared. Be Confident. Be CardioReady.
LP MAGAZINE | MARCH - APRIL 2014
cardioready.com 55
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MEET GENERATION Z
Those young people now joining the workforce have been shaped by nearly a decade of war and economic uncertainty, and the contrast in their attitudes and behaviors is vivid. They are dubious about their long-term prospects (five years) and fearful about the short-term (tomorrow). Compared with their forerunners, today’s young people have much lower expectations, their expressions of confidence are much more cautious, and their demands fairly modest.
continued from page 55
expectations, undaunted self-confidence, and unrelenting fountains of suggestions and requests.
What a Difference a Decade Can Make.
The young people now joining the workforce have been shaped by nearly a decade of war and economic uncertainty and the contrast in their attitudes and behaviors is vivid. Here’s the big picture for Generation Z. They are dubious about their long-term prospects (five years) and fearful about the short-term (tomorrow). Compared with their forerunners over the last decade, today’s young people have much lower expectations, their expressions of confidence are much more cautious, and their demands fairly modest. Can you blame them? Those born in 1990 were eleven years old on 9/11, that infamous day. Ever since then we have been
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a nation at war. They graduated from high school in 2008, just as the economy was on the verge of collapse and entering the deepest and most protracted recession since the Great Depression. Now they are graduating from college amidst a stumbling jobless “recovery” in which unemployment remains stubbornly high, especially among those under the age of 25, and forced to compete for job opportunities with people their parents’ age. Are the shifts in all of these macro and micro forces of history—economics, geopolitics, technology, parenting—from the 1990s to the 2000s the very sort that makes one age cohort distinguishable from another in generational terms? It seems the answer is yes. Shaped by the 2000s, those young people entering the adult world today are thinking about their economic future more like children of the 1930s than their immediate forerunners, those children of the ‘90s. But Gen Zers are totally plugged in, to each other as well as an infinite array of answers to any question at any time. And their parents tended to the soft touch, as opposed to sending them out to sell apples on the street.
Managing Gen Zers
What should the grown-ups know about this leading edge of Generation Z about to descend upon the workplace? Our research reveals five key formative trends shaping Generation Z. Social Media Is the Future. The information technology revolution is complete. Gen Yers were the transition. Gen Zers are all the way there. They have never known a world in which one could not be in conversation with anyone, anywhere, any time, and they will shock you with their ability to leverage this connectivity. Managing Generation Z requires mastering the tools of social media. But managers must take control. The key is command-driven use of social media. Human Connections Are More Important than Ever. The highly engaged parenting, teaching, and counseling approach to the young accelerated dramatically from Y to Z. Gen Zers are less likely to resist authority relationships than Gen Yers did, but will only perform for individuals when they are engaged in intensive working relationships. Skill Gaps Are Significant. This generation more than any other will suffer from the growing gap between the highly skilled and the unskilled. The technical skill gap is huge, but the nontechnical skill gap is even more pervasive. On the one hand, managing Generation Z requires a huge remedial effort on broad transferable skills like work habits, interpersonal communication, and critical thinking, as well as a huge investment in remedial technical training. On the other hand, there will be a growing elite among the emerging workforce—those with the greatest technical skills training and also the benefits of personal development opportunities. Retaining those among the growing elite will require increasing differentiation and reward. They Possess a Global Mindset, Yet Local Reality Attachment. They know more about far away parts of the world than Gen Yers ever did, but they are also likely to be far continued on page 58 |
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MEET GENERATION Z continued from page 56
less geographically adventurous. They are very plugged into the boundless world online, but the key to engaging them in their environment tactically is a relentless focus on the local. They Represent Infinite Diversity. The emerging Generation Z reflects a whole new way of thinking about difference. Again, Generation Y was the transition, while Generation Z is all the way there. They are less likely to fall into previously recognized categories and much more likely to be mixing and matching various components of identity and points of view that appeal to them. They are ever-creating their own personal montage of selfhood options.
Bringing out the Best in Gen Zers
Based on our working model of challenges and solutions, our research points to seven key strategies for bringing out the best in Generation Z in the workplace. Promote High-Intensity Relations. What types of peer relationships and what types of authority relationships bring out the best in Gen Zers? ■ Small, highly defined work groups with a strong peer leader. ■ Tight and well-defined and observed chain of command. ■ Teaching-style leadership. ■ Customer service-style management. Provide Continuing Re-education. There is a growing nontechnical skill gap among the emerging young workforce. The basics of personal responsibility, problem solving, time management, and interpersonal communication are way too often missing in the new young workforce. Employers are finding it is worthwhile to make a heavy investment in building a workplace culture of highly defined behavioral norms. This requires an ongoing process of teaching personal conduct, work habits, and the conduct of working relationships. Define Laser-Focused Roles. How do Gen Zers best get up-to-speed and assimilate into new roles? The more structured and defined the roles and responsibilities, the more quickly and effectively Gen Zers are able to take on work and succeed. What are the features of typical early career stage roles that tend to be problematic for Gen Zers? How can redefining roles with laser focus make the difference between success and failure? Consider two approaches—narrow specialization and a system of ranks with corresponding criteria, testing protocols, and rewards and responsibilities attached to each rank. Take Control of…at Least Some of…the Virtual Ethos. What is the impact and what are the challenges with the transformational reality of social media? We are studying its impact and the challenges posed to employers. Meanwhile, we have been piloting solutions that are based on command-driven approaches to social media in the workplace in which employers can use social media effectively while reducing the downsides for use in recruiting, on-boarding, ongoing communication,
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These children of the 2000s simultaneously grew up way too fast and never grew up at all. They are privy to everything from a dangerously young age. Their access to information, ideas, images, and sounds is completely without precedent. At the same time, they are isolated and scheduled to a degree that children never have been.
training, development, performance management, and knowledge transfer. Command-driven social media means the employer controls who is in the group, what is discussed and when, and the employer is able to supervise and participate in the online community. Plan for Global Outreaching and Local Nesting. What are the opportunities and pitfalls for Generation Z presented by globalization? The flip side is the intensive Gen-Z focus on tactile control of the local environment and the intensive gravitational pull of the local for Gen Zers. How can employers use the Gen-Z focus on the local to increase engagement? How can employers use the reality of non-geographical connections to increase reach when it comes to recruiting, retention, innovation, sourcing, and sales? Build Continuity though Short-Term Renewable Loyalty. There is a strong continuation of the trend toward highly transactional employment relationships. Gen Zers seem to be highly responsive to clearly defined exchanges of time/tasks for directly calibrated rewards. The most effective way to drive performance and maintain ongoing working relationships with Gen Zers is for continued on page 60 |
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Problem. Solved. Reduce shrink without increasing costs. Even as retail shrinkage increased to $54 billon last year*, Loss Prevention professionals are being asked to do more with less… less funding, less information, fewer resources and a dwindling capacity in the criminal justice system. CEC’s Restorative Justice Program uses mobile technology and restorative education to help retailers reduce shrink at no cost, while changing lives and strengthening communities. Contact CEC today to learn how to initiate a free pilot in your stores.
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Reinventing the way petty crimes are handled
MEET GENERATION Z continued from page 58
managers to explicitly negotiate performance and reward on an ongoing basis in a transparent open exchange. Retain the Superstars for the Long Term by Building Dream Jobs. There is a steady exacerbation of the growing divide between the “most valuable” new young workers and everyone else. No matter how bad the job market may be for some, there is a growing elite among the new young workforce who will be in much greater demand than supply. There is a growing premium on those with skills in greater demand than supply, especially those who have availed themselves of personal-development opportunities. The key for employers to recruiting and retaining the “most valuable” young rising stars, at the high end of the talent-skill-effort spectrum, is going to be the ability to create dream jobs for those superstars. What are the dream job elements and how can employers make dream jobs for young stars that also make sense for the organization? Dream jobs are always contingent on ongoing performance,
but built on a long-term understanding of tremendous work conditions, rewards, and flexibility for the superstar in return for consistent superstar contribution with the intention of maintaining a long-term working relationship.
Stay Tuned for More
Our research indicates that Generation Z represents the greatest generational shift the workplace has ever seen. The bleeding edge of Gen Zers—today’s 16 to 23 year olds—is already entering the retail workforce. By 2015, they will be 20 million strong, 25 million by 2017, and 30 million by 2019. Generation Z will present profound challenges to leaders, managers, supervisors, HR professionals, and educators in every sector of the workforce. It will be increasingly important to understand where they are coming from and key strategies for bringing out the best in this emerging young workforce. Our research on Generation Z is ongoing. Stay tuned.
BRUCE TULGAN is a leading expert on young people in the workplace. He is an advisor to business leaders all over the world, the author or coauthor of numerous books including the classic Managing Generation X (1995), the recent bestseller It’s Okay to Be the Boss (2007), and his latest Not Everyone Gets a Trophy: How to Manage Generation Y (2009). Since founding the management training firm RainmakerThinking in 1993, he has been a sought-after keynote speaker and seminar leader. Tulgan’s weekly v-log (video newsletter) is available for free at rainmakerthinking.com. He can be reached at brucet@rainmakerthinking.com.
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CERTIFICATION
Will Certification Benefit Solution Providers?
I
recently attended the Food Marketing Institute (FMI) asset protection conference in Jacksonville, Florida, which continued to demonstrate the continued support and acceptance of professional certification for our industry. It seems like it was only a few years ago that most conference attendees came by our booth to solicit information about the benefits of the still new certifications. They were not used to the idea that they were being asked to consider allocating time to study what they had been doing for years. Now they come by the booth and ask how to get started because they have heard about the knowledge others have gained and are applying to their positions in LP. We often hear something like, “My manager completed it and told me he learned a lot.” For the past couple of decades, many in our industry knew that a specific loss prevention certification was needed for our profession. We all knew if created properly, it would be a tremendous learning tool for many. It is clear that not just LP practitioners in North America see the benefit as evidenced by our recent announcement that we are expanding certification into India because of the overwhelming interest we have received there.
by Gene Smith, LPC Smith is president of The Loss Prevention Foundation, the not-for-profit organization charged with the responsibility of managing certification. He was formerly president of the industry’s largest executive search and consulting firm. During the past fifteen-plus years, Smith has provided career counseling for thousands of industry professionals nationwide. He can be reached at 704-837-2521 or via email at gene.smith@losspreventionfoundation.org.
more effective and efficient solution provider for having acquired my LPC designation.” “A busy person always finds time to do one more thing,” said Karen VanBrunt, LPC, analyst services administrator for Agilence. “After twenty-four years with the same company as an LP professional, I knew I still had much to learn about various areas of LP that I had never been exposed to. I could not think of a better way to enhance my skills than to become certified. The Foundation provided me with the opportunity I could not get from other courses. It’s a certification built by and for our industry that, at the end of the day, would enrich anyone’s LP knowledge.”
“We believe that being certified shows our commitment to supporting the loss prevention industry. Through certification we have a better understanding of our client’s challenges and needs, which helps us provide value and better solutions as an industry partner.” Cita Doyle, LPQ, Director of Sales and Marketing, InstaKey Security Systems
Not Just for LP Practitioners
We are also now having solution providers approach us in record numbers wanting to know how they or their company team can earn certification. When we ask them about their motivation for certification, here is some of what we hear: ■ “I never worked loss prevention, so I really want to know for sure what my clients do every day.” ■ “I want to show my clients that I respect and am interested in what they deal with in their jobs.” ■ “I want to learn information that might help me apply the proper solution to my client’s needs.” ■ “It will help me look at solutions through their eyes.” ■ “I know other solution providers who have become certified, and they tell me they learned a a great deal." ■ “I want to help elevate our profession, and certification is the best way I know to do that.” Here are a few quotes from solution providers who have earned their certification. “The LPC course was a rigorous journey through every aspect of retail loss prevention,” said Kevin Lynch, LPC, executive director of business development for Tyco Integrated Security. “As a solution provider to the LP community, it gave me a unique, new perspective on the amount of knowledge and leadership it requires to be a top-flight LP executive. I will be a significantly
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Cita Doyle, LPQ, is director of sales and marketing for InstaKey Security Systems. She explained why she became certified and is having her entire support team earn their certification. “We believe that being certified shows our commitment to supporting the loss prevention industry. Through certification we have a better understanding of our client’s challenges and needs, which helps us provide value and better solutions as an industry partner.” Another solution provider with several years in the industry recently thanked us for helping him earn his certification. He informed us that he was successful in helping an LP director secure funding for a project because of the information he learned in the return-on-investment (ROI) section of the LPQ coursework. He felt that the section gave him the ability to help his client understand and explain the ROI so the LP director in turn could sell it to his CFO. |
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Based on these testimonies and others we’ve heard, certification is a great benefit to solution providers. Certification will benefit anyone on either side of the table who view themselves as LP professionals. Whether you are new to the profession or an experienced veteran, we know you will gain valuable knowledge that you can use immediately in performing your current function better.
introducing
summit series
Newly Certified
Thanks to the work and dedication of hundreds of professionals, we now have over 452 companies who have someone certified LPQ or LPC, or currently have someone enrolled in one of certification programs. Following are individuals who recently earned their certifications.
Recent LPC Recipients Sam Alvarado, LPC, Macy's Logistics and Operations Nathan Anderson, LPC Ryan Arensberg, LPC, Lowe’s Chad Barnhill, LPC Arturo Barraza, LPC, Lowe’s Larry Borden, LPC Emily Bosworth, LPC, Lowe’s Winston Boyce, LPC, Lowe’s Dale Brantley, LPC, Best Buy Scott Bushnell, LPC, Lowe’s Robert Caveness, LPC, Lowe’s Robert Cochran, LPC, Rite Aid Corey Cook, LPC, JCPenney Robert Corrado, LPC, Rite Aid Pedro Corrales, LPC, Lowe’s Marcus Culliver, LPC, Lowe’s Scott Demmons, LPC, Lowe’s Jessica DeValkenaere, LPC, Staples Thomas Devaney, LPC, Rite Aid Cynthia Diogostine, LPC John Doggette, LPC, Lowe’s Leighton Dowdle, LPC, Lowe’s Kate Early, LPC, Lowe’s John Ellis, LPC, Lowe’s Tracy Fleming, LPC, Walmart Timothy Foley, LPC, Lowe’s Steve Forgette, LPC, T.J.Maxx Jacob Gillette, LPC, DICK’S Sporting Goods Carlos Gonzalez, LPC, Walgreens Shawn Hanley, LPC, Lowe’s Ryan Hogan, LPC, Lowe’s Nichole Huber, LPC, Rite Aid Todd Isenhour, LPC, Lowe’s Marlon Jones, LPC William Jones, LPC, Gander Mountain Amy Jankaitis, LPC Curtis Leininger, LPC, Lowe’s John McCallister, LPC, Lowe’s Kevin Molle, LPC, Rite Aid Richard Nowak, LPC, Lowe’s
Efran Padilla, LPC, Lowe’s Jeffrey Patronaggio, LPC, Lowe’s Don Popa, LPC, Rite Aid Page Ramirez, LPC, Office Depot Sue Read, LPC, Lowe’s Eric Rode, LPC Terry Rogers, LPC Travis Ross, LPC, Lowe’s Jeremy Santos, LPC, Lowe’s Dennis Shanley, LPC, Lowe’s Daryl Shaw, LPC, Buy For Less Jason Smith, LPC, Hallmark Cards Jimmy Soto, LPC, Walgreens Jerry Stockley, LPC, 7-Eleven Terry Sullivan, LPC, Lowe’s Brian Swon, LPC, Lowe’s Matthew Thompson, LPC, Lowe’s Brian Thumm, LPC, Lowe’s Samuel White, LPC, Lowe’s Michael Yarbrough, LPC, Lowe’s
Recent LPQ Recipients Donald Abba, LPQ, SMG Management Nicole Anderson, LPQ, Federated Co-operatives Bill Coates, LPQ, 7-Eleven Janet Crimo, LPQ, Staples Jeffrey Dobrusin, LPQ Jeffrey Hedges, LPQ William Johnson, LPQ Lee Lastovica, LPQ, Genesco Thomas Mistrata, LPQ Vanessa Moinhos, LPQ Eric Murray, LPQ Adam Nowicki, LPQ Brigette Prock, LPQ, PETCO Raymond Ruiters, LPQ Douglas Squires, LPQ Elizabeth Tichenor, LPQ Austin Wadsworth, LPQ Joseph Young, LPQ, Neimann Foods Thomas Zimmerman, LPQ, DSW
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LP MAGAZINE | MARCH - APRIL 2014
Visit Us at RILA Booth #206
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SOLUTIONS SHOWCASE CHECKVIEW
Checkview Challenge: How a National Retailer Became PCI Compliant in 90 Days The Situation
The Payment Card Industry Data Security Standard (PCI DSS) requires the ability to authenticate and identify access to systems containing confidential and secure payment information. This identification of access to secure systems includes retail store servers where the information is maintained. Retailers can either choose to implement an access-control system or monitor the server room with video equipment. The video requirement includes a minimum of 90 days of storage.
The Challenge
A Fortune 500 national retailer needed its 1,500 locations PCI compliant within 90 days. Since access control would be an entirely new venture for its stores, this retailer decided to select the video option since there was a current infrastructure in place. However, the current infrastructure couldn’t support the 90-day requirement necessary without an enormous investment to upgrade each DVR in operation. Ultimately, the retailer needed a recording solution that: Captured and recorded 90 days of video Functioned in low light and complete darkness Could easily plug into their network Functioned both as a camera as well as a recording device
CHALLENGE
The Checkview Solution
Checkview worked with its leading industry partners to source both the hardware and software that the retailer needed for a cost-effective solution meeting the necessary PCI DDS requirements as well as its internal network needs. Checkview was able to install this solution in 1,500 locations in 90 days, thereby achieving 100 percent PCI compliance.
“I don’t know what we would have done without Checkview. They came to the table with several viable solutions. Once we selected one and decided to implement, Checkview managed every detail of the process. They truly are a valuable member of my asset protection team.” “The project details from camera programming, scheduling, and coordination of installation was a massive undertaking that Checkview handled with ease,” said the director of loss prevention operations for this retailer with over 600 million shoppers annually. Checkview efficiently and methodically executed this roll out through its certified and thoroughly trained field service team. “I don’t know what we would have done without Checkview,” said the director. “They came to the table with several viable solutions. Once we selected one and decided to implement, Checkview managed every detail of the process. They truly are a valuable member of my asset protection team.”
What’s your challenge? Challenge us to solve it at Checkview.com. LP MAGAZINE | MARCH - APRIL 2014
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DIGITAL DIALOGUE By Jacque Brittain, LPC
Managing Industry News: Are You Staying Informed?
I
n a recent article in our weekly e-newsletter, LP Insider, we asked our readers, “What makes a magazine a resource?” An article can be well-written, the messages can be meaningful, and the lessons life-changing; but none of it really matters if no one is reading. Information holds its greatest value when we put it to use. Of course, that same message applies to all of our media resources. What makes the material valuable to you? There is no single interest or motivation that determines what we chose to read or whether it will hold value. In many ways, adding value is in the eyes of the beholder. This is not only something that is unique to a particular individual, but can sway within any one of us based on our mood, our state of mind, or our course of action. Our ability to absorb information is an
Retail is an incredibly dynamic business. Naturally, this leads to exceedingly diverse loss prevention content that surfaces on a perpetual basis. As a result, staying current with important news and events and sorting through what is most relevant to each of us becomes a sizable task. active process. It takes a focused effort by the reader to recognize what they consider to be important. That’s why we feel that it’s important to provide you with informational options. This takes the learning process to another level, helping to keep you and your team informed, educated, and engaged. Retail is an incredibly dynamic business. Naturally, this leads to exceedingly diverse loss prevention content that surfaces on a perpetual basis. As a result, staying current with important news and events and sorting through what is most relevant to each of us becomes a sizable task.
Brittain is editorial director, digital, for LP Magazine. Formerly a director of learning design and certification, Brittain managed the development of the LPC and LPQ certification programs in collaboration with the Loss Prevention Foundation. Prior to that he was vice president of operations for the industry’s largest executive search and consulting firm. In his thirty-plus years in the LP industry, he has helped build and enhance many learning initiatives and provided career counseling for thousands of industry professionals. Brittain can be reached at jacb@lpportal.com or by phone at 704-246-3143.
It may not be prudent or realistic to try to stay informed on every story, investigation, or event that takes place on a daily basis, but it is still wise to explore industry-specific content that keeps us informed and engaged. We then must find ways to best manage our information and apply it within the framework of our day-to-day responsibilities. So, how successful do you feel that you are at managing this information? Do you consider yourself to be well-informed? Are you current on the latest and most compelling information related to the industry? Following is a summary of several topics that have been prominent in the news over the past few months with a focus on those that have drawn the greatest interest from our industry professionals. Examples have been provided to add perspective, but this is by no means a complete list of important industry topics and only provides a glimpse of current events.
Data Breaches Still Dominating the News
Cyber-criminals hacking into company databases has provided a relentless theme in every digital outlet early in 2014, with several retailers confirming breaches and several others currently investigating potential incidents both in the U.S. and internationally. Countless stories have flooded the newswires and discussion groups as companies and customers seek answers to a problem that has the potential to affect millions of retail transactions every day. Millions of customer accounts were compromised as a result of these breaches, with multiple reports of cyber-fencing of accounts as well as actual and potential use of the information by criminal factions. Congressional hearings have been held that have challenged existing practices while calling for additional controls, customer protection, and reporting standards. These stories have clearly drawn the interest and attention of the entire retail community with companies examining internal security tools, policies, and protocols to strengthen their existing programs. Many are restructuring their departments by adding new positions, redefining roles, and eliminating others to combat the threat. Loss prevention practitioners and solution providers are working closely with IT departments and other experts to improve security efforts. “Chip and PIN” credit cards, cyber-threat information sharing, and additional technology solutions are also being introduced and/or expedited in order to enhance controls and improve service. This trend is continued on page 68
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expected to continue to dominate news channels as additional information is released and additional solutions are developed and implemented.
All in the Family
Shoplifting rings and organized retail crime (ORC) incidents continue to make headlines, highlighted by a recent incident involving a Chicago-area family allegedly stealing more than $7.1 million in retail merchandise and selling the items on eBay. The husband, wife, and daughter operated a sophisticated booster operation, taking extended road trips to steal toys and other items from retailers nationwide. The husband and wife emigrated from what was then Yugoslavia and are in the U.S. illegally. Both have arrest records, and Branko Bogdanov, the husband, was supposed to be deported following a criminal conviction more than ten years ago. Bogdanov and his wife, Lela, will be held in jail pending trial after a federal judge ruled that they are flight risks. They currently own a $1.3 million home and twelve vehicles. On a more positive note, many of the reported incidents were solved following collaborative efforts between various retailers and law enforcement partners. The $7 million Chicago family incident was solved as part of eBay’s PROACT team partnership with loss prevention executives at several retailers in cooperation with eBay and the U.S. Secret Service leading to the arrests. Target’s forensic services laboratory was recently recognized for assisting outside law enforcement with help on special cases. Many other recent incidents clearly show the importance and the power of collaborative partnerships between retailers and other enforcement agencies.
Gateway Crimes
As reported in a recent LP Magazine story with Kroger’s Dennis Dansak, there is often a direct relationship between ORC and other crimes, such as drug trafficking, drug abuse, gun violations, other violent crimes, and even terrorism. The significance of ORC incidents as “gateway crimes” was repeatedly confirmed in recent events. Numerous incidents involved heroin, including a woman who asked to use heroin while in custody, a shoplifting suspect that had 246 heroin packets in her possession, and another involving an employee allegedly selling heroin in Happy Meals at the drive-through window. Multiple incidents involved mobile meth labs that were confiscated in vehicles during shoplifter arrests. A food-stamp fraud case involved suspects shipping products and money to Liberia. Another incident involved a store-based operation where suspects were exchanging food stamps and stolen merchandise for cash and crack cocaine.
News You Can Use
Some of the most read stories were those focused on learning, education, and professional growth. Articles involving LP safety, the National Retail Security Survey, training, and leadership articles, such as the “Sports Authority LP Magazine Review,” and articles on building business partnerships showed high readership.
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These subjects also tended to provide the most fuel for conversations in the various group-discussion outlets. Participation in the various discussion groups varies greatly. Some groups show very little interactive participation, while others are much more participatory, such as the Loss Prevention Foundation discussion group on LinkedIn. Several have made it clear that direct access to the information is the best way to spark interest and participation, with those topics that provide such access offering the most feedback from the group members.
LP Worldwide
From flash mobs in Brazil to the theft of a $995,000 alligator coat in Hong Kong, the types of crimes occurring worldwide and the way that loss prevention departments and law enforcement are handling these issues has provided a wealth of content and a growing interest from the loss prevention community. A British television program featured individuals involved in actual shoplifting incidents and other crimes. A shoplifter is jailed with 280 criminal convictions. A man known as the “Pink Panther Robber” involved in a notorious jewelry theft ring recently escaped from prison. Serious criminal acts involving data breaches, fraud, ORC, and other incidents continue to remind us that these are worldwide problems and provide insight into how these issues are handled on an international scale.
You Can’t Make This Stuff Up
Crime itself is never amusing, but some of the outlandish actions and behaviors described in some of these stories leave us wondering about the capacities of many of those involved. Everything from the ridiculous to the bizarre has provided us with an endless source of eye-rolling and head-scratching. A man robbed a petrol station wearing a flower pot on his head and wielding a chainsaw, only stealing a bottle of soda. A man smuggles nearly 40,000 piranhas into the country and sells them to pet stores as harmless “silver tetras.” A woman has sex with five underage teens behind a store after meeting them while shopping and then accuses them of robbery when her cell phone comes up missing. Naturally, one of the teens recorded the encounter on his cell phone. A shoplifter on drugs thought he was invisible to the police. And most recently, a man robbed a second-hand store wearing nothing but a g-string, stealing a bride’s sash, a hood, a cape, and a batman doll before breaking into a dance routine outside the building while wearing his ill-gotten goods—all of which was captured on video.
How Informed Are You?
Are you getting the information that you need? While some of these stories may not directly affect you or your department, other articles and information may significantly impact our industry and our way of doing business. LP Magazine keeps you up-to-date and informed on the latest and most important subjects facing our industry. It can offer a source of new ideas and new approaches to the business, as well as providing information and education for you and your team. But it is still critical that the information is put to use. This requires that we seek out and apply the resources at our disposal, manage the information effectively, and utilize the most effective channels to communicate that information to our teams. |
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PEOPLE ON THE MOVE Mike Nagyhazy was appointed Director of LP for 24 Hour Fitness.
Eric Barger was made a Regional LP Auditor for O’Reilly Auto Parts.
Scott McBride was named VP of LP, Safety, Nadine Eller is now Regional LP and Safety Manager with PetSmart. and Security at American Eagle Outfitters. Vincent Reidy, Jr. is now a Regional Human Resources Manager for AutoZone. Erin Gutierrez is now a Regional LP Manager at Bath & Body Works. Chris Fontana, CFI is now Area LP Manager with Big Lots. Patrick Johnson was named Senior Manager, Regional AP, for Bi-Lo Holdings. CKE Restaurants has appointed Anne Sullivan VP of LP and Safety, and Christopher Magana a Regional LP Manager. Greg Brumley, CPP, LPC was appointed LP Director at Coinstar Exchange. CVS Caremark appointed Adalbert Martinez, CFI Senior Regional LP Manager and John Morris Regional LP Manager. Ernesto Contreras is now a District Manager of LP for DICK’S Sporting Goods. Dominoes made Eric Rausch East Region Safety and LP Manager and Tad Dack an LP Specialist. Brian Hall was named Distribution Center General Manager for Furniture Mall of Kansas. Jeff Mangold, CFI is now a Regional LP Manager with GameStop. Matt Grant was named Senior District LP Manager at Gordmans. John Mitchell was made a District Operations Manager, and Juan Interiano was named Multi-Store/District AP Manager at The Home Depot. Mike Harris was named Regional Director, AP for Hudson’s Bay Company. Mauro Dri was named Country Risk Manager for IKEA Canada. Shaun Gilfoy, CFI is now Director of Regional Security, North and South America, with Levi Strauss and Company. Lord and Taylor announced that Tom Kilgallon and Arnold Milliken were named Regional Directors of AP. Macy’s made Joe Coll Regional Director of Store’s Investigations, Ashlee Beckham District Manager of Investigations, and Larry Martinez LP Manager. Shannon Hunter was named Director, LP Operations and International, and Greg Jobe, CPP Regional LP Manager for Office Depot.
Joe Bleyer, CFI, LPC is the new Director of AP and Justin McManus is now Senior Director of AP, Europe for Ralph Lauren. Rent-A-Center announced the following changes: Juan Valverde was promoted to Director of LP Mexico and Esteban Ulate was named Regional LP Manager for northern Mexico. Sean Huggins was named Senior Manager of Internal and ORC Investigations for Rite Aid. Sdiqa Sharifi is now Operations Manager, Ross Investigative and Safety Center, and Amanda Zettle Koch Senior Area LP Manager for Ross Stores. Tim Liles was made an LP Manager with Sally Beauty. Ken Basil is now Director of LP and Learning and Development, and Syed Raza is LP Director of Home Services for Sears Holdings. Davis Shepheard was made a Regional Operations and LP Manager at Sears Hometown and Outlet Stores. Jesse Pinheiro was named District LP Manager for Smart and Final. Gregg Makinajian was made Field LP Manager at Staples. Dennis Gibbons, LPC was named Investigations Analyst at TJX. Stephen Scott was appointed VP of LP for Tractor Supply Company. Rob Gibson, CFI was made AP Manager, West for Under Armour. Jose Gonzalez, CFI was appointed VP, AP and Security at Walmart Brazil. Walmart Stores U.S. named Anthony Williams and Anthony Alosio, CFI as AP Senior Managers.
To stay up-to-date on the latest career moves as they happen, sign up for LP Insider, the magazine’s weekly e-newsletter, or visit the People on the Move page on the magazine’s website, LPportal.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 | MARCH - APRIL 2014
CALENDAR March 6, 2014 LAAORCA 5th Annual ORC Conference Pasadena (CA) Convention Center laaorca.org March 9 – 12, 2014 Food Marketing Institute 2014 Asset Protection Conference Hyatt Regency Riverfront Hotel, Jacksonville, FL fmi.org March 11 – 13, 2014 Jeweler’s Security Alliance 36th Annual Security Seminar and Expo Hilton Buena Vista Hotel, Orlando, FL jewelerssecurity.org March 17 – 20, 2014 Merchant Risk Council e-Commerce Payments & Risk Conference Aria Resort, Las Vegas, NV merchantriskcouncil.org April 1 – 4, 2014 ISC West Sands Expo & Convention Center, Las Vegas, NV iscwest.com April 6 – 9, 2014 Retail Industry Leaders Association Asset Protection Conference JW Marriott, Indianapolis, IN rila.org April 30 – May 2, 2014 International Organization of Black Security Executives Annual Spring Conference Pleasanton, CA iobse.com June 11 – 13, 2014 National Retail Federation Loss Prevention Conference & EXPO Greater Fort Lauderdale (FL) Broward County Convention Center lp14.nrf.com August 3 – 6, 2014 Restaurant Loss Prevention & Security Association 2014 Annual Conference Caribe Royale Hotel, Orlando, FL rlpsa.com September 10 – 11, 2014 Retail Council of Canada Retail Loss Prevention Conference Toronto (ON) Congress Centre retailcouncil.org September 29 – October 2, 2014 ASIS International 60th Annual Seminar and Exhibits Georgia World Congress Center Atlanta, GA asisonline.org
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ADVERTISERS Agilence.................................................................33 agilenceinc.com/cloud Alpha.......................................................................17 alphaworld.com American Military University................................9 publicsafetyatamu.com/security Axis Communications.............................................7 axis.com/retail Bass Security........................................................29 bass-security.com CardioReady..........................................................55 cardioready.com Checkpoint.............................................................19 checkpointsystems.com Checkview..............................................................35 checkview.com ClickIt Inc...............................................................31 clickitinc.com Contact, Inc............................................................69 contactinc.com Corrective Education Company..........................59 correctiveeducation.com Detex.......................................................................57 detex.com/230x Diebold....................................................................49 diebold.com/lpmagazine FireKing Security Group.......................................63 fireking.com InstaKey..................................................................34 instakey.com Intelligent Loss Prevention..................................22 intelligentlossprevention.com International Assoc. of Interviewers.................67 certifiedinterviewer.com LockUp....................................................................37 lockup.com Loss Prevention Foundation................................52 losspreventionfoundation.org Milestone...............................................................45 milestonesys.com NRF LP Conference..............................................64 nrf.com/lp14 NuTech National...............................................2, 51 nutechnational.com Palmer, Reifler and Associates..........................47 palmerreiflerlaw.com Protection1 Security Solutions...........................13 protection1.com Protos Security........................................................3 protossecurity.com RILA AP Conference.............................................25 rila.org/ap The Retail Equation.................................................5 theretailequation.com/success RLPSA Conference...............................................60 rlpsa.com Salient Systems.....................................................41 salientsys.com Secureitech...........................................................21 securitech.com/simplythebest Security Resources..............................................75 securityresources.net Se-Kure Controls...................................................70 se-kure.com Sony Electronics...................................................23 sony.com/security/retail Turning Point Retail..............................................70 turningpointjustice.com Tyco Integrated Security.....................................76 tycois.com/lp Tyco Retail Solutions............................................43 tycoretailsolutions.com Verisk Retail...........................................................61 veriskretail.com
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PARTING WORDS
Make up Your Mind To Be Happy C
onferences are fun for me; a highlight of my year. And it doesn’t matter which conference. You can always find a session or a conversation that will make you smarter. You can always find a great restaurant and good company for dinner. But what is really interesting is watching others and trying to gauge how happy they are in their chosen occupation. It is usually written on their faces, whether they are a retailer or a solution provider. I just returned from the food retailers’ conference where it appeared that most people had made up their mind to be happy. However, there were a few who walked around with sad or troubled looks on their face, but they were the exception. Each of them, if they make up their mind, can change that. This brings me to Tina Sellers, director of LP at Delhaize America, which is Food Lion’s parent company. She led a great discussion on “Getting Your House in Order.” There wasn’t a thing about shrink, catching shoplifters, ORC, or accidents. It was just plain talk on how each person can get things right with themselves, starting with family. Family. How well do you keep work distractions from your family? When the phone rings at night, sometimes making you angry or emotional, do you take it out on your family? Are you able to keep your cell phone in your pocket when sitting with the family at dinner? It was suggested that you take a basket and make everyone put their device in it when the family was engaged together. Good idea. Finances. After family the topic was finances. Do you have a savings plan, do you contribute to your retirement, do you have a will, do you know the contents of your parents will and what your responsibilities might be in that event? These are all pretty basic questions, but many in the session were not in a good place. Business Relationships. Next came discussion of business relationships. Do you have mentors who you take advantage of? Have you tried to engage colleagues from other companies? Here was a good suggestion—when sitting in a session, introduce yourself to the people near you and suggest having lunch or a drink together. Don’t shy away from conversations with solution providers either. All of them bring value to our industry. You don’t have to be a buyer to establish a new, healthy relationship. Education. What about education? If you don’t have a degree there are several ways to go about obtaining one in person or online. Yes, it is difficult to balance your job and
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Jim Lee, LPC Executive Editor
school, but you can do it. What about certifications—LPQ, LPC, CFI, CFE, and CPP? Most companies should be able to help you with the costs of a degree or certification program. You simply have to ask. Health. Lastly, the discussion turned to health, which is all too often easy to neglect. Do you diet, get regular exercise, and have regular doctor checkups? Your health is important to you as an individual, but also to your family and friends. The best indicator of a good session for me is, did I feel better afterwards? In this case yes, I did. The next conference I attend will be the RILA event in Indianapolis the first week of April. Indy is a short drive from my hometown, so I know about Indiana. Indy is a great city and will be a good host to what I expect to be a great conference. However, the first week of April in Indiana? There might be six inches of snow, there might be a tornado, it may be sunny and 70; all in the same week! So I’m thinking positive thoughts on the weather and better thoughts about finding a restaurant that can do a breaded tenderloin Indiana style. Now that will make me happy.
On Another Note
Recently I had the opportunity to have one-on-one conversations with two different CEOs. I asked them both what made them happy. Without hesitation they both said it was single objective—profit. Everything else was secondary to the drive for profit. My follow-up question was how well was LP contributing to their profit. Both CEOs replied with a lukewarm, “Fine.” They went on to say LP did a good job of getting rid of dishonest employees and had shrink and technology programs in place, which was all “Fine.” So, how does LP do great? They both responded the same way. Talk more about profit and less about shrink. Present a profit plan, not a shrink plan. Demonstrate how LP supports the business and grows profit as well as reducing loss. Convince them that all LP associates understand the value of the customer and everything they do supports the customer experience. If we are all about the customer and profit, then shrink will take care of itself. That would make both CEOs happy. I imagine there are many others that feel the same way.
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Visit us at RILA Booth 401 To download our latest White Paper, visit TycoIS.com/LP 1.800.2.TYCO.IS / Safer. Smarter. Tyco.™ ©2014 Tyco. All rights reserved. Tyco and the product names listed above are marks and/or registered marks. Unauthorized use is strictly prohibited.
Steve Young Football Legend
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Usando la nueva etiqueta de alimentos en estos paquetes significa que están protegidos y certificados para el uso en microondas. La comida y nosotros estamos más seguros de los posibles incendios.
Protegemos sus gafas sin perder de vista la comodidad de sus clientes.
En Checkpoint somos especialistas en sistemas de protección anti-hurto. Hemos creado productos específicos para el sector de ópticas, con el menor tamaño y la más alta fiabilidad. Disponemos de los sistemas más eficaces para proteger gafas, permitiendo su libre exposición, para que sus clientes puedan probárselas con toda comodidad. Le ofrecemos: Antenas antihurto. Tags para gafas AM y RF.
Checkpoint Systems Blvd. Manuel Ávila Camacho #184 Piso 17 Col. Reforma Social, 11650 México, D.F. (52)55 5281-8940 - info-mx@checkpt.net www.CheckpointSystems.com.mx
Encuentre las 7 diferencias
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• Sin protección antiestática.
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Garantía Checkpoint.
Una buena etiqueta RF antihurto se distingue por las ventajas que ofrece. Checkpoint es un referente mundial en etiquetas de seguridad, porque dispone de un proceso continuo de investigación + desarrollo y somete cada etiqueta a un estricto control de calidad. (*) Etiqueta 2010 y 4010 Food
Checkpoint Systems Blvd. Manuel Avila Camacho #184, Piso 17 Col. Reforma Social, CP11650 México, D.F. (52)55 5281-8940 - info-mx@checkpt.net www.CheckpointSystems.com.mx
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Con la solución RFID de Checkpoint, nuestro inventario perpetuo esta exacto. Ahora nuestros clientes pueden encontrar lo que están buscando.