July - August 2011

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

MAGAZINE

THE THREAT OF SOCIAL MEDIA

PROTECTING YOUR BRAND Reducing Shrink through People, not Technology Flash Mobs Becoming a Threat to Retailers Reflecting on Quality Recruitment and Retention

Contents

17 The Threat of Social Media

Ten steps to protecting your brand.

6

PUBLISHER’S LETTER Finding Your Niche

By Jack Trlica

8

ON THE WEB

10

RETAIL SPONSORS

12

LOOKING BACK Ten Years of LP Magazine

14

INTERVIEWING History of Interrogation According to W-Z: The Present

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

24

ACADEMIC VIEWPOINT Perceived Wage Inequity Can Often Be Used to Rationalize Employee Theft

By Richard C. Hollinger, Ph.D.

46

CERTIFICATION Give Our Veterans a Fighting Chance

By Gene Smith

48

FUNDAMENTALS Still More Game Changers

By Mike Marquis, CFI

56

SUPPLY CHAIN Taking a Bite Out of Organized Crime

By Kelby Woodard

58

EVIDENCE-BASED LP Retailers’ Research Objectives

By Read Hayes, Ph.D., CPP

60

INDUSTRY NEWS -N RF Presents Multiple Awards at LP Conference - 2 010 Jewelry Crime Statistics Published -A merican Apparel to Double Its Item-Level RFID

By Robert L. DiLonardo

62

PEOPLE ON THE MOVE

64

ADVERTISER DIRECTORY

65

VENDOR SPONSORS

66

PARTING WORDS August—You Need an Identity

By Jim Lee

By Helen Levinson, Desert Rose Design

27 Reducing Shrink through People, Not Technology A conversation with Gary Johnson, The Vitamin Shoppe.

By James Lee, Executive Editor

39 Flash Mobs Becoming a Threat to Retailers A new twist in retail theft.

By Frank Muscato, The Muscato Group

49 Reflecting on Quality Recruitment and Retention

One LP employee’s experience with good and bad managers.

By Ryan Kelly

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Publisher’s LETTER MAGAZINE

Finding Your Niche

700 Matthews Mint Hill Rd, Ste C Matthews, NC 28105 704-365-5226 office, 704-365-1026 fax

B

y definition, a niche is (1) a special area of demand for a product or service, or (2) a situation or activity especially suited to a person’s interests, abilities, or nature. LP Magazine is an example of a niche publication in that when we started this magazine ten years ago, there was no publication dedicated to the loss prevention industry. With a little research we determined there was an untapped demand for information and educational material on LP topics, which we set out to fill and, hopefully, have successfully done so.

The second part of that definition is what I want to address here—finding the career niche that you can identify and fill that suits your personal and professional skills and interests. This topic is top of mind for me right now because I have 26- and 23-year-old sons finishing degrees and searching for career opportunities that fit both their skills and interests. Hopefully, in today’s job market identifying their niche may be a way to differentiate themselves from the many applicants for the few jobs available.

Specialist vs. Generalist

Over the years there has been an ongoing debate around the importance of being a specialist versus a generalist for professional success. If you look at loss prevention over the years, one could argue that successful LP professionals have moved from being strictly security specialists to business generalists, albeit with an LP specialty.

I would suggest that a combination of specialized skills with general knowledge is critical for success at every level of the organization. For example, an entry-level store detective must have special skills to identify theft, uncover the facts, interview the suspect, and close the case. To move up in the organization, the skilled investigator must acquire additional skills, such as managing people, as well as general knowledge of retail operations and business principles. The LPQ and LPC certifications are built around this concept.

Even if you are one who has this combination of specific and general knowledge, finding your niche can help differentiate you and potentially find a more fulfilling position. Going back to that entry-level store detective, what if he or she is especially interested in computers? Combining those skills could very well help one move into a niche position as a forensic or online investigator. Or perhaps that investigator has a passion for coaching others. Combining those skills could open the door to a position in LP training.

Growing Opportunities

As loss prevention gets more and more integrated into the overall business, there will continue to be more and more niche opportunities available to those willing to look for them. Data and information security is a growing need. Brand protection and online investigations is gaining importance (see “The Threat of Social Media” on page 17). RFID may create new opportunities in logistics and inventory management. Our global economy will certainly open up international opportunities for those who are adventurous or have language skills.

Finding your niche takes introspection, self-motivation, ongoing education, risk taking, and looking outside your box. But as every parent tells their child, if you can combine a job with what you are passionate about, you will love going to work every day. Finding your niche will not only give you more personal satisfaction, but also give your company a more satisfied, more motivated employee.

Jack Trlica Editor and Publisher LossPrevention and LP Magazine are service marks owned by the publishers and their use is restricted. All editorial content is copyrighted. No article may be reproduced by any means without expressed, written permission from the publisher. Reprints or PDF versions of articles are available by contacting the publisher.

Statements of fact or opinion are the responsibility of the authors and do not necessarily represent the opinion of the publishers. Advertising in the publication does not imply endorsement by the publishers. The editor reserves the right to accept or reject any article or advertisement.

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EDITOR AND PUBLISHER Jack Trlica JackT@LPportal.com EXECUTIVE EDITOR James Lee JimL@LPportal.com CONTRIBUTING EDITORS Adrian Beck Robert L. DiLonardo Walter E. Palmer, CFI, CPP, CFE Amber Virgillo CONTRIBUTORS William A. Alford, CFE Read Hayes, Ph.D., CPP Richard C. Hollinger, Ph.D. Mike Marquis, CFI Gene Smith Shane G. Sturman, CFI, CPP Kelby Woodard David E. Zulawski, CFI, CFE ONLINE EDITOR Matt Richardson MattR@LPportal.com CREATIVE DIRECTOR Larry Preslar ART DIRECTOR Mindy Kuhn DESIGN & PRODUCTION SPARK Publications info@SPARKpublications.com 704-844-6080 ADVERTISING

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

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

© 2011 Loss Prevention Magazine, Inc.

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ON THE WEB

Editorial Board

Legal Briefs

Leo Anguiano Vice President, Loss Prevention & Risk Management, Central Parking Corp.

Check out the new Legal Briefs columns in the editorial section of the magazine website, www.LPportal.com/legal-briefs.html. Following are some of the latest articles on legal issues affecting retail loss prevention.

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

The Need to Modernize Civil Recovery Statutes

By Marisa C. McIntyre, J.D. Retail Theft Victims and the Criminal Exception

By Michelle Gomez, Esq.

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

Cash Theft vs. Merchandise Theft and Its Applicability to Civil Recovery Statutes

By James F. Welborn, J.D.

Daniel Doyle, CFI Vice President, Loss Prevention & HR Administration, Bealls

Who Has Liability as an Accomplice?

By Marissa C. McIntyre, J.D. Merchant Detention Statutes: What Is a Reasonable Length of Time for Detention?

By Michelle Gomez, Esq.

Patti Felz Vice President, Loss Prevention, Polo Ralph Lauren

New Weekly e-Newsletter for the Retail LP Professional

Barry Grant Senior Vice President, Operations & Loss Prevention, CPI Corp

Starting in May, the magazine launched a newly redesigned e-newsletter with a more frequent distribution schedule. Now going out weekly, the newsletter offers: ■ C urrent loss prevention, retail, and technology news, ■ O riginal content from magazine staff and contributors, ■ P eople on the move listings, ■ H elpful links, and ■ A little fun to brighten your week.

If you are not receiving our e-newsletter, visit the website at www.LPportal.com and click on the icon shown here to sign up. If you would like to contribute to the newsletter or have any comments, contact us at newsletter@LPportal.com.

Benefits of an Open Architecture: Lowe’s Companies’ View on IP Video Standards Available to view on the Webinar page of the magazine website, www.LPportal.com, through the end of September.

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Tom Roan Group Vice President, Loss Prevention, Macy’s Tim Shipman Director, Corporate Investigations and Crisis Management, Food Lion Mark Stinde Senior Director, Asset Protection 7-Eleven

Frank Johns Chairman, The Loss Prevention Foundation

Bill Titus Vice President, Loss Prevention, Sears Holdings

Gary Johnson Vice President, Loss Prevention, Vitamin Shoppe

Bill Turner Senior Director, Retail Operations, Cole Haan

Paul Jones Senior Director, Asset Protection, eBay

Claude Verville Vice President, Loss Prevention, Safety & Hazmat, Lowe's

Doug Marker Vice President, Loss Prevention and Safety, Michaels Stores

Sponsored by:

Monica Mullins Vice President, Asset Protection & Safety, Wal-Mart Stores U.S.

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

Bob MacLea Senior Vice President, Loss Prevention, TJX

Featured Speakers Brian Morrison, Lowe’s Companies Steve Surfaro, Axis Communications Jackie Andersen, Axis Communications

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

Bill Heine Senior Director, Global Security, Brinker International

Mike Lamb Vice President, Asset Protection, The Home Depot

Archived Webinar

Chris McDonald Senior Director, Loss Prevention, Dollar General

LPportal.com

Stanley E. Welch Vice President, Director of Loss Prevention, JCPenney Keith White Senior Vice President, Loss Prevention and Corporate Admin., Gap Inc.

Don’t Hire Monsters

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Why recruit LP professionals on those monster job sites? Use the premier Internet site for retail loss prevention professionals...LPjobs.com.

We have more traffic than any other site dedicated to the LP industry.

So your positions will be seen by experienced LP folks looking for career advancement. From store level to management, our clients find winners, not monsters, quickly and cost effectively. Visit the web and see for yourself why retailers both big and small rely on LPjobs.com.

E-RECRUITING FOR LOSS PREVENTION

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 | July – august 2011

11

LOOKING BACK ON 10 YEARS OF LP MAGAZINE

PITFALLS

Arguably the most dramatic change affecting retailers and their LP departments is how retail crime is rapidly being transformed by effective, even innovative use of technology—particularly the Internet and email.

“You should always be seeking more responsibility; not necessarily asking for a promotion. You earn promotion before you deserve the promotion.”

– Frank Johns, Office Depot

We are as we are perceived.

Perception is reality.

We need to be above reproach.

Set an example and be an example

“Vendors are like bees.

They get to go around to all the different flowers and observe not only what is happening in the industry from a technology viewpoint, but also how it’s being applied in other retailers.”

– Bill Titus, Sears

Excessive drinking, rich foods, and who knows what else. This can be life on the road when there is nothing better to do than work…and that can be done tomorrow or the next day, not tonight.

The strategic closing of a store location should enhance the viability of a retailer, not erode profitability and subject the organization to added stress.

January-February

March-April

May-June May – June 2005

March – April 2005

“I’ve always said, ‘People don’t steal from themselves.’ Once you understand that, you have to convince the employees that it’s in their own best interest to protect the company.”

– Dr. Richard Hollinger

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LossPreventionMagazine.com

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V4.3

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2005

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LossPreventionMagazine.com

The European Road Map Managing Stock Loss in the Retail Sector

INTERNET FRAUD How the Web Is Changing LP

INVESTIGATING YOUR OWN | INTERVIEW WITH OFFICE DEPOT’S FRANK JOHNS THE UNDER-MANAGEMENT EPIDEMIC | THE ABCs OF INVESTIGATIONS

Federated buys May Company.

Pope Benedict XVI succeeds Pope John Paul II.

A Formula for Fighting Organized Retail Theft

by Karl Langhorst Interview with Dr. Richard Hollinger, University of Florida Managing LP by Managing Data by John Hassard Profile of Cracker Barrel Old Country Store

by John Taylor Weathering the Perfect Storm by Michael Gilligan

july – august 2011

1

States begin restricting sales of pseudoephedrinebased products.

Internet Fraud—How the Web Is Changing LP

by Michael Stugrin Interview with Office Depot’s Frank Johns Investigating Your Own

by Randal Nickerson The Under-Management Epidemic by Bruce Tulgan The ABCs of Retail Investigations

by John Velke

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SUPPLY-CHAIN THEFT | INTERVIEW WITH SEAR’S BILL TITUS PROFILE OF OFFICEMAX | PITFALLS OF BUSINESS TRAVEL

The European Road Map—Managing Stock Loss in the Retail Sector

by Adrian Beck Interview with Bill Titus of Sears Supply-Chain Theft— A New LP Challenge

by David Jones Profile of OfficeMax’s LP Organization Pitfalls of Business Travel—Taking Responsibility for Training Young Professionals

2005 “I think if you are working as an LP executive at the director level, and your focus is strictly on loss prevention, your days are numbered. We just don’t have that luxury anymore. Companies are looking for contributions far beyond that.”

– Keith White, Gap Inc.

One of the most effective ways to change behavior is to get out into the stores and sit down with store managers to probe into the root causes of higher levels of exceptions and profit-erosion issues.

One who presents wellthought-out proposals that are convincing and effective is not only improving their odds of getting that “Yes” answer they are seeking, but is also building their own long-term credibility as an independent thinker and leader within the company.

Hot Products

To help you more precisely focus your asset protection efforts, you need a process customized to your store and product mix, and to your unique culture and personnel.

July-August

September-October

July – August 2005

September – October 2005

V4.4

V4.5

November-December November – December 2005

LossPreventionMagazine.com

LossPreventionMagazine.com

LossPreventionMagazine.com

V4.6

In the minds of many loss prevention professionals, preemployment testing is a compliment to criminal background and employment reference checks.

When tailored to the specific needs of the company, this process can serve well as we are “seeking the gold.”

CHANGING BEHAVIOR

Moving Exception Reporting Beyond LP

INTERVIEW WITH GAP’S KEITH WHITE | LEVERAGING AUDIT TECHNOLOGY PROFILE OF HUGHES SUPPLY | SIX STEPS TO A SUCCESSFUL LP PROGRAM

Ben Guffy dies.

SECURITY IN THE CHAIN RESTAURANT INDUSTRY | AVOIDING IDENTITY FRAUD PROTECTING HOT PRODUCTS | SELLING YOUR PROPOSAL TO SENIOR EXECUTIVES

Hurricane Katrina devastates New Orleans and Gulf Coast.

Changing Behavior— Moving Exception Reporting Beyond LP

by Jon Grander Interview with Keith White, Gap Inc. Leveraging Technology to Make Cents of Your Audit Program

by Roger Blazek, et al Installing a Retail LP Model in a Wholesale DC Environment

by Michael Stugrin Six Steps to a Successful LP Program by Dan Faketty

BACKGROUND CHECKS AND PRE-EMPLOYMENT TESTING | THE TEACHING AUDIT INTERVIEW WITH CVS’ ERNIE DEYLE | SELLING YOUR PROPOSAL TO SENIOR EXECUTIVES

Tyco CEO Dennis Kozlowski sent to prison.

Evaluating the Pros and Cons of Remote Video Monitoring by Nathaniel Fry and Robert Rice Interview with Gene James of Jack in the Box Hot Products—Protecting Our Best Stuff

by Read Hayes Avoiding the Lightning Strike of Identity Fraud

by William Alford Selling Your Proposal to Senior Executives—Part 1

by Walter Palmer

Hurricane Impact—The Aftermath and Response

by Retail LP by Jack Trlica Interview with Ernie Deyle, CVS/pharmacy Seeking the Gold— Background Checks and Pre-employment Testing

by Steve Forgette The Teaching Audit

by Christopher McDonald Selling Your Proposal to Senior Executives— Part 2 by Walter Palmer

LP Magazine | July – august 2011

Knowing how to answer an audit question is one thing. Knowing why a question is being asked is something much more valuable. Being able to explain the intent of a question and train on it adds even more value.

AU

13

interviewing

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

The History of Interrogation According to W-Z: The Present I n the last issue we discussed the past history of interrogation beginning with the story of Adam and Eve in the Garden of Eden to the Salem witch trials of the 1690s. This column will move forward and review the more recent past, beginning in the late 1800s to the present practices of loss prevention and the police.

The Third Degree

The third degree, trickery, and deceit mentioned by the U.S. Supreme Court in the Brown v. Mississippi decision has its origins in New York City. Inspector Thomas Brynes headed up the New York City detective bureau from 1880 to 1895, when he was forced to resign. Ever the political savvy officer, Brynes was a pro at self-promotion, choreographing arrests to bolster his image with the public. He was critical of Scotland Yard’s ineffectiveness at solving the Jack-the-Ripper murders in London claiming he would have solved the case long ago.

Brynes coined the phrase “the third degree” to describe his technique of eliciting confessions from criminal suspects. The first degree was the policeman who apprehended the suspect, the second degree was the investigating detective, and the third degree was Brynes and his tactics. He would use any means to obtain a confession from someone he believed was guilty, including trickery, deceit, or physical beatings. Besides beatings, Brynes would also use phony witnesses and staged encounters between suspects to convince them their guilt was known.

In 1931 the Wickersham Commission, examining law enforcement practices and prohibition, found the use of the third degree as practiced by Brynes was widespread across the United States. August Vollmer, the primary author of the commission’s report who later became chief of the Berkeley (CA) Police Department is considered by many to be the father of modern law enforcement methods, originating many of the concepts of police work used today.

World War II

Interestingly, after the widespread use of the third degree, Germany and the United States during World War II developed

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Zulawski and Sturman are executives in the investigative and training firm of Wicklander-Zulawski & Associates (www.w-z.com). Zulawski is a senior partner and Sturman is president.

Sturman is also a member of ASIS International’s Retail Loss Prevention Council.

They can be reached at 800-222-7789 or via email at dzulawski@w-z.com and ssturman@w-z.com. © 2011 Wicklander-Zulawski & Associates, Inc.

similar interrogation strategies to obtain information from prisoners of war. Hanns Scharff, master interrogator at Dulag Luft, was responsible for interrogating airmen captured during bombing raids over Europe. It was said that he never failed to obtain information from the downed airmen. His interrogation strategy employed a sophisticated intelligence-gathering system cataloguing the minutia of everyday life on the Allied bomber bases. Using this information he would convince airmen the information was already known, thus opening conversations that would confirm and add new information to the database.

It was the early polygraph examiners needs that combined behavioral observations, behavioral interview, and the emotional appeal to the suspect into what we use in today’s interrogations.

In one anecdote Hans was walking with an airman in the woods holding an innocent conversation when he made mention of the change of color of the tracer rounds flash on the fighter aircraft. The airmen innocently told him this was to let the pilot know he was almost out of ammunition. During a later dogfight with a German ace, there was a change in the American’s tracer color and the German pilot disengaged from the dogfight in order to let the American live.

Similar to Hanns Scharff was Major Sherwood F. Moran, USMC. Major Sherwood was assigned to interrogate captured Japanese in the Pacific theater of World War II. The Major had extensive experience with the Japanese culture having lived there continued on page 16

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continued from page 14

charts. What they used was a direct accusation at the beginning of the interrogation to elicit behavioral clues from the suspect that were typical of innocence or guilt. A statement such as, “Our investigation clearly indicates you’re responsible for [insert crime].”

The subject’s reaction to this statement helped the examiner confirm a deceptive conclusion. Generally, the deceptive subject reacted to this statement with less aggressiveness than a truthful person, thus adding another confirmation to the examiner’s conclusion.

The examiner now had to interrogate the deceptive subject, but it was unlikely that simply using the evidence or information developed during the investigation would be sufficient to obtain a confession. Generally, that information had been used by the investigator already, and its use had been unproductive. The answer to this problem came from sales. The salesman provides his potential customer with benefits of the product to satisfy the customer’s needs. In the post-polygraph interrogation the subject’s needs tend to revolve around his self-image.

The polygraph examiner could now talk about why the individual participated in the incident, rather than discuss how the crime was committed. In a factual discussion of how the crime was committed, even a small error by the investigator in restating the method of the crime could be disastrous. The polygraph examiners were able to avoid this by simply discussing the reasons why the individual became involved in the incident. This provided the benefit of a face-saving device for the subject, and an opportunity for the examiner to interrogate at length without discussing the evidence.

for years along with a native’s speaker’s ability with the language.

Major Sherwood began each interrogation telling the soldier he was now safe. The conversation then turned to the common Japanese experience that they both shared before he began delving into the intelligence gathering process.

Both the United States and Germany had extensive intelligence operations to support their troops. The U.S. had sophisticated camps on both coasts dedicated to the interrogation of POWs from both theaters of the war. These operations were unlike the Japanese, Korean, Chinese, or Vietnamese prison camps where Americans were tortured or brainwashed. It is interesting that the U.S. chose enhanced interrogation methods with terrorists after the success they achieved using non-confrontational interrogation during World War II on both sides of the conflict.

Polygraph

The beginning of an emotional approach to interrogation can be traced to the polygraph. Polygraph examiners found themselves having to interrogate suspects without using evidence. In most situations a suspect was taking a polygraph because he was suspected and had not confessed based on the information available to investigators. The examiner could use the polygraph as a prop during interrogation and then repeat the evidence available, but this was a generally ineffective means of interrogation.

Early polygraph examiners were in a decidedly difficult position since the technique had not been validated and testing sequences were in the early stages of development. As the polygraph examiners conducted more tests they observed physical and verbal responses from the subjects prior to the test that helped them reach a correct conclusion. The polygraph pretest gave the examiner a check and balance against later polygraph charts to assist in a correct truth or deception conclusion. If the examiner observed a deceptive pretest from the subject, he would expect to see deceptive charts during the testing sequence, or vice versa—truthful pretest, truthful charts.

This was an effective means of identifying the subject’s true status independent of the polygraph. In the mid-1970s Douglas Wicklander began working on using the pretest independent of the polygraph to investigate cases. The behavioral interview became a standard investigative tool to resolve general loss and specific issue cases in situations where the polygraph was too expensive or time-consuming to use. In fact, the behavioral interview took the place of the polygraph after Congress passed the Employee Polygraph Protection Act, which limited an employer’s ability to use the examination.

Sales Techniques

Sales also provided the early examiners with additional helpful components. The way a salesman would handle a customer’s objection, such as “I don’t need more life insurance,” was to agree, yet turn the objection around into another reason why the customer should buy. The examiner, would likely hear, “I wouldn’t do something like that. I have money in the bank.”

In the same way that the salesman handled the objection, the examiner handled the explanatory denial by agreeing and then changing the rationalization impulsiveness to support the individual’s self-image.

Another component coming from sales was recognizing the buy signs the customer was ready to make a purchase. The examiners noted the individual making a decision to confess would drop their heads, become quiet, and perhaps even tear up.

Recognizing the person was ready to confess, the examiner needed to ask for the admission. Salesman quickly learned if they asked a customer if he wanted to buy their product they were often rejected. Instead, the salesman asked for the sale assumptively.

“Do you want 10 boxes or 15?” “Do you want to take delivery today or first thing tomorrow?” The examiners offered a choice question based on the rationalization they were using. “Did you plan it out or do it on the spur of the moment?” “Was it your idea or someone else’s?” Selection of either of the choices was the individual’s first admission to the crime.

It was the early polygraph examiners’ technique that combined behavioral observations, behavioral interview, and the emotional appeal to the suspect into what we use in today’s interrogations. In our next column we will discuss the future of the interrogative process.

Emotional Interrogation

Polygraph examinations also provided the seminal point for development of the emotional interrogation of a suspect. The early polygraph examiners had several significant needs during the interrogation of a guilty suspect. First, the examiners needed an additional check and balance to assure the accuracy of their conclusion. They already had the polygraph pretest, which would confirm the accuracy of their decision, but they needed something in addition when they were dealing with deceptive

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Cover feature

THE THREAT OF SOCIAL MEDIA

Ten Steps to Protecting Your Brand

By Helen Levinson

LP Magazine | July – august 2011

17

Social Media

T

he statistics are in, and the results boast resounding numbers. According to Eric Qualman, author of Socialnomics: How Social Media Transforms the Way We Live and Do Business, 96 percent of Generation Y has joined a social network. Although social media sites like Facebook, Twitter, and YouTube are commonly viewed as a personal activity, they are a goldmine for branding and marketing. So, what does this have to do with loss prevention?

Social media sites have an array of applications; some that may surprise loss prevention professionals. One thing is clear, social media is here to stay. In less than nine months, Facebook added 100 million users, while iPhone applications hit one billion. Sites like Facebook have the ability to boost exposure and profit for a company, but they can also cause major damage to it as well.

This is where asset protection and risk management comes in.

Setting up a Social Media Monitoring Strategy

According to a 2009 Deloitte ethics and workplace survey, 74 percent of employed Americans surveyed believe it is easy to damage a brand’s reputation via sites such as Facebook, Twitter, and YouTube.

Although that statistic may be frightening, it is possible for social media and areas like asset protection to have a beneficial relationship.

In the summer of 2009, Dunkin Donuts launched its new vanilla-flavored drink, Coolatta, by organizing a competition on Facebook. When the competition started, the Dunkin Donuts fan page had almost 800,000 supporters.

Within one week, their fan base was composed of 1.1 million and kept growing (today it has more than 3.1 million). Companies have the ability to harness the power of social media, but that power comes from the people, the consumers. When left unmonitored, they also have the capability to destroy any brand, no matter how reputable or well known.

While it may seem overwhelming, the following are ten steps to consider for protecting your company and your brand.

1. Assemble a team or small group of individuals to closely monitor consumer feedback 24/7.

This team should be familiar with sites like Socialmention, Hootsuite, and Brandwatch. Check them out if you are unfamiliar. There should also be a member of this team on the web at all times. Social media interaction doesn’t end when business hours do, and quick responses can avert a potential disaster. This team should also be responsible for investigating suspicious activity, such as theft, counterfeiting, and other crimes, which will be discussed further.

2. Establish corporate guidelines that are updated frequently.

It’s important to document what your company’s expectations are

regarding social media. Lawsuits and public relations nightmares are a few consequences of the lack of corporate guidelines on this matter. You need to know where the company stands on this issue—there are no gray areas. As technology evolves, so should these guidelines. According to the Deloitte 2010 ethics and workplace survey, 40 percent of executives say their company does not allow access to online social network sites from the workplace. However, denying access to these sites doesn’t make them disappear. Just because employees cannot access these sites at the office…even though most of them can access them through their mobile device…it doesn’t mean they will not discuss the company, other employees, or your brand. Every company needs to address the responsibilities of the employees when they are on these sites.

3. Establish a response system.

Companies need to establish an internal response system when monitoring complaints online. The response system would provide specific protocols based on the nature of the complaint or issue, and from there, a response committee can address the issue. To be most effective, a response committee should consist of one manager or director from each department and follow a set process on how to resolve and respond to a complaint or issue. Don’t make the mistake of assuming that just because you have lawyers, it means you are covered from customer complaints.

Today’s tech-savvy consumers beg

Examining your company’s participation in social media sites may lead you to reevaluate the larger issues affecting your company and help prevent future problems.

But you have to manage it wisely by creating a team of individuals to oversee the accounts.

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Social Media to differ. You prepare responses for situations such as severe weather, bomb threats, and fire, so why not prepare for this?

The following scenario showcases a response system in action. On April 13, 2009, a video of Domino’s employees violating public-health laws by sneezing on food and contaminating other ingredients was released on YouTube. Over 100 million views and over 300,000 comments were posted that day.

References to it were in five of the twelve results on the first page of a Google search for “Domino’s” and discussions had spread throughout Twitter.

Domino’s Pizza was faced with the challenge of reestablishing their clients’ and investors’ trust. They responded fast and efficiently in order to stop the snowball effect, discredited the content of the video and its producers, and minimized

Sites like Facebook have the ability to boost exposure and profit for a company, but they can also cause major damage to it as well. This is where asset protection and risk management comes in. the issue to avoid alarming investors, since the company’s share value had been dancing up and down with the lowest rates in the last five years. They realized they had to reach the same consumers the video had reached.

LP Magazine | July – august 2011

They replied with a YouTube video featuring Patrick Doyle, president of Domino’s Pizza, and created an official Twitter account. Domino’s managed to refocus the attention of clients back to the product—pizza—by building alliances with bloggers and giving away free food in order to reconcile with the product.

Social Media Works Both Ways

Even though the release of the video was a PR disaster, the fact that the employees in the video said their names and then explicitly preformed the violations helped Domino’s out in their LP department. It was posted on YouTube for public view and fair game for investigation.

Social media can work both ways like that. Many people tend to post more than they should, and you have to watch your employees in this continued on page 20

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Social Media continued from page 19

The asset protection industry may see a shift from worrying about the control of inventory to the control of information, which travels fast and efficiently.

You might not have thought social media sites were worth using professionally, but they are a significant resource for areas such as building up a brand, investigation, and gathering customer feedback.

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respect. But the fact that people do post more than they should gives you the upper hand in finding violators.

According to GetSafeOnline.org, 25 percent of registered social networking users had posted sensitive personal data on their profiles. The proof is in the post…or the tweet, picture, or video. This brings us to the next steps.

4. Use social media as an investigative tool. People post too much valuable information. People post where they are, what they are doing, and, even more importantly, visual elements of what happened through photos and videos. For example, say you set a Google alert or Bing alert for your company. A blog pops up describing where the blogger found your brand-new product for half the price and included a picture.

It might not be worth examining, but it doesn’t hurt to look into it. If you decide to pursue it, you now have a lead in a possible counterfeit or theft investigation. While laws regarding the use of evidence from social media sites are still evolving, electronically stored information (EIS) is becoming an accepted form of evidence. According to E-Commerce News Network, 95 percent of all information is electronic.

Utilize this abundance of information for your investigations.

5. Report suspicious activity.

Unfortunately, we don’t live in a perfect world. Crime will always be a part of our society, and it has even crept into the world of social media.

Companies should also establish an internal response system to report suspicious activity, such as organized retail crime, counterfeiting of goods, dissemination of proprietary information, and cyber-bullying of employees and/or supervisors on social media sites. The response system would consist of a set process on how to report suspicious activity via email and/or a toll-free telephone line. All would be sent to the response committee for internal review, and from there, a set protocol would be July – August 2011

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established. You are responsible for finding the suspicious activity, so make sure your company knows what to do with the information.

Want to see social media investigations in action? The American Medical News released an article earlier this year detailing cases where social media investigations have led to key pieces of evidence collected in insurance fraud. In one case, a Miami private investigator named Daniel Maya was working for an insurance agency. They were having a hard time keeping tabs on a patient who claimed to be disabled due to injuries from a car accident. Maya decided to look at the 23-year-old’s Twitter account to see if he could find any evidence that proved otherwise. The man was tweeting like everyone else, describing where he was going and what he was doing. One tweet described his plans to go jet skiing. Investigators, armed with a video camera, went to the site where the young man was jet skiing and caught him on tape. This $500,000 lawsuit against the city was saved by a tweet.

Even though people know the cost of tweeting such information, they continue to do it anyways, leaving an opening for LP professionals to get the inside scoop. Many people are realizing that they can get the information they need from social media sites, and you can be one of them. But be careful. Those people may be looking to get their hands on you or your company’s information.

6. Guard your information. With email still the biggest threat to leaking proprietary information, other modes of online communication are quickly catching up. According to Proofpoint, Inc., 17 percent of companies in the U.S. had confidential information exposed on social media sites like Facebook and LinkedIn in 2009. That figure is up from 12 percent in 2008.

By following blogs and message boards, monitoring YouTube videos, and keeping an eye on social networks, retailers can be aware of continued on page 22

Social Media

Your company should embrace the many benefits of social media, be aware of how social media can hurt your company’s brand and reputation, and use social media as a tool to aid your company’s asset protection efforts.

continued from page 20

issues that arise and respond quickly instead of simply hoping that nothing comes up. Being a part of these social online communities is a risk, but it’s becoming a necessity as more businesses realize their potential.

Just make sure your company is not vulnerable to hackers and the employees know what they can and cannot share.

7. Manage feedback and build brand loyalty. Not all tweets or Facebook posts are going to blow-up like the Domino’s Pizza fiasco, but don’t underestimate their importance.

Social media gives companies a chance to directly interact with their customers. Examining this feedback can assist you in looking at some of the ineffective operations of the business. And when a company promptly responds to feedback, positive or negative, it builds brand loyalty. A loyal following is the base of asset protection, and you have the chance to prove you respect your customers with every post or tweet.

This also gives you the power to put out potential fires the minute they arise. As mentioned before, this is a 24/7 job for a 24/7 world.

Employees Are Also Using These Sites

It is important to look at what customers are saying about your company or product, but it’s not just

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the customers you should look out for; it’s also the employees. Many people think that when logging on to social media sites, they become anonymous. They might have some personal information or pictures on these sites, but all too often, people lose their inhibitions when they realize they have the power to type anything they want without a face-to-face confrontation.

Employees need to realize they represent the company, and they need to understand this every time they contribute to social media sites.

This is yet another reason corporate guidelines are useful for informing employees that, while they have a right to those sites, they also have a responsibility to uphold the image of the company. Potentially, a disgruntled employee who logs on might do more damage than an angry customer.

In early March 2011, someone who had access to the official Chrysler Twitter account said the F-word in one of the tweets. The tweet was deleted promptly, but Chrysler has over 7,000 followers, and it was re-tweeted immediately.

The source of the tweet was Scott Bartosiewicz, an employee from the social media contractor for Chrysler.

He was not a disgruntled employee, but he confused his personal account with the brand account; a mistake that cost him his job.

It took seconds for one tweet to tarnish this brand, but don’t let this July – August 2011

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prevent you from creating an account like Twitter. Chrysler had over 7,000 followers when this incident occurred.

They now have over 13,000. Of course, it is not smart to pull an unprofessional stunt for the sake of attention, but it’s a reminder that it’s never the end of the world when it comes to social media. You can rebuild your brand by keeping a professional online reputation.

These next steps showcase how your employees are affecting your company online.

8. Check out what your fellow employees are saying on social media sites. Some might say this is an invasion of privacy for the employees, and they have a right to participate in these sites freely. They do have a right, but by posting statuses and pictures on them, they are opening them up to the public. It’s important to check out what the employees are saying, because they could be discrediting the brand. They have a right to their own opinions, but under the company guidelines that were discussed before, they should keep a level of professionalism even out of the office on these sites.

Think about the content you are posting and how it reflects on you as a person. According to a CareerBuilder survey, 53 percent of employers use social networking sites when researching candidates. This isn’t a free speech issue. Employers are trying to protect their company and brand by

Social Media getting a candid look at the people working for them or the potential employees. What is the lesson to be learned—online posts and personas matter.

9. Check out what your fellow employees are saying on social media sites. This is the same step as above, but it is not redundant.

According to the U.S. Chamber of Commerce, approximately 75 percent of all employees steal from work, whether it’s time theft, office supplies, or larger products. And 30 percent of all corporate bankruptcies are a direct result of employee theft. How can you bring down these statistics for your company? Monitor your employees’ online profiles. If they tweet twenty times between 9:00 and 11:00 a.m. on a workday, it’s likely they are misusing company time. The reason many people share information online is because they think no one is watching.

But if you see an employee is selling a printer on Facebook Marketplace that looks like the one that just went missing around the office, it might be beneficial to start watching.

It may seem too “big brother” to keep such a close eye on employees who participate in social networking sites, but try to think of it as a better-safe-than-sorry technique. Employee theft is a major contributor to shrink, and using social media is just another tool to stop it.

This doesn’t mean everyone will admit to everything once they get online; nothing in life is ever that easy. But slipups will occur, and you have to ask yourself if you missed them because you weren’t looking.

This last step is a general rule you should remember whenever

participating in a company social networking account.

10. Use “social” etiquette.

Everybody knows at least one person who has to blog, tweet, or post about every little thing they did that day, from eating breakfast to cutting their toenails. Don’t be that person. Post something if you have something meaningful to say; otherwise let it be.

The fans and followers won’t forget about you. That is, unless you never do it. You should try to keep them engaged frequently with contests, coupons, and events. It’s the whole company’s responsibility to take care of the social media accounts, and that includes building up the brand as well as protecting it. Lastly, don’t berate employees, executives in your company, or even a competitor in any form of social media. Bad-mouthing will not get you anywhere except in trouble.

Social Media Threat Video A video that speaks to many of the points discussed in this article is available at LP Magazine’s YouTube channel, LossPreventionTV, or on the video page of the magazine website, www.LPportal.com.

No Insurance for Social Media Damage The Internet has changed how we think about the flow of information.

The asset protection industry may see a shift from worrying about the control of inventory to the control of information, which travels fast and efficiently. You might not have thought these sites were worth using professionally, but they are a significant resource for areas such as building up a brand, investigation, and gathering customer feedback.

Examining your company’s participation in these sites may lead you to reevaluate the larger issues affecting your company and help prevent future problems. But you have to manage it wisely by creating a team of individuals to oversee the accounts.

There is no insurance policy regarding the damage to a brand’s reputation as a result of unmonitored social media feedback. A large number of tweets complaining about your company or brand can be as damaging as one of those people stealing half of your inventory, but no policy will bring those customers back as it would the inventory. It is up to you to manage your company’s online reputation.

In order to ensure these effects remain positive, your company should embrace the many benefits of social media, be aware of how social media can hurt your company’s brand and reputation, and use social media as a tool to aid your company’s asset protection efforts. If you have not done so, it’s time for a social media audit.

HELEN LEVINSON is cofounder and chief technical officer of Desert Rose Design. With over sixteen years’ experience in the digital marketing and automation arena, she precisely forecasts her clients’ web-based needs and advises others about the benefits and pitfalls of technology. Levinson is a frequent speaker who recently presented on this subject at the Food Marketing Institute asset protection conference. She is recognized as a digital marketing expert, specializing in social media strategies of how to mitigate risk and prevent damage to a brand’s reputation online. Levinson can be reached at hlevinson@desertrose.net; on LinkedIn at www.linkedin.com/in/helenlevinson; and Twitter @helenlevinson.

LP Magazine | July – august 2011

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ACADEMIC VIEWPOINT

Perceived Wage Inequity Can Often Be Used to Rationalize Employee Theft T

by Richard C. Hollinger, Ph.D. Dr. Hollinger is a professor in the Department of Criminology, Law, and Society at the University of Florida, Gainesville. He is also director of the Security Research Project, which annually conducts the National Retail Security Survey (www.crim.ufl.edu/srp/srp.htm). Dr. Hollinger can be reached at rhollin@ufl.edu or 352-392-0265 x230. © 2011 Richard C. Hollinger

he whole retail industry breathed a collective sigh of relief recently when the U.S. Supreme Court rendered a decision in June not to hear a gender wage inequity case as a “class-action suit” against Walmart. The case was focused on whether or not the largest employer in the world could be accused in civil court with collectively discriminating against numerous women in many different states. All these suits alleged that the plaintiffs were not paid equitably when compared to their male counterparts. If the case had gone forward as a class-action lawsuit, this ruling would have set a major precedent encouraging numerous other similar class-action lawsuits to be lodged against other retailers and large employers.

The Judges’ Opinions

As background to this decision, in The New York Times on June 20, 2011, Adam Liptak reported the following: The Supreme Court on Monday threw out an enormous employment discrimination class-action suit against Wal-Mart [sic] that had sought billions of dollars on behalf of as many as 1.5 million female workers. The suit claimed that Wal-Mart’s policies and practices had led to countless discriminatory decisions over pay and promotions. The court divided 5 to 4 along ideological lines on the basic question in the case—whether the suit satisfied a requirement of the class-action rules that “there are questions of law or fact common to the class” of female employees. The court’s five more conservative justices said no, shutting down the suit and limiting the ability of other plaintiffs to band together in large class actions. The court was unanimous, however, in saying that the plaintiffs’ lawyers had improperly sued under a part of the class-action rules that was not primarily concerned with monetary claims. The plaintiffs sought to make that case with testimony from William T. Bielby, a sociologist specializing in social framework analysis. Professor Bielby told a lower court that he had collected general “scientific evidence about gender bias, stereotypes and the

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Most people view retailing as a temporary job, not for permanent employment or a long-term career. This tells me that retailing still has not created a climate that encourages long-term commitment, honesty, and ethical behavior. structure and dynamics of gender inequality in organizations.” He said he also had reviewed extensive litigation materials gathered by the lawyers in the case. He concluded that Wal-Mart’s culture might foster pay and other disparities through a centralized personnel policy that allowed for subjective decisions by local managers. Such practices, he argued, allowed stereotypes to sway personnel choices, making “decisions about compensation and promotion vulnerable to gender bias.”

Justice Scalia rejected the testimony, which he called crucial to the plaintiffs’ case. “It is worlds away,” he wrote, “from ‘significant proof’ that Wal-Mart ‘operated under a general policy of discrimination.’ ” Although she agreed with her colleagues in the unanimous decision that this petition was not worthy of a class-action treatment, Justice Ruth Bader Ginsburg pointed out that both the statistics presented by the plaintiffs and their individual accounts were evidence that “gender bias suffused Wal-Mart’s corporate culture.” She said, for instance, that women filled 70 percent of the hourly jobs, but only 33 percent of management positions and that “senior management often refer to female associates as ‘little Janie Qs.’ ” Justice Ginsburg went on

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to say, “The practice of delegating to supervisors large discretion to make personnel decisions, uncontrolled by formal standards, has long been known to have the potential to produce disparate effects,” she wrote. “Managers, like all humankind, may be prey to biases of which they are unaware.”

Discrimination-Free Workplace

In my opinion, perhaps the most remarkable aspect of this decision is not the refusal of the Supreme Court to hear this case as a class action. Based upon the facts of the petition, it is quite understandable that the justices concluded that all these many cases were not sufficiently similar or identical. Instead, to me the most alarming part of this decision is the mere fact that there are still scores of cases based upon gender wage discrimination being filed against major retail firms. If wage inequity still exists on such a broad scale in the industry, despite our many years of effort to increase diversity and fairness, then we are a long way from a discrimination-free workplace.

As professionals charged with addressing the underlying causes of employee theft, we should recognize that this situation creates the perfect environment for encouraging minority retail associates to take informal action on their own to correct perceived workplace inequity. In other words, gender…or racial and ethnic…wage inequity creates a social climate that encourages pilferage, theft, dishonesty, and counterproductive behavior to be rationalized as a justified response in the mind of these employees.

This means that the seeds of employee dishonesty may still be present in many companies and workplaces all across the land. I

hope that most readers of this column will agree that this is not a healthy situation.

Perceptions of Retail Careers

When I ask the twenty-something aged college students enrolled in my classes, especially women, racial, and ethnic minorities, whether they are receptive to working in retail, their first answer is usually in the affirmative. In fact, many are already working part-time jobs in either retailing or the food-service industry. “Yes” remains their answer until you ask them if they wish to continue working in retail after receiving their college degrees. Then the answer usually changes to a strong “no.”

Like it or not, retail sales as well as retail loss prevention are not viewed by most college students as an occupation worth pursuing. In fact, most people view retailing as a temporary job, not for permanent employment or a long-term career. This tells me that retailing still has not created a climate that encourages long-term commitment, honesty, and ethical behavior. For many retail associates, who feel they have little or no power in the work organization, we are creating exactly the opposite environment.

It was Albert Einstein who defined insanity as “doing the same thing over and over again, but expecting different results.”

Should those of us in loss prevention and retail management be expecting different results when we continue to treat our employees as temporary or marginal workers? If so, perhaps we should not be surprised if they decide that stealing from their employers is a perfectly justified response to an unsatisfactory workplace situation.

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LP Magazine | July – august 2011

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Interview

Reducing Shrink through People, Not A Conversation Technology with Gary Johnson, The Vitamin Shoppe

LP Magazine | July – august 2011

By James Lee, Executive Editor

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Interview EDITOR’S NOTE: Gary Johnson, CPP is currently vice president of loss prevention for The Vitamin Shoppe.

With over twenty-five years of LP experience, he has held leadership positions with A&P Supermarkets, Barnes & Noble, Pier 1 Imports, Ivey’s-Florida, and Osco Drug Stores.

Johnson is very active in the LP and security industries. He is currently chairperson of the National Retail Federation (NRF) Loss Prevention Advisory Council. Prior to his election to head this council, he served as vice chair and was the founding head of the NRF LP Awards and Recognition Committee.

He is also the regional leader for the NRF’s Investigators’ Network in the Northeast.

Johnson remains active with ASIS International, where he has served on their retail committee. He also sits on the editorial board for LP Magazine.

EDITOR: Let’s start by giving our readers a little background on The Vitamin Shoppe.

JOHNSON: The Vitamin Shoppe started in 1977 as a single store and grew over the ‘80s into a regional presence throughout New York, New Jersey, and Connecticut. In 2004 the organization embarked on an aggressive growth plan. That’s when new leadership, including myself, was brought into the organization to leverage all of our past experiences to move the operation from a regional to a nationwide player.

I think the challenge with technology is that you have to have the people component to support it anyway.

You can’t just throw technology at the problem. Throughout my retail career, there’s been a lack of cohesiveness in terms of that. For example, companies may put EAS systems in, yet they don’t tag completely or don’t have training programs for associates on how to deactivate or respond to alarms.

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We currently have 500-plus stores in thirty-nine states.

EDITOR: Was there a loss prevention organization when you arrived in 2004?

JOHNSON: I inherited a small department that was meeting the expectations of the ownership at that time, when there were only 175 stores.

When I arrived, they were experiencing the beginnings of some increasing inventory shrink. So in addition to correcting that, my charge was really to modernize the program and change the operating disciplines to integrate LP into all facets of the business; again, to ready us for the growth that was planned.

Interview leadership team. We meet frequently on all aspects of the business, which allows me to offer my expertise in everything from store operations to human resources, supply chain, IT, business continuity and disaster recovery, to our scientific and regulatory department. I have a seat at the table with these other disciplines, which ensure that an LP point of view is represented in any topic that comes up.

EDITOR: As you sat down with a blank piece of paper, what were some of the early priorities that you felt needed to be put in place to better serve the business?

JOHNSON: In my initial assessment there were not any really big surprises, but rather I saw the need to address some basic fundamentals. So early on there were three primary focuses—people, people, and people.

The first people focus was to take a critical look at what we expected the associates in the stores to do. What were the expectations of our policies and procedures and where were the gaps? Working with store operations, we jettisoned any old practices that didn’t make sense, closed or remediated gaps, and then recommunicated our new operating guidelines.

Another people component was partnering with human resources to examine our background screening program. That resulted in implementing a more robust and more automated background screening program, to include

drug screening. You can imagine in the health and wellness arena, having a drug-free workforce is paramount to one of our core competencies in terms of living your brand.

The third people piece was taking a fresh look at the organization, not only in terms of the loss prevention personnel, but really the entire field management teams. What were the spans and controls, geographic alignments, and the right size for the growth that we were anticipating?

So, early on it was basic blocking and tackling, focusing on people, people, people, that really laid the foundation for how we wanted to integrate the LP function into store operations.

EDITOR: Are you responsible for anything outside of loss prevention?

JOHNSON: From an official reporting standpoint, I’m responsible for the traditional loss prevention functions. But from an overall standpoint, I’m involved in all parts of the business. I am an officer in the company, and one of the advantages of being an officer is I’m a part of the senior LP Magazine | July – august 2011

EDITOR: So, in fact, you are a retail business person who happens to have loss prevention as a responsibility. How does being a business person first and then the LP leader second translate to your people in the organization as they interact with the stores?

JOHNSON: From a credibility standpoint, they really function as that conduit to the brand, that conduit to the leadership of the organization. Everything we do from a tactical and strategic LP standpoint is absolutely aligned with the company objectives and in support of our brand initiatives; we refer to them as “critical success factors.” Each of the regional LP managers develop their own business plans for their operating area, making sure that what they want to achieve is in support of critical success factors around shrink control, merchandise availability, et cetera, so that they become integrated at the field level as a business partner, not just the loss prevention subject-matter expert.

EDITOR: Do your regionals marry up with their operations counterparts in their particular region?

JOHNSON: For the most part, they do align geographically, although we have a couple of regions where there is some overlap. I’ve learned over the years that it makes sense to hire the best people you can and not necessarily tie them to a specific region. Also, they do not report to that regional business partner, but report to the corporate office. So while they work with a regional director as their internal customer, they serve the greater good, if you will, by reporting back to the central organization. That keeps their allegiance and their operating principles in sync with what the whole organization wants, not necessarily with what one region may want. That avoids what I’ve seen in

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Interview other companies where a regional LP professional reports to a regional director, and the program becomes the “California way” or the “Northeast way,” not the company way.

EDITOR: Describe your LP organization for us?

JOHNSON: There are four regional LP managers in the field. At corporate office, also known as our Customer Support Center, I have a manager of LP for the supply chain, an LP specialist, and an LP coordinator. That’s seven people for 500 stores, so it’s a very lean organization. But I really believe that if you get the right people in the right positions in a specialty retail environment, you can have success with a hundred stores per LP manager.

The caveat, of course, is having the right people.

I’ve been blessed that many of my LP team members have worked for me in prior lives. All of them have at least fifteen years of experience in loss prevention. They are all great leaders in the organization. I work hard to get them involved in all parts of the business, so they don’t just stay in the LP silo. Because they’re able to be true business partners, they can work with HR on succession planning, provide feedback to district managers about their store teams, really look at root-cause analysis from an audit standpoint and build localized programs to fix problems.

EDITOR: What technology solutions have you put in place since you’ve been there?

JOHNSON: Actually, we really haven’t. And that’s by design.

Fundamentally, when we embarked on this LP program, we focused primarily on the people component and how to change behaviors, based on how they operate their business and not based on technology.

That being said, we did introduce LP Analytics from Epicor, which was our POS provider, in order to offer the quickest way to get traction to begin data mining. So, from a technology standpoint, we do have exception reporting. Along with that, we implemented an internal

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Fundamentally, when we embarked on this LP program, we focused primarily on the people component and how to change behaviors, based on how they operate their business and not based on technology.

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awareness campaign in our new-hire process and on-going store meetings to communicate the capabilities of exception-based reporting. The POS project and integration of exception reporting combined with our associate awareness has really become a deterrent to internal fraud.

We are currently doing a proof of concept with cameras in several stores that are centrally monitored here at our Customer Support Center. The security staff who conduct video audit routines and review video will call the stores or send video clips to the district manager when we see things that are a challenge.

Because we’ve just started this test, I can’t tell you yet that my shrink or my margins get any better. I can say that it definitely changes people’s behavior.

EDITOR: Does your awareness and training campaign have any online components?

JOHNSON: The whole organization has an online computer-based training

Interview program called Vitamin Shoppe University.

One of the things that differentiates The Vitamin Shoppe from our competition is our product knowledge. While many of the components of Vitamin Shoppe University deal with product knowledge, we’ve branched into some different operational and loss prevention components—our operational controls, our business standards, our code of conduct, our policy-and-procedure manuals, for example, are all now available online. If the stores have a question about bank deposits, there’s keyword search functionality they can use to answer their question. We’ve really tried to modernize the old binders and written manuals that retailers have had for years.

Ultimately, what we are trying to do from an LP standpoint is to make sure that we have engaged store managers, district managers, and regionals. We’ve done that through training, which is why we haven’t had to rely on technology.

EDITOR: It’s interesting that you’ve relied on people and training instead of technology. Often when a new director

comes into a new company, they look at implementing technology-based solutions to make an immediate impact. Tell us why you didn’t.

JOHNSON: I think the challenge with technology is that you have to have the people component to support it anyway.

You can’t just throw technology at the problem. Throughout my retail career, there’s been a lack of cohesiveness in terms of that. For example, companies may put EAS systems in, yet they don’t tag completely or don’t have training programs for associates on how to deactivate or respond to alarms.

When I joined The Vitamin Shoppe, we had EAS systems in the stores and tagged everything over a certain dollar threshold.

We tested EAS by taking systems out of the stores and then analyzed the results.

Obviously, we reduced our cost, but we also found out it had no measureable impact on our shrinkage. EAS is probably a great tool for some companies, but in our small footprint store, with our high customer engagement, it was not a value to our organization. I think this is an

example that loss prevention solutions are not a one-size-fits-all proposition. I know I’m bucking the trend here, but in our environment, it works. Our shrink results bear that out.

EDITOR: Speaking of shrink, you mentioned that when you arrived in 2004, shrink was on the increase. Based on what you just said, I’m guessing that’s no longer the case.

JOHNSON: Since I’ve been with the organization, we’ve reduced shrinkage year over year. Last year we actually posted record improvement. I think our shrink performance validates the notion that you can achieve results through proper hiring, proper training, and a philosophy of transparency.

EDITOR: What do you mean by transparency?

JOHNSON: To me, transparency means knowledge. It means telling people what you expect of them and what the ramifications are if they don’t continued on page 32

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LP Magazine | July – august 2011

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Interview continued from page 31

meet expectations. It’s a big piece of building that climate of honesty that many of us strive for. For example, I don’t think anybody should be surprised when they lose their job.

We work daily at communicating that message. It’s a cornerstone in everything we do. So, whether it’s our store self-audit program or the quarterly audits by our district managers, there’s transparency.

Everyone knows what the expectations are, and they know it’s going to be checked. So, when something needs work or there’s not compliance to a particular area, there’s no “I got you.”

Transparency has helped us build our alliance with store operations and diminished that old-school mentality.

EDITOR: Earlier you mentioned that you have an LP manager for supply chain. How many distribution centers do you have?

JOHNSON: We currently only have one Vitamin Shoppe distribution center, although we have partnered with a third-party logistics company in California for some of our faster moving SKUs on the West Coast.

EDITOR: Do all products come out of the DC, or are there some direct shipments?

JOHNSON: Roughly 90 percent of it comes through the warehouse and about 10 percent is direct shipped.

EDITOR: What process do you have for verifying the receipt of merchandise in stores?

JOHNSON: The stores do not do detailed receiving. We ship plastic totes and corrugated boxes, so it’s at the carton level. Obviously, there are a lot of quality-control components that are built into the outbound order from a weight and size tolerance.

EDITOR: Supply-chain LP doesn’t always get the attention it deserves.

Sometimes it’s difficult to recruit LP professionals on the logistics side because the perception is that all the action happens in the stores.

Have you found that to be true?

32

From an official reporting standpoint, I’m responsible for the traditional loss prevention functions.

But from an overall standpoint, I’m involved in all parts of the business.

I am an officer in the company, and one of the advantages of being an officer is I’m a part of the senior leadership team.

I have a seat at the table with these other disciplines, which ensures that an LP point of view is represented in any topic that comes up.

July – August 2011

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JOHNSON: I agree with you in general, but I’m fortunate to have a supply-chain manager whose entire career has been on the logistics side.

He started twenty-something years ago doing undercover investigations on the distribution side of the house. So, he’s grown up in that business.

EDITOR: Does he also have the safety responsibility?

JOHNSON: He has safety within the DC and in our Customer Support Center. He’s done a yeoman’s job in terms of our on-boarding training, material-handling requirements, ladder safety, box-cutter safety; all the issues that contribute to accidents. Even though he has been with us only a year, he has driven down both the frequency and severity of our accidents.

EDITOR: Within your world, are you challenged by organized retail crime?

JOHNSON: We’re really not. ORC, and even amateur shoplifting, is not a huge problem. I’m not naïve enough to think that external theft doesn’t happen, but from an ORC standpoint in particular, we have not had any big hits. We’ve not encountered any flash-mob situations or any of the new methodologies that are coming down the pipe. I think that is probably attributable to a couple of things. One, we’re not all that deep in any particular categories, so you can’t wipe out an end cap and get more than a dozen

Interview products. The bigger piece is the resale ability. Most ORC teams are trying to turn a large volume of merchandise into cash. Our customers are not going to buy vitamins and supplements at a flea market or on an online auction site. So, I think it’s difficult to move a large quantity of our product to make it worth their while.

EDITOR: Let’s step back in time for a minute. How did you get started in a career in loss prevention?

JOHNSON: Actually, it started when I was going to school at Western Illinois University.

EDITOR: Really? Western Illinois has produced several top LP executives, including Keith White from the Gap, Keith Wanke at Dunham’s, and Jim Giese, now retired from Foley’s. So, what happened for you at Western Illinois?

JOHNSON: I was a criminal justice major with dual minors in sociology

and security administration with an interest in law enforcement.

The turning point for me was their internship program. I did my internship with Osco Drug in Chicago.

I was their first intern, and they gave me all kinds of assignments, many of which I suspect they might not give a new intern today. They exposed me to many different parts of the business, from the liquor department to the film department to sundries. I also think I hit the industry at the right time when the private sector was really figuring out that they had to look inward and build better internal controls rather than relying on the public sector.

EDITOR: So, you started your LP career with what company?

JOHNSON: I was fortunate enough that Osco hired me full time after I graduated. I started as an LP agent and then was quickly promoted to an LP coordinator for the Chicago area. After Osco, I went to Ivey’s Department Stores in Florida as a corporate

LP Magazine | July – august 2011

investigator. After that, I was hired by Pier 1 Imports and relocated my family to Fort Worth. I really enjoyed my time at Pier 1. Ultimately, though, I got the opportunity for my first directorship with Barnes & Noble in New York.

EDITOR: So, from a college intern to now a vice president of loss prevention, you’ve become a leader in the LP industry, to include serving in leadership roles with the National Retail Federation. What was your impression of the recently completed LP conference in Dallas?

JOHNSON: By all accounts, it was a fantastic conference. Allen Tague and the conference planning committee really did a fantastic job of delivering some really solid educational content.

Attendance was up around 25 percent both with retailers and vendors, which hopefully means from an economy standpoint, companies are better able to spend expense dollars to participate in these kinds of industry events. continued on page 34

33

Interview continued from page 33

EDITOR: Congratulations on taking over as chair of the NRF LP council.

JOHNSON: Thank you. I’m honored to be selected by my peers to head the council. I’ve been fortunate to serve as vice chair under Bill Titus these past several years. Bill has done a great job leading the council and building significant momentum with all the subcommittees within the LP advisory council, as well as readying me for the challenges ahead. I’m looking forward to building on that momentum and having the opportunity to influence the industry.

EDITOR: What are your goals as chair?

JOHNSON: One of my goals is to continue the council’s focus on inclusion and fostering avenues for active participation from the LP community.

One of the great things about our

Are You

profession is that LP professionals have always demonstrated a commitment to work together to advance our industry. So, my message to those LP professionals who are not involved is simple—LP is not a spectator sport.

You have to get off the sidelines and become involved in our industry, for both the sake of our profession as well as your own career. There are lots of ways to get involved. Participate in one of the regional investigators’ networking meetings. Join in the Women in LP conference calls and mentoring program. Get involved with one of the many operating committees that focus on everything from legislation to organized retail crime to homeland security. Consider presenting your views and experience at a future conference.

EDITOR’S NOTE: Individuals who would like to suggest topics for presentation at next year’s LP conference may do so on the

NRF website, www.NRF.com. The conference planning committee will convene in October to begin shaping the 2012 conference, which is scheduled for June 20 – 22 in New Orleans.

EDITOR: That’s great, Gary. We talk a lot about education and career development and you should be applauded for your leadership in these areas.

JOHNSON: Today’s LP professional must have a thirst for learning and a commitment to being a life-long learner. Obviously, attending conferences, whether it’s NRF, FMI, RILA, or ASIS, is just one way. You should also take advantage of any company-sponsored training classes.

Consider getting certified, whether it’s the CPP, CFE, CFI, or the LPQ or LPC. Whatever avenue you choose, there are developmental opportunities out there.

You owe it to yourself and your career to take advantage of these programs.

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“I’m certified.

Here’s why.”

Anthony ‘Tony’ Cavaliere, LPC Territory Loss Prevention Manager Sears Holdings

Many professions require a single, necessary certification process to prove expertise in that particular field. Until recently in the field of loss prevention, we lacked that universally-accepted benchmark certification process.

When I researched the LPC, I was intrigued by the broad array of subjects that were covered.

It’s a legitimate, in-depth review of all areas of loss prevention.

The coursework was expansive, and areas that I have had little or

“I have a job.

Why do I need certification?”

Certification not only prepares you for the future, it helps you when you need it most—in your current job. Certification refreshes and validates your knowledge base while teaching you critical business expertise to round-out your skill set.

It not only covers key components of loss prevention, it teaches you solid business skills to prepare you for your next promotion.

“Yeah, but…”

“It costs a lot.” Certification is very affordable and can even be paid for in installments. It is one of the best investments you can make for yourself and will pay for itself over again as you advance in your career.

“I don’t have the time.” Certification was designed by seasoned professionals who understand the demands on your time.

The coursework allows you to work at your own pace and at your convenience.

Everyone is busy, but those who are committed to advancement will find the time to invest in learning.

“I’ve never taken an online course.”

The certification coursework is designed with the adult learner in mind. The online courses are built in easy-to-use presentation style enhanced with video illustrations to elevate comprehension and heighten retention.

“What if I fail?” Both the LPQ and LPC certifications have been accepted for college credit at highly respected universities, and as such, passing the exam demands commitment and study.

However, the coursework includes highly effective study and review tools to fully prepare you for the exam. In the event you fail the exam, you can review the coursework and retest after 30 days.

“Okay, how do I get started?”

It’s easy to get started. Go online to sign up at www.LossPreventionFoundation.org.

If you need help or want more information, contact Kelly Durham at Kelly.Durham@LossPreventionFoundation.org or call 866-433-5545.

no experience with were explained in intricate detail.

I was also amazed to see the widespread support and acknowledgement the LPC garnered.

From retailers to grocers to vendors, it seems the entire loss prevention

universe has been involved.

I fully believe the LPC and LPQ will be the future benchmark for our industry that had simply not existed before. That’s why I felt I needed to be a part of it and why I’m proud to have “LPC” behind my name. www.losspreventionfoundation.org

PARTNERING WITH RETAILERS

The past few months have been a whirlwind, culminating with a few quality days in Dallas at the 2011 National Retail Federation Loss Prevention Conference. During the conference, we reconnected with old colleagues, met new friends, and learned about some exciting advancements in the LP field. I was proud that eBay and PayPal sponsored the Fusion Center, where numerous law enforcement officials gathered to network with retailers in an effort to establish partnerships and devise plans to reduce organized retail crime (ORC). The conference was educational, inspiring, and enjoyable.

It’s hard to open a newspaper or watch the news without seeing the continued economic stress on the American workforce.

This stress manifests itself in many companies and agencies as a mandate to “do more with less.” I, too, have been given this mandate over the years when sales were soft or expenses high.

In reflecting on this, I believe it is crucial for us to enhance loss prevention programs with robust technology if we are going to have a chance at success.

At the NRF conference I walked through the exhibit hall with an eye for “game changers” that could assist retailers and eBay in our efforts to reduce ORC. It was exciting to see several electronic article surveillance (EAS) solutions that address booster-bag detection as well as jamming devices, two solutions that are long overdue. I had the opportunity to meet with several companies that have developed extremely innovative products and programs.

The Retail Equation demonstrated their new suite of solutions to ensure retailers are on top of the growing challenge of return fraud.

Their offering is powerful and works at reducing return fraud and shrink, in addition to increasing sales.

I also looked at several exception-reporting and data-analytics programs. It is tremendous to see companies continue to invest behind and build their offerings. Kevin McMenimen, president of Enabl-u Technologies, shared his vision and future plans for LERPnet 2.0. All I can say is, “Hold on!” We have a lot of exciting things to come with the evolution of LERPnet 2.0.

Lastly, I had the opportunity to meet with a company that is developing handheld devices that enable retailers to mark high-risk products quickly with identifiers. These identifiers can be displayed or hidden, and only viewed under ultraviolet light—a very innovative, amazing technology.

With the continued advancement of technology, I see a light at the end of the tunnel in our battle against ORC. For those companies that have a mandate to do more with less, these advancements may serve as a solution.

Unfortunately, we can expect that the number of police and prosecutors will be reduced over the next few years as a result of

by Paul Jones

budget cuts, bankrupt states, and rising felony thresholds. This is problematic for our fight against ORC. In an article published here a few months ago, I highlighted our partnership with the National Association of Shoplifting Prevention’s “Say No to Shoplifting” campaign. We believe that partnering with the NASP and reaching young offenders early is a great way to stop crime. The results of their program for reducing repeat offenders are fascinating. I would encourage each of you to visit the NASP website at www.shopliftprevention.org and consider if utilizing their program as a way to handle juvenile offenders may help you reduce repeat crimes, enhance your brand, and save the time and money you would have spent on prosecution.

Paul Jones is Global Director of Asset Protection. Contact him at pajones@ebay.com.

As we look at the future of crime, it is imperative for us to be integrated deeply into our companies’ growth plans and collaborate internally as well as with each other to stay ahead of the criminals.

PROACT is currently working with retailers to refine our exception reporting in key product segments. We are also reviewing and implementing various technology solutions that will identify bad actors early and prevent entry to our platforms when possible. Most recently, we had a working group with a couple of home-improvement companies at our location in Salt Lake City, and have several great ideas as a result of our collaboration.

One thing that never stops in retail is change. Change is what makes this industry exciting. Over the next few years, the lines between online and offline retail will continue to blur. The influence of smartphones in changing the ways in which we shop, research, and pay is simply staggering. Eventually, we will all sell in multi-channels and choose to be paid in a variety of ways.

With these advances come risks. Inevitably, criminals will adapt to the new ways of commerce. As we look at the future of crime, it is imperative for us to be integrated deeply into our companies’ growth plans and collaborate internally as well as with each other to stay ahead of the criminals.

I invite loss prevention executives who are involved in ORC efforts to share their thoughts and approach. If you are interested, please send me an email at pajones@ebay.com.

Feature

Flash

Mobs Becoming a Threat to

Retailers

By Frank Muscato

LP Magazine | July – August 2011

39

Flash Mobs

J

ust when retailers thought they were getting a handle on external theft and organized retail crime (ORC), along comes a new twist called “flash mobs.” What started out a few years ago with the use of social-networking sites and smartphone communications to gather a group of people in a public place to dance or perform another innocent form of entertainment has recently evolved into gathering together protestors in the Middle East democracy movement.

Now, teenagers as well as criminal gangs are using the same techniques to steal from retailers. These groups are in their infancy, but there appears to be a rapidly growing trend throughout the United States. Retailers get ready.

A flash mob may be coming to a store near you soon.

Retailers need to recognize the existence of this new phenomenon and form alliances and strategies to deal with these episodes. There needs to be a “solution reaction” developed and shared among retailers. With groups of thirty to sixty people, ranging in ages from 11 to 60, entering stores with the intent to steal large amounts of retail property, the solution has to be quick, formidable, and absolute. Solutions may entail identifying a group leader or methods of actually detaining one or more of the mob participants.

Whatever the collective strategy is, if a solution is not developed…and developed quickly…these flash mobs are going to overrun our stores.

Safety in Numbers

First we need to identify and understand the reason the flash mob is entering the retail store. Regardless of the sociology of these groups, be they thrill-seeking teenagers or violence-prone gangbangers, the fact is they are entering your store to steal merchandise; it’s that simple. The merchandise is being taken for personal use or sold to make money. The bottom line for retailers is lost merchandise and possible threat of injury to customers and associates.

The fear ratio among the flash mob is little to zero, because they understand there is power in numbers, and that will win over fear of reprisal or punishment every time. These groups understand that the retailer will likely do little to stop these crimes. After all, retailers have limited responses. They may call the police, who will likely arrive long after the episode is over. Or, they may try to take some of the stolen property from mob members while they are on the way out of the store. The latter is less likely as most retailers forbid their staff, for good cause, from any type of confrontation with thieves.

The flash mob has the advantage in these thefts because there are few

things that can be done to stop them.

Theft and larceny state laws are weak and often not effective unless there is pressure put on those that enforce these laws, and that rarely happens. The mob knows that if they take the merchandise and just run away, there will be little that can be done because of the size of the group.

Consider this scenario: A thirty-person flash mob enters a store, takes the desired merchandise, and begins to leave the store. In a best-case scenario, a police officer is nearby or actually working in the store. He gives orders to “FREEZE!” Yet all the mob members continue to exit the store with the stolen property. That officer may be able to physically stop one or two of these thieves. That means that the other twenty-eight thieves leave the store with hundreds or thousands of dollars in stolen property. They still have not committed anything other than theft (in most states). There would not be any further charges, such as escape, resisting arrest, or evading arrest, because it would be the state’s responsibility to prove that the person heard the officer or knew that the officer was talking directly to them.

All that law enforcement has is a theft, and it is most probably a minor or misdemeanor theft, because the felony levels throughout the county have risen over the past few years.

“Being a national retail organization and having stores in major markets, we often deal with this problem.

Our close working relationships with law enforcement have proven to be the most effective way to control and deter this kind of behavior. However, it remains a significant concern for us.”

– Tom Roan, Group Vice President, Loss Prevention, Macy’s 40

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Flash Mobs

On April 25, 2011, a group of twenty young men entered a trendy clothing store near Dupont Circle in Washington, D.C., and stole merchandise off shelves, racks, and tables. In what was described as a “quick and sophisticated operation” that included a lookout stationed at the front door, hundreds of items worth thousands of dollars were taken. The store manager was quoted as saying, “They had no fear. They were on their cell phones inside the store talking to their friend outside who was watching for police.”

– ABC 7 News D.C.

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Possible Solutions

Retailers have to be proactive and create a deterrence to these flash mobs. If these mobs can create actions and figure out ways to steal property from us, retailers can certainly figure out ways to stop these flash mobs. Sure, legislation can be enacted, but our recent experience with enacting legislation aimed at organized retail crime tells us that this is a long and difficult road.

Even if legislation were on the books today, you would still have to find someone to enforce that legislation.

The retailers’ best bet is to develop a series of solution reactions. Unless these mobs have fear of

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continued on page 42 LP Magazine | July – August 2011

41

Flash Mobs continued from page 41

Retailers on Chicago’s Michigan Avenue report multiple flash-mob incidents where groups of teens rush into a store creating a disturbance, steal merchandise, and flee in minutes.

According to police reports, the youth select a target and use tweets or texts to coordinate these crimes. Filene’s Basement, Express, and The North Face store have all been targets of flash mobs. Police have increased patrols in the area focusing on breaking up large gatherings of youth with threats of arrest for loitering.

– CBS 2 Chicago 42

reprisal, they will continue to hit retailers, and it is likely going to start happening at an alarming rate across the country. Following are some suggestions to consider. n Create retail and law enforcement flash-mob prevention coalitions to brainstorm and develop prevention and reaction strategies. n Develop training for both retailers and law enforcement on how to deal with these episodes. n Consider ways for store personal to intervene at the beginning of the episode, not physically, but verbally, vocally, and visually. n Develop ways for remote monitoring facilities to alert law enforcement dispatch facilities or mall security. n Create an alarm or alert system to identify potential flash mobs in certain areas, such as malls. n Create a system identifying these groups with the information shared among retailers. n Research present laws that can be enforced when these episodes occur. n Lobby for new legislation that brings serious penalties to those involved in flash-mob thefts. n Get federal, state, and local involvement to monitor the Internet sites where flash-mob information is shared. n Through interviews of those arrested, identify the leaders and their methods of operating.

Organized Retail Crime

There is a good possibility that those who are already fencing stolen goods are going to participate in these crimes, if they are not already. It is also obvious that criminal street gangs will likely use these same tactics as a cover to acquire large amounts of expensive retail property.

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That means that flash mobs may become another tactic for organized retail crime.

Violence is always a potential issue when criminal and neighborhood gangs are involved.

For the most part, retailers will not be able to recognize the difference between violence-prone gangs and misguided teenagers acting as flash mobs. Therein lies a real threat of violent confrontations if retailers try to stop someone involved in one of these episodes. Retailers need to be trained to recognize symbols, tattoos, clothing, and actions that may indicate gang affiliation.

Fences, on the other hand, face little chance of being identified with these flash mobs because there is no physical participation at the scene of the theft by the fence. The fence just waits till the property is brought to him or her and buys the stolen property for about 25 percent of the retail value. It will be hard to prove that the fence encouraged the group to commit the crime, because a smart fence will only discuss the value of the property, not how the seller acquired it. So the established stolen property fence should have no problem building their illegal business with the oncoming rise in flash-mob thefts at retail stores.

Retailers and Store Personnel

The primary responsibility for preventing flash mobs from committing thefts in the stores lies with the retailer.

How merchandise is displayed and controlled is at issue. The number of employees and their positions within the store are vital to preventing these groups from gaining control of high-end merchandise. Retailers are quick to point the finger at the thieves, but some of the blame can be traced back to the retailer. They should have good video systems in place,

Flash Mobs experienced, trained associates on the floor, high-end merchandise secured, and loss prevention personnel trained and involved.

Retailers should work together to have a coalition established to deal with identifying these types of crimes once they start occurring in different areas of the country. Retailers need to begin preparing for these incidents before they become rampant. Information on incidents involving flash mobs should be discussed and training established within the retail community.

Again, retailers cannot wait for law enforcement to do something about flash mobs, because it will be too late and large amounts of merchandise will be gone from the stores.

Following are a few suggestions for store-level personnel. n C all the police as soon as it is recognized as a possible flash-mob theft event. n G et descriptions of those involved. n S ecure any video of the incident.

n

n n

n n

n

n

I dentify possible leaders, including those giving orders, vocalizing on what to steal, pointing where to go, et cetera.

Get any vehicle descriptions possible.

M onitor and identify how much and what type of product is stolen.

C all loss prevention.

I f the store is in a mall setting, notify mall security.

S hare information with other retailers.

P rotect any physical evidence left by the flash mob.

Law Enforcement

There is little law enforcement can do about flash mobs until they are involved in a crime. Simply organizing a flash mob is not against the law… as of yet. Once the flash mob engages in the actions to commit the crime, law enforcement can take action, but until then they are powerless. So there needs to be some preventive measures and intelligence-building

LP Magazine | July – August 2011

initiated within the law enforcement community dealing with these types of crimes. Coalitions need to be established and information shared among those responsible for preventing these thefts.

When violence is involved, of course, law enforcement takes quick action. However, crimes that don’t involve violence are usually treated as “simple theft” and often put on the backburner. With our prisons full and the costs of keeping felons locked up a growing burden to the state, flash mobs can grow in frequency until someone is seriously injured.

Even then, only that incident will be identified as a serious issue.

Legislation

This may be the easiest avenue in helping to prevent these types of crimes. Again, as said before, legislation is only as good as it can continued on page 44

43

Flash Mobs

Recent Flash-Mob Incidents at Sears

continued from page 43

or will be enforced. The best way to create laws specific to flash-mob theft is to amend present statutes already on the books.

Keep in mind that “robbery” is simply “theft by force,” which is a felony in all states. By definition, “force” could be a weapon of some kind, a physical assault, or a “threat that instills an imminent fear in someone.” In essence, imminent fear is what is created when a large group of people enter a retail store and start loading up on merchandise. Individuals working in the store would certainly think that if they tried to interfere in this situation, these thieves would band together to stop that interference, therefore creating that imminent fear.

Amending state robbery laws in this way would make the offense a robbery and a felony for any participant of a flash mob involved in that retail theft.

Since robbery is considered a violent crime, it would also help ensure law enforcement involvement.

Things have been changing in favor of retail over the past ten or so years as retail and law enforcement have banded together creating coalitions, getting involved with state and national retail associations, enacting legislation aimed at ORC, and sharing information within the private-public sectors concerning criminal acts committed against retailers.

It is time to add flash-mob theft to crimes against retailers before we find ourselves trailing these types of crimes like we did with organized crime. ORC had a healthy foot in our door before retailers recognized it as a serious threat to their businesses. It behooves us to be proactive before flash mobs get out of hand.

In recent weeks, theft incidents involving flash mobs have occurred in Sears stores in Upper Darby, Pennsylvania, and Douglasville, Georgia. The two events involved primarily teenagers who entered the stores specifically to shoplift merchandise.

In Upper Darby seventeen individuals entered the store and took watches, shoes, and clothing in approximately eight minutes. A store loss prevention associate observed the entire incident and immediately called local police, who arrived just after the group exited. The LP associate observed the group going to a nearby fast-food restaurant where police apprehended the suspects and recovered the merchandise. Sixteen juveniles and one adult were charged with retail theft. The young adult, who appeared to be leading the group, was also charged with corrupting minors.

The Douglasville incident involved eight females who entered the store and began concealing large amounts of merchandise in the women’s clothing and cosmetics departments. Upon observing the first concealment, loss prevention called police who arrived within five minutes with the suspects still in the store. The four officers were able to apprehend all but three of the suspects. The five suspects apprehended ranged in age from 12 to 16. A 17- and 19-year-old and another minor escaped police.

“In both of these cases, the flash mobs appeared to be young people involved in personal shoplifting as opposed to organized retail crime gangs,” said Bill Titus, vice president of loss prevention for Sears Holdings. “Fortunately, our store personnel followed their training, resulting in the police making apprehensions and recovering the stolen merchandise.”

The guidelines given to Sears store loss prevention professionals center around three elements: n Be Aware—Report to LP or store management whenever associates see large gatherings of juveniles inside or directly outside the store. n D eter Theft—Attempt to discourage thefts by stationing associates near high-value merchandise and displaying good customer service to those participating in the incident. n React—Call 911 once acts of theft are observed. Do not call police simply because a group enters the store.

The LP team should continue to monitor the group and document the incident, but should never attempt to make an apprehension, as it would not be safe to do so.

FRANK MUSCATO retired from the Dallas Police Department’s Intelligence Division as a case supervisor in 1993 following twenty-five years of service to help create retail’s first organized retail crime division inside Walmart.

After eleven years with Walmart, he went to Walgreens to assist in creating their ORC taskforce. In 2010 Muscato established The Muscato Group based in Dallas, specializing in ORC training and special investigations. He is recognized nationally for his expertise in ORC and in lobbying for ORC legislation and is affectionately referred to as “The Godfather of ORC” by his peers. Muscato can be reached at 214-930-9359 or fcmuscato@gmail.com.

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

id you know the unemployment rate for our young men and women returning from Afghanistan and Iraq in May was 30 percent? Did you know that unemployment payments to service members fresh out of the military have doubled since 2008?

Many of us find these statistics not only alarming, but unacceptable. As a hiring manager, you may be able to do more about this than you think.

We all recognize that these young men and women have sacrificed much so the rest of us could go about living our normal life. We all shudder to think that we forget the sacrifices their families have made so we can have our freedom. We may even be alarmed to know that this 30 percent does not include the thousands that have re-enlisted for another tour of duty because they could not find employment as a private citizen.

We salute the retailers who have a history of hiring veterans.

We can’t thank them enough. However, what are we doing as a profession to help? Clearly, we can do much more.

Military Transition Committee

The Loss Prevention Foundation has a Military Transition Committee chaired by ADT’s Kevin Lynch. Recently, Lynch along with Brand Elverston of Walmart, Scott McBride from American Eagle, and I met in Washington D.C. with various high-ranking military leaders to discuss how retail loss prevention could be more active in helping veterans find jobs. As a result of this meeting, the Foundation is aggressively moving forward with a comprehensive plan that will help to attract more qualified enlisted military and veteran candidates into the industry.

Many of these young men and women have excellent transferrable skills for retail loss prevention. Ken Rayca, director of LP at Liz Claiborne, said it best: “If they can learn all that the military teaches them, surely they can learn what we need to teach them.” Think about that. Military personnel have been conditioned to make a plan, follow a plan, and flex to it if needed. They understand loyalty, dedication, and the importance of accomplishing a goal. They are taught organizational, leadership, and time-management concepts. They are trained to pay attention to detail or suffer the consequences if they don’t.

Sounds like a great training academy for future LP professionals.

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July – August 2011

In addition, many have college degrees or at least have taken classes while in the service.

Unfortunately, with all of this training, they still lack understanding the retail business and culture of the private loss prevention industry. We believe exposing high-potential military personnel to the LPQualified (LPQ) course will help to ensure they understand our profession, as well as prepare them for an interview; subsequently increasing their chances of getting hired. Since they would have a much better understanding of what they are getting into from the LPQ, the turnover rate should be lower for retailers when they do get hired.

A Mission to Make a Difference

The mission of the Foundation’s Military Transition Committee is to “attract, prepare, and promote the hiring of veterans, non-returning active-duty approaching separation, National Guard, and reserve military personnel to retail loss prevention.”

Other members of this committee, including John Clark, Jeff McPike, and David Phillips, LPQ, have also done much to prepare our plan.

Here are just a few key items the committee has been working on: ■ Establish critical military partnerships, ■ Promote retail loss prevention in various military sources as a career alternative, ■ Obtain LPQ course approval as a military transition course, ■ Have the Foundation and retailers attend key military job fairs, ■ Link qualified candidates to retail opportunities, and ■ Provide job search advice and supporting resources.

If you are a hiring manager and have been successful in filling jobs with former service members, the committee would like to hear from you. If you would like to get involved, please contact David.Phillips@losspreventionfoundation.org.

For more information on the Military Transition Committee, visit the Foundation website, www.losspreventionfoundation.org.

In the near future, please look for more information on how we all can help. Together, we can help make a difference in the lives of many to whom our nation owes a great deal. |

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Fundamentals

Still More Game Changers T

by Mike Marquis, CFI Marquis is currently an assistant vice president of loss prevention with the TJX Companies.

His more than twenty-four years of LP experience includes senior leadership positions with Limited Brands and Urban Outfitters. Marquis invites your comments at mike_marquis@tjx.com.

The opinions and commentary expressed by Marquis do not necessarily represent the TJX Companies or any of its divisions.

In today’s world we have a leadership pool more diverse in all aspects, with improved information, research, and educational opportunities. Isn’t that a game changer?

he last few issues I’ve been working on this “game changer” concept. (“What, again?” you ask. Why, yes, I am going to get another column out of it. The response has been pretty good.)

Seriously, I had another piece of feedback that hit the mark.

It got to me via LinkedIn…incidentally, a networking game changer in my opinion.

Mike, I just read your article in the most recent issue of LP Magazine…electronically no less. Loved the “green bar” reference! I think we’re currently in the midst of the next game change event in the LP industry. I see it similar to the game change in HR 10-15 years ago—talent. It ranges from talent assessment, placement, and development. Carpenters use the same tools, but we know the best ones produce a better product. Something drove them a little harder or someone knew to manage them a certain way and now they produce a little better. I think the next cycle of LP game changers might be organic. Have a great 2011.

Greg When I began my career (yes, we had running water and indoor facilities), the majority of “security” or “LP” directors I met were men with a law enforcement background. I’m not offering an opinion about the effectiveness, just stating a fact.

Over time, the security label faded. LP has hung around while being joined by “AP.” More and more individuals who grew up in the business as I did took on leadership roles. These folks, not all men by the way, brought different backgrounds, educational disciplines, experiences, and perspectives to the AP or LP world…(call it what you’d like since RSFTIP* seems a bit too long).

I mentioned in passing the diversity in gender; but diversity as a whole has improved in our business. That evolution brought more perspective and challenged thinking. An interesting and amusing (to me at least) side note is diversity is a journey, not a destination. If you have a goal of being “more diverse,” then 100 percent of anything fails to meet that goal. Think about it and if you’re not amused, send me a note. I’ll explain.

Back to talent. Part of the evolution is education and research. In the early ‘90s the University of Florida began the National Retail Security Survey, which continues today under the tutelage of Dr. Richard Hollinger. That survey has provided

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valuable statistical data for organizations to rely on to fund programs and dedicate resources.

I think I’ve read somewhere about a magazine for our profession being around for the last ten years. Check out the May-June issue or try the website www.LPportal.com.

Today the Loss Prevention Research Council digs deeper into practical applications and theories; sometimes confirming what has long been suspected and other times delivering a head shaking, “How about that!”

Finally, education around professional development has moved forward. The Retail Industry Leaders Association, Food Marketing Institute, and National Retail Federation LP conferences have all raised the bar in the twenty-something years I’ve attended.

In 1977, after twenty years of fixing to get ready to, ASIS issued its first CPP designation and today recognizes just under 10,000 CPPs around the world. In the last ten years ASIS also introduced the PCI and PSP. (No information is on their website regarding number of designees thus far.)

Founded in 1988, the Association of Certified Fraud Examiners (CFE) claims about 55,000 members.

The Center for Interviewer Standards & Assessment (CISA) has recognized about 1,100 CFIs in its first ten years.

Even younger on the development board, we have the Loss Prevention Foundation’s LPQ and LPC designations. Both are retail specific and provide for college credits. In reviewing the curriculum for the LPC, it has much more than a security focus.

Business matters in the LP industry.

So in today’s world we have a leadership pool more diverse in all aspects, with improved information, research, and educational opportunities. Isn’t that a game changer? *Retail Support Function That Increases Profitability. (Isn’t it obvious?) |

LPportal.com

feature

LP Management Reflecting on Quality Recruitment and Retention

By Ryan Kelly LP Magazine | July – August 2011

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LP Management

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et’s face it—the bottom line to any corporate organization is the profit margin. However, those in executive management should always be mindful that quality of service drives the margin. Factors that lead to high-quality service are often the result of well-retained employees, and this human element is the focus of this article. Specifically, all management levels need to be mindful of what policies work, what don’t work, and what looks promising.

Recruitment and Training

Think back to when you first joined your company. What was your initial impression of the first few people you met when you went in for the initial interview? Do you remember their general attitude about the company?

Chances are more likely than not that your initial impression was positive. Perhaps this is why you stayed with the company.

Do you think the same attitudes are being conveyed to new recruits today? If not, you might consider those colleagues who left the company. What was it about their experiences that differed from yours that made them leave?

These questions remind us of the importance of first impressions. We already know the value of a good first impression, but we should ensure that we are practicing what we preach with both customers and employees.

Consider, for example, the case where a prospective employee is brought in for an interview. During this interview, the prospect is asked to complete some paperwork and is given more detailed information about the job than originally advertised.

The prospect is informed that he or she needs to agree to the current, although possibly out-of-date, employee handbook, sign a confidentiality agreement, and sign

50

The lowest level of the LP organization might be a store-level associate, detective, or security guard.

Whatever your company’s title for this position, it is imperative to remember that these are the individuals who are the backbone of your organization and ultimately your LP success.

another paper agreeing to be charged for their background check and uniforms if hired. The prospect agrees, signs the papers, and is subsequently hired.

Consider further that during the course of their training, various colleagues are bad-mouthing the company. It appears that not everyone agrees with corporate policy, and that various mistakes are made, such as supervisors not reporting work hours on time, and word-of-mouth policy conflicting with written policy. Further, whenever a corporate representative comes by, a meeting is held, and various promises of healthcare, pay raises, and new uniforms are discussed and promised. At first, these are highly motivational talks, but after very little follow through, employees are becoming disgruntled. How long do you think it will be until this new employee quits, or starts looking for employment elsewhere?

You might think that this example is fictitious, but without revealing the employer, I do admit that all this happened to me during an entry-level job in loss prevention. It was also later discovered that this same company was making a profit on the uniforms that it required its employees to buy brand new and at full price. In reality, many of these uniforms were worn and missing pieces, such as buttons and loops.

Contrast this with a completely different company that I worked for, and you can tell why this second company was better at retaining employees and doing so at lower wages. Specifically, the other company tossed out free uniforms to its employees.

“Need a new shirt?” the supervisor would ask. “No problem, what size are you again?” He would then toss one of the surplus shirts at me after pulling it from the

LP Management back stock room. He rarely had to order supplies; in fact, he was always prepared. Perhaps this had to do with his previous experience as a Marine, or maybe the company treated him well, and he sought to take care of his own in the same manner. Whatever the true cause, he left a lasting impression.

The Carrot and the Stick

My experiences are not always the same as the next person’s, but the point is that in both cases, the corporate company had expenses, but one company sought to use a business model that set the tone by making it clear that the employee would be paying all incidentals. This may have seemed appropriate with the initial wages advertised in the job opening, but overall morale went down after the deductions were made, and monthly paychecks were mailed out. The other company masked these

If you establish rapport with me, give me respect, give me the opportunity to respect you back, and you acknowledge this, then we might have a more successful relationship as supervisor and subordinate. This is the essence of mutual respect. expenses from the employee in their business model, and even though the wage was a bit lower as advertised, it was always the wage earned each and every pay period…no deductions.

There are basic costs to doing business, but ways to make these costs appear as incentives for employees rather than burdens also exist.

For example, if you as the supervisor provide a new uniform for me and I pay for it, well, it better be perfect and pristine because that’s my hard-earned money. Contrast that when you give me one with no questions asked and at no cost to me, then I’m going to feel like I owe you one. In this latter situation, I’m more inclined to be a more motivated employee, and in the long run, I’m going to remain loyal to you because you provide for your own. Evidently, do you really want an employee who later quits having a shirt with your company logo on it? Imagine the ramifications of that former employee running around town misrepresenting your company in his or her newly discovered pajamas, painting shirt, or continued on page 52

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what have you. If you retain ownership over the uniform, you can require that they give it back. If the employee paid for it, then it legally belongs to them.

Of course, uniforms alone are not the only factor that’s going to ensure my loyalty. In fact, I need a clear set of guidelines and feedback to know when I’m doing something right and when I have failed to meet the standard. If you establish rapport with me, give me respect, give me the opportunity to respect you back, and you acknowledge this, then we might have a more successful relationship as supervisor and subordinate. This is the essence of mutual respect.

For example, if I show up late to my shift, then you need to make it clear that the long-term consequences of this action might lead to termination. At the same time, you, as supervisor, should submit my correct work hours on time so that I am properly paid and not underpaid. Don’t give me a reason, no matter how ill-conceived, to justify my arriving to work late on Monday because you don’t usually pay me on time. I’m only human, and I will mess-up sometimes and respond to your directives, but I will also be more inclined to follow your example and leadership. After all, someone saw you fit enough to be supervisor, and if I follow in your footsteps, then one day I might be so lucky to also have a leadership position. Even if there are no future openings, grooming me to be the next supervisor might make me an ideal associate to train incoming recruits to the entry-level positions.

It might be more appropriate to offer more carrots than sticks.

Remember the first company I mentioned above (hereafter referred to as “Company A”)? They offered many promises that never went fulfilled, including healthcare and wage

52

Supervisors and mid-level management need to set the proper tone for objective integrity and high levels of excellence in all moral standards.

Let’s work to improve our approach with how we do our job and manage our workplace.

increases among others. They even went so far as to give employees a 20 percent finder’s fee if we brought in new clients. Yet, these were lofty goals and rarely, if ever, became fulfilled incentives. They never even considered the cost-free incentive of recognition.

Contract that with the attitude of the second company mentioned above (hereafter referred to as “Company B). This company was already motivating me to do my best, and as it was, I not only met, but exceeded their expectations within the first few months of my employment. Every month the director of safety would hold a meeting and explain to us what we did right that week as a group and where we could improve. He might even offer other insights into company directives and policies as they related to our security unit. Being an undergraduate student at the time, the free food alone was enough to compensate my time for the meeting, but then the supervisor surprised me. He asked me to stand in front of the group and began to express his admiration for my dedication as an employee. I was presented with a certificate stating “Officer of the Month,” a ten dollar gift card to one of our vendors, and a company polo shirt to add to my casual wear. He also treated me to breakfast the next morning.

I was not used to the idea of being praised in public, but it surely made me feel appreciated.

I can only guess how much this actually set the company back.

In fact, I wouldn’t be surprised if he actually paid for this out of his own pocket money. I was not shown any preferential treatment, but I was kindly rewarded for my efforts as a model employee that month, nothing less and nothing more.

What Is a Model Employee?

Think of it like this.

The lowest level of the LP organization might be a

store-level associate, detective, or security guard.

Whatever your company’s title for this position, it is imperative to remember that these are the individuals who are the backbone of your organization and ultimately your LP success. They are in many ways your public relations officers. Even if they don’t issue statements, they are surely out there interacting with your customers, your internal associates, and the various would-be suspects who might be trying to steal your property. The friendlier a face to an internal client, the more charismatic a personality to patrons, and the more effective skills used in approaching and handling shoplifting suspects are all often characteristics of a high-quality, first-responder-type employee. These first responders have the highest level of discretion, and they need to know that they have the company’s utmost respect and trust. Investing in the factors that instill these high-level qualities in model employees is paramount to minimizing loss and maximizing profit margins, which, of course, is the goal of your LP organization.

Don’t Discriminate, Be Ethical

Once upon a time, Company A was willing to discriminate on the type of employee it wanted to hire. Granted, retailers have a right, if not a duty, to weed out those with a criminal record and less than trustworthy integrity. However, I’m referring to the type of discrimination based on demographics and related characteristics. For example, Company A realized that I had a unique talent for writing job descriptions and a direct connection with the local job listing board at the nearby university and surrounding community. The future CEO, who happened to be the son of the founder of the company, asked me to help write a job description. He wanted to include a preference for applicants with loss prevention or military experience, which was fine. But he also stated, “I would prefer if they are older than 25 and married.”

Why? “They are less likely to leave because they need to work.” I paused.

Had anyone in this company ever written a real job description before? I’m not sure. I made many pleadings to them that, at the very least, they had to consider there was a campus of nearly 30,000 students nearby to advertise to. Of all those who answer the ad, they could choose the best and brightest. Why did they have to be older than 25? Why did they have to be married? Didn’t this company check references and examine a prospect’s previous length of employment and other factors that are indicative of a good employee?

Company A was already having issues with employee retention, and this just didn’t make any

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LP Management continued from page 53

sense to me that the managers spent very little time trying to understand why. I pointed out that company couldn’t discriminate by age. Still, they were insistent. I suggested to them that once applicants come into the interview and fill out paperwork, managers will know such demographics, but I pleaded that they not reject an otherwise highly qualified younger, single candidate. The manager argued that college students might move on after graduation. My response was that hiring college students was a more ideal approach than what was already in place. In the long run the company would save on paying for certain long-term expenses, such as health insurance and unemployment, and that students might be motivated to work harder for the higher wages. Because of poor retention, it appeared that the local non-student population was refusing the job offering from this company. Further, how did they know that some of these potential employees wouldn’t stay? They didn’t even want to get to know them.

Perhaps of all other discriminatory decisions, I was most dismayed at one in particular. I suggested hiring more female associates because part of our constituent base for the company was female residents at one of our property locations.

Didn’t it make sense to represent that population? Specifically, one of our duties was to perform random room searches and inspections, which was allowed in the resident contracts.

But what of those female residents’

The bottom line to any corporate organization is the profit margin.

However, those in executive management should always be mindful that quality of service drives the margin. Factors that lead to high-quality service are often the result of well-retained employees. comfort level? Did it not make sense to hire at least one female associate?

I expected the company’s argument would be that no females had applied.

However, I was shocked to learn it was simply prejudice. Specifically, I was told that some persons were scolded in the past due to employees dating. One manager even made the comment that most females wouldn’t be able to tolerate the amount of physical labor involved in the daily job. Really? The job involved walking around the properties, investigating cases, and carrying devices weighing no more than eight pounds. They couldn’t be serious could they? Every other company I had worked for, including law enforcement and private security, had a more diverse employee

population. Surely they were joking and didn’t mean it. Yet, I could find no evidence to the contrary.

The point here is that supervisors and mid-level management need to set the proper tone for objective integrity and high levels of excellence in all moral standards. Whether these standards are directly specified by the corporation or not is irrelevant.

A little bit of common sense and honorable aptitude never hurt anybody. Let’s not lose sight of our goals by becoming Company A. If we are Company A, let’s work to improve our approach with how we do our job and manage our workplace.

Final Thoughts

This article is meant only as a brief treatise on an effective approach to a management style as it affects recruitment and retention. I don’t seek to exhaust every possible and effective strategy for creating a thriving work place in loss prevention, but I do think it not too much to highlight a few key lessons learned in unit understanding, unit morale, and workplace cohesion. Many of these lessons are various themes identified in conversations with both loss prevention associates and supervisors.

Here are a few items to consider: n Treat employees with mutual respect. n Offer more carrots (incentives) than sticks (punishments). n Praise in public and criticize in private. n Set the example that you want your employees to follow. n Encourage professional development. n Most of all, be ethical.

RYAN KELLY is currently a doctoral student in criminology. His work experience includes college instructor, campus police, loss prevention associate, and law clerk. Kelly’s community service ranges from volunteering as a community first responder to membership in the Civil Air Patrol to election to the city council at the age of twenty-three. Professionally, he has contributed to the Encyclopedia of Forensic Science on topics, including anthrax murder investigation and crack cocaine. He currently serves as a founding member of the non-profit organization www.CrimeAcademy.org. Kelly can be reached at 724-905-0358 or ryan@ryankelly.org.

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Supply Chain

Taking a Bite Out of Organized Crime I

f you have noticed the absence of this column for the past several months, it’s not that I’ve lost my desire to offer my thoughts on loss prevention and supply-chain issues. I promise I have a good excuse…at least I hope you feel this is a positive reason. Last fall I was elected to the Minnesota House of Representatives, and as a result, my free time suddenly became precious and rare.

While I was doing my duty as a citizen legislator, I did not forget the lessons I learned as a loss prevention professional. In fact, I took the opportunity to author an organized retail crime (ORC) statute that adds organized theft to the category of racketeering and was one of the few bills actually signed by the governor this year (as I write this article the state of Minnesota is still under a partial government shutdown).

For far too long organized criminals who prey on U.S. retailers and supply chains have enjoyed a lack of focus on the part of law enforcement.

This was due in part to the perception that this was a “victimless” crime and did not warrant the use of scarce police resources. The much greater reason behind this lack of focus was the inability of prosecutors to build a case under existing law.

That is beginning to change.

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by Kelby Woodard Woodard is a founding partner of Trade Innovations and the Trusted Trade Alliance, which specialize in security, customs compliance, and supply-chain strategy consulting through offices located on five continents. He also cofounded TRG Direct, which provides direct filing of customs entries utilizing an Internet-based software solution. Woodard is the former director of supply-chain security at the Target Corporation and a former board member of the International Cargo Security Council. He can be reached at kelby.woodard@tradeinnovations.com.

To add a bit of poetic justice to this fine piece of legislation, the governor who signed the statute was none other than the heir to the Dayton retail fortune himself, Mark Dayton. This law will provide prosecutors with the tools they need to finally prosecute organized retail crime in the state that is home to such retail giants as Target and Best Buy. Organized crime is too often romanticized by Hollywood movies, such as Goodfellas (a personal favorite), Scarface, or the Godfather series, as well as the television series The Sopranos. We all realize that organized crime has an adverse affect on our companies and our economy and is anything but romantic. Our supply chains are not immune to the billions of dollars that are lost by U.S. companies each year through organized crime. In fact, global supply chains have been used as means for smuggling and as profit centers for the mafia since its inception. The weaknesses in supply-chain security that they exploit are often used as blueprints for criminal and terrorist organizations throughout the world to advance their own nefarious aspirations.

Proactive security programs like C-TPAT (Customs-Trade Partnership Against Terrorism) and the awareness of the security threats that we face in the post September 11th world have made a positive impact. That is only one small part of the solution, however.

For far too long organized criminals who prey on U.S. retailers and supply chains have enjoyed a lack of focus on the part of law enforcement. This was due in part to the perception that this was a “victimless” crime and did not warrant the use of scarce police resources. The much greater reason behind this lack of focus was the inability of prosecutors to build a case under existing law. That is beginning to change.

In fact, Minnesota now joins over thirty other states that have passed similar legislation in the past few years. The noose is slowly tightening around those who make an illicit living off of our companies and our supply chains, but the onus is still on us as retailers to protect the assets that can mean the difference between a profitable year and taking one step closer to bankruptcy. |

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Evidence-Based LP

by Read Hayes, Ph.D., CPP

Retailers’ Research Objectives N

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. © 2011 Loss Prevention Research Council

o matter what, crime and loss keep happening. That’s why every issue of this column is dedicated to supporting LP professionals. I really hope sharing research findings, crime-prevention concepts, and research methods helps all of us get better at reducing potential and actual crime and loss as well as getting adequate budgets to accomplish this end.

As most readers now hopefully know, Loss Prevention Research Council (LPRC) retail members drive our research objectives.

In turn, the LPRC team determines how best to meet retailers’ objectives by choosing the best guiding theory and research methods. As mentioned before, we use multi-method research to better understand and measure loss dynamics and protective processes. Below are some of our latest efforts and current findings.

StoreLab Learning and Innovation Centers

LPRC’s StoreLab program is designed to innovate, pilot, and improve solo and combined asset protection efforts in active store or distribution center locations. We are now working in over sixteen locations in Gainesville, Florida, two in Chicago, one in Atlanta, and four in Los Angeles. These working retail locations are provided by member companies Home Depot, SUPERVALU, Publix, AutoZone, OfficeMax, CVS/pharmacy, Office Depot, Advance Auto, and T.J.Maxx.

We’re using these stores and others to learn how current and proposed enhancements or new technologies and processes work using some sales and loss data as well as shopper, employee, and offender interviews. A key thing we’re working on now is how specific crime and loss events occur on a micro level. We’re also looking very closely at the mechanisms of action of technologies.

Most events result from a cascade of concurrent and sequential factors. To be really precise and cost-efficient, we need to understand these processes. We’re accumulating a lot of report briefs and video highlights to aid our learning.

One key point of note—bad things happen as a result of a cascade of preceding events and environmental factors. And good things like prevention happen when we interrupt or “shock” would-be offenders by changing the factors. We’re learning about this on a micro level in our StoreLab locations, as well as by interviewing offenders. This way we can see and hear about what’s probably causing what and why.

LPRC working groups, including benefit denial, product protection, video analytics, and packaging innovation, are looking at a variety of new technologies for deployment into lab store locations, including electronic and chemical product or packaging

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locks, laser detection, peg and fixture solutions, sticker and logo variations, and facial and movement recognition.

We use our large-scale randomized controlled trials or field experiments, as well as statistical models to learn on a more macro scale what’s going on and why. We need both scales and all the data we can get to gain the greatest understanding.

Offender Research

LPRC researcher Corrie Tallman is heading LPRC’s multi-faceted offender interviewing program. This component is critical to everything we do. We need to understand offender characteristics and how that affects how they notice, interpret, and respond to environments and asset protection efforts. We’ve talked to hundreds of offenders by phone and had dozens walk through our lab locations so far as we add and tweak the loss prevention efforts. Our interview data come from multiple external and internal sources: ■ ORC—We are working with several ORC teams around the U.S. to systematically interview boosters and fences. We’ve been on location raids and done many field interviews with all levels of offenders.

■ In-store—Several retail chains are preparing to collect data from all detained offenders by having their in-store people ask a set of key questions.

■ Referral—Multiple chains have their in-store LP people recruit detainees to call our interviewers.

■ Public recruiting—We are also recruiting active offenders from all levels and types via advertisements.

■ Employees—We have recently begun collecting data from detained dishonest employees from three chains with more retailers coming on line.

Impact Conference October 10 – 12 , Boca Raton, FL All retailers…members or not…are invited to participate in the LPRC’s Annual Impact Workshop and Conference being held this year at Office Depot’s Boca Raton, Florida, headquarters October 10 – 12. This year’s agenda includes group exercises on new experimental, statistical, and interview research findings, as well as live offender interaction, ORC surveillance and sting vehicles, and a lot of highly interactive networking events.

If you are interested, please contact Jenna Pennington at jpennington@lpresearch.org for more information. |

LPportal.com

Offender interviews and store visits are dramatically increasing our ability to better overload or deter offenders by helping them better see, understand, and fear situationally deployed deterrent cues around high-loss and high-crime items and areas.

Predictive Analytics Or Data Modeling

Our team is statistically looking at how factors outside stores, such as interacting with parking lot, and interior variables explain and predict outcomes, including sales, accident, and loss levels.

We mostly want to explain, not just predict, good and bad levels or events, so we use different variables and different statistical techniques. Both are important. Retailing experts work to propose what probably explains what, and how to best measure these variables.

We then test these hypotheses using inferential statistics. Our current focus is on explaining between store variance, so we look at what drives individual store risk level, as well as how well a given store handles their risk level. We think this is very important since spurious or other non-important relationships don’t really get us too far down the road we all want to be on. We’re of course finding how important management knowledge, tools, commitment, and execution are, as well as other social and built environmental factors.

Randomized Controlled Trials

We’ve now completed nine field experiments, or randomized controlled trials (RTC), and are currently in the middle of two more with even more planned. As an experimentalist, I firmly believe we should rigorously determine how well an LP effort

KEY_002_Final_Outlines.indd 1

works by using good sampling, assignment, control, measurement, and analysis. Small pilots and simple before-and-after observations are helpful, but loss is so high, and safety and reputation are so precious, we believe in using best science to study efficacy or impact as well cost-effectiveness.

RCTs are not perfect. They are strong on measuring cause and effect in studied locations, but are not as strong for extrapolating results. But by using larger stratified samples, we can better estimate outside tested store results.

We’ve now tested Keepers/safers twice, protective fixtures three times, enhanced CCTV public-view monitors (ePVM) twice, enhanced CCTV domes (eDomes) once, Spiderwraps once, source-tagged hidden EAS once, and store-applied visible EAS tags once. We’ve also evaluated a set of in-store protective procedures and in-store warning signage.

We have found all tested processes can work or fail, but all have been found effective when specifically tailored to specific problems and stores (think situational crime prevention). Our team is now working with packaging, stickers, new fixtures, and even more enhanced ePVMs, with even more testing in detailed planning.

Membership Update

LPRC member retailers are excited to announce continuing membership growth with the recent additions of Walgreens, eBay, Meijer, Toys“R”Us, PWC, Rite Aid, 7-Eleven, Bloomingdales, and Barnes & Noble to our roster. The group is now talking to over a dozen additional retail chains they want to interact with and engage in the multiple research projects, conference calls, and meetings.

LP Magazine | July – August 2011

2/24/11 11:26 AM

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Industry News

NRF Presents Multiple Awards at LP Conference O

ne of the highlights of the National Retail Federation (NRF) Loss Prevention Conference and Expo held June 13 – 15 in Dallas was the recognition of numerous LP professionals and law enforcement officers as well as retail volunteers.

Melissa Mitchell, director of loss prevention for LifeWay Christian Stores and chair of the NRF awards and recognition committee, presented the awards following an emotional video featuring loss prevention volunteers in action. See the box on the next page for a list of the companies recognized for their volunteer efforts.

Ring of Excellence

This year’s inductee into the NRF Ring of Excellence was John Hegan, who retired as vice president of security at R.H. Macy & Company. Hegan began his 45-year career as a store detective with Bamberger’s and eventually worked his way up to vice president and director of security at the time of Bamberger’s merger John Hegan with Macy’s.

Hegan developed high-level relationships with the New York Police Department (NYPD) and other city agencies to reorganize the security operations for the annual Macy’s Thanksgiving Day Parade. He also worked with the U.S. Secret Service and NYPD on the security plan for then presidential candidate Bill Clinton’s visit to the Macy’s Herald Square store prior to his acceptance speech at the 1992 Democratic National Convention, which was held across the street at Madison Square Garden.

Jim Lee, the 2010 inductee and executive editor of LP Magazine, worked with Hegan on the NRF LP advisory council. “Unfortunately, not very many of today’s LP executives had the good fortune to know John,” said Lee, “but I know him as a very special person. When I think of John the words that come to me are stability, gentleman, expert, caring, integrity, and respect for others and the LP profession. It’s terrific that this very special person was recognized for his long career and contributions to our industry.”

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by Robert L. DiLonardo DiLonardo is a well-known authority on the electronic article surveillance business, the cost justification of security products and services, and retail accounting. He is the principal of Retail Consulting Partners, LLC (www.retailconsultingllc.com), a firm that provides strategic and tactical guidance in retail security equipment procurement.

DiLonardo can be reached at 727-709-6961 or by email at rdilonar@tampabay.rr.com.

Hegan was unable to attend the awards ceremony due to health issues.

Loss Prevention Case of the Year

Four investigators from Safeway and Target were recognized as the Loss Prevention Case of the Year winners for a yearlong investigation that led to the dismantling of one of the East Coast’s largest organized crime enterprises valued at $30 to $45 million.

In early 2009 the ORC investigators from Safeway and Target (see photo opposite) worked together to identify what ultimately totaled eleven pawn shops in the Baltimore area that were selling stolen merchandise directly, online, as well as to a warehouse operation that delivered palletized product to wholesalers and diverters in a four-state area.

Dubbed “Operation Pharmgate” because of the preponderance of over-the-counter medications and beauty products, the investigation eventually involved the Baltimore County and City Police Departments, the U.S. Postal Inspection Service, Federal Bureau of Investigation, Food and Drug Administration, and Internal Revenue Service. LP teams at Home Depot and Wegmans also provided assistance.

The investigation culminated in March 2010 when a federal grand jury released indictments of fifteen people seeking to recover $20 million in cash and the assets of ten businesses along with fifty-eight bank accounts. Following the indictments on March 25th, more than a hundred officers from seven agencies carried out search warrants on more than thirty locations. All but one of the original persons indicted have been convicted or pled guilty.

Law Enforcement Retail Partnership Award

The Law Enforcement Retail Partnership Award was presented to Chicago police officers Oscar Valenzuela and Marek Drozd and Cook County Assistant State’s Attorney David Williams who partnered with Target investigators on an investigation of over-the-counter medication product thefts.

The investigation targeted a fencing operation employing multiple boosters that was supplying a wholesale business.

Using an undercover officer, the team orchestrated the sale |

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Calendar of a semi-trailer load of merchandise valued at $100,000 to the wholesaler for $22,000. After the transaction, Chicago police executed search warrants that recovered more than $4.5 million in cash. Several suspects were charged with felony theft and money laundering.

In addition to Target, retailers CVS/pharmacy and Walgreens and manufacturers Proctor & Gamble, Monster Energy Drink, and Red Bull participated in the investigation.

Special Recognition

Kevin Tyrrell, section chief with the U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations organization, was honored for his role in launching the ICE Organized Retail Crime Pilot Program (ORCP) in July 2009. Initially targeting ORC in the Houston, Los Angeles, Miami, and New York markets, the program has since expanded into a national initiative know known as SEARCH (Seizing Earnings and Assets from Retail Crime Heists). As of April 2011, the initiative has resulted in 93 cases initiated, 41 criminal arrests, 29 indictments, 251 seizures, and $4.9 million in cash, property, and monetary instruments seized. continued on page 63

August 7 – 10, 2011 National Food Service Security Council 32nd Annual Meeting Hyatt Grand Champions, Indian Wells, CA www.nfssconline.org September 14, 2011 Retail Council of Canada Retail Loss Prevention Conference International Centre, Toronto, ON www.retailcouncil.org September 19 – 22, 2011 ASIS International 57th Annual Seminar and Exhibits Orange County Convention Center Orlando, FL www.asisonline.org September 27 – 28, 2011 International Association of Property Crime Investigators National Property Crime Investigations Conference The Gold Coast Hotel & Casino, Las Vegas, NV www.iapci.org October 1, 2011 The Shulman Center for Compulsive Theft and Spending Third International Conference on Compulsive Theft, Spending, and Hoarding Embassy Suites, Detroit (MI) Metro Airport www.theshulmancenter.com October 4 – 6, 2011 Coalition of Law Enforcement and Retail (CLEAR) 2nd Annual Training Conference Peppermill Resort and Casino, Reno, NV www.clearusa.org October 10 – 12, 2011 Loss Prevention Research Council Annual Impact Workshop Office Depot Headquarters, Boca Raton, FL www.lpresearch.org

Loss Prevention Case of the Year winners were (from left to right) Shane Coover, senior investigator, Safeway; Mike Serio, investigations team leader, Target; Raphael Villanes, senior investigator, Safeway; and Damien Walter, formerly with Target.

Loss Prevention Volunteers in Action Barnes & Noble Hike for KaTREEna CVS/pharmacy H.E.L.P. Philadelphia Dollar General Second Harvest Food Bank GAP Habitat for Humanity Hart Inventory Services Children’s Cancer Center, Letters to Soldiers, Boys and Girls Club, Feeding the Hungry Kirklands The Center for Courageous Kids Camp Charley Starbucks Northwest Harvest Food Bank The Buckle, Inc. Gifts, toys, clothes, and meals to the underprivileged TJX Companies American Cancer Society, Making Strides Against Breast Cancer Tractor Supply CASA

LP Magazine | July – August 2011

October 19 – 21, 2011 International AntiCounterfeiting Coalition Annual Fall Conference Waldorf Astoria Orlando, FL www.iacc.org November 2 – 3, 2011 ISC East Jacob Javits Convention Center, New York, NY www.iscsolutions.com March 11 – 14, 2012 Food Marketing Institute Asset Protection Conference Hyatt Regency, New Orleans, LA www.fmi.org April 22 - 25, 2012 Retail Industry Leaders Association LP, Auditing, and Safety Conference Dallas, TX www.rila.org

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People on the move 7-Eleven has announced the following changes: Deb Brown and Ali Bukhari to AP Specialists and Jim Passarella to Division AP Director.

Edward Campodonico was appointed Director of LP and Safety for ABC Fine Wine & Spirits.

Dennis Lonergan, CFI has been promoted to Senior Regional LP Manager for Abercrombie & Fitch.

Paul DeMasi, Ali Hatipoglu, and Sarah Torrez have been named Directors of LP for Aeropostale.

Brad Trew was appointed Corporate Investigations Operational Manager for AFI International.

John Moriarty was named Director of LP for A’GACI. Michael Mills was appointed Regional LP Manager for Anna’s Linens.

David Pruett, CFI was named Regional LP Manager for AutoZone.

Hedgie Bartol has joined the Retail Business Development team for Axis Communications.

Taylor Magaziner and Jonathan Novack were appointed Area LP Managers for Bed Bath & Beyond.

Christine Olsz was named LP Manager for Bergdorf Goodman.

BJ’s Wholesale Club has announced the following changes: John Carro to Market Investigation, Crystal Houtman to Manager of Corporate Security, and Abigail Nortey to Regional AP Manager.

Alex Rodriguez has been promoted to Internal Investigator, and Josh Winner was appointed LP Manager for Bloomingdale’s.

Burlington Coat Factory has announced the following changes: Lexi Hurley to LP Investigator, Steve Prescott to Territory Shortage Control Manager, and Bill Wagner to Territory LP Director.

Chris McGourty was named Director of LP for Pride Convenience.

Darnell Pharr was appointed Manager AP for Giant Food Stores.

David Cohen was named Director of LP/Retail Services for Radio Shack.

Dave Alves was named Director of LP for Golf Galaxy.

Fernando Chila was named Regional LP Manager for Rent-A-Center.

Goodwill has announced the following changes: Art Delgado to LP Manager, Casey Smith to Corporate LP Manager, and Jonathan Ramires to Director of LP.

Rite Aid has announced the following changes: Pat DiGiaro to District LP Manager, Jason Gonzales and Sean Huggins to ORC Investigations, and Sandy Chandler, LPC, CPP to Regional Director of LP.

Darryl Bishop was appointed AP Supervisor for The Great Atlantic & Pacific Tea Co.

Dustin Dillard was named Senior Area LP Manager for Ross.

Stephanie Monaghan was appointed Regional LP Manager for GUESS.

Jim Matz has been promoted to Senior Director of LP for Rue21.

Harbor Freight Tools has announced the following changes: Todd Mace to Manager of LP, Mike Nagyhazy to Director of LP and Tony Starrs to District LP Manager.

Scott Emery, CPP was appointed Regional Director of AP for Saks Fifth Avenue.

Michael Sanders has been promoted to Senior Corporate Manager of LP for JCPenney.

Randy Miner has been promoted to Director of LP for Jo-Ann Stores.

Ryan Cheramie, CFE, Michael Hammons, and Joe Ochoa, CFI were appointed District LP Managers, and Sheila Martinez was appointed Regional LP Director for Kohl’s.

Mark Pagan was named Regional LP Investigator for LifeWay Christian Stores.

Matthew Haughton, CFI was appointed Director of Corporate Security for L’Oreal.

Darin Barton, CFI has been promoted to Manager of Field Investigations for Lowe’s.

Sears Holdings has announced the following changes: Doug Fessenden to Director of LP; Timothy Kneidel, CFI, Michelle Cliver, and Justin Henkenberns to District LP Managers; and Joe Nowicki to Director, Logistics LP. John Bocker was named Director, Compliance and Loss Control for Smashburger.

Eric Hieber has been promoted to Director of AP for The Sports Authority.

Christopher BenVau was appointed SVP National Accounts North America and Patrick Mulhern was named VP National Accounts East for Stanley Security Solutions.

Kirk Elmer was named Director of Internal Audit and Kristen Hake has been promoted to Corporate Field Auditor for Stein Mart.

Peter Evans was appointed to Corporate Investigator for Sullivan Family of Companies.

Jeff Hunter has been promoted to Field Manager of LP for Claire’s.

Macy’s has announced the following changes: Maurizio Scrofani to VP; George Betti, Alan Cramer, Tim Ferreira, Ron Galster, Natalie Gerk-Parra, Georgia Gonzalez, Shaun Guilfoil, Michael Hooper, CFI, Krystal Jagielski, Christian McCarthy, Mikhail Mdinaradze, Rob O’Neil Jr., Carlos Portela, and Todd Pultz to District Managers of Investigations; Umberto Devany and James Franks to Regional Training Managers; Dawn Barber, Tim Huff, John McLean, CFI, and Dave Smith to District Directors of LP; Stephen Boarman to Director of LP Administration; Tom Happe to Director of LP Operations; Tara Nutley to Director of LP Training and Communication; and Eric Williams to ORC Manager.

Jason Scheel was appointed Director for Compass Loss Prevention.

Cheryl Sencabaugh has been appointed Regional Trainer for Marmaxx.

Maryann Vazquez was named LP Manager for UNIGLO.

Monty Whitlow was named Regional AP Manager for The Comex Group.

Chris O’Neil, Justin Pompey, and Jeremy Willis have been named DLPM at Marshalls.

Scott St. Clair was appointed National Account Manager for Universal Surveillance Systems.

Tom Seng, CFE was appointed Director of LP for Continental Services.

Dave Harben, CFI was appointed Regional LP Manager for Maurices.

Anthony Nelipovich was appointed VP Major Accounts for Uveritech.

David Schmuck was named Area LP Manager for dd’s Discounts.

Jeff Lyons has been appointed LP/Safety Manager for Navy Exchange Service Command.

Robert Pennucci, CFI has been promoted to Director of LP for Victoria’s Secret.

Philip Martinez was named LP Manager for Dick’s Sporting Goods.

Curt Steele was named District LP Manager for Nike.

Sev Garcia, LPQ, CFI has been promoted to Market LP Director for Walgreens.

Paul Paglia has been promoted to Senior Director of LP and Operations for Donna Karan.

Kevin Hebert, Nathan Iniguez, and Kim Scheidt have been named LP Managers for Nordstrom.

Mike Limauro was named VP of AP for Weis Markets.

DSW has announced the following changes: Chip Chiappetta to Regional LP Manager, Liz Nash to District LP Manager, and Jordan Rivchun to Corporate LP Investigations Supervisor.

Chris Bitner has been promoted to Director of Global Information Security for Office Depot.

Scott Harping, CFI was appointed to Regional LP Director for Wet Seal.

Annette Barry has been promoted to Senior Regional LP/Operations Manager for The Paradies Shops.

Vincent Carranza has been promoted to Corporate LP Manager for Duty Free Americas.

Rick Beardsley was appointed Director of LP for Party City.

David Allen has been promoted to Northeast Regional Account Manager for WG Security Products.

Cary Jones was named Director of LP for Eye Care Centers of America.

Chance Bowlin, LPC, CFI was named Corporate LP Manager for Petco.

Tony Gunderson was appointed Area LP Manager for Family Dollar.

Scott Martyka, CFI was appointed Senior Regional LP Manager for PetSmart.

Game Stop has announced the following changes: Kausha Bass to DC LP Manager for Refurbishment, Nadine Bruggeman to Manager LP Operations, Ken Evans to Regional LP Manager, John Gay to LP Director of Distribution, Brandon Gentry to Field LP Manager, and Eseralda Mejico to DC LP Supervisor.

Tom Floystrop was named Director of LP for Pet Supermarket.

Albert Chavez was named LP Manager for Central Parking Corporation.

Cliff Rodriguez was appointed LP Manager US Fashion/WFJ for Chanel, Inc. Jeff Nicholson was appointed Regional LP Manager for Charming Shoppes.

Gregg Smith was named Senior Director of LP for The Children’s Place.

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Mike Keenan, CPP, CFI has been promoted to VP, LP for Gap.

Michael MacDonald was appointed LP Manager for Portillo’s Corp.

July – August 2011

|

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Jim Hare was named VP of Sysrepublic.

Jerome Harris and Noah Williams were appointed District LP Managers for T.J.Maxx.

Lindsey Beaupre has been promoted to AP Business Partner for Target.

Peter Ianneillo was appointed LP Supervisor for TJX. Tim Ayo has been promoted to Director, Retail LP for T-Mobile.

Mark Shoemaker was named National Director of Investigations and Matt Sincic, LPQ was named Regional AP Manager for Toys“R”Us.

Matthew Granelli was named LP Analyst for The Zellman Group.

Information for the People on the Move section is provided in part by The Loss Prevention Foundation, Loss Prevention Recruiters, and Jennings Executive Recruiting. Send information on promotions and new hires for this listing to peopleonthemove@LPportal.com.

Industry News continued from page 61

2010 Jewelry Crime Statistics Published The Jewelers’ Security Alliance (JSA) recently published its 2010 Annual Crime Report covering crimes against the jewelry industry in the U.S. The total number of crimes reported to the JSA decreased by about 4.5 percent over 2009, from 1,557 to 1,487 incidents. Losses from the 2010 incidents totaled $80.8 million, a significant drop of 17.3 percent over 2009.

The report includes two major categories of incidents— on- and off-premises. On-premises incidents increased by 3.6 percent in 2010, but dollar losses in that category decreased by about 15.5 percent. On-premises incidents accounted for 92.4 percent of the 2010 total. They include robbery, burglary, and theft types, such as distraction crimes, diamond switching, and check or credit card fraud.

Primarily attacks against traveling salespeople, off-premises incidents accounted for only 7.6 percent of the total, but they decreased by 17.5 percent, to the lowest total since the 1980s. The decline in off-premises incidents is attributed to a significant decrease in the number of salespeople on the road due to the state of the economy.

The report also breaks down the incident data by state.

The five states experiencing the most crimes reported to the JSA were California (214), Illinois (144), Florida (122), Texas (119), and New York (90). These five states account for over 46 percent of the total incidents in 2010.

The JSA is a non-profit trade association providing crime-prevention information and services to the jewelry industry. JSA, founded in 1883, has over 20,000 member firms, and works closely with the FBI and other local law enforcement agencies throughout the U.S. The entire report can be obtained from the organization’s website, www.jewelerssecurity.org.

American Apparel to Double Its Item-Level RFID In another strong sign that item-level RFID is gaining traction in retail, RFID Journal reported recently that American Apparel will add another fifty stores to its fifty-store pilot program launched last year. About half of the new installations will be in international locations.

American Apparel source-applies hangtags embedded with passive ultrahigh-frequency (UHF) EPC Gen 2 inlays to all items consigned to RFID-enabled stores.

According to Stacey Shulman, American Apparel’s vice president of technology, “The ROI on RFID-enabled stores is no more than six months. Stores that are using the RFID system have proven to reduce shrink, improve stock levels, and reduce [employee] turnover.” In fact, 100 percent of the RFID stores outperformed the non-users.

In an effort to gauge the impact that RFID has on incremental sales, senior management decided to look at monthly comparable store sales. Comparables in user stores averaged a plus 6 percent, compared to a plus 3 percent for non-user stores. A widely used sales performance metric, comparable sales is a month-over-month comparison of sales in stores opened at least twelve months.

The original pilot program employed a couple of interesting applications, over and above the primary goals of insuring the completeness of shipments and the reconciliation of on-hand inventory. The operating software can differentiate between merchandise that is located on the selling floor and in the stock room. This feature enables store personnel to keep the appropriate items and quantities on the floor and available to customers.

The second application is of particular interest to loss prevention. RFID readers were placed at the store entrances to test whether or not the RFID tags would be a successful deterrent against shoplifting. Unfortunately, the interrogators could not reliably detect the circuits. Instead, American Apparel employed electronic article surveillance (EAS) in all stores. Shrinkage has been reduced by as much as 75 percent in store employing both technologies. The company attributes the reduction in internal theft to RFID, and the reduction in external theft to EAS. American Apparel is a Los Angeles-based clothing manufacturer and retailer with 258 stores in twenty countries. The company also operates a successful wholesale business, supplying t-shirts and casual wear to distributors and screen printers.

Archive Webinar Benefits of an Open Architecture: Lowe’s Companies’ View on IP Video Standards In a world of better, faster, and more cost-effective products and technologies, retailers are inundated with choices. If you are considering new technology products for your retail business, you must ensure those products are interoperable with your existing infrastructure and guarantee minimal to no disruption as your business scales. This educational webinar speaks to how an open architecture of IP video standards saves time and money and positively impacts your operation’s bottom line.

Watch this webinar to gain: ■ Insight to what an open standard means and its benefits.

■ O NVIF, an industry alliance that is gaining momentum as the defacto standard.

■ I dentifying tangible and measurable opportunities to improve operational efficiency and business flexibility.

■ R eal examples of lower total cost of ownership (TCO) and improved return on investment (ROI).

■ A bility to scale into new markets, while ensuring interoperability.

Featured Speakers Brian Morrison, Lowe’s Companies Steve Surfaro, Axis Communications Jackie Andersen, Axis Communications Sponsored by

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LP Magazine | July – August 2011

65

Parting Words

August—You Need an Identity

J

ust coming off of a terrific celebration of the 4th of July and looking forward to Labor Day and the very special remembrances of the 10th anniversary of 9/11, I realized that the month of August is without a national holiday. It’s kind of a kicked back month of vacations, hot weather, and putting the kids back to school.

My apologies to anyone who has a birthday or anniversary in August, but you have to dig deep to find special days set aside for August. Some of those I came up with are National Watermelon Day on the 3rd, Lefthanders Day on the 13th, and National Smile Week from the 5th to the 11th. This month, it seems, everybody is on vacation.

My apologies to anyone who has a birthday or anniversary in August, but you have to dig deep to find special days set aside for August.

So, I decided to clean out my briefcase. Five conferences and a couple of national LP company meetings have left me with a pile of stuff. Lanyards, badges, programs, dinner invites, pencils from golf courses, lottery tickets from other states, pens from vendors, session evaluation sheets, hotel memo pads and pen (those are free aren’t they?), conference bags, other people’s business cards, and a to-do list made out on the plane. “Clean out briefcase” was not on the list, but I did it anyway, which stirred up lots of wonderful and heartfelt memories of seeing old friends, meeting new ones, witnessing thought-provoking sessions, and some not so much, but all a part of the process of being involved with LP professionals.

I had the privilege to be involved and know a special LP professional who was recognized at the National Retail Federation LP conference in June. I wrote about John Hegan in the LP Magazine Thursday newsletter a few weeks ago and wanted to share it again with those who may not have seen it. It reads as follows.

66

July – August 2011

Jim Lee Executive Editor

Someone Special

Think of someone who is very “special” that you have met, you know, have worked with in the past, or perhaps work for today. Special people make you feel better just to be around them. Why is that?

Recently at the NRF LP conference a “special” person was recognized. Mr. John Hegan was inducted into the Ring of Excellence. The NRF Ring is a premier recognition program for loss prevention professionals whose achievements and outstanding leadership have significantly shaped the industry. The defining quality among these leaders is that the retail industry would not be what it is today without their contribution. That is the NRF definition and it fits John Hegan perfectly.

John worked for Bambergers, which became Macy’s, for 45 years as a store detective and progressed to be the VP and director. He had many accomplishments, but had a “special” flare for coordinating the annual Macy’s Thanksgiving Day Parade. He also served the LP community with his 20-year stint on the NRF advisory council.

Since John has been retired for many years, most people never had the opportunity to meet or get to know John.

Those of us who did, understand what “special” means in a person. I can close my eyes and think of John and the words that come to me are stability, gentleman, expert, caring, integrity, and respect for others and for the LP profession.

John could not be at the ceremony to personally receive his induction into the Ring of Excellence due to health reasons, but the applause for him was heartwarming. Congrats and thank you to a very “special” person.

As the magazine moves forward on the September-October issue, you should know we are planning some very special editorial in remembrance of ten years after 9/11. We will be using the print magazine, weekly newsletter, and our website for 9/11 perspectives.

Smile.

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