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There are a number of articles on the magazine website you may have missed. Check out the following articles. Go-to People in LP—Jeremy Han, Rent-A-Center by Jim Lee and Amber Virgillo Your Smartphone Is Making You Dumb by Amber Virgillo Go-to People in LP—Chris Canoles, Home Depot by Jim Lee and Amber Virgillo Aspect User Conference Mixes Education and Entertainment by Jack Trlica Go-to People in LP—Steve Hodgkins, jcpenney By Jim Lee and Amber Virgillo
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Ken Amos, LPC Divisional Vice President, Loss Prevention Walgreens
Leo Anguiano Vice President, Chief Risk Officer, Central Parking Corp.
Jim Carr, CFI Director, International Loss Prevention, Rent-A-Center
Ken Cornish Vice President, Retail Operations, The Kroger Co.
Francis D’Addario Emeritus Faculty Member, Strategic Influence and Innovation Security Executive Council
Charles Delgado Vice President, Manager of Asset Protection BJ’s Wholesale Club
Patti Felz Vice President, Loss Prevention, Polo Ralph Lauren
Barry Grant Senior Vice President, Operations & Loss Prevention, CPI Corp
Bill Heine Senior Director, Global Security, Brinker International
Sonya Hostetler Vice President, Asset Protection & Safety, Walmart Stores U.S.
Frank Johns, LPC Chairman, The Loss Prevention Foundation
Gary Johnson Vice President, Loss Prevention, Vitamin Shoppe
Paul Jones, LPC Senior Director, Global Asset Protection, eBay
Bob MacLea Senior Vice President, Loss Prevention, TJX
Chris McDonald Senior Vice President, Loss Prevention, Compass Group NA
Randy Meadows Senior Vice President, Loss Prevention, Kohl’s
Tom Roan Group Vice President, Loss Prevention, Macy’s
Tim Shipman, LPC Director, Corporate Investigations and Crisis Management, Delhaize America
Mark Stinde Vice President, Asset Protection 7-Eleven
Paul Stone, LPC Vice President, Loss Prevention and Risk Management, Best Buy
Bill Titus Vice President, Loss Prevention, Sears Holdings
Bill Turner Senior Director, Retail Operations, Cole Haan
Claude Verville Vice President, Loss Prevention, Safety & Hazmat, Lowe's
Stanley E. Welch Vice President, Director of Loss Prevention, jcpenney
Keith White Senior Vice President, Loss Prevention and Corporate Admin., Gap Inc.
According to one LP executive in Mexico, “Crime is going to happen. The challenge we face is how do we minimize the loss and the risks to customer and employees?”
“For leaders of the retail LP industry, there is an obligation to do things together to attract talent to our field.” – Monica Mullins, Walmart Imagine the next evolution of data sharing not just among retail loss prevention, but among LP and security across communities where patterns may be analyzed for activity increasing across a variety of segments. “Sometimes taking an opportunity that may be perceived as a lesser position will help you grow in your career and as a leader.” – Stan Welch, JCPenney
Formulation of strong partnerships between retailers and law enforcement are essential to impact ORC. LAW ENFORCEMENT AND RETAIL PARTNERSHIPS January-February
THE VOICE OF LOSS PREVENTION
January – February 2011 | LPportal.com | V10.1
MAGAZINEWorking Together for Common Goals
By Millie Kresevich
LP MAGAZINE | JANUARY – FEBRUARY 2011
2011
SECURITY 41 2020
Identifying the 1/28/11 11:45 AM Store of the Future
LPM 0111-1.indd 1 INTERVIEW WITH JOE FRYAR OF FOOD CITY
LAW ENFORCEMENT AND RETAIL PARTNERSHIPS
2011 LOSS PREVENTION RESOURCE GUIDE
1/28/11 12:58 PM March-April
MAGAZINE
THE VOICE OF LOSS PREVENTION
LPportal.com | V10.2 March – April 2011
THE CHALLENGES OF LP IN MEXICO
LPM 0311-1.indd 1 INTERVIEW WITH WALMART’S MONICA MULLINS
TOP THREE PITFALLS OF VENDOR-RETAILER RELATIONSHIPS
OVERHAULING YOUR ONLINE FRAUD PREVENTION STRATEGY
3/28/11 11:26 AM May-June
THE VOICE OF LOSS PREVENTION
LPportal.com | V10.3 May – June 2011
MAGAZINE
THE EVOLUTION OF DATA SHARING
IN RETAIL’S BATTLE AGAINST ORC
THE CAREER JOURNEY OF JCPENNEY’S STAN WELCH
LEVERAGING VIDEO ANALYTICS THROUGHOUT THE ORGANIZATION
BE A GREAT WORKPLACE CITIZEN
LPM 0511-1.indd 1 7/19/12 6:50 PM
Borders files for bankruptcy.
Democracy movement engulfs Middle East. Osama bin Laden killed.
Security 2020— Identifying the Store of the Future by Francis D’Addario
Interview with Joe Fryar, Food City
Law Enforcement and Retail Partnerships by Millie Kresevich
2011 Loss Prevention Resource Guide The Challenges of LP in Mexico by William Alford
Interview with Walmart’s Monica Mullins
Top Three Pitfalls of Vendor-Retailer Partnerships by Amber Virgillo
Overhauling Your Online Fraud Prevention Strategy by Phil Mead The Evolution of Data Sharing in Retail’s Battle with ORC by Jack Trlica
The Career Journey of JCPenney’s Stan Welch by James Lee
Leveraging Video Analytics throughout the Organization by Jen Richard
Be a Great Workplace Citizen by Bruce Tulgan
“Prevention is our goal. It has been said that you cannot catch your way to Using low shrink numbers.” – Joe Fryar, Food City Technology and Training to Impact Financial Success
“I think the challenge with technology is that you have to have the people component to support it. You can’t just throw technology at the problem.” – Gary Johnson, The Vitamin Shoppe 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.
“That morning as I drove across the Brooklyn Bridge, I knew what my destiny in life was. I was going to what we called, ‘The Big One.’” – Bobby Senn, FDNY (retired)
July-August September-October November-December
MAGAZINE
THE VOICE OF LOSS PREVENTION
LPportal.com | V10.4 July – August 2011
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
LPM 0711-1.indd 1 7/25/11 12:21 PM LOSS PREVENTION LOSS PREVENTION
MAGAZINE
THE VOICE OF LOSS PREVENTION
LPportal.com | V10.5 September – October 2011
THE IMPACT OF 9/11 ON LOSS PREVENTION
TEN YEARS LATER
WHERE WERE YOU ON SEPTEMBER 11TH?
TEN LONG YEARS FOR ONE NYC FIREFIGHTER
TRAINING MALL SECURITY ON TERRORIST THREATS
LPM 0911-A.indd 1 9/27/11 10:40 PM LOSS PREVENTION
MAGAZINE
THE VOICE OF LOSS PREVENTION
LPportal.com | V10.6 November – December 2011
LAAORCA
TAKING A BITE OUT OF ORGANIZED RETAIL CRIME
LPM 1111-A.indd 1 MANAGING LOSS IN THE RENT-TO-OWN INDUSTRY
WHY SMART LEADERS DO SUCH DUMB THINGS
TRAINING EMPLOYEES TO WRITE GOOD REPORTS
11/16/11 6:49 PM
Scandal ends Murdoch’s British newspaper. Hurricane Irene hits East Coast. Steve Jobs dies.
The Threat of Social Media by Helen Levinson
Interview with Gary Johnson, The Vitamin Shoppe
Flash Mobs Becoming a Threat to Retailers by Frank Muscato
Reflecting on Quality Recruitment and Retention by Ryan Kelly Special Edition— Ten Years Later
The Impact of 9/11 on Loss Prevention by Jack Trlica
Where Were You on the Morning of September 11th? by James Lee
Ten Long, Slow, Consuming Years by Bobby Senn LAAORCA— Taking a Bite out of ORC by Adam Paul
Interview with Bobby Templet, Rent-A-Center
Why Smart Leaders Do Such Dumb Things by Patrick Kuhse
Ten Steps to Training Employees to Write Good Reports by Liz Martinez One could argue that one of the most significant impacts of 9/11 was to dramatically accelerate the already expanding role of LP in the corporation.
The idea behind LAAORCA is a simple one—retailers can pool information and share it directly with law enforcement, who can then prosecute the crimes far more swiftly and easily than they ever could in the past.
“The term ‘shrink’ is not even in our vocabulary.” – Bobby Templet, Rent-A-Center
Cross-Cultural Interviewing: Part 2
The beginning of every interview or interrogation revolves around the elements of rapport. Rapport between people is a level of comfort or trust that the other person has your best interests at heart. Effectively, “this person cares about me” is our conclusion.
This is difficult enough when cultures don’t clash, but when there are strong cross-cultural differences and language problems, the issues can be exacerbated. There is already a significant difference between the dynamics of an interview or interrogation, then add into the mix cultural issues, and the simple becomes complex.
While researchers differ on the exact time it takes for people to make their first judgment about another, they all agree it is not long. Every human being reads another’s verbal and physical behavior and then predicts whether they like or trust the other person. It is a combination of demeanor, voice, personal space, interview location, and a host of other things that, when added together, create rapport between people. Once a judgment is made about another person, that conclusion is difficult to change. There is no question a common heritage and language gives one a step up on developing rapport.
Regardless of whether you are interviewing or interrogating, an expression of caring will help bring a connection between the interviewer and subject. However, trying too hard to make a connection will breed distrust into the relationship. We want to care about the other person, but not so much that we appear insincere.
Regardless of whether you are interviewing or interrogating, an expression of caring will help bring a connection between the interviewer and subject. However, trying too hard to make a connection will breed distrust into the relationship. We want to care about the other person, but not so much that we appear insincere.
by David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP
Zulawski and Sturman are executives in the investigative and training firm of Wicklander-Zulawski & Associates (www.w-z.com). Zulawski is a senior partner and Sturman is president. Sturman is also a member of ASIS International’s Retail Loss Prevention Council. They can be reached at 800-222-7789 or via email at dzulawski@w-z.com and ssturman@w-z.com.
© 2012 Wicklander-Zulawski & Associates, Inc.
Establishing Rapport
Developing a personal relationship is the key to success regardless of the culture. This can be shown by expressing interest in the other person’s comfort and showing a combination of empathy and compassion for the individual’s situation. While we face these situations as a regular part of our jobs, we can never forget the person may be frightened, uncertain, and confused, so the interviewer must adjust accordingly to open a dialogue with the individual.
While the interviewer has his own agenda, he must give appropriate respect to his subject. Even simple attempts to establish rapport may trigger resistance since the person is looking through his own lens of reality. Someone who has experienced discrimination may see a slight where none was meant because of his personal history. If a person has English as a second language, his poor speech may be interpreted by the English speaker as unintelligent.
The interviewer’s voice is going to send volumes of information to another person. Striving for a calm, steady speech pattern will go a long way to quiet even those who do not understand the language. People will also have a different interpretation of someone who is speaking a guttural language, like German or Arabic, which may sound angry to the unaccustomed listener. This interpretation is common to a number of languages or dialects, such as Greeks, Israelis, African Americans, Poles, Italians, and Arabs to name a few. Many of us from the United States are unaccustomed to the emotional speech patterns of other cultures and may misinterpret this for anger. The context of the conversation and behavioral features of the individual will help in sorting out the true meaning of the situation.
Every culture has some element of saving or losing face as part its members’ behavior. The interviewer has to balance the fact that merely participating in an interview may cause shame for some. This may increase resistance and reduce cooperation from the individual. Sometimes it is the interviewer’s questions that trigger shame as the interviewer explores the topics. In other instances it may be the repetitive nature of the questions that makes the subject question whether he is being believed. The “cognitive
continued on page 16
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continued from page 14 interview”—an interview designed to assist a witness’ recall—seeks to help deflect these thoughts by a series of instructions prior to beginning the interview.
Another way to establish rapport in most situations is by listening. Probing questions may make an individual feel as though they are being interrogated, while using narrative or open-ended questions encourage the person to respond with longer answers that provide more information. This allows the interviewer to observe the perspective of the subject and what he feels is important, rather than contaminating the view with the interviewer’s words or bias. The interviewer then uses probing questions to clarify or expand the narrative, which makes sense to the subject who has been allowed to speak freely about his situation. The open narrative question is especially important to those cultures that may be less open to speaking freely in social contexts or those they find intimidating.
Nonverbal Response
The nonverbal world is also something an interviewer can focus on in a cross-cultural interview. While it is difficult for a non-native speaker to associate specific movements with a part of the individual’s response, it may be apparent to the translator. The more often an interviewer can work with the same translator, the more aware the translator will become of what the interviewer finds valuable. Plus, the translator can be a valuable source of cultural information and insight into the subject’s demeanor.
During a cross-cultural interview, the subject is constantly sending information on the nonverbal channel through his movements, gestures, and posture. Translators and native speakers can often help interpret the behaviors for the interviewer. However, the interviewer can, in general terms, observe the basic emotional displays and accurately identify the emotion in cross-cultural interviews.
More difficult is to establish the exact cause of the emotional response. The basic human emotions of fear, surprise, anger, happiness, sadness, disgust, and contempt are recognized by people across the globe.
These emotional displays may be modified by different cultures to minimize or mask the emotion during conversations. The British, Japanese, and American Indian all, to some extent, learn to control their emotions to conceal what they are feeling. We should also mention there are appropriate non-verbal behaviors that should accompany the emotional display; however, these may change from culture to culture.
For example, in most of the English-speaking industrialized nations, people will look down, talk slowly, frown, and avert their eyes when delivering bad news. In contrast the Japanese may smile as they inform another of the problem and may do the same when they are regretful or ashamed. This is the cultural way the Japanese express regret.
While the basic emotions are cross-culturally recognizable, there are differences in how much people will move their face and brows. The more stoic expressions come from the Asian cultures, such as Chinese, Japanese, and Koreans, who avoid extremes of behavior, including the basic emotions. To many Western cultures who are unfamiliar with the Asian expressions, this lack of facial affect leaves an impression of deception or non-cooperation, which may be totally incorrect.
A strong contrast to the Asians is the Middle East, African American, Latinos, and Jews. These groups often express themselves with stronger emotional displays, such as weeping, flailing arms, deep breathing, or calling out to God when expressing anguish or suffering. One can imagine the strong behavioral cultural differences of how the loss of a loved one may be expressed in these opposite cultural settings.
These cultural norms may also lead to concealing how much
something hurts them physically or emotionally. The expression of pain is seen as a sign of weakness in many Asian cultures, while Puerto Ricans and Dominicans may loudly express their feelings of pain. Arabs and Middle Easterners may loudly call out for God’s help while covering their face with their hands in response to pain or bad news. To those unfamiliar with these cultures, it may seem overly dramatic and even phony.
Probing questions may make an individual feel as though they are being interrogated, while using narrative or open-ended questions encourage the person to respond with longer answers that provide more information. This allows the interviewer to observe the perspective of the subject and what he feels is important, rather than contaminating the view with the interviewer’s words or bias.
Physical Touching
Cultures may also differ in how much they touch and what it means when they do. The dominant groups in the United Kingdom, United States, and Canada tend to touch much less than other cultures, such as the Slavic, who hug, kiss, embrace, and shower verbal endearments on those they care about. Another example, touching someone on the shoulder to give comfort as done here in the United States would be insulting in the Middle East or Asia. For Muslims and certain other religions, it is not permitted to touch a member of the opposite sex unless they are related, but they may welcome a touch by a member of the same sex.
In many cultures males and females will walk arm-in-arm or holding hands with members of the same sex with no hint of sexual attraction. Touching varies significantly and should be treated carefully so no offense is given or taken, and when done while interviewing, it should be used sparingly, if at all.
We will continue this discussion in our next column.
Cover feature
ORC
ARE RETAILERS TO BLAME?
By Amber Virgillo, Contributing Editor
If you started counting from one to one billion 24 hours a day, 7 days a week, nonstop, it would take you 95 years to finish. Isn’t that shocking just how much even one billion is?
It’s easy to throw around numbers about how big a problem organized retail crime (ORC) is to our industry to create a compelling argument about the gravity of a problem, but the question is:
Are we doing a disservice to the loss prevention industry by not being on the same page with how to define, categorize, or combat the growing ORC problem? Or at least sincerely examining the role retailers play in perpetuating this problem?
It’s clear from attending two of the industry’s largest trade shows recently, the Retail Industry Leaders Association (RILA) Loss Prevention, Audit, and Safety Conference and the National Retail Federation (NRF) Loss Prevention Conference in New Orleans, that the ORC definition and how retailers categorize ORC is still widely debated. This debate seems valuable considering it was only a few years ago that the acronym “ORC” was making its debut. And now the industry has moved on to tackle larger questions on the topic, such as the enormity of the problem, defining it across the spectrum of retail, and trying to understand the retailers’ role in the problem.
Most authorities on the ORC topic are backing off the “$30 billion” figure for categorizing the issue. According to the NRF’s seventh annual ORC survey, industry experts today are citing a “multi-billion-dollar problem” and recently NBC’s Brian Williams stated that ORC is a $12 billion-a-year problem.
The purpose of this article is not to debate whether ORC is a problem. Nor is it to define exactly how significant a problem ORC is in terms of revenue. To argue these points with so many varying opinions would be like buying a four-door mini-Cooper—what’s the point? The point here is to raise some questions for healthy industry debate such as: ■ What role do retailers play, if any, in creating a demand for stolen product? ■ Is “diverter” a bad word? ■ What can loss prevention professionals do to ensure their companies know their supply chain is legitimate and has integrity?
Given the complexities of various categories of retail, this article will primarily focus on the grocery and drug store segments. The Question—How Do You Know?
If you ask any retailer if they are buying their own stolen product back, the response will likely be a quick rejection that the notion is even possible. But, if you follow up with the even more important question—“How do you know your company isn’t buying stolen product?”—the answer becomes more stammering.
Over the past three months, at three different industry events, three major retailers admitted in a candid forum that they have purchased stolen product or they specifically have found other retailers’ product on their shelves. How does this happen? With these admissions, doesn’t it make sense to question the notion that the “multi-billion-dollar problem” has to include the demand retailers could be creating?
“Most companies do not believe that this type of occurrence could ever happen,” says Tony Sheppard, nationwide manager, organized retail crime at
Consumer-created demand Illegitimate broker sells to wholesaler
CVS/pharmacy. “But the individuals who make buying decisions need to be educated about the impact ORC has and how to identify possible suspicious transactions.”
One retailer interviewed for this article places security tags on products that specify to call a hotline number if the product is purchased anywhere other than that exact retailer. This individual stated there has been more than a dozen occasions that their product has been purchased by consumers at competing retailers. Given these examples and the admissions of major retailers, there is more than enough evidence that retailers are purchasing stolen product that is ending up on shelves for consumers to purchase—not just online auctions or flea markets—thus creating demand for ORC rings to steal it.
There has recently been a groundswell of retailers considering their role in perpetuating the ORC issue primarily started by an article written by David George, vice president of asset protection with Harris Teeter, titled,
Retailer supplies Boosters steal from the demand retailer and sell to fence Wholesaler (“legitimate” Fence sells to broker) sells to retailer illegitimate brokers
ORC Are we to blame?
“ORC—Are We to Blame?” in the My Turn section under Columns on the magazine website (LPportal.com/ my-turn). George illustrates what he calls “the economics of ORC” in the chart shown on the opposite page. More and more retailers have begun to take actionable steps within their organizations to implement anti-ORC buying programs and other anti-ORC measures, such as super-duty security tags and laser tagging.
The Hive— Your Company’s Diverters
Have you ever diverted money? You might come back with a resounding “No!” But you could have been diverted to an alternate route in traffic or your attention could have been diverted to a different topic. Why is the word “diverter” met with such negative connotations when discussing products? Webster’s definition itself is not negative: Divert—to turn aside from a course or direction. Many of those interviewed for this article immediately made a distinction between “diverters” and “alternate-source suppliers,” preferring to refer to their diverters as alternate-source suppliers on principle.
One way to articulate how diverting works is to imagine a bee hive with its intense activity. The hive is actually the United States and the bees represent activity between alternate-source suppliers and retailers’ buying teams. It’s an incredibly complicated industry with layers upon layers of people, both legitimate and illegitimate.
Michael Kresser, vice president with Food Marketing Group (FMG), an alternate-source wholesaler, states, “It’s incredibly important that our clients believe in our supply-chain integrity. We are very proud of our policies and procedures that ensure we have the
■ Are we doing a disservice to the loss prevention industry by not being on the same page with how to define, categorize,or combat the growing ORC problem? Or at least sincerely examining the role retailers play in perpetuating this problem? ■
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highest quality product, delivered on time, every time. We have our own team of inspectors that ensures our product is completely legitimate. We inspect everything from the dot matrix on the labels, the lot numbers, expiration dates, and even down to the glue used to prepare the boxes. We guarantee genuine product and that’s why we’ve had such long-lasting client relationships.” FMG employs a loss prevention professional with more than 26 years experience who continually ensures the physical security of warehouse premises as well as vetting the various warehouses FMG uses.
“Not only is buying stolen product a felony, we’re also focused on the most important part—the product integrity and consumer safety,” says Kresser. “If an alternate-source wholesaler engages in buying stolen product, there is no way to track that product if a possible recall happens. At FMG we always handle product recalls with the utmost efficiency, and it’s a complicated process even for a totally legitimate product.”
Kresser stresses the importance of the relationship between the alternate-source wholesaler and the retail buyer. There is a level of trust between buyers and diverters because diverting is such a complex industry, it is very rare a legitimate “company” would pop up with an unbelievable deal on a product and then be around for a long-term, professional relationship with that company’s buyer.
“The whole diverting industry is under extreme pressure due to retailers pinching them to get the best price,” says CVS’s Sheppard. “Buyers may have been dealing with the same diverter for many years, but that doesn’t matter if there has never been any due diligence to validate they are a completely legitimate alternate-source provider.”
The bottom line is alternate-source providers, or diverters, are completely legitimate business enterprises that help retailers obtain and move product to the benefit of the consumer. If a retailer believes all diverters are purchasing stolen product, he has a fundamental misunderstanding of the industry and probably very little understanding about his own internal supply-chain polices or procedure.
The Wild Card—Your Buyers Have you ever been totally sure you’ve won a Blackjack hand? Just when you’re about to scream, “Winner, winner, chicken dinner,” you bust. It was that sneaky ace the dealer had that did you in. Some elements in retail organizations loss prevention can’t control. The process is complicated with thousands of different variables. Within the supply-chain process, retail buying groups seem like this wild card that can possibly throw a wrench into your well-laid plans of anti-ORC buying. But just like any amateur Blackjack player, there is a way to play what the book says when it comes to your buying team. ■ If you ask any retailer if they are Retailers interviewed for this article stressed a few critical elements when it comes to partnering with buying their own stolen buyers and why it’s so important. product back, the ■ Partner with your buyers just like you would law enforcement. response will likely be a ■ Educate your buyers on the impact quick rejection that the notion is even possible. ■ of ORC and why it’s important to them. Know how they are compensated.
But, if you follow up with the even more Keith Lewis, who retired as a task agent with the Georgia Bureau of Investigation in 2011 important question— where he worked major theft cases, “How do you know your focusing on cargo theft for the past six years, explains there are two company isn’t buying supply chains a company must be stolen product?”— the answer becomes knowledgeable about—the legitimate and illegitimate. Even for the most honest diverters, as products more stammering. ■ move through this complicated web of suppliers, there is still the possibility that the diverter could be brokering stolen products and not know it due to fake bills of lading from sophisticated ORC rings that imitate manufacturers’ packaging methods, even down to the outer box markings. “Stolen truck loads move very quickly, and it’s very difficult to track them due to public distribution centers where anyone can store and ship items with ‘legit’ bills of lading as well as the plausible deniability that accompanies this stolen product through the supply chain,” says Lewis, explaining the difficulty in tracking and prosecuting those responsible for stealing large amounts of product and reintroducing it into the supply chain. “Unfortunately, the only way for retailers to be completely sure they are not purchasing stolen goods is to buy directly from manufacturers, or at least deal
with distributors who verify they only purchase from manufacturers,” says John Hawthorne, senior loss prevention manager for Publix Supermarkets. “There are a number of very well-established, legitimate distributors out there. Some well-intended distributors may purchase product from sources other than the manufacturer and may not be aware they are selling retailers goods that were stolen further upstream.”
But only buying direct from the manufactures would be a retailer’s nightmare. What if they over-buy and have product left over? Are they supposed to eat that product (no pun intended)? What if diverters didn’t exist and manufacturers truly had no competition when trying to get retailers the best price? With 98 percent of retailers utilizing diverters, this notion of only buying direct seems perfect in the loss prevention world, but definitely not a realistic proposition in the overall retail world.
“Law enforcement can’t do it alone,” says Lewis. “We must have educated buyers that partner with us to alert us when a deal seems too good to be true. Loss prevention professionals need to know exactly how the buyers in their companies are compensated because the more they are incentivized on the ‘deal’ they bring to the retailer, the more risk that retailer has of purchasing stolen goods.”
“With 8,100 stores, our purchasing department is only a subsection of those we deal with on a daily basis,” says Jerry Biggs, director of organized retail crime investigations for Walgreens. “But it is critical that you maintain good communication with that department. If you know those individuals, it’s more likely you can trust them to know who they are dealing with on a daily basis, and they will be more apt to alert you to potential problems.
“Another important element when dealing with your company’s buyers is to make sure there are guidelines set for purchasing policies and that you are familiar with those guidelines,” continues Biggs. “I communicate with our alternative source buyers regularly. It comes back to relationships just like with local, state, and federal law enforcement. Your buyers are just as critical a partnership to have and maintain.”
“Not only do we need to educate our buyers, it’s critical to ensure your executive team knows the consequences of ORC and the risks of potentially purchasing stolen product—no matter the financial incentive,” says Cathy Langley, senior director of loss prevention at Rite Aid.
Another retailer said it was critical for her to know exactly how her company’s buyers were compensated.
“If your company’s buyers are compensated or bonused off of the best deal they are bringing the retailer, that could
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be a risky proposition when faced with a stolen truck load of product for a great price,” explains the retail professional with more than 15 years experience in the food and drug industry. “It’s just human nature that financial incentives can turn some good people bad, and it just helps to know the background, so you can speak their language.”
The First Action—Your Responsibility
Who could use more work to do? It’s rare you hear someone complaining they are paid too much and do too little. Especially with the evolving role of loss prevention professionals into true business partners, there is shrink to account for, internals to investigate, external theft to prevent, and employees to keep safe. How much more can be piled on your already full plate?
Maybe just add a few more things—like supply-chain integrity. Why? Because many believe that impacting this segment of the ORC problem would dramatically help retail in all different areas, including external theft, ORC, shrink, employee safety, and even sales.
ORC experts interviewed discussed some very specific and tactical mechanisms to implement to truly reduce the retailer’s role in perpetuating the ORC problem. ■ Do your due diligence, ■ Make surprise inspections, and ■ Implement an anti-ORC buying program.
Ken Golec, retired federal senior special agent of the USDA Office of Inspector General, explains the importance of a detailed investigation when visiting these diverter’s warehouses.
“To make things even harder to detect, there are some warehouses that are quasi-legitimate, meaning half of the warehouse deals with totally legitimate product from the manufacturer or another retailer that over-purchased, but the other half of the warehouse could be dealing in stolen product and acting as the fence for a staff of boosters,” says Golec, who now runs his own investigations and consulting company out of Atlanta, Golec Investigations & Consulting. “These large-scale ORC rings are so efficient in covering their tracks and moving the product that
price alone can’t always be an indicator of stolen items. Once the product gets to a retail buyer for instance, the buyer may only be saving just a few cents per item and would cause no suspicion. This is why is it so critical that loss prevention professionals do their due diligence from within their companies, educating their buyers and making unannounced visits to these warehouses.” Kresser of FMG, an alternate wholesaler, concurs. “We always encourage our clients ■ Alternate-source providers, or diverters, to conduct surprise inspections because we are proud to show our facility,” he says. “We are completely legitimate business enterprises believe if the entire industry was policed better, there would be a professional standard that that help retailers obtain weeds out those poor performers and move product to the benefit of the consumer. that give our industry negative connotations.” “It’s our responsibility as
If a retailer believes all diverters are loss prevention professionals to educate our buyers on the importance of knowing where the purchasing stolen product is coming from,” says product, he has Sheppard of CVS. “It’s imperative we educate our internal audiences a fundamental as well as execute the tactical misunderstanding of the industry and due diligence, such as conducting surprise visits and inspections of all the alternate-source providers probably very little understanding a retailer may use.” Sheppard goes on to explain the critical elements he and his about his own internal team look for when making these supply-chain polices or procedure. ■ surprise inspections: ■ Is all the product of the highest integrity? ■ What is the condition of the warehouse? ■ What type of product is coming into the warehouse? (Bonus packs, pallets, loose product, etc.) ■ Are the products in the manufacturers’ boxes? ■ Do the products have mixed lot numbers? ■ Do there appear to be cleaning stations or chemicals being used? ■ Are there security tags or labels on the floor or in trash cans? ■ What condition is the physical product in? (Touch it and see if you can feel residue or left over security tags.) Sheppard also recommends conducting these visits with a member of the retail buying staff. The warehouse
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ORC Incidents Annually
Number of ORC Cases
Started Lasering Here
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owners don’t need to know you’re a member of loss prevention.
“At times we will accompany our buyers to observe details about a warehouse others may miss,” says Biggs from Walgreens. “It’s very important to have feet on the ground and talk to the neighbors even. Another important element is to keep visiting the warehouses even after they’ve been deemed legitimate. Unannounced visits are always the best way to understand exactly what’s going on.”
Rite Aid also implements similar standards when vetting an alternate-source vendor, including standard business checks, talking to other customers they supply, and simply using the gut-check method when visiting the location—Does this feel right?
“It can also be as simple as doing a Google Earth check on the location before you arrive,” adds Langley. “If the location is residential or there are other uncommon sites or dimensions, you might already have red flags.”
The Next Step—Your Program
One method some retailers are starting to employ is laser tagging, one of the newest tools to fight ORC rings. However, the practice seems to inspire some debate on its effectiveness versus cost. One retailer interviewed who utilizes laser tagging stated they achieved a return on investment for the machine in just one week. This same retailer, when comparing sales year over year in the same period, cited a $2.8 million lift in sales. Take a look at the chart at left supplied by this retailer to demonstrate the drop in known ORC cases in one market. Note that the only ORC cases
used in this example are reported and verified cases—no guesstimates.
How is this possible, some ask? The explanation given seems simple enough. If everyone can agree that repackage operations are solely intended to cover up stolen product, then laser tagging keeps product out of the repacking business. Why? Because ORC rings know they will earn less than they would for unmarked product.
Some opponents of this process tout some of the challenges, such as finding space for the laser machine, changing the flow of merchandise as it comes through the distribution centers, and answering the question, “How long does it take to laser fast-moving product?” It seems at least from the case study cited above, retailers have a duty to research these answers for their own operations for even the possibility of impacting ORC to this magnitude.
If retailers can’t afford the latest security tag or invest in a laser system, it does seem there are some rather low-cost, internal steps that can be taken. For instance, Harris Teeter’s David George outlines a straightforward, five-step process of setting up an anti-ORC buying program within retail. 1. Meet with your executives and explain how buying stolen product creates demand for more stolen product. 2. Get a commitment that your company will not purchase stolen product, which may entail revamping incentive structure for buyers. 3. Communicate expectations to suppliers by establishing procedures for violations and sending vendors detailed letters. 4. Create a “right to audit” clause in all supplier contracts that allows unannounced visits to supply warehouses. 5. Audit for compliance by inspecting lot numbers after you receive product.
These steps could be implemented by even the lone loss prevention director without a team of resources. Other suggestions for that individual are to leverage your resources by partnering with other retailers in your same segment and educate your distribution center management so they can be an extension of your inspection team— checking for product integrity and lot number matching.
“Retailers need to do everything they can to prevent creating a demand for stolen product in order to help decrease the ORC problem,” states CVS’s Sheppard. Several of his colleagues concur, including Cathy Langley at Rite Aid. “I agree that until all retailers start doing thorough audits of their alternate-source vendors and actually drop vendors that they feel have suspicious practices, it will be difficult to make a major impact ■ Certainly, retailers against ORC,” says Langley. “Although the Harris Teeter are not to blame for program reduces demand for the entire ORC problem. stolen goods, we can’t do it alone,” explains George when It is most professionals’ asked about the article. “It’s opinions that the thieves will always find a way going to take all of us to put integrity first and take a stand to do the right thing, rather than to beat the system— laser tagging or not, simply buying from the cheapest, unreliable, and low-quality source. We need to buy from reputable warehouse visits or not. suppliers and at Harris Teeter, we
But does that mean we don’t plug the accept nothing less.” So, are we to blame for ORC? This is a very complicated holes we know of? ■ question given the multi-layered complexity of the commodity marketplace. Certainly, retailers are not to blame for the entire ORC problem. It is most professionals’ opinions that the thieves will always find a way to beat the system—laser tagging or not, warehouse visits or not. But does that mean we don’t plug the holes we know of? The purpose of all of these interviews conducted, points summarized, and questions raised here is meant to spark industry debate and conversation, because if we’re not talking, debating, and learning…then perhaps we are to blame. To offer your experiences and insights, add your comments to this article on the magazine website, LPportal.com, or on the discussion groups LP Central on LinkedIn and LP Voices on Facebook. AMBER VIRGILLO is a contributing editor for LP Magazine. She can be reached at 770-335-4891 or AmberV@LPportal.com.
Sandy Chandler, LPC, CPP
Regional Director, Loss Prevention Rite Aid Corporation
With the evolution of our profession, it is imperative that retail LP professionals become true business partners. Whether you are a seasoned LP professional or just starting out, the Foundation certification courses have valuable content to meet that goal.
These courses contain a wide range of subject matter that validates our ever-changing roles, showing how valuable our position is to our retail organizations. The LPC allowed me to become more proficient on some subjects not previously utilized. For example,
“I have a job. Why do I need certification?”
the compliance module enhanced my expertise, giving me an edge in our highly regulated retail environment.
In order to promote career knowledge and advancement, the Rite Aid LP department endorses both the LPC and LPQ courses, and selects key personnel every year to receive scholarships. Why? Because these certifications provide the business skills necessary to maximize our contributions, not only within our department, but to impact the company on multiple levels, substantiating a higher return on investment and further advancing our industry through continued professional development. Certification not only prepares you for the future, it helps you when you need it most—in your current job. Certification refreshes and validates your knowledge base while teaching you critical business expertise to roundout your skill set. It not only covers key components of loss prevention, it teaches you solid business skills to prepare you for your next promotion.
“It costs a lot.” Certification is very affordable and can even be paid for in installments. It is one of the best investments you can make for yourself and will pay for itself over again as you advance in your career. “I don’t have the time.” Certification was designed by seasoned professionals who understand the demands on your time. The coursework allows you to work at your own pace and at your convenience. Everyone is busy, but those who are committed to advancement will find the time to invest in learning.
“I’ve never taken an online course.”
The certification coursework is designed with the adult learner in mind. The online courses are built in easy-to-use presentation style enhanced with video illustrations to elevate comprehension and heighten retention. “What if I fail?” Both the LPQ and LPC certifications have been accepted for college credit at highly respected universities, and as such, passing the exam demands commitment and study. However, the coursework includes highly effective study and review tools to fully prepare you for the exam. In the event you fail the exam, you can review the coursework and retest after 30 days.
“Okay, how do I get started?”
It’s easy to get started. Go online to sign up at www.LossPreventionFoundation.org. If you need help or want more information, contact Gene Smith at Gene.Smith@LossPreventionFoundation.org or call 866-433-5545.
SM
Roundtable Topics on Internal Theft at the NRF LP Conference
On Thursday afternoon, June 21, in New Orleans at the 2012 National Retail Federation (NRF) loss prevention conference, Mike Amanek of Bloomingdale’s, Bruce Pyke from The Bon-Ton Stores, Bob Vranek of Belk, and I moderated a very interesting roundtable on the subject of “internal theft.” The hour-long session generated a series of provocative discussions on a variety of subjects. I thought that readers of this column might like a glimpse of the topics that came up in our group discussion.
Perhaps you have different preferences, but it is my observation that roundtables are some of the most valuable sessions to attend at loss prevention events. In this largely unstructured meeting format, approximately forty-five participants actively discussed a series of topics related to the problem of employee dishonesty and internal theft in the retail store.
Economic Downturn
To get things going, we first asked the attendees to explain their experiences with internal theft during the economic downturn. Contrary to expectations, we found that most companies experienced lower than expected rates and levels of employee dishonesty during the economic downturn and this ongoing period of high unemployment.
When participants were asked for explanations of this counterintuitive situation, a number of theories were offered. Some participants believed that under our current tight labor market, most associates did not want to jeopardize their jobs by involvement in dishonesty. Many employees were fearful that they would not be able to get another job if fired or prosecuted. Others believed that many of the most unproductive and dishonest employees had already been purged from their stores. As such, remaining employees were those who were the more honest and also persons who most highly valued their current retail careers.
by Richard C. Hollinger, Ph.D.
Dr. Hollinger is a professor in the Department of Sociology and Criminology & Law at the University of Florida, Gainesville. He is also director of the Security Research Project, which annually conducts the National Retail Security Survey (soccrim.clas.ufl.edu/criminology/srp/srp.html). Dr. Hollinger can be reached at rhollin@ufl.edu or 352-294-7175. © 2012 Richard C. Hollinger
Collaboration
Another topic that came up involved the increasingly disturbing situation where current employees collaborated with dishonest outsiders in order to “hook up” with employee insiders in order to jointly perpetrate theft from the store. Many participants of the roundtable told stories of these hybrid forms of theft where dishonest insiders enabled dishonest outsiders to carry out incidents of shoplifting, pass-throughs, burglaries, robberies, stock-room pilferage, and large-scale cargo and loading-dock thefts. It is clear that these hybrid types of crime constitute a major problem.
Screening associates to determine whether their “friends” have criminal aspirations is a difficult, but potentially productive way to prevent dishonest associates from helping outsiders to steal from their employers. This might be a perfect use of freely available social media information posted by your associates.
Employee Motivation
The final topic of discussion involved the controversial topic of providing financial rewards and other incentives as a way to motivate associates to turn in fellow employees who are stealing or engaging in other forms of illegal activity. Although I observed that many of my young students believed that it was culturally stigmatizing to “rat out” friends who were dishonest, no one in the room found that providing rewards for turning in others was a bad idea. In fact, the debate focused on how much to provide as a reward in terms of dollars or percentage recovered.
Despite the commonly found “culture of dishonesty” in our society, no participant thought that providing hotlines and rewards was an inherently bad idea. In fact, many thought that their companies did not provide a large enough reward for turning in fellow employees or shoplifting friends. These folks believed that if the reward was more significant, that even more people would be encouraged to “do the right thing” and stand up to protect the assets of their store.
Hopefully, the above summary will encourage further debate among the readers of this column as you determine how you would have personally responded to these roundtable discussion topics. In any event, I encourage you to attend roundtable sessions in future loss prevention conferences. I think that you will conclude, as I have, that these are an invaluable way to share ideas in a face-to-face format on the many controversial subjects that challenge our industry and profession.
Transparency is a core value at eBay. As a company we
believe in a transparent marketplace and work to ensure that we maximize transparency around the flow of information and seller activity. We believe that more information means more choice, and ultimately a safer site for our members. As part of our transparency, we: ■ Work with loss prevention departments and law enforcement globally to identify, prevent, and deter criminal activity, and ■ Provide our API to developers to create seller reporting programs.
Following are a few examples of tools that are available that may help you conduct investigations.
Advanced Search
One program we provide free of charge is the eBay advanced search function, which provides users a way to research product sales, sellers, and protect their brand. This tool allows users to search for: ■ Active listings of a product, ■ Current sellers of a specific product, and ■ Current listings by brand. These searches can be limited by price range and narrowed down to within ten miles of a zip code. ■ Completed listings of a product. ■ Past sellers of a specific product. ■ Past listings by brand.
You may search by email address, member ID, member ID history, or member name and set up reporting for new listings of any seller you are interested in.
We have also created a button called “Report this Item” that is next to every listing to enable any retailer to report an item as stolen. Any item reported by a PROACT member will be investigated as a stolen item by the PROACT department.
If you are interested in receiving a copy of our training guide for advanced search, send an email to PROACT@eBay.com and place “Training Guide” in the subject line.
Following is a partial list of additional tools available to our retail partners.
Terapeak.com
Terapeak.com is a third-party reporting tool based on our sales activity. Terapeak allows you to search the last 365 days of closed eBay listings to obtain pricing and listing statistics regarding specific products. A membership can be obtained for around $300 per year for one site, and for an additional charge you can receive the international reports for all eBay sites. Some of what it offers is highlighted below. ■ Seller Report—This provides the user with a breakdown of any eBay sellers business, based on the last 365 days. You can view metrics, such as average pricing sell through percent, and the items most commonly listed. ■ Item Browse—Review how the seller listed their product for closed listings. ■ Trending Reports—This report highlights the sales performance of a seller over the last ninety days and illustrates whether they are increasing or decreasing in sales. ■ Top Titles—This report groups seller’s similar listings and ranks them on either sales or units sold. It also includes an average selling price for each top title. ■ Title Builder—Uses current eBay listing titles to suggest keyword searches for items you are interested in. ■ Category Research—With this report you may search by a category, such as gift cards, and identify the top sellers and the average selling price. ■ Private-Label and Brand Reporting—You may search by private-label items or by brand name. Once you have run this report you can request the top sellers, which will provide the total sales, average selling price, and the number of units sold over the last ninety days. ■ Graphing—Terapeak provides graphing for most of the reports mentioned.
Dave DiSilva is a member of eBay’s Global Asset Protection team. As a company we believe in a transparent marketplace and work to ensure that we maximize transparency around the flow of information and seller activity.
ORC Workbench
The ORC Workbench is another third-party research tool that also includes a case management system that works in conjunction with your searches. The workbench quickly locates items of interest, revealing necessary details about the seller account, location, and historic sales. Report analytics aids the investigator in determining a need to further investigate or block the seller from future searches. ■ Zip Code Search—Workbench provides the ability to search by product, by zip code and focus down to a half-mile of any zip code. ■ Image Capture—You may capture images and data from social networking sites and court records to include in your case report. ■ Seller History—Obtain all of a seller’s history over the last ninety days with a view of the actual listing. ■ Product Search—Search for specific products sold and the sellers of those products. ■ Store and Analyze Seller Sales History—Commit historical sales to a case and then generate seller analytics (graphs and charts) that summarize seller activity.
These are just a sampling of the tools available to you. These tools are made available by eBay to promote transparency. For more information on these or any other tools, contact PROACT@eBay.com for assistance.
The Transition from LP Executive to Solutions Provider
By James Lee, Executive Editor
The loss prevention industry is fortunate to have a strong support network of quality solutions providers. Some of the executives with these companies started their loss prevention careers on the retail side, but have made a successful transition to the vendor side. We spoke with several of these executives to try to understand the challenges they faced and how they became successful in their new roles. The insights they provide are meaningful to both retailers and other vendors.
Cheryl Blake
Vice President of Corporate Development Aspect Loss Prevention, a division of Verisk Crime Analytics
Retail Experience
Director of LP at GameStop and FuncoLand; prior experience with Kids“R”Us, Lord & Taylor, JCPenney, and Korvette’s. Rod Holm
Senior Vice President of Global Business Development Universal Surveillance Systems
Retail Experience
Vice President of LP at Express; other experience with Limited Brands, Gottschalks, Target, and Marshall’s. Steven May
CEO LP Innovations, Inc.
Retail Experience
Senior Vice President of LP and Audit, J. Baker Inc.
Kevin McMenimen
Consultant Verisk Crime Analytics Former President/CEO of Enabl-u Technologies and RuMe Interactive
Retail Experience
Corporate Manager of Investigations Worldwide, Tiffany & Co.; additional experience with Bloomingdale’s, Jordan Marsh, and Macy’s. Walter Palmer
President PCG Solutions Former Partner in Contact, Inc.
Retail Experience
Director of Loss Prevention, Babies“R”Us; prior experience with Kay Bee Toys. Stuart Rosenthal
Director of Sales, North America, Alpha Former Director of Sales, Northeast, for Universal Surveillance Systems
Retail Experience
Director of Loss Prevention, Kids“R”Us and Imaginarium Toy Stores; other experience with Bloomingdale’s, Ross Stores, and Britches of Georgetowne.
Prior to your role in the vendor world, you had a long career as a retail LP practitioner. Why did you make the switch? What were your hopes and fears?
BLAKE: To be completely truthful, being a vendor had never been on my career path. Eleven years ago it wasn’t something that was normally done by dedicated LP professionals. However, the other positions I had been offered necessitated a move, and my kids wanted to finish high school in Minneapolis, so I accepted a position as VP of LP services with Aspect. Being one of the first LP executives I knew to make the transition, I didn’t know what to expect. I hoped for a positive reaction from my peers, since they would be essential to any success I would achieve in this new world. My biggest worry was that the job would be too one-dimensional compared to the ever-changing opportunities in the retail space. As it turned out, this job is every bit as challenging as I desired.
HOLM: In the wake of layoffs and mergers, I was given an opportunity to join a company that I had a great relationship with as a customer. I felt that they had great products, an innovative and talented team, major upside growth potential, and a business plan that was well thought out and ready to execute for the future. I also knew how much USS tried to give back to communities through support of different charities, and these values were also very important to me.
MAY: My transition to the vendor community was a voluntary act based on an idea. I believed that the loss prevention function, especially in specialty retail, could be better served with a
combination of both internal and outsourced loss prevention services. That idea led to the founding of LP Innovations (LPI) while I was still SVP at J. Baker. The CEO of J. Baker at that time was Alan Weinstein, who was not only very supportive of this concept, but also helped provide our initial funding. That was over fourteen years ago and, though at times it has been fun, challenging, and frustrating, I would do it all over again.
McMENIMEN: I made the switch based on opportunity. Realizing I had designed several solutions that would not only work for one retailer, but that fit well across a variety of retailers, I built a working model of the solution and went to several friends, who happened to also be retailers, and demonstrated the concept for feedback. This “if we build it, would you come?” approach paid off with immediate sales requests. At the time my “hopes” were to be able to make it work and satisfy the immediate customer needs, and the “fears” centered around the unknown in not knowing what may lay ahead that might be a roadblock. I was stepping out of my comfort zone and into an area that left many unknowns. I had less concern for myself or my career at that point as I felt I would have retail to fall back on if it didn’t work out. I was less concerned with “making it big” and more concerned with “making it work,” but I knew that if it did work, then I could help a lot of companies versus just designing a system in-house and working for one retailer.
PALMER: Once I started working at corporate, I had the opportunity to get involved with several special projects in not only the LP arena, but also IT, supply chain, and inventory control. I realized I really enjoy process-oriented projects. I also had a passion for training and awareness. At some point, I thought I’d like to try making a career in those areas.
Protect your merchandise and increase your sales - PERIOD
ROSENTHAL: I had spent approximately twenty-plus years on the retail side and was looking for a new challenge. As it happened I had recently played golf at an outing with a vendor partner. A few months later I reached out to discuss making the move and decided it was time to try something new. My biggest fear was the unknown and working outside of my comfort zone. I was very lucky and called on a lot of my friends who graciously met with me and, in most cases, became clients.
IT IS FUNNY that when I first came over, everyone told me I was going to the “dark side.” Well, the dark side is pretty bright. I love being over here.
What was the greatest challenge you faced in making the transition?
BLAKE: The LP world is made up of people who are used to being the ones in control, so when you are a service provider, you have to resist the temptation to try to run your customers’ programs. I offer my customers good advice, but the decisions are ultimately theirs. As it turns out, this has actually helped me deal with my kids growing up and making their own decisions.
HOLM: I think the biggest challenge was getting to feel comfortable with presenting all of the products and explaining to customers what differentiated USS products from the competition. As an LP professional, selling was something that happened frequently, sometimes to the CEO and CFO, store operations, as well as your direct reports.
MAY: Prior to the launch of LPI, I was challenged daily with controlling shrink for a multichannel retailer with thousands of stores across the U.S. and Canada and all that entails. Like most of my peers, I found it very challenging and dedicated myself to that goal. However, once I made the transition to LPI, I was not only challenged with leading a team of great folks in a common goal, much like I did as a director of LP, I had to figure out how to bring in new customers. My first customer was easy since it was my current employer, and I assumed it would be as easy for all new customers. I thought it would be as simple as telling the new prospect why they should buy my services, and they would line up at the door. Of course, that ended up being far from the truth and building an effective sales organization has been the biggest challenge of my career, but also, on a personal basis, the most rewarding.
McMENIMEN: I actually found the transition to be a relatively smooth one. It was a different kind of role, but I was essentially still working with my peers and sharing knowledge. In my new role, however, I was actually able to get more involved and help people directly. Rather than just share best practices, I was able to help implement them. I enjoyed it and, if there was a challenge, it was more in needing to charge people and make money, where it was more in my nature to simply be as helpful as possible. But, because I needed to eat and support my family, I had to learn to price the solutions, ask for money, and, worst of all, follow up on billing and late payments and chase people for money. I have since become far more comfortable with the first part, but still hate to call customers and chase down money, especially when the people you are calling are those you deem your peers and friends.
ROSENTHAL: The biggest challenge was working from home, which presented two obstacles. One was not having people around you all the time, and the second was conditioning my family to understand that I was working and could not run errands any time they needed something.
Has it been an advantage knowing the retail LP world from the inside? If so, how has it benefited you in providing solutions to your customers?
BLAKE: Absolutely. I can relate to what retailers require based upon first-hand experience. I’m familiar with the challenges of implementing a program in the retail space and have been able to educate my customers on issues that they may not have experienced yet. I’m not saying that other service providers don’t understand what is needed, but because I’ve “walked the walk,” I enjoy a greater credibility with LP leaders. It’s also the most enjoyable part of my job. I truly love the evaluation and problem-solving process.
HOLM: I think that the biggest advantage is that I have sat on the other side of the desk, and understand the challenges that LP leadership faces, not only with budgets for tools and technology, which includes building an ROI model that makes good business sense, but also from a payroll and people standpoint. Credibility and honesty are the keys to the successes that I have had.
MAY: Having a background in retail LP has been a major advantage in my transition to LPI. It obviously has the
benefit of helping me identify personally with the challenges facing a director of LP. I have walked in his or her shoes and have faced many of the challenges they have. Also, since we provide loss prevention programs to a variety of retailers, we face those same challenges everyday with our customers. LPI is unique in that we are still very much frontline LP professionals working in the retail industry, so the challenges we face are the same as those working for an internal department. I believe this gives us a unique perspective that helps us provide custom solutions to the specific needs of an LP director. It is not a one-size-fits-all approach to loss prevention, but truly a custom approach that encompasses what is unique about that retailer’s culture.
McMENIMEN: The insight into retail LP has been the core of our success. Without this we would not have had the immediate nor long-term success that we have experienced. It was also a significant differentiator from other solution providers in truly being a company that had “walked the walk,” so to speak. It made us real partners in the industry, well beyond just being a “vendor.”
PALMER: Our view is that we are not selling an “off-the-shelf” product. Instead, we are selling our capabilities, expertise, and problem-solving ability. The inside knowledge of what it takes to reduce shrink, improve safety, and achieve operational results is critical to our ability to help clients. In fact, our “selling” process is more about ensuring people know what our capabilities are and then letting them decide when, and if, they could benefit from our services.
ROSENTHAL: It is absolutely an advantage. By coming from the LP world, I have clear understanding of what the LP executive faces within their organization in selling programs internally, obtaining funding, and, most importantly, earning the trust of the field and store staffs who must execute these programs. I have always viewed my roles in LP as a sales role. I always was in a position to influence and sell new programs, policies, and procedures. There is a lot more selling from the LP world to their internal customers than most people understand. That being said, I do not view myself as a sales person, but an extension of my clients. I enjoy being in their stores, visiting with the
CLEAR PROTECTION + CLEAR PROMOTION + CLEAR OPTIONS = CLEAR CHOICE
ORC SOURCE TAGGING STORE LOGO
Label solutions to secure virtually any type of merchandise
field staffs and stores, which keeps me close to my roots in LP. I firmly believe in only offering to my customers products that most benefit their shortage or shrinkage reduction programs and generate the best ROI.
Have you been disappointed with how some LP executives treat you as a vendor? Any disappointments in partnering with other vendors?
BLAKE: I was worried about how my former colleagues would treat me, but it has not been an issue. I entered into this new world striving to be a partner, so I’ve had a great experience. I was surprised when my status as a vendor disqualified me from participating in some events, such as the Women in LP caucus, or from attending conference sessions at certain trade shows. However, many of these things are changing as the industry recognizes the benefits of informed and integrated partnerships.
HOLM: I have no disappointments at all, and I am very appreciative of the partnerships that I have been able to establish. My commitment is to provide the customers with cost-effective solutions that work in their stores.
MAY: For the most part I have had great relationships with LP executives and vendors alike and have built lifelong friendships with many of them. I remember early in my career at LPI working with some truly great senior executive’s like Bill Titus and Kevin Valentine, to name just a couple. I had known both Bill and Kevin only casually as fellow LP directors prior to joining LPI and always admired their programs and careers. I recall specifically being intimidated by Bill, being a little younger than him and coming from a smaller retail format. I wasn’t quite sure what to expect from him in my new role as a vendor “trying to sell him services” as compared to when we were peers. He quickly solved that awkwardness for me by challenging me to talk with him about emerging technologies, loss prevention best practices of other retailers, what new issues I thought we would be facing in retail loss prevention in the near term as would as the long term. What I quickly realized was Bill and Kevin are dedicated lifelong learners who always challenge themselves to stay on top of their business by asking questions and seeking answers from as many sources as possible. Neither one cared if my background was as a vendor or retailer, but both were more interested in actively getting as many diverse opinions as possible to best serve the needs of their employer. So I owe both Bill and Kevin a big “Thank you” because I unashamedly adopted this approach for myself, and it has served me exceptionally well throughout my career.
McMENIMEN: With LP executives, I have found that my biggest disappointment is when I find execs who are not open to new ideas or get too tunnel-visioned to be open to new ideas or even discussion around new ideas. Not just in being close minded to hearing about new products, but in taking the time to get more involved with the industry initiatives and with the industry in general in shaping its direction. It’s not always about hearing a sales pitch. As a vendor we are not always trying to sell you. We can all learn from each other. Being open to sharing information and providing input on new ideas is critical to our collective success. I find the same with other vendors and to date have had great success, even with folks who are in some ways competitors, in being able to work together on certain projects. My only disappointment with other vendors has been limited to a very few occasions where lack of integrity has come into question with someone representing one interest, but having a different agenda and using the situation for gathering intelligence to steal ideas. I prefer the upfront approach…and I prefer to be kissed first.
ROSENTHAL: This is interesting. When I was first promoted to corporate manager at Kids“R”Us, my director taught me how important it is to call back a vendor. He always said it is the right thing to do. Be honest and say if you’re not interested, but the bottom line is you might need them later. It is frustrating at times with the lack of response, but I also understand how busy people are and that, if there is not an immediate need, you might not get that immediate phone call back.
Now that you have been in both worlds, how do you react to comments like “the dark side,” “just another vendor,” and “suitcase slammer?” How have you tried to distinguish yourself and your company from those perceptions?
BLAKE: When I first started at Aspect, I wasn’t fully at ease in my new role, and often used terms like those to describe myself. It was almost like I was apologizing for being in the position. A good friend in the business told me that by categorizing myself that way, I was actually diminishing
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myself and the work I did with his company. He said that he saw me as a partner, working with him to help him succeed, rather than an adversary. It was great advice that I took to heart and have made a cornerstone of our company’s approach to business.
HOLM: After three years with USS, I am still waiting to feel like I am on the “dark side.” I think by building true partnerships through great communication and follow up, a high degree of integrity and mutual trust, and by listening to what the customer’s needs are and having the solution offerings to address those needs is what makes our company different. Many of our products were developed based on feedback from our customers.
MAY: I have heard these comments, but they are usually made tongue-in-cheek and, from my perspective, not how the vendor community is viewed by most retail LP professionals. I have found that most retailers or vendors take a partnership approach and see our products and services as an extension of the loss prevention program.
McMENIMEN: I have not found this as much of an issue as the general perception makes it out to be. In thirteen years there has only been one negative comment made when I was, interestingly enough, compared to a used car salesman. But I hope it was a comment about the suit I was wearing and less about the products or services or my approach to selling them. However, given it was a comment from someone who was frustrated that their request for a free program had been denied, maybe it was just lashing out. I think the success in differentiating yourself and your company comes in being less of a “vendor” and more in being a solid business “partner” and delivering on your word. That can often come at a cost, but I am a firm believer in putting your money where your mouth is. In those rare occasions when something negative happens, we have always accepted responsibility for a mistake and always deliver on making it right at our cost. Some vendors will charge for the privilege of fixing their own mistake, and I have never been a proponent of that. Being a partner and doing so with integrity and ethics has always been what helps us distinguish ourselves from those perceptions. ROSENTHAL: It is funny that when I first came over, everyone told me I was going to the “dark side.” Well, the dark side is pretty bright. I love being over here. We at Alpha differentiate ourselves in our support, training, and testing programs we conduct. We average a 98 percent success rate on all tests we conduct. We have field trainers and product managers that meet with our customers, and we truly are a business partner. We sell solutions and not just products. We don’t throw everything on a wall and go for what sticks, which is my definition of a “suitcase slammer.” At Alpha we are in it for the long haul, and our customer relationships are the most important to us and why our customers come to us for solutions first. Finally, for me personally, I have never forgotten my roots in LP and that is the foundation for everything I do in sales.
Much More Online
These executives had much more to say than space allows in the print magazine. Go to the magazine website to see how they answered these additional questions:
It is a reality that LP executives lose their jobs for whatever reasons and some believe they can become a consultant or vendor without skipping a beat? How would you counsel a friend faced with this situation?
Based on your experiences, if you were back on the practitioner side, would you treat vendors any differently than before?
Are there things that you miss from being an LP executive? Things you have not missed?
In your role as a practitioner, you managed a budget inside a large corporation. Is there a different attitude or challenge managing the budget of a small company that may directly affect your personal finances?
Your present role takes you into a broader spectrum of retail segments, such as big-box, grocery, restaurant, and department store, than you experienced as an LP executive. Have you found differences in the purchasing process or priorities?
In what ways, if any, do you think the decision making on purchasing products and services has changed in the past decade?
i³ International understands the challenges LP Leaders face. They are a company that offers great products for loss prevention needs, with the flexibility to deliver business intelligence metrics, which are an added value to Executives in Sales & Operations.
Rui Rodrigues National Director, Loss Prevention for Staples Canada.
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