September - October 2016

SEPTEMBER–OCTOBER 2016 | V15.5 LOSSPREVENTIONMEDIA.COM

LOSS PREVENTION MAGAZINE THE AUTHORITY ON ALL THINGS ASSET PROTECTION

A CANDID CONVERSATION WITH JIM LEE, LPC WHAT CRISIS-PREPARED RETAILERS HAVE IN COMMON PUTTING STOLEN GOODS BACK ON RETAILERS’ SHELVES

•LP-PREMIER-1-final_9x_•LP-PREMIER-1-final 9/9/16 6:19 PM Page 1

P R E M I E R

I S S U E

LossPreventionMagazine.com

Fifteen Years of Loss Prevention Magazine

ORGANIZED RETAIL THEFT From Prison Training Grounds to a Store Near You

By King Rogers

A CONVERSATION WITH DAVID MYERS LOWE’S INTRANET LP AUDIT CALCULATING ROI GETTING MISCONDUCT ADMISSIONS COLUMNS BY HOLLINGER WELCH SPAIN TULGAN WICKLANDER-ZULAWSKI

Jan/Feb 2002

Mar/Apr 2002

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May/Jun 2002

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Premiere Issue 2001

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January – February 2003

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V2.1

V2.2

V2.4

July – August 2003

IDENTITY THEFT

A Growing Epidemic of Fraud

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REMOTE VIDEO AT BIG LOTS THE GO-TO PEOPLE INSIDE LP ARMY AIR FORCE EXCHANGE SERVICE REFUND FRAUD COLUMNS BY HOLLINGER MARQUIS SPAIN WELCH WICKLANDER-ZULAWSKI

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Jan/Feb 2003

Mar/Apr 2003

May/Jun 2003 •LP-MayJune 04 FINAL 2.

4/10/04

3:27 AM

Jul/Aug 2003 •LP-JulyAug 04 #3

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6/20/04

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July – August 2004

May – June 2004

LossPreventionMagazine.com

V3.4

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POS EXCEPTION REPORTING

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V3.5

CRISIS MANAGEMENT From Homeland Security to Workplace Violence

That Drive Success at Saks Fifth Avenue

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LossPreventionMagazine.com

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V4.1

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LossPreventionMagazine.com

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CHANGING BEHAVIOR

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1

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Fifteen Years of Loss January – Febuary 2007

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V6.1

V6.3

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V6.5

–17 16 es pag See

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in an Interconnected Global Economy

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January – February 2011 | LPportal.com | V10.1

LPportal.com | V10.2 March – April 2011

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MAGAZINE

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Prevention Magazine THE VOICE OF LOSS PREVENTION

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LPportal.com | V11.1 January – February 2012

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TABLE OF CONTENTS 6 EDITOR’S LETTER

Thanks for Fifteen Great Years

15

By Jack Trlica

10 RETAIL SPONSORS 12 INTERVIEWING

Fifteen Years of Loss Prevention

What Has Changed in Fifteen Years of Interviewing

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

Looking at yesterday, today, and tomorrow through the eyes of the magazine

26 CERTIFICATION

Drive Better Results in Your Company and Career Interview with Weston Pate, LPC, Kmart

By Bill Turner, LPC, Contributing Writer

28 ACADEMIC VIEWPOINT

31

The Container Store Fifteen Years Later

By Richard C. Hollinger, PhD

The Magazine, Certification, Baseball, and C-Suite Arrogance

42 EVIDENCE-BASED LP Be All You Can Be

By Read Hayes, PhD, CPP

44 ASK THE EXPERT

The Importance of Continuing Education for LP Professionals Interview with Stuart Levine, The Zellman Group

56 LEGENDS IN LP

A candid conversation with Jim Lee, LPC

Revisiting the Legends in Loss Prevention

By Jack Trlica, Managing Editor

By John Velke

68 DIVERSITY IN LP

Infusing Wisdom into Potential

45

By Mimi Welch and Nicole Rogers

71 SOLUTIONS SHOWCASE

Crisis Management

78

What Walgreens, 7-Eleven, and other crisis-prepared retailers have in common

- Best Security Industries - Detex - Protos Security - Instakey Security Solutions

LPM DIGITAL

The Daily Pulse of Loss Prevention

By Jacque Brittain, LPC, and Kelsey Seidler

81 PRODUCT SHOWCASE 82 INDUSTRY NEWS

By Garett Seivold, Contributing Writer

- Loss Prevention in the New Millennium - The Cost of Cash

By Bob DiLonardo

59

85 CALENDAR 87 PEOPLE ON THE MOVE 88 ADVERTISER DIRECTORY 89 VENDOR SPONSORS 90 PARTING WORDS

ORC and Diverters

Closing the loop that’s putting stolen goods back on retailers’ shelves

The Next Fifteen Years of LPM

By Merek Bigelow and Kevin McMenimen, LPC

By Chris Trlica, Contributing Writer

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EDITOR’S LETTER

Thanks for Fifteen Great Years

F

ifteen years has gone by quickly—until I look at my photo in our first issue compared to my current photo. When we started the magazine in 2001, we knew the industry needed a publication and hoped that we could find a way to fill the need. Thanks to great support from retailers, solutions providers, and readers, we’ve stayed afloat and hopefully met at least some of that need. There’s still a lot to do, and we look forward to continuing to serve the loss prevention industry far into the future.

This September–October issue coincides exactly fifteen years to the month that we published the premiere fall 2001 edition. This issue is our ninetieth publication.

All of the covers over the past fifteen years are reproduced in the special gatefold cover of this edition.

In addition, our good friend Bill Turner, LPC, has spent the last two months looking through each of those magazines to write a three-part retrospective that begins on page 15.

We turned the tables on Jim Lee, LPC, the magazine’s executive editor and cofounder, who normally interviews an industry executive for each issue. Given some of those ninety interviews involved multiple people, he’s interviewed well over a hundred people who gave their insights about the LP world. In this edition on page 31, he gets his opportunity to offer some of his observations.

Lee also writes the Parting Words column at the end of the magazine.

But given he sat for the executive interview, we gave him a reprieve in this issue so as not to tax him too much and asked the magazine’s

6

COO Kevin McMenimen, LPC, and Director of Marketing Merek Bigelow to try to fill his shoes (see page 90).

Our friends at Wicklander-Zulawski have been writing about interviewing and interrogation since 2001. By my calculation that represents something like 130,000-plus words to help educate our industry investigators. In this edition on page 12, they look back at the changes they have observed over the past fifteen years and look forward at what might change ahead in the world of interviewing.

Another close friend of ours and to the LP industry is Dick Hollinger, PhD. He too has written for the magazine since the beginning. We coaxed him out of his recent retirement to put down his fishing gear and look back at that first article where he profiled The Container Store to provide an update (see page 28).

We ran a series of articles in 2006 and 2007 called Legends of Loss Prevention where we profiled several icons of the LP industry. We asked the author of that series, John Velke, now the vice president of loss prevention and safety for Total Wine & More, to recap that series (see page 56). As an aside, Velke is an accomplished writer in his own right with several books to his credit. His latest title, Prove ‘Em Innocent: The Art & Science of Workplace Investigations, was just released and is highly recommended.

We also tracked down Mimi Welch who wrote the Women in LP column in the premiere issue that eventually morphed into Diversity in LP. Mimi is alive and well in Seattle, Washington, where she’s still consulting and advising individuals and organizations on creating better

SEPTEMBER–OCTOBER 2016

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workplace environments. Today she’s focusing on bridging the generational gap between millennials and baby boomers. A sample of her current work is on page 69.

Finally, Bob DiLonardo, who edited our Industry News column for fifteen years, looked back at some of the key topics and events that influenced the industry over that time (see page 82).

Also in that section is a report on the results of a new survey on cash management conducted by Tellermate that offers some interesting insights.

While much of this issue commemorates our fifteenth anniversary, we also feature articles on current topics like crisis management (page 45) and organized retail crime (page59), plus many of our regular columns.

One new section called Digital Dialogue gives our print readers a glimpse into some of the original content and daily reporting we are publishing on our digital channel (see page 78). Check here in each new edition of the print magazine to see what you may be missing. If you are not a digital subscriber, we encourage you to take advantage of our daily e-newsletters and breaking news by signing up at LossPreventionMedia.com.

It’s gratifying to look back over the past fifteen years, but it’s exciting to look forward to what awaits the loss prevention industry down the road. Please stay with us for the ride.

Jack Trlica Managing Editor

LOSSPREVENTIONMEDIA.COM

LISTEN. SOLVE. DELIVER.

EDITORIAL BOARD

Leo Anguiano, LPC Senior Director, Asset Protection, Dollar Express Jim Carr, CFI Senior Director, Global Loss Prevention, Rent-A-Center Ray Cloud Senior Vice President, Loss Prevention, Ross Stores Francis D’Addario, CPP, CFE Emeritus Faculty Member, Strategic Influence and Innovation, Security Executive Council Charles Delgado, LPC Vice President, Asset Protection, Meijer Scott Draher, LPC Vice President, Loss Prevention, Safety, and Operations, Lowe’s Scott Glenn Chief Security Officer, Sears Holdings Tim Gorman Divisional Vice President, Loss Prevention, Asset Protection, and Business Continuity, Walgreens Barry Grant Chief Operating Officer, Canadian Images Bill Heine Senior Director, Global Security, Brinker International Frank Johns, LPC Chairman, The Loss Prevention Foundation Mike Lamb, LPC Vice President, Asset Protection & Safety, Walmart Stores US

David Lund, LPC Vice President of Loss Prevention, DICK’S Sporting Goods Bob MacLea Senior Vice President, Loss Prevention, TJX John Matas Vice President, Asset Protection, Investigations & ORC, Macy’s Chris McDonald Senior Vice President, Loss Prevention, Compass Group NA

EXECUTIVE EDITOR James Lee, LPC JimL@LPportal.com EDITORIAL DIRECTOR, DIGITAL Jacque Brittain, LPC JacB@LPportal.com MANAGING EDITOR, DIGITAL Kelsey Seidler KelseyS@LPportal.com

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

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

Dan Provost, LPC Vice President, Global Loss Prevention, Staples Tina Sellers, LPC Director of Loss Prevention, Delhaize America Mark Stinde Vice President, Asset Protection, 7-Eleven

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

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

DESIGN & PRODUCTION SPARK Publications info@SPARKpublications.com CREATIVE DIRECTOR Larry Preslar

Robert Vranek Vice President, Loss Prevention, Belk

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

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

Loss Prevention, LP Magazine, and LP Magazine EU are service marks owned by the publishers and their use is restricted. All editorial content is copyrighted. No article may be reproduced by any means without expressed, written permission from the publisher.

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

SEPTEMBER–OCTOBER 2016

700 Matthews Mint Hill Rd, Ste C Matthews, NC 28105 704-365-5226 office, 704-365-1026 fax MANAGING EDITOR Jack Trlica JackT@LPportal.com

Karl Langhorst, CPP, CFI Corporate Director, Loss Prevention, The Kroger Co.

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LOSS PREVENTION MAGAZINE

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SUBSCRIPTION SERVICES

NEW OR CHANGE OF ADDRESS myLPmag.com POSTMASTER Send change of address forms to Loss Prevention Magazine P.O. Box 92558 Long Beach, CA 90809-2558 Loss Prevention aka LP Magazine aka LPM (USPS 000-710) is published bimonthly

by Loss Prevention Magazine, Inc., 700 Matthews Mint Hill Rd, Ste C, Matthews, NC 28105. Print subscriptions are available free to qualified loss prevention and associated professionals in the U.S. and Canada at www.myLPmag.com.

The publisher reserves the right to determine qualification standards.

International print subscriptions are available for $99 per year payable in U.S. funds at circulation@LPportal.com. For questions about subscriptions, contact circulation@LPportal.com or call 888-881-5861. Periodicals postage paid at Matthews, NC, and additional mailing offices.

© 2016 Loss Prevention Magazine, Inc.

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LP MAGAZINE | SEPTEMBER–OCTOBER 2016

11

INTERVIEWING

What Has Changed in Fifteen Years of Interviewing

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

© 2016 Wicklander-Zulawski & Associates, Inc.

fraternity of interviewers who have established that they have the necessary knowledge to conduct investigative interviews with victims, witnesses, suspects, or other sources to determine the facts in the case. The CFI certification is managed under the auspices of the International Association of Interviewers (IAI), a professional organization focused on the science of interviewing and continuing education.

LP Magazine provided a springboard to the foundation and IAI to further the professionalism of a burgeoning aspect of controlling loss in organizations. But the professional organizations are only one aspect of the changes that have occurred over the last fifteen years in the industry.

I

t’s difficult to believe that it is been fifteen years since Jim Lee, Walter Palmer, and Jack Trlica established Loss Prevention magazine as the loss prevention industry’s only magazine. We were privileged to be asked to participate in the premiere issue, Fall 2001, and have continued with an ongoing column dedicated to interviewing and investigation ever since. The magazine has changed its look over the years, but has continued to provide the loss prevention industry with the relevant and timely articles it needed to grow.

The magazine founders’ foresight in providing a central location for loss prevention information and education manifested itself

Evolving Techniques

As interviewing has come under increasing scrutiny in the public sector, this scrutiny has also spilled over into interviews conducted by loss prevention investigators for their companies. With the advent of DNA and its increasing use, it became evident that police investigators were sometimes obtaining false confessions from innocent people. These confessions became the foundation upon which prosecutors built their cases even when lacking independent corroboration of the individual’s guilt. Over the last five years there have been an increasing number of falsely convicted individuals released from prison after their cases were re-examined.

In many of these cases expert witnesses from the academic community would offer opinions on the causes of these false confessions; they are increasingly focusing on John E. Reid’s confrontational nine steps of interrogation as the underlying cause of the false confessions. These experts have recently entered into civil lawsuits alleging improprieties in the employee dishonesty interviews conducted by LP investigators. Fortunately, the ongoing training and strong differences in operating procedures between the private and public sector has often been enough to make the experts’ testimony irrelevant.

Most companies are using the WZ non-confrontational interrogation style, and more and more law enforcement agencies are beginning to shy away from the aggressive confrontational approach, preferring instead a more ethical standard of interviewing. During the next ten years, there will be a dramatic shift away from a confrontational style of interrogation. This has begun in several countries around the globe and is beginning to creep into the North American marketplace.

As interviewing has come under increasing scrutiny in the public sector, this scrutiny has also spilled over into interviews conducted by loss prevention investigators for their companies. in the following years with two certification programs to further professionalize the LP industry. The Loss Prevention Foundation was established to provide a certification for the industry to qualify and certify that those in the profession had the necessary knowledge to provide professional advice to their organizations. LPQualified and LPCertified became important designations signifying the holders had the knowledge necessary to grow their careers and elevate the loss prevention profession.

The Certified Forensic Interviewer (CFI) designation furthered the educational aims of the industry by focusing on a critical skill set used by investigators to establish the facts in a case and later to obtain admissions of wrongdoing. The CFI is an exclusive

12

SEPTEMBER–OCTOBER 2016

Zulawski and Sturman are executives in the investigative and training firm of Wicklander-Zulawski & Associates (w-z.com). Zulawski is a senior partner, and Sturman is president. Sturman is also a member of ASIS International’s Retail Loss Prevention Council.

They can be reached at 800-222-7789 or via email at dzulawski@w-z.com and ssturman@w-z.com.

continued on page 14 |

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continued from page 12

the employee’s guilt. The interviewers could use a script, and their performance could be measured and monitored. A number of companies used audio recordings as evidence of the interview, the subject’s treatment, and his confession. The same recordings could also be used to monitor and measure the interviewer’s performance against the prepared script. This provided a method to increase performance of the interviewer and monitor their activities on the phone. Plus, the entire interview was available to establish that there was no coercion, threats, or promises being made to the employee.

The smartphone and the ability to text will also be used to continue the investigation in real time as the employee makes admissions or offers explanations of why he couldn’t be involved.

Texting allows other investigators an opportunity to disprove the employee’s statements in real time, so the interrogator can use that evidence during the actual interview with the employee.

Many companies in an effort to stay ahead of the potential for civil litigation have elected to establish strong ethical interviewing practices in their corporate culture. They begin this practice by training their investigators in the WZ non-confrontational approach to interviewing and then monitor and measure each investigator’s performance against this benchmark to make sure a standardized interview method is used across the company. Some companies also use recordings of the investigators’ interviews to continually monitor the treatment of associates being interviewed and to maintain a stream of feedback to the interviewer on his or her efforts.

While companies are training and monitoring their investigators’ efforts in internal investigations, there also have been changes in practices brought on by the National Labor Relations Board (NLRB) decisions relating to internal investigations. Over the last several years, there have been an increasing number of NLRB decisions that have overturned long-standing precedents. For example, in 2015 the NLRB overturned thirty-seven years of precedent in protecting the confidentiality of witness statements, which could put the witnesses into a position of being intimidated or coerced. This is likely the result of a Democratic administration, which has shifted the balance of power on the board. Not only has the board taken a more favorable stance relating to union organizing, but also it has overturned precedent on maintaining confidentiality of the investigation. Citing an employee’s right to organize, the NLRB determined that a company requiring employees to keep an investigation confidential was a violation of the National Labor Relations Act. The board also has changed the precedent relating to whether or not an employee has the right to record an interview with company officials.

We can anticipate that this trend of weakening a company investigation will continue as long as the board has a Democratic majority. Besides the National Labor Relations Board, we can anticipate a growing number of legal challenges relating to employee interviews. Lawyers are increasingly becoming aware of the internal investigations organizations conduct to remove dishonest or unethical associates from the business. As the notoriety of the false confession gained momentum over the last decade, lawyers are increasingly turning to false or coerced confession experts to testify at employment hearings, arbitrations, or in civil lawsuits.

On a final note, we are working on an interviewing simulator that will allow an interviewer to practice interviewing on a computer with hundreds of variations to the interview.

For example, if an associate claimed he purchased a specific piece of merchandise from a location, it may be possible in real time to check the inventory to determine if that item was actually stocked in the store at the time claimed. Or a witness could be checked to see if he corroborates or disputes the employee’s statement. Since the investigator is on the phone, he may have access to any number of company reports he can consult to gather information about what the employee has admitted or denied.

With the influx of immigrants, there will be an additional need for bilingual interviewers or interpreters to assist during the interview. The smartphone also will offer a possible solution providing real-time translation services for the interviewer or being able to link with an actual interpreter who can offer assistance in translating the conversation.

Telephone Interviews

Another advance over the last fifteen years has been the increased use of telephone interviewing. Many organizations turned to telephone interviews only when there was an emergency or perhaps when an employee was caught in the act while no one from loss prevention was on-site. Our first sojourn into telephone interviewing was at the request of Paul Jones, then vice president of loss prevention of Sunglass Hut. Jones recognized an investigator’s loss of productivity and associated travel costs to handle an investigation across the country was a serious problem. He asked us to develop a training model of interviewing over the phone that could assist with his productivity and cost issues. With the success of that program, it quickly spread to other organizations that also recognized the advantages of a well-thought-out telephone interview program.

Other companies begin to develop teams of telephone interviewers to close cases where the evidence was conclusive of

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SEPTEMBER–OCTOBER 2016

Interview Simulator

On a final note, we are working on an interviewing simulator that will allow an interviewer to practice interviewing on a computer with hundreds of variations to the interview. This will allow a new interviewer to practice the skills without the risk of going directly into a real conversation with a dishonest employee.

The simulation will also allow interviewers who haven’t done an interview in a while to hone their skills before the big day.

We have only touched on some of the changes that occurred over the last fifteen years and some we believe will come during the next fifteen. We’re glad to have been part of the success of the loss prevention industry and hope that we will remain part of the LP Magazine team in the coming years.

Happy Anniversary, LPM! |

LOSSPREVENTIONMEDIA.COM

FEATURE

LOOKING AT YESTERDAY, TODAY, AND TOMORROW

By Bill Turner, LPC

FIFTEEN YEARS OF LOSS PREVENTION

B

ased on another project, I have spent two months combing over every issue of Loss Prevention magazine. Being a reader from the very beginning and contributing content every now and then, I thought I was pretty familiar with the magazine’s history, its development, and the changes in the industry over the years.

I wasn’t wrong in that thinking, but it is amazing how much more you learn when you actually sit down and re-read every issue from cover to cover.

What you realize is that some things have changed, some things have remained the same, and some subjects formerly of great interest and concern to the retail LP industry have literally come and gone.

Some issues are here to stay, and new developments and technology are forming the future direction of our business.

I quickly knew that there would not be enough room in one article to accurately describe the changes in the industry evident in the pages of the magazine over the past fifteen years. So this article will be the first in a three-part series. We will begin by looking at the first five years, from the inaugural issue in fall 2001 through 2006. In the November–December 2016 issue, we will cover the middle years of 2007 through 2011. And in the January–February 2017 issue, we will conclude with 2012 through today and look at current concerns and what the future may bring to our industry.

With that positive encouragement and the support of retailers and vendors alike, the inaugural edition was published and distributed to the industry at the beginning of September 2001. Just days later, the horrible events of 9/11 changed the world. As Tina Sellers stated in the tenth anniversary issue of the magazine in 2011, “9/11 was the trigger that shifted retail loss prevention’s focus from traditional shrink reduction programs to true asset protection measures.” She was right. A lot has changed in our industry since 2001, and Loss Prevention magazine

What you realize is that some things have changed, some things have remained the same, and some subjects formerly of great interest and concern to the retail LP industry have literally come and gone.

Numerous LP professionals have made huge contributions and are a critical part of the magazine’s foundation and success. It is impossible to list them all, but there are certain individuals who have contributed hours and hours and page after page of interesting and thoughtful content over the years.

Among them are Doug Wicklander, Dave Zulawski, Bob DiLonardo, Richard Hollinger, Walter Palmer, Read Hayes, King Rogers, Mike Marquis, Gene Smith, Adrian Beck, Shane Sturman, and of course, Jim Lee and Jack Trlica.

A big thanks goes to each of them.

And we shouldn’t forget the solution providers who have been tremendous supporters over the years. There are many, but certainly ADT/Sensormatic/ Tyco and Learn It Solutions/Enable-u/ Verisk Retail deserve recognition as two that have been with the magazine from the very beginning.

I think a way to get a good feel for the changes to the LP industry over the past fifteen years may be to briefly look at some of the magazine’s mainstay subjects listed earlier and their evolution since 2001.

Shoplifting and Organized Retail Crime (ORC) P R E M I E R

I S S U E

LossPreventionMagazine.com

It’s about Time

You are reading the ninetieth issue of Loss Prevention magazine. As Jim Lee and Jack Trlica tell the story, it began with the belief that retail loss prevention professionals needed their own magazine.

The magazine’s mission, as originally drafted, was to “provide the industry with a high-quality, contemporary magazine of high interest to retail loss prevention management and professionals.” The concept was introduced in June 2001 at the National Retail Federation (NRF) loss prevention conference in Vancouver, British Columbia.

The response from the majority of the LP professionals and vendors in attendance was “it’s about time.”

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has been there every step of the way.

Looking back over the past fifteen years, there are certain subjects that have become mainstays and building blocks of the magazine’s very foundation. Organized retail crime and shoplifting, crisis management, exception reporting, electronic article surveillance (EAS), credit card fraud, certification, high-shrink programs, the National Retail Security Survey, data protection, people, education, diversity, employee dishonesty, and LP technology are subjects that have been written about and discussed in the magazine over and over again.

SEPTEMBER–OCTOBER 2016

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ORGANIZED RETAIL THEFT From Prison Training Grounds to a Store Near You

By King Rogers

A CONVERSATION WITH DAVID MYERS LOWE’S INTRANET LP AUDIT CALCULATING ROI GETTING MISCONDUCT ADMISSIONS COLUMNS BY HOLLINGER WELCH SPAIN TULGAN WICKLANDER-ZULAWSKI

The very first issue and the very first cover of the magazine in fall 2001 featured an article by King Rogers titled “Organized Retail Theft.” Perhaps it is appropriate that this fifteenth

LOSSPREVENTIONMEDIA.COM

FIFTEEN YEARS OF LOSS PREVENTION anniversary issue also includes a feature article on ORC (see page 59).

In his 2001 article, King talked about the evolution from professional adult thieves from foreign countries operating on the east coast to highly organized former felons targeting household products and over-the-counter pharmaceuticals. By the next time organized retail theft was the topic of a major article (in the July–August 2002 issue), the name had changed to organized retail crime. The older term of organized retail theft showed up periodically, but organized retail crime is now used almost exclusively.

In that July–August 2002 issue, Target described its investigation strategy that specifically addressed ORC. Highly trained mobile teams, law enforcement partnerships, intelligence gathering, and state-of-the-art technology were the main components of that strategy.

In a later issue Rogers described ORC as one of the primary trends in retail loss prevention. Numerous articles referenced ORC as part of a bigger story, but the next in-depth look was in the May–June 2002 issue. In that issue GAP talked about its efforts to combat ORC and the importance of partnerships with law enforcement. It was GAP’s opinion at the time that 25 percent of the company’s overall shrink was attributable to professional boosters. The article went on to describe the lookouts, boosters, mules, and a director as the components of an ORC crime ring.

January – February 2005 LossPreventionMagazine.com

V4.1

A FORMULA FOR FIGHTING ORGANIZED RETAIL THEFT

MANAGING LP BY MANAGING DATA | INTERVIEW WITH DR. RICHARD HOLLINGER PROFILE OF CRACKER BARREL | LP STRATEGIES IN A STORE-CLOSING ENVIRONMENT

LPM Jan-Feb 05 final1.indd 1

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The cover story of the January–February 2005 issue looked at ORC though the eyes of the grocery store industry. It described ORC’s attack on baby formula and outlined professional shoplifting’s possible ties to terrorism. Once again, the partnership with law enforcement was emphasized. An article on Internet fraud in the March–April 2005 issue made one of the first mentions of Limited Brands’ dedicated ORC team.

The last major article on ORC during the magazine’s first five years was in the March–April 2006 issue. It described NRF’s and the Retail Industry Leaders Association’s early attempts to connect

9/11 was probably the biggest single event that reshaped the thinking and direction of the retail loss prevention industry. As such, it is no surprise that crisis management has been the subject of numerous articles in the magazine.

retailers in the fight against ORC in the form of RLPIN and InfoShare, respectively.

Simple shoplifting is a basic component of ORC and has been a primary focus and concern of LP departments forever. While the subject comes up often as part of the National Retail Security Survey (more on that later) and is mentioned frequently in other articles, I found it interesting that there are only about four feature articles in the magazine’s history that concentrated on ordinary shoplifting.

One of those in the September–October 2002 issue looked at what shoplifters say about shoplifting. They said that

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LP MAGAZINE | SEPTEMBER–OCTOBER 2016

they fear cameras the most, followed by guards, EAS, and alert employees.

The January–February 2004 issue raised the growing concern about pharmacy theft incidents of all types, including shoplifting. A database connecting drug store chains was just being developed at that time.

Crisis Management

As noted earlier, 9/11 was probably the biggest single event that reshaped the thinking and direction of the retail loss prevention industry. As such, it is no surprise that crisis management has been the subject of numerous articles in the magazine. The cover story of the second issue (January–February 2002) featured retail’s response to 9/11. Discussing a wide range of issues including communications, business continuity, physical security, and mail-room security, it basically outlined concerns that would become some of the top priorites of retailers going forward.

In the September–October 2006 issue, Bobby Senn of the New York City Fire Department wrote a very touching and compassionate article describing his experience on 9/11. He talked about how he miraculously escaped certain death when the south tower fell. He further described the lasting effect on him five years later and how telling the story is his way of remembering and paying tribute to

17

FIFTEEN YEARS OF LOSS PREVENTION his lost comrades and all the other people who lost their lives that day.

Planning for a terrorist attack against US retailers was a topic in the January–February 2003 issue. The need for enhanced food security and numerous other threats were discussed. Seven steps to implement a workplace violent crisis response plan was a feature article topic in September–October 2004. As with many articles on crisis management, formal planning and regular training exercises were emphasized. The same issue contained an article discussing general business continuity planning.

The need for every company to have a formal plan and the importance of having the complete support from senior management were described as critical.

November – December 2005 LossPreventionMagazine.com

V4.6

Technology articles are probably the most numerous of any type in the magazine’s fifteen-year history.

From RFID to EAS, biometrics, exception reporting, video of all types, and self-checkout, it’s all here.

he describes the increasing threat of identity theft, the most common types, how it’s done, and how to protect yourself and your business from it. An interesting side note is that, according to Jim Lee, the cover on the issue containing Abagnale’s identity theft article is one of the favorites, if not the favorite cover in the magazine’s fifteen-year history. It depicts a man’s head being zipped open down the face revealing a totally different person’s head inside. Lee said it was so popular that only two or three copies remain in the magazine’s office.

Abagnale followed up in the next issue of the magazine talking about check fraud and its threat to retailers, which was interesting to read, but it’s one of those subjects that was then of major concern and is virtually non-existent today.

An initial retail survey around refund fraud and abuse was the topic of a July–August 2003 article. Rates of return in various retail segments and numerous types of return fraud were outlined. A year later, in the March– April 2004 issue, internal fraud perpetrated by retail buyers was the topic. A company’s vulnerability and methods used by dishonest procurement individuals were pointed out.

March – April 2005 LossPreventionMagazine.com

V4.2

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

LossPrevention

In a November–December 2005 feature article, Jack Trlica described the devastating effect of Hurricane Katrina on major retailers. He talked about the issues of power, tracking down employees, securing data, communications, and looting after the storm.

LP’s role in preventing workplace violence was a topic in the March–April 2006 issue.

Preventive practices, screening protocols, types of threats, and early warning signs were described.

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Fraud

Fraud of all types is a major concern and area of focus for most retailers and their LP departments. So it makes sense that the subject is covered in numerous articles in the magazine over the years.

The subject of identity theft was the cover story of the March–April 2003 issue. It was written by Frank Abagnale, the author of Catch Me if You Can. Abagnale is now an internationally renowned consultant. However, in his younger years he was a master forger and confidence man. In the article

SEPTEMBER–OCTOBER 2016

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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

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The March–April 2005 cover story showcased Internet fraud, one of the magazine’s first major articles covering this new and growing concern. The

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FIFTEEN YEARS OF LOSS PREVENTION article described electronic fencing, paperless fraud methods used to purchase gift cards, and how easy and relatively anonymous these types of fraud are. An interesting side bar in this article talked about controlling fraud at eBay. This was at a time that eBay’s sincerity in wanting to deal with fraud was being questioned by many retail LP professionals.

Identity fraud was back again in a feature article in the September–October 2005 issue.

This time recent data breaches of various retailers and banks were described. The article further discussed data protection methods for both businesses and individuals.

The National Retail Security Survey (NRSS) and Employee Theft Richard Hollinger, PhD, and the University of Florida have conducted the NRSS every year since the early 1990s. In the March–April issue of

2002, Dr. Hollinger expressed concern that participation hit a new low in 2001 with only 120 retailers filling out the survey. He wondered if the survey was even worth continuing and asked how participation could be increased. The survey did continue and participation was up to 150 by 2006. Over the years, participation has seen its ups and downs, but the survey is still going strong today.

Dr. Hollinger has speculated that retail mergers, acquisitions, and bankruptcies have made it more difficult to grow participation numbers. In the final installment of this series in January–February 2017, we will compare and contrast the findings of the NRSS over the years.

In addition to often discussing the NRSS and its findings in the magazine, Dr. Hollinger has written a column in almost every issue discussing all aspects of workplace dishonesty. Those articles are too numerous to recap here, but his insights and research

have been invaluable to the industry in its fight against employee theft.

Others who have contributed greatly to the subject of dishonest employees include the Wicklander-Zulawski team. From the very beginning in 2001 through today, Dave Zulawski, Doug Wicklander, and the team have written a column in every issue on interviews and interrogations. Their tips, techniques, and how-tos are invaluable reading for any LP professional and have been instrumental in teaching a whole generation how to be better interviewers. Because there are so many, it’s impossible to capture them all here, but the magazine owes a huge debt of gratitude to the WZ team for their contributions and continual support over the years. Given that employee theft is such a big part of retail loss prevention, it’s interesting to note that, like shoplifting, there are very few feature articles in the magazine concentrating solely on the subject. But as mentioned above,

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FIFTEEN YEARS OF LOSS PREVENTION 2003 issue that Walmart, which had earlier pushed for total RFID saturation in the industry down to the item level, was modifying its position and approach and would only concentrate on RFID at the carton and pallet level in its distribution centers.

Walter Palmer was bullish on RFID’s future and its impact on retail in his article from November–December 2004. In it he described the creation of global standards, the shrinking size and cost of RFID chips, IT infrastructure needs, and end-user demands from Walmart and the Department of Defense. Citing numerous benefits, despite some privacy concerns, he concluded that RFID’s future was bright

the efforts of Dr. Hollinger and WZ have more than covered the subject.

Loss Prevention Technology

Unlike employee theft, feature articles on retail technology affecting retail loss prevention are numerous. In fact, stand-alone technology articles are probably the most numerous of any type in the magazine’s fifteen-year history. From RFID to EAS, biometrics, exception reporting, video of all types, and self-checkout, it’s all here.

RFID was the cover story in the September–October issue in 2002. In that article Trlica speculated that RFID would be a key component in the future of supply chain management. Six senior retail and solution provider executives quoted in the article touted RFID as the biggest retail game changer ever.

In an interesting turn of events, we learned in the November–December

No discussion of people and the LP industry would be complete without discussing the need for improved diversity. It can be argued that the subject is still the elephant in the room and needs to get better.

and advised LP professionals to study up and get involved. RFID and EAS as complementary technologies were discussed in the March–April 2005 issue. A lot of time has gone by since then, but basically we are still talking about the same thing—how RFID will dramatically change the retail industry in the future. In the third installment in this series, we will take a closer look at where RFID stands in retail today.

The May–June 2002 issue contains the magazine’s first major article on EAS source tagging. Topics such as which EAS technology to use (AM or RF), the need to deploy EAS in all stores, leverage over manufacturers, and costing were all discussed as part of the questions to be answered to make source tagging viable. The article touts source tagging of CDs and DVDs as a big success and a primary driver of reduced shrink in that category. The November–December 2003 issue found DiLonardo, one of the foremost authorities on EAS, discussing its overall economic proposition. He discussed the fact that early adopters of EAS were struggling with continued cost justification and how source tagging may improve ROI. Biometric technology was a topic in the March–April 2004 issue. The article described the various types being developed such as finger, eye, DNA, human scent, vein-scan, ear shape, and gait recognition and how they may be used in retail.

But the author admitted that mass deployment of the technology could be several years away.

Point-of-sale (POS) exception reporting was the subject of three

Remembering 9/11

In the September–October 2006 issue, Bobby Senn of the New York City Fire Department wrote a very touching and compassionate article describing his experience on 9/11. He talked about how he miraculously escaped certain death when the south tower fell. He further described the lasting effect on him five years later and how telling the story is his way of remembering and paying tribute to his lost comrades and all the other people who lost their lives that day.

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POS EXCEPTION REPORTING The Benefits and ROI

INTERVIEW WITH PAUL JONES | PARTNERING WITH LAW ENFORCEMENT TO COMBAT ORC PROFILE OF THE PARADIES SHOPS | MEASURING INTERVIEWER PERFORMANCE

major articles from 2003 to 2005.

In the March–April 2003 issue, JCPenny described the development of its homegrown POS exception reporting system and the success the company had dealing with various POS transaction types. In the cover article from May–June 2004, Walter

Palmer covered the benefits and ROI of POS exception reporting in detail. He described the excitement in the LP industry around the subject and projected that additional data streams beyond POS would be added to further leverage the technology.

In the July–August 2005 cover story, Jon Grander of Brown Shoe Co. described how exception-reporting data can go beyond investigations and be used as a training tool to modify associate behavior.

Remote video monitoring made the cover of the September–October 2005 issue. The pros and cons of that technology and how it would affect the next generation of LP were discussed. In the article many industry practitioners gave their opinions on the current and future state of remote monitoring and its ever-increasing value to the retail LP industry.

No discussion of evolving retail technology and LP concerns would be complete without talking about

September – October 2005 LossPreventionMagazine.com

V4.5

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

self-checkout. In the January–February 2006 issue, DiLonardo was back describing what it was, how it worked, and the challenges it presented to the LP world. He concluded that self-checkout was here to stay and would eventually grow as a self-service tool well beyond retail.

Education That Gets Results Since January 2015, less than 1% of the shoplifters who have completed CEC’s education program Stock photo. Posed by model.

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FIFTEEN YEARS OF LOSS PREVENTION

Shrink Reduction and Loss Prevention Programs

July – August 2003 LossPreventionMagazine.com

V2.4

Obviously these two subjects go hand-in-hand and are usually the core focus and concern of most retail LP professionals. A September–October 2003 article looked at Stage Stores’ program for high-risk locations. Lee Bland discussed identification of metrics and outlined the key components of their program including general shortage interviews, awareness programs, operational audits, and physical security issues. She emphasized the need to keep any target store program flexible and concluded by noting that their program had resulted in a 48 percent shrink reduction in targeted stores.

The very next month, in November–December 2003, we got a look at GAP’s approach to specialty retail target store programs. It’s no surprise that the basic pieces and parts of GAP’s plan closely mirrored that of Stage Stores. One interesting addition was that GAP gave cash bonuses to target store managers who met their shrink goals. The company cited a 20 percent shrink reduction as a result of its program.

In the May–June 2005 issue, Dan Faketty began a series discussing a six-step strategic approach to a targeted loss prevention program. One technique he suggested was videotaping interviews with professional boosters who were caught, so the videos could be used as associate training tools in the future.

Leveraging People, Technology, and Relationships REMOTE VIDEO AT BIG LOTS THE GO-TO PEOPLE INSIDE LP ARMY AIR FORCE EXCHANGE SERVICE REFUND FRAUD COLUMNS BY HOLLINGER MARQUIS SPAIN WELCH WICKLANDER-ZULAWSKI

issue. Quite often, the subject of the interview is a top LP professional in his or her company who offers great overviews of the issues facing our industry and how companies are dealing with them. But the interview isn’t always at the VP or director level.

One interview that has always been popular and is still talked about today is the one from July–August 2003 showcasing the “go-to people inside LP.” In that interview, Lee talked to six individuals who occupied the number two positions in their LP departments and inquired about how they supported their organizations and their bosses.

Interviewed were Jim Carr of Pep Boys, John Matas of Macy’s East, Nick

Russu of JCPenney, John Selevich of Limited Brands, Suni Shamapande of Nike, and Pat Swansick of Hollywood Entertainment. The group talked about the strength needed in their roles, the difficulties of the position, how they managed their bosses, how they lead, and the challenges they needed to overcome.

It’s interesting to look at where these six individuals are thirteen years later.

Only one is with the same company, and all but two have left traditional retail.

Carr is currently the senior director of asset protection at Rent-A-Center.

Matas is the vice president of loss prevention, investigations, and ORC at Macy’s. Reports are that Nick Russu is now in the plumbing business in Texas. Selevich is currently the director of digital operations for this very magazine. Shamapande is a director at Pricewaterhouse Coopers specializing in retail and LP consulting.

And Swansick joined the Oregon Department of Justice as an investigator.

As mentioned, virtually every article published in the magazine is educational in some form. One of the early educational articles that stands out is a two-part discussion by Walter Palmer in the September–October and November–December 2005 issues entitled “Selling Your Proposal to Senior Executives.” Palmer discussed the importance of aligning to corporate continued on page 24

Selling Your Proposal

People, Education, and Diversity

One of the primary missions of Loss Prevention magazine has always been to serve as an ongoing source of information and education to the professionals in the retail LP industry.

That education, in some form, is present in virtually every article published. And no discussion about the magazine would be complete without acknowledging the great people who make up this industry.

The focus on people comes in many forms. One is the in-depth interview of an individual by Jim Lee in every

By Walter E. Palmer, CFI, CPP, CFE

“Great ideas are worthless unless they are put into practice” Most, if not all, of us have experienced this maxim time and time again in

proof pres·en·ta·tion

our business careers. We have a brilliant plan that will significantly reduce shortage, improve efficiencies, and increase safety of our employees and customers. There is just one problem—we can’t get the organization to approve it.

In presenting his findings from this year’s National Retail Security Survey, Dr. Richard Hollinger highlighted some of these same frustrations expressed by loss prevention executives in trying to accomplish their goals. In his survey, executives identified such issues as “lack of upper management support,” “staffing,” “ineffective training,” and “budgetary pressures and constraints” as major impediments to the success of the LP department.

While there are many factors that go into those responses, we must look within and decide if we are doing a sufficient job in presenting our proposals, plans, and projects in such a manner as to gain support from the organization. This article looks at how we improve our odds of getting approval for what we’re requesting. While it would be impossible to give an exact formula for success in every company and with every project, it is reasonable to explore a framework that can be used to increase our chance of success at getting our proposal approved and implemented.

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strategy, mastering the ins and outs of ROI calculations, creating positive emotions, using statistics effectively, and citing proven research. He further talked about presentation and creating a call to action.

And no discussion of people and the LP industry would be complete without discussing the need for improved diversity.

It can be argued that the subject is still the elephant in the room and needs to get better. Over the years the magazine has recognized this and pushed for improvement. Mimi Welch, a noted consultant and diversity educator, wrote a column on diversity in the majority of the issues for the first five years. The column began under the title Women in LP. Welch wrote extensively about

women’s issues, their challenges in the LP field, and how to improve the balance in our industry. After two years, she changed the title of her column to Diversity in LP and broadened her focus beyond gender to include all aspects of diversity, including color, background, diversity of thought, and the value that diversity brings to a team. Welch returned for this fifteenth anniversary issue with a contribution on page 69.

In his November–December 2013 Parting Words column, Jim Lee talked about the progress of diversity in the LP industry, the need to set directional goals (not numeric), looking at diversity as a business improvement strategy, creating forums such as diversity councils, and making sure that each candidate pool

contained qualified diversity individuals.

He went on to call out thirteen women in senior LP positions at that time, but noted the need for continued improvement in all facets of diversity.

But that’s getting ahead of ourselves.

I hope you have enjoyed this overview of the first five years of the magazine. It was hard to include everything, but I hope I’ve given you a good taste of the beginning years, emerging LP trends, and the magazine’s contribution to the industry. We will continue the journey in the next two issues. Many, if not all, of the articles mentioned are available on the magazine’s website, LossPreventionMedia.com. If not, PDFs are available by contacting editor@LPportal.com.

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

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CERTIFICATION

Drive Better Results in Your Company and Career T

Interview with Weston Pate, LPC Pate is a zone manager, asset and profit protection (APP) for Kmart in the New York/Connecticut area.

He is responsible for implementing the APP team’s 5 Play strategy in his zone and leading a team to increase profitability in the stores. Pate has been with Kmart five years and has served in various roles with increasing levels of responsibility.

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

and the many ways that we continually work to improve ourselves and those around us.

What benefits have you seen from taking the course?

I think that one of the biggest benefits I have seen is the ability to speak to certain parts of the business better, such as supply chain, and I also have seen interest from my peers and my direct reports now that they see the LPC credential on my signature. I believe this has been a great benefit because if others take the course, then they too will be better equipped to drive better results.

Why and when did you decide to pursue certification?

I decided to pursue the certification program to expand my knowledge of the asset protection business and industry as well as assist in furthering my career. I became LPC certified June 30, 2016.

Was the course what you expected?

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

The course was more detailed than I expected it to be and truly highlighted the route that the loss prevention industry is taking when it comes to how we should conduct business.

Do not procrastinate. If I could name one thing that I wish I could re-do from the course, it would be to buckle down a lot sooner and get the work done.

Tell us more about the process—going through the courses and taking the exam.

How has going through the certification process influenced the way that you approach your job?

To be honest, at first I procrastinated getting through the course work. I soon found that there was a lot more material than I had originally expected, so I got to work attempting to complete two chapters a day. I studied for the exam by taking the final exam multiple times and focusing on the areas where I missed questions. Come test day, I was nervous, but felt confident that through the course and the study aides, I had what I needed to pass.

I believe it has given me different perspectives to look at and was a great reminder to always build partnerships. Partnerships are critical to all parts of the business, and to drive excellent results you have to be able to develop partnerships in all that you do.

How would you compare certification to other educational courses that you’ve taken?

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

It’s very comparable to my college coursework and takes the same level of discipline and self-motivation to complete. This is something that you have to motivate yourself to do, and the feeling you get once you have completed the coursework and final exam is amazing.

I truly think that seeing how Sears Holdings asset protection and profit team aligned with the route the rest of the industry is taking was great. I really took away some of the vocabulary and equations learned in the course, and I’m applying them to my current work.

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

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

Yes, I do. I feel that it helps you align yourself with the rest of the industry and gives a great refresher on critical components of the asset and profit protection business.

I believe the most eye-opening experience was how far loss prevention has come as an industry

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Do you think certification offers a professional advantage over those who have not been certified?

I do believe that certification provides an advantage. The certification sets you apart from others who may have similar experience and education and shows your dedication to being an LP professional.

How has certification changed your expectations of loss prevention as a career, for yourself and for others?

Ever since becoming an asset protection manager, I have seen this as a career and a career that I love and truly enjoy. This course just solidifies my commitment to making this a career.

Would you recommend certification to others?

Absolutely! I believe that this course will help any asset protection professional drive better results as well as give them a competitive advantage when it comes to career opportunities.

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Is there anything else that you would like to share regarding the learning experience?

This course is truly a learning experience. I honestly believe it is comparable to my college coursework experience in terms of content, amount of coursework, and knowledge gained. I would highly recommend this course to all LP professionals.

Newly Certified

Following are individuals who recently earned their certifications.

Recent LPC Recipients David Henderson, LPC, CFI, O’Reilly Auto Parts Chad Hixon, LPC, CFI, Maurices Dustin Hudgins, LPC, CFI, Payless Shoe Source Robert McLaughlin, LPC, CFI, McCoy’s Building Supply Steven Nixon, LPC, Lowe’s Weston Pate, LPC, Kmart Daniel Renauer, LPC, Walmart Stores Michael Reynolds, LPC, Rite Aid Bryan Rice, LPC, CFI, Urban Outfitters David Rozhon, LPC, Sears Holdings Kristen Scott, LPC, CFI, Office Depot Tobias Steckler, LPC, Belk Department Stores Mark Swistak, LPC, CFI, Ollie’s Bargain Outlet

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27

ACADEMIC VIEWPOINT ACADEMIC VIEWPOINT

by Richard C. Hollinger, PhD

The Container Store Fifteen Years Later W

Dr. Hollinger recently retired as professor emeritus of the Department of Sociology and Criminology & Law at the University of Florida, Gainesville.

He was director of the Security Research Project, which annually conducts the National Retail Security Survey. He will continue as contributer, editor, and co-principal investigator.

Dr. Hollinger can be reached at rhollin@ufl.edu. © 2016 Richard C. Hollinger

hen I was first asked to write a regular column for their brand new publication Loss Prevention magazine, Jack Trlica and Jim Lee suggested that I focus on the linkage between academic research and the day-to-day practice of loss prevention. Fifteen years ago my first column in the inaugural issue was a review of The Container Store.

The Container Store now has over eighty stores generating over $700 million in annual sales and has even lower shrinkage now than in 2001, along with negligible turnover, higher job satisfaction, and beginning wages that are twice the average in the retail industry.

Humble Pie for the Naysayers

Most of my research and the academic literature on employee dishonesty clearly made the argument that if you pay people adequately, treat them well, and encourage them to remain with the company, they will have no reason to steal and will also become actively involved in protecting the company assets from shoplifters and employee theft. To prove this point, I selected a firm that met all of these criteria, namely, The Container Store.

In 2001 The Container Store was The Container Store article a twenty-store chain from the premiere issue. that had extremely low levels of shrinkage, almost no turnover, high levels of job satisfaction, and excellent profitability while paying their employees an above-average wage. After I wrote about this retail company that had seemingly found the secret to low shrinkage, a number of readers pointed out that this level of success could not persist for long. After a total of thirty-five years of impressive growth, high profitability, and most importantly, low shrinkage, The Container Store is still thriving.

The Container Store has been on Fortune magazine’s list of top 100 employers for a remarkable seventeen

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SEPTEMBER–OCTOBER 2016

straight years. Their last ranking was number fourteen.

They still have shrinkage levels that are some of the very lowest in the nation while continuing to show a respectable profit margin. In 2001 CEO Kip Tindell (now chairman of the board) was quoted as saying, “A funny thing happens when you take the time to educate your employees, pay them well, and treat them as equals.” That is, retail stores can become remarkably successful.

I recently interviewed Joan Manson, vice president of loss prevention, benefits, payroll, and legal, who was proud to confirm that Kip Tindell was right on the money. The Container Store now has over eighty stores generating over $700 million in annual sales and has even lower shrinkage now than in 2001, along with negligible turnover, higher job satisfaction, and beginning wages that are twice Joan Manson the average in the retail industry.

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LOSSPREVENTIONMEDIA.COM

This company continues to prove the naysayers wrong. The Container Store demonstrates that you can build a sustainable chain with well-compensated employees who are paid far above the retail national average. The logic of their success is simple. These employees feel that they are part of a family environment that is a place where they love to work. In fact, most never leave the company. Why should they when full-time employees make on average more than $50,000 a year?

Job Satisfaction Is Key

At the very beginning, former Chairman Garrett Boone developed a set of basic customer service principles that were founded on constant training. In 2001 employees were given 235 hours of training.

Now full-time employees receive 260 hours of training, and even part-time employees average 177 hours of training. All of this training obviously pays off on the bottom line. Moreover, The Container Store is proud that they have never laid off employees because of low sales.

Manson has been employed at The Container Store for virtually her whole career and is particularly proud of the fact that her CEO is a woman, Melissa Reiff.

Manson reports that fifteen years later, The Container Store is still an awesome place to work. She says that some even call it a fantasyland—not one that is based

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This company continues to prove the naysayers wrong.

The Container Store demonstrates that you can build a sustainable chain with well-compensated employees who are paid far above the retail national average. in fiction, but on hard data built on a foundation of logical retail planning, maximizing profitability, and yielding loss prevention success.

Most readers of this column know that I have been arguing for the benefits of high job satisfaction, which research has shown to yield high profits, minimal turnover, and low shrinkage. It is truly gratifying to see that fifteen years later this retail model continues to work so successfully at The Container Store. Perhaps it can work this well at your retail firm as well.

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LP MAGAZINE | SEPTEMBER–OCTOBER 2016

29

As a member of The Loss Prevention Foundation, you join an association founded by and for loss prevention professionals. With access to an elite network of fellow industry professionals, development tools tailored specifically to our industry to help you advance your career and other great member benefits such as exclusive access to elite savings and discounts on thousands of products and services nationwide. Your membership is not only a demonstration of industry leadership; it’s a commitment to the profession and to your own professional development. Elevating the Industry, One Leader at a Time.

For more information, visit losspreventionfoundation.org or call (866)433-5545

INTERVIEW

THE MAGAZINE, CERTIFICATION, BASEBALL, AND C-SUITE ARROGANCE A CANDID CONVERSATION WITH JIM LEE, LPC

By Jack Trlica, Managing Editor

INTERVIEW EDITOR’S NOTE: James “Jim” Lee, LPC, is the executive editor and cofounder of LP Magazine. Lee has over thirty years of practical experience as a retail security and loss prevention executive, including senior positions with Montgomery Ward, Lazarus, The Broadway, and Marshalls. He is also cofounder of Contact, Inc., a consulting and training company that supports retailers with internal awareness programs, and LPjobs, the largest e-recruiting platform for LP professionals. In 2010 Lee was inducted into the National Retail Federation’s Ring of Excellence.

TRLICA: It’s been fifteen years since the magazine was introduced. How did that happen and what did you hope to accomplish by publishing a magazine for the loss prevention industry?

LEE: It started because you had an idea

for a magazine and came to me and my business partner at the time, Walter Palmer. We had several discussions about how it might work and agreed to take a shot at putting one together.

And that meant developing content, getting support from retailers, and finding support from vendors who would advertise in the magazine, all of which we did. What we hoped to accomplish was create a vehicle that would provide educational value for LP professionals that had not been there before in our industry.

TRLICA: Did you have a long-term goal?

LEE: Frankly, my long-term goal was

to still be in business a year down the road. It would have been very easy for the magazine not to succeed.

It would have been very easy not to get support from the advertising community who provided funding for it. It could have been that retailers wouldn’t support it. It wasn’t a given that all that was going to happen.

TRLICA: But the vision was to create a vehicle for educating the industry. Do you think the magazine has accomplished that?

LEE: Absolutely. Without a question

it has. And the magazine has spawned several other educational sources, such as a certification program with the Loss Prevention Foundation. There have been various

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educational sources that have been birthed because of the magazine.

So yes, it did accomplish that.

TRLICA: The magazine has obviously flourished over the past fifteen years while it has evolved. Talk a little bit about that evolution, both in print and in digital.

LEE: The evolution is basically this.

In the beginning it was you, Fabi Preslar our designer, Walter, and me.

And then we got an ad rep about the time we lost Walter. So in the beginning there were only four of us putting out the magazine. So the most obvious evolution was going from four people to about fifteen.

Looking at print, when we first started most of the articles were written for the most part by the practitioner, in some cases with a lot of editing.

Now we are at a point where we get information from the practitioners, but the articles are written by freelancers or someone on staff. We still have very close contact with the practitioners, who help us develop article ideas, but for the most part, they don’t have to do the writing anymore.

From a digital standpoint, in the last three or so years, we’ve been able to hire some really talented people and now have a true digital publishing capability, not just sending out a newsletter and calling ourselves a digital publisher. We spent a great deal of time and money to build a robust digital publishing technology platform with the help of an outside firm that is built on proven methods, integrated technology, and strong analytics. That combination of an exceptional digital platform and a very talented team has allowed us to provide the industry

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much, much more in the digital world that has ever been available before.

TRLICA: You mentioned earlier certification. What is the value of certification that the LP Foundation brings to this industry?

LEE: The value of the foundation is

that it is a not-for-profit association that is pure in its inception and pure in the development of an institutional program for the loss prevention professional. It is an association that is run by LP executives and supported by the broad LP community, both the solutions providers and the practitioners. It’s not a product-driven organization trying to be just another company. It clearly is an educational program. When I look around my office, I have one certificate and one diploma, although over the years I’ve received lots of certificates for various things. One is my diploma from Indiana University, and the other is a certificate that says I have my LPC certification. It’s not that either my certificate or my diploma ever really got me a job. But it developed, I think, an awareness and educational value within myself to help further my career, as certification does with everyone who goes through it. And the magazine has been a big part of the development of the Foundation and it continues to be as it supports the Foundation with its marketing expertise and operational support.

TRLICA: Before the magazine, you had a successful career as an LP executive. For those who don’t know, talk about how you started in the industry.

LEE: I started in the industry because

Montgomery Ward paid significantly more than the federal law enforcement agencies did. And when you’re twenty-two years old, money matters.

I started with Montgomery Ward after college and spent the first twelve years in retail with them, where I rose to the number two person in the security department before moving

LOSSPREVENTIONMEDIA.COM

INTERVIEW there I went to Marshalls, which is now a part of the TJX corporation.

TRLICA: A lot of executives in loss prevention like you started at Montgomery Ward. What about Wards produced so many successful LP professionals?

LEE: There were a couple of

individuals there in what was then called the personnel department or human resources who had training dollars available. The regional personal director was a former security manager with Sears named Bill Horrell. He decided to carve out some training dollars for security managers on the given that Montgomery Ward would go to college campuses and recruit criminal justice, criminology, or police science majors, which they did. They started the program in the early ‘70s, and over the next decade, there were probably a couple of hundred people who were recruited from the Midwest who went to work for Wards. Because of that commitment, a lot of people in this industry grew up working for Montgomery Ward.

TRLICA: You’re a huge proponent of education and mentoring.

Who are some of the people who worked for you that went on to run their own organizations?

LEE: There’s a lot of them, and if I

were to start naming them, I’m going to leave somebody out. So all those that have worked for me know who you are, and I was blessed to have you.

But there two that I would mention that I had special relationships with.

One is Jay Fogg who recently retired as senior vice president of operations for Bloomingdale’s. He’s a workaholic, on to three different retailers after that and had a twenty-five year career as a senior LP executive.

TRLICA: What three companies?

LEE: I went from Montgomery Ward

to Lazerus, which became part of Macy’s. Then I went to The Broadway in Southern California, which also became part of Macy’s. And then from

An LP executive who is successful understands why, not just what. Knowing what to do is completely different than knowing why we do something. I think LP executives who understand why you do something are successful.

LP MAGAZINE | SEPTEMBER–OCTOBER 2016

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INTERVIEW

listening to somebody talk about what they think they have as issues or problems can help them solve them.

if anything was broken he could get it fixed, and he had great vision for what needed to be accomplished in an organization. Literally the best executive I ever worked with.

The second is Bob MacLea who is a great person with a big heart.

He is someone who has a great high level of trust within the organization and genuinely listens to his people.

He is just fun to work with.

TRLICA: Are there any important bits of advice that you offer executives or even young people starting out?

LEE: When asked I give the same

TRLICA: What are your observations of the qualities that help make someone successful as an LP executive?

LEE: I think success is measured in

a lot of different ways, so I would answer that question this way.

An LP executive who is successful understands why, not just what.

Knowing what to do is completely different than knowing why we do something. I think LP executives who understand why you do something are successful. I think the second part of the answer is those that have the ability to be leaders, not just in the LP organization, but also with the executives they’re working for and influence other parts of the company. I think the leadership quality is the strongest quality, and it has to be present for somebody to be successful in LP.

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advice in terms of what I try to do.

Read as much as you possibly can.

Ask as many questions as you can, not only of your bosses and peers, but also of those people within other organizations and companies. Sit down periodically and make a list of where you want to go and what you want to be a year down the road, three, five years down the road. You have to have an objective roadmap.

TRLICA: Some people may not know that the magazine has a custom-publishing arm that continues to provide communication programs for retailers. Tell our readers about LPM Media Group.

LEE: We have a group of very talented,

creative people with analytical skills, design skills, and who understand retail. We have just short of two dozen companies that we put together training and awareness programs for, whether they be conventional or whether they be digital and online.

We have some very well-known retailers who we work with because of the talented people within our company who can do that.

TRLICA: Today you continue to consult and mentor many people in the industry. In fact, it’s common for you to get calls day, night, even weekends from both retail and vendor executives seeking your counsel. Why is that?

LEE: When you work twenty-five

TRLICA: You also played a part in launching LPjobs.

How did that come about?

LEE: LPjobs came about because Paul

years as a practitioner and something just short of that on the private side, you win, lose, and tie a lot. I have a lot of experience in all three of those, and people who seek and ask my guidance know that I have that.

Just as important, I think I’m a good listener to those people who call and ask for my help. And sometimes just

Jones was sitting at Sunglass Hut as the VP staring up at the ceiling when I visited him. He said, “You ought to start a company called LPjobs.” So it was Paul Jones who had the idea that we do an e-recruiting company.

Walter Palmer and I helped develop and launch LPjobs with the help of Paul back in 2000. LPjobs is still in

SEPTEMBER–OCTOBER 2016

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existence today helping young people find good jobs and helping retailers find good people. LPjobs was one of the initial advertisers with the magazine and continues to be an advertiser with the magazine to this day.

TRLICA: You moved from the retail side to the vendor side, and that’s something that many LP executives have tried but not always successfully. What are the common failures, and what are some of the keys to success in moving to the provider role?

LEE: The common failure is not to

have a job in LP and decide that you can be a consultant—that you can just put your shingle up and you’ll be able to advise and counsel retail companies and make money. That just doesn’t happen like that. That’s a recipe for failure. In order to go out on your own in this business, you need to have a product, hopefully one that is recurring. But you need to have a product or an ongoing service that you can provide because you cannot be consulting, which occupies all of your time, and at the same time develop a product. You can’t do both at the same time. I think the other piece is that oftentimes when someone decides to go to the vendor side, they go to work for a vendor company. It clearly is a lot easier to establish themselves with a base salary and bonus opportunity, but they’re working for somebody else.

The pitfall in that situation is having an expectation that the relationships you had over the years, that those people are going to be anxious to speak with you. But they’re all busy and often don’t answer your calls. It’s one of the biggest disappointments I hear from people who make that switch: “Why don’t people call me back.”

It’s just the nature of the business.

TRLICA: You typically byline the executive interview in each issue of the magazine. What are some of the more memorable interviews that you conducted

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INTERVIEW

available. Coughlin was the real first director of security for Walmart, so he had experience in our profession.

Even though he had risen to a very high level with Walmart, he has not forgotten where he came from. We were told he had forty-five minutes for us and to pick a date. We picked the very first date that was available, January 2, 2002. You and I showed up a half hour early for the interview, and the admin led us into his conference room. Tom came in and sat literally for three-and-a-half hours with us. Here was the CEO of Walmart sitting with us for three-and-a-half hours. That is a wonderful memory for us at the magazine.

A couple of other interviews we did were unique and worthy of mention.

One is the Paul Jones interview, and one is the Mark Stinde interview. Both of them transformed their companies’ LP programs. Paul at Limited Brands transformed the LP program and hired a terrific, spectacular staff and put a lot of programs, initiatives, and strategies in place that, in my opinion, probably at that time made them the best LP program in retail.

Mark also totally transformed 7-Eleven into a professional asset protection, profit-driven program. I’m sure the company didn’t believe that loss prevention could have so much

and recurring themes that you see in these interviews?

LEE: We’re close to having ninety of

those interviews now. I think every one of them had something of interest to me. There are some that I have special memories of. The first was Tom Coughlin, who at the time was the CEO of stores at Walmart. We sent the premiere issue of the magazine to Tom Coughlin’s office asking if he would be the subject of an interview for the magazine. Shortly thereafter, his administrative assistant called you and said he would do an interview and gave several dates that Tom had

There’s a long list of items that have to be put in place to handle the shrinkage program that every LP executive knows. Unfortunately, sometimes C-level people would rather ask their LP executive about all the big cases you had last week as opposed to giving the LP executive the opportunity to talk about all the things their organization did to help create profit outside of catching people. Creating profit means reducing shrink.

LP MAGAZINE | SEPTEMBER–OCTOBER 2016

35

INTERVIEW he’ll still be answering that question.

He has an amazing mind for this business, and if you go back and read the interview that we did with him, you see that come through loud and clear.

We actually did two interviews with Claude Verville at Lowe’s. The second we did, you and I sat with Claude at a restaurant, and we talked for over an hour and a half. He probably spent thirty seconds talking apprehending someone. He spent the rest of the time talking about the customer experience and how the LP team can support the objectives of the company from a profit and customer service standpoint.

It was truly remarkable to hear how Claude and the rest of his team had evolved to that level of understanding for their true value within Lowe’s.

TRLICA: Is there anyone that you’d like to interview that you’ve not?

LEE: There are some people that

we’ve not been allowed to interview because of the company moratorium on publications like ours having access to the top executives. The first who comes to mind is Bob MacLea at TJX. He has a lifetime story that others should hear. Perhaps we will interview him after he retires. There are a few like that who we’ve not been able to get approval to interview.

TRLICA: Another thing that you do in the magazine is your Parting Words column at the back of the magazine. In that column,

value within an organization. Those two are very memorable to me.

The other two that are memorable are two individuals who worked together early on in their careers. That was Bob Oberosler and Claude Verville.

Anytime you talk with Bob Oberosler, it’s always interesting because Bob’s thought process is usually about six to twelve months out in terms of trying to invent or create something new.

Bob’s the type of person you can ask a question and literally get up and leave and go have lunch and come back and

36

The magazine is in really good hands because we’ve been able to hire some pretty smart people who will continue to make the magazine different and better, regardless of what we do to help them.

That means the magazine will continue to evolve and improve to provide even better service and partnership to this great industry of loss prevention.

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INTERVIEW you offer your observations on a variety of topics, some light-hearted, some serious. In one last year you commented about C-level executives who make emotional decisions that sometime lead to change at the head of the LP organization. What about that topic bothers you?

LEE: I think being the top LP

executive in any retail company is a hard job, and I think clearly it is often an underappreciated job and often misunderstood by the C-suite. It’s primarily misunderstood because most of the C-level folks don’t take time to get to know their LP executive and understand the strategy behind running an LP program. And as a result, sometimes C-level people change their LP executive out of an arrogance or out of a self-serving motivation on their part because maybe the results aren’t as good as they would like. But it clearly is out of a lack of understanding the LP executive. And sometimes they make

a change that gets them no further ahead. They were just as well off having the previous regime in power.

The best two presidents I worked for both asked me the same question time and time again: “What can I do to make you succeed?” If the senior LP executive is not hearing this from the C-suite, then that arrogance and ignorance will restrict everyone’s success.

TRLICA: You are also passionate about LP organizations that sometimes lose their focus on reducing shrink. What’s your opinion on that?

LEE: There’s a long list of items that

have to be put in place to handle the shrinkage program that every LP executive knows. Unfortunately, sometimes C-level people would rather ask their LP executive about all the big cases you had last week as opposed to giving the LP executive the opportunity to talk about all the things their

organization did to help create profit outside of catching people. Creating profit means reducing shrink. So top-level organizations in retail that are run by top-level, forward-thinking LP executives stay focused on shrinkage and profit, understanding that you have to catch people, and knowing that has a place in the business but not an overpowering place in the business.

TRLICA: On the personal side, one of the things you’re most well-known for is your love of golf. When did you first pick up the game and why does it play such an important part in your life?

LEE: I didn’t start playing golf until my

mid- to late-twenties, mostly because I didn’t have any money to spend on golf earlier. Having been involved in sports all my life and not being able to continue to play sports because of various injuries, I looked for something that I could enjoy doing and gravitated

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INTERVIEW

Often in business you simply fire the unsuccessful person. It requires no work on your part to make that type of change. It does require work if you decide you see something in that person that is worth keeping. So the better thing to do is try to figure out what position, what role can they play within the company where they can be successful and still make use of the experience that they’ve gained over the years.

in January. The results are great. By March, everyone in the company has forgotten about it, and you’re on a new year. The same in baseball. You get four hits in one game, and the next game, you start right back at zero.

Another lesson you learn that can be applied to LP involves making personnel changes. Often in business you simply fire the unsuccessful person.

The easy way out is to get rid of a person. It requires no work on your part to make that type of change. It does require work if you decide you see something in that person that is

to golf. And loved the game of golf, and loved playing with people in the business. You find out an awful lot of things about a person when you play golf with them. One, what kind of person they are. Two, whether or not they understand the value of rules because golf’s a very easy sport to cheat in. Just like having a job in business is very easy to see that. And golf gets you some of those answers. And golf is a sport that allows you to play for a long period of time. Granted, maybe not as well as you played when you were younger, but still allows you to play for a long period of time.

TRLICA: When you mentioned college earlier, you failed to mention that you were an All Big Ten baseball player at Indiana.

What lessons did you learn from your career in baseball?

LEE: I’d say clearly in baseball you

learn how to accept failure. Hitting a baseball thrown at ninety miles an hour is one of the hardest things to do in any athletic endeavor. The Baseball Hall of Fame is full of individuals who only achieved success 30 percent of the time. So you learn in baseball the ability to accept failure in life. Striking out four times in one day is a very humiliating experience. You learn to celebrate your successes because you know they won’t last very long. It’s kind of like hitting your shrink results

38

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INTERVIEW continued from page 38

worth keeping. So the better thing to do is try to figure out what position, what role can they play within the company where they can be successful and still make use of the experience that they’ve gained over the years. I believe that most everybody, unless there’s a character or ethics issue, can provide a great service to the company and doesn’t need to be fired. I always maintained that somebody who wasn’t doing a great job in one position didn’t need to just be fired. You need to accept responsibility in finding another role that they can play and be successful.

I experienced that and saw a lot of people succeed as a result of it.

I related that back to watching two individuals I played against in college. One was Ted Sizemore from the University of Michigan who was a catcher and went on to start his professional baseball career. He would never have made it unless one of the coaches saw that he might be better served as a second baseman. They moved him to second base and he played fourteen or fifteen years for the Dodgers and the St. Louis Cardinals.

He was very successful because someone saw that they needed not to cut him and stop his professional career, but change positions. The other was Steve Garvey, who played third base for Michigan State. But if he was able to field the ground ball, he never could throw it over to the first baseman without throwing it in the stands. So he’s a person that probably should not have had much of a career in baseball, but somebody saw that they needed to find a position for him because he could hit a little bit.

They moved him to first base, and he had a wonderful, magnificent, long career because they made the decision that he shouldn’t be fired, that they should find a better role for him to play on the team or in the company.

TRLICA: There’s something else that maybe only a few people know about you is your knowledge of history

40

and your unbelievable memory for trivia. So where does all that come from?

LEE: Most of my knowledge of history

relates to just a large appetite for reading military history. And some of it relates to the fact that I was with my mother and stepfather who was in the military for a few years in Germany during the Cold War period and developed a great appetite for understanding World War II and generals and battles that were fought.

From the sports trivia standpoint, I’m a product of the ‘50s, ‘60s, and ‘70s.

Because I played sports and knew a lot of the people who played, I tend to remember and relate dates and events and games, whether it’s football, basketball, or baseball. I had favorite players. Growing up, I thought Ted Williams and Mickey Mantle were just it. Little did I know when I got to college I was going to be coached by a guy who actually played with Ted Williams and probably against Mickey Mantle and all my heroes. So it’s easier for me to remember some of those days because of my personal experiences.

TRLICA: We’re sitting in your office doing this interview, and you have lots of memorabilia here. What are some of the things that mean the most to you that are sitting on the shelves or on the wall?

LEE: The things that are here are

in two different categories. One shelf is full of family items. I think probably the picture of my wife and my two daughters probably is my most favorite, although I still cherish the pictures of my mother and Native American Cherokee grandmother. Another bookcase holds items that relate back to being an athlete, playing baseball, and some are people who I played with or admired in sports.

TRLICA: Many of your industry friends believe you will never retire. Is that true, or are you planning on moving to Hilton Head for good one of these days?

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LEE: Well, my wife pretty much

has moved there full time, and I certainly enjoy my time there. But, seriously, I don’t know the answer to that. I’m not sure I understand what retirement is. While I love to play golf, I wouldn’t want to play golf every day. I do know that as long as I’m healthy and it’s enjoyable to talk with those in the industry and continue to be a part of this industry, I don’t have a date in mind to retire. It’s almost the month of September when we have our annual magazine meeting.

There will be 120 or so retailers and solution providers and their spouses all together at Sanibel Island, Florida. It’s a truly spectacular event, and it’ll be fun to be around those people. So as long as those types of things happen and it makes me feel good, I don’t have a date in mind.

TRLICA: Speaking of personal items, I notice that you’re wearing a watch for the first time that I’ve ever seen.

Why after all these years are you wearing a watch?

LEE: I bought a watch and started

wearing it about two months ago, and you’re the first person who has noticed. I stopped wearing a watch fifty years ago when my grandfather passed away with a sudden heart attack, six months from his retirement. I was angry that my grandfather was taken so suddenly.

I guess getting rid of my watch was my way of saying that time wasn’t that important. I figured fifty years is long enough. So I bought a watch.

TRLICA: Here’s my last question.

What’s next for the magazine?

LEE: The magazine is in really good

hands because we’ve been able to hire some pretty smart people who will continue to make the magazine different and better, regardless of what we do to help them. That means the magazine will continue to evolve and improve to provide even better service and partnership to this great industry of loss prevention.

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Find out about security solutions for success in retail at genetec.com/retail

EVIDENCE-BASED LP

by Read Hayes, PhD, CPP

Be All You Can Be

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

F

Be a Leader

ear of crime is real, and it’s costing retailers. All retail chains strive to generate sales by stocking well-designed stores with desirable merchandise and friendly, helpful associates. But all this is for naught if shoppers perceive the site is dangerous. If they do, they won’t even visit. As mentioned in this column before, we’re working with multiple retailers in our Violent Crime Working Group to improve prevention and recovery.

We recently conducted a Houston Robbery Prevention Summit and were pleasantly surprised that over twelve retail chains and multiple federal and local law enforcement leaders and investigators energetically joined together for a day of learning and planning. This group wants to continue meeting and improving protective actions and speed of offender evidence sharing.

It is always tough to do, but always important. We need people to lead out there in order to improve LP/AP results.

Technology and even process aren’t enough. Success comes from someone getting the process executed over the long-term.

And we lead by being real experts for our organizations, by convincing partners to partner. We lead our own teams, and we lead our local law enforcement partners if need be.

The US Army has long worked to understand and produce high-quality leaders. Lives, and our freedom, depend on them getting it right. Army field manual 22-100 bases leadership development around the concept of “be, know, and do.” The same principals help any manager accomplish his or her goals.

Success comes from someone getting the process executed over the long-term. And we lead by being real experts for our organizations, by convincing partners to partner.

Getting Focused

We’re focusing on better ways to deter violent offenders like robbers and purse snatchers before they try, as well as incapacitating high-impact offenders via faster arrest in Houston, Atlanta, Jacksonville, and Gainesville.

These research efforts are grounded in situational crime prevention (SCP) theory and involve multiple sites, methods, and measurements.

We always use frameworks, and parking lot and other violent crime is no exception—there is too much at stake to just randomly do stuff. So SCP guides our actions, gives them context, and allows us to tweak our methods to dial-in effectiveness for larger-scale effectiveness measurement.

We want to affect offender decisions out in place in time if at all possible. We communicate with them in zone 5 via social and traditional media, as well as by word of mouth.

We want our store to look like a no-go from a drive-by view (in other words, it looks too tough to tackle). As the offender moves through zone 4 or parking lot and as they enter the store, the same thing applies—not here, not now.

And of course at and near the actual asset point we can “message” them as well.

We realize many offenders unfortunately don’t notice, understand, or care about our deterrent efforts, so we’re working on ways to facilitate faster detainment of these chronic offenders. We will keep you apprised on the R&D implications.

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SEPTEMBER–OCTOBER 2016

Be a good leader by demonstrating sound character, decisiveness, and selfless service—even when tired and discouraged.

Know your people and how to communicate and inspire supervisors, peers, and subordinates alike; and strive for technical and tactical crime and loss control knowledge and proficiency.

And of course know your organization’s business and people, the company’s objectives and strategy, and even the areas around your locations.

Do make good decisions, motivate people, operate your team to make the right things happen, and constantly improve LP processes and results with evidence-based solutions.

LPRC in Action

Retailers established the Loss Prevention Research Council (LPRC), so they drive it. And they all want the same thing. They

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want an independent entity that will help them form better LP/AP strategies and then help them rigorously develop and test solutions to improve their LP impact.

I’ve adapted the US Army’s focus to the LPRC to make sure member organizations and their individual team members benefit.

Be. Our members tend be experienced, open-minded, and have a healthy thirst for knowledge. They want to push and to work with similar professionals all year around. To this end, the LPRC is a coalition of over forty retail chains combined with over forty solution companies collaborating monthly in eleven working groups with our science team to produce, enhance, test, discuss, and deploy improved crime and loss control tactics and technologies.

Know. Retailers also want their own AP teams, their organizational counterparts, and their solution partners to all know and use the latest protective tactics and evidence-based solutions. They don’t want to just keep trying what vendors bring them and guessing on eventual outcomes. They seek a common, tested framework and terminology. So they use the new online LPRC keyword-rich Knowledge Center collection of hundreds of reports and briefs, and they individually and collaboratively participate in and discuss real-world research and development.

Do. Most importantly, retailers strive to put their new tactics and knowledge to work reducing their risks, adverse events, and losses. They do this by participating and collaborating in the monthly action-oriented webinars; in the ever-expanding LPRC and University of Florida

(UF) Innovation Lab; in their own innovation stores (StoreLabs); during working group field exercises and visits; at the annual interactive Impact Conference; and of course in rolling out and evaluating their improved efforts.

Make an Impact

You’re invited! Now in its sixteenth year, LPRC’s Impact Conference is an annual gathering where multiple new research results are discussed, the iLab is toured, the working groups break out, offenders are interviewed, and new projects are planned. We typically have over 200 AP and solution executives engaging together. These executives include pyramid heads as well as field and corporate LP/ AP leaders and investigators. The Impact experience also includes law enforcement, academics, and students working together as well as enjoying fantastic social networking at the Innovation Lab reception and at the campus venue.

Recommended Reading

Invisible Influence: The Hidden Forces That Shape Behavior by Jonah Berger, is a marketing book by a marketing professor that lays out how others and messages can influence perceptions and decisions. It is ideal for us to use as a source for editing anti-crime messages for our programs.

As always, our UF and LPRC teams are working to support you, so please let me know your thoughts and suggestions via our website at lpresearch.org, on LinkedIn, or at rhayes@lpresearch.org.

LP MAGAZINE | SEPTEMBER–OCTOBER 2016

43

ASK THE EXPERT

Sponsored Editorial

The Importance of Continuing Education for LP Professionals

Interview with Stuart Levine, CFI, CFCI Levine is CEO of The Zellman Group, an LP industry solutions provider supporting retailers with loss prevention services, civil recovery, field audit, sales audit, employment screening, and customer service shopping. Prior to founding The Zellman Group, Levine was director of LP at Bed Bath & Beyond and held other LP positions with JCPenney, Lord & Taylor, and Limited Brands.

L

Other than purchasing quality products and services, how important is it for loss prevention practitioners to invest in their relationships with solution providers?

oss prevention professionals at every level of the retail enterprise need a varied skill set to be successful at their jobs.

Both retailers and solutions providers play a role in supporting continuing education in the industry. We discussed this role with someone experienced both as a retailer and solutions provider.

This is a difficult question that has multiple answers. I think that it is just as important for the service providers to invest in their relationships with the retailers as it is for the retailers to invest in the relationships with suppliers. There needs to be mutual trust in both directions. It is imperative that the service providers have values that are in line with the retailers.

Prior to The Zellman Group, you served as a loss prevention practitioner. Tell us a little about your own experience in loss prevention and when you realized that it had evolved from a job and into a career for you.

As your company is entering its twentieth year in business, your commitment to loss prevention education is greater than ever. Why is that?

While I was a deputy sheriff with the Palm Beach County Sheriff’s Department, I worked off duty at JCPenney at their diamond sale events. I liked the structure and culture of the company. After my first full-time loss prevention job with Caldor, I moved to JCPenney in New Bedford, Massachusetts, as an LP manager. I learned a lot about retail loss prevention and shrink and was hooked on my new career.

I don’t believe it is possible to grow without continuing your education. I am excited that I am starting to study for my LPC certification this month and am committed to receiving the certification in the next few months. The Zellman Group recently became a Doctorate-level supporter of the Loss Prevention Foundation. This support gives us the opportunity to offer LPC scholarships to the retail community. We are also sponsors of the IAI and Loss Prevention Research Council.

Both of these organizations are education-based and offer great tools for the LP professional to continue their education.

What was the most difficult decision that you faced in your loss prevention career?

When I was the director of loss prevention at Bed Bath & Beyond, I felt that I hit a personal road block on the effect I could have within the organization. I came from an entrepreneurial family and saw an opportunity to offer loss prevention services to small companies that could not afford their own department.

I started The Zellman Group in 1997 to fill this industry void.

What is the most important piece of advice that you would share with loss prevention professionals just getting starting in their careers?

The retail industry is rapidly changing, and with it the role of loss prevention. What steps do you feel that loss prevention professionals must take to keep pace?

Don’t be shy about networking with other respected loss prevention professionals. Many of the issues that you will be faced with have been conquered in the past. As you continue to move up the ladder in your career, always look to hire the smartest person that you interview. By doing this you will have a better opportunity to bring value to the company and make your department an integral part of the team.

I think that education is the key to LP professionals future growth. Industry trade shows afford the opportunity to attend seminars that offer a different prospective on solving industry issues. I also feel that certification is equally important. Certification with the Loss Prevention Foundation, the International Association of Interviewers (IAI), and others show a person’s commitment to the industry.

What is the most important piece of advice that you would offer a loss prevention professional assuming their first role as a decision maker for the department?

Other than providing quality products and services, what additional role do you feel that solution providers can take in supporting loss prevention as a career choice?

Look, listen, and react. I found that one of the biggest mistakes that I made in my career was that I would look and react without listening. A good LP professional will do everything possible to be part of the company’s executive team and not get tagged as retail police. By being a member of the team, you all have the same objective in lowering shrink while obtaining valuable insight from store operations, human resources, and other departments.

Supporting industry trade media, such as this magazine, gives the media outlet the funds needed to continue delivering quality educational articles and information to the industry.

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SEPTEMBER–OCTOBER 2016

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FEATURE

CRISIS MANAGEMENT WHAT WALGREENS, 7-ELEVEN, AND OTHER CRISIS-PREPARED RETAILERS HAVE IN COMMON

By Garett Seivold, Contributing Writer

CRISIS MANAGEMENT

D

onald Trump’s acceptance speech at the Republican National Convention in Cleveland painted a grim picture of the nation’s safety.

The candidate recited a laundry list of recent global crises and pounded a message of danger—it’s everywhere and growing. A week later, in Philadelphia, Democrats endeavored to laugh-off that characterization and paint a much sunnier portrait of the state of the nation, insisting, for example, that—upticks in violence notwithstanding—crime remains at historic lows.

Regardless of which characterization more closely tracks reality, there is no denying that turmoil does exist. Crises regularly occur. And while it’s possible that Trump’s characterization was an exaggeration—he has, on occasion, been known to—he was perhaps spot on in capturing a feeling that the nation and the world today is a powder keg.

That feeling is one reason why, in both convention cities, Walgreens didn’t just hope for the best. They put their crisis preparedness plan into action—taking steps to protect their stores, people, and profits in the event that the heated political climate sparked unrest. Well in advance of the balloon drops, Walgreens LP field managers had completed crisis prep forms to help guide risk assessment and mitigation. Information collected included details on asset proximity, store construction such as number and placement of windows, store hours, neighborhood characteristics, previous store crime, and a host of other checklist items. The company readied to keep store shelves stocked, deal with closures if necessary, execute contingencies in the event armored cars were unable to make cash pick-ups and extended its preparations far beyond the immediate vicinity of the convention center.

“A lot of people might think ‘we have no stores in the area, so it’s not a problem,’ but not everyone stays at the $400 Hyatt right next door to

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the event. Every hotel room in the suburbs was sold,” said Dave Colen, director of corporate investigations and standards at Walgreens and a Dave Colen key member of a multi-functional team within the company’s Asset Protections Solutions division that constantly monitors risk and mediation strategies. “We didn’t solely rely on the fact that we had no stores in close proximity to the event.

You have to account for the fact that sometimes the event comes to you.”

Several retailers say today’s civil unrest and social protests are raising the bar for crisis preparedness programs.

Additive to traditional sources of agitation, LP teams now find themselves tracking every police-involved shooting and anniversary, analyzing the potential for it to spark protest and put store assets at risk.

“The events that occurred in Dallas on July 7, with the ambushing and killing of police officers, has challenged the way we think about a Byron Smith crisis,” said Byron Smith, corporate asset protection manager for 7-Eleven in its Corporate Security, International, Acquisitions and Supply Chain division. “Preparing for those events that we have never experienced forces us to continually review our plans.

We have become really good at preparing and recovering from storm events, buts it’s those events like social unrest, protest, and the like mean that we must frequently review our approach.”

Colen also cited unrest as a key challenge facing retailers’ crisis management teams, one that is forcing them to be more ready, more

SEPTEMBER–OCTOBER 2016

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often. “The reality is that every trial of Baltimore police officers, every police shooting, has become a potential flashpoint.”

Crisis teams have grown more accustomed to tracking weather events, but these, too, are commanding more attention than ever. Between floods, wildfires, tornadoes, and hurricanes, extreme weather events now trigger corporate crisis management plans more frequently than ever before. For example, the North Atlantic Ocean spawned more hurricanes and tropical storms in the first decade of this century than it had in the 1,000 years before

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CRISIS MANAGEMENT

To reach maximum readiness potential, a retailer’s crisis preparedness program would have the same priority as other mission-centered activities, such as marketing and branding, have an identifiable line in the budget and not subsumed in another budget, and the discipline’s leaders would be given the power to make and enforce decisions.

it, according to Pennsylvania State University researchers.

The future also looks stormy. The US Climate Change Science Program predicts the intensity of storms and hurricanes will increase, featuring greater wind speeds, rainfall intensity, and storm surge levels. We can also expect a dramatic increase in the frequency of extreme heat events in the years ahead, according to government scientists. For retailers with a large footprint like Walgreens—70 percent of Americans live within five miles of a store location—it means either an extreme weather event somewhere is

currently impacting a store or else one is right around the corner. “Any events that impact communities impact our stores,” said Colen.

What Does It Take to Be Ready?

While many crisis events are, by their nature, impossible to predict, the impact they have on retailers can be dramatically curtailed if the organization is crisis-prepared and managers are adequately prepared to effectively manage the resultant disruption.

To be a crisis-prepared retailer, Walgreens relies on, well, preparation.

LP MAGAZINE | SEPTEMBER–OCTOBER 2016

Colen is a big believer in the blue-sky principle, noting that the time to strategize for a hurricane is when the weather is clear, not after clouds have already formed. He credits regular blue-sky meetings, which bring together crisis team representatives from corporate communications, supply chain, safety, and other departments, as helping Walgreens align the different resilience disciplines, which was the number one obstacle to preparedness cited by crisis managers in the 2016 Crisis Management Insights Survey by Regester Larkin. “It’s when things are good that it’s time to sit down and talk about things.”

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CRISIS MANAGEMENT

Retailers’ Crisis Preparedness Activities and Program Elements Annual Crisis Simulation

Partner/Supplier Preparedness Review

Climate Change Impact/Risk Assessment Don’t Know 6.2%

No 23.8%

All Locations 23.8% No 52.9%

No 31.3%

Yes 47.1%

Don’t Know 4.8%

Yes 62.5%

Some Locations 23.8%

Retailer has in the last twelve months conducted an assessment of how weather or environmental changes could impact facilities and business operations.

Retailer has in the last twelve months conducted a review of business partners/ suppliers to assess ability to meet requirements and obligations.

Crisis team communication is also a critical part of 7-Eleven’s success. Smith says it helps the company avoid the second most frequently cited obstacle to crisis preparedness—a lack of clarity of roles and responsibilities, which was cited as problematic by 47 percent of crisis managers. The 7-Eleven team holds scheduled meetings quarterly, and whenever events occur they immediately convene via a conference call as they did after the recent shooting of police officers in Dallas.

To gain a complete picture of how a crisis event will be managed, organizations must identify the functional roles and responsibilities of external agencies, external organizations, and internal departments and individuals for each stage—preparation, mitigation, response, and recovery.

Lines of authority must also be established and identified. Tabletop exercises are an excellent way to highlight the responsibilities of different crisis team members, and Smith says they play an important role in keeping

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No 47.6%

Yes, Company-wide 33.3% Yes, Some Locations 14.3%

Most Locations 23.8%

Retailer has simulated a crisis event in the last twelve months for the purpose of planning and practicing an evacuation or other crisis response (HVAC shut-off, shelter-in-place, etc.).

Mass Notification System

7-Eleven ready to manage a full range of crisis events.

To Smith a more significant challenge than confusion at corporate over roles has been pushing crisis preparedness principles down to the store associate level. “I think it’s always difficult when trying to deliver a message about crisis preparedness to have that message not only resonate, but also stick with the individual,” he said.

Typically, crisis planners are of two minds on the subject, explained Colen. One school of thought is to tell employees what they need to know when the emergency is imminent, so the information is fresh. “But I’m a fan of the second school of thought,” said Colen, “which is to socialize the information early and often.” He believes that frequent reminders of emergency information are more likely to sink in and also convey a message to workers that the company takes crisis events seriously and instill confidence that it has taken the necessary planning steps to keep them safe.

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Capable of delivering emergency text (and/or voice) alert messages to all employee stakeholders.

Source: SDR National Survey of Security Executives, 2012

Strong Leadership and Informed Employees

Crisis response requires solid leadership, but it also requires personnel who are willing to be led. And that depends on whether a company has spent time before a major disaster providing crisis information, training, drilling, and establishing trust. Workers need to sense that the company is ready to handle the event and has their interests at heart, which is not something that a retailer can build once the storm is already on the radar.

A deep well of credibility and goodwill is something that is critical for retailers to tap into. “If you don’t talk about it until the crisis is happening, workers aren’t going to be comfortable that you can handle it,” and may fail to check in, call for instructions, or simply stay home, said Colen. “There is a greater likelihood that they will go to work if you’ve been talking about it all the time for weeks and not just the day before.” Reminders of emergency preparations don’t need to be long to

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CRISIS MANAGEMENT convey concern, said Colen. Starting a month or so out from an identified event, Walgreens store managers typically will disseminate relevant information during normal five-minute operational meetings with store personnel.

Short but regular education sessions are a good way to provide information, answer questions, identify needs, and address concerns. These mini-training sessions on emergency topics can also be delivered as a short aside during other general employee training. In this way, stores can limit the amount of time that emergency planning takes individuals away from their business activities.

In this type of session, managers can socialize contingency plan information such as: ■ I ndividual roles and responsibilities, ■ I nformation about threats, hazards, and protective actions, ■ N otification, warning, and communications procedures, ■ E mergency response procedures, and ■ E vacuation, shelter, and accountability procedures.

7-Eleven is committed to raising its staff’s level of awareness of emergency procedures. At its new campus headquarters located in Irving, Texas, workstations are outfitted with emergency information cards. And a quick reference guide, with information such as the location of emergency evacuation rally points, is as close as the back of their access/ID cards, hanging from their lanyards.

In order to assist franchisees, 7-Eleven is in the final stages of publishing an eight-by-eleven emergency reference flip chart for use by store employees, which will walk them though how to handle a bomb threat, a refrigeration failure, evacuation, and other emergencies. “This will give our franchisees and employees a go-to resource chart to address just about any risk or event and it fits nicely with our ‘My 7-Eleven’ safety education program,” said Smith.

Long ago, the company relied on the traditional emergency preparedness binder and then moved emergency procedures and instructions to the

LP MAGAZINE | SEPTEMBER–OCTOBER 2016

company Intranet, but recently decided that asking store associates to conduct online information searches was unnecessarily complicated. With the upcoming switch to a simple flip-chart reference, “It’s like we’ve come full circle,” said Smith.

Early Preparation

As it did in the run-up to the Republican and Democratic national conventions, Walgreens begins taking preparatory actions as soon as a potential event is identified. The general assessment form it developed guides field managers to collect all relevant information and is customizable, giving the company flexibility in its readiness activities.

Colen suggested that retailers should have a comprehensive list of actions that it may be necessary to take in order to help a store location prepare for disaster, which is not something that can be pieced together at the last minute. For example, “You have to make sure all cameras are operational, or put repair orders in, and that they’re pointing at the right things.”

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CRISIS MANAGEMENT

To gain a complete picture of how a crisis event will be managed, organizations must identify the functional roles and responsibilities of external agencies, external organizations, and internal departments and individuals for each stage—preparation, mitigation, response, and recovery.

In the event of a planned protest, a crisis team needs to maintain contact with local police, assess whether any particular vulnerability may cause stores or neighboring businesses to be the target of protesters, and assess how practical it will be to operate normally during the protest, as well as accounting for direct physical threat and planning to maintain full communications with employees in areas targeted by protesters.

There are also far-flung issues to consider, Colen suggested. “What about twenty-four-hour stores that haven’t closed for years? Do they even know where the keys are? How to power

50

down? Or set the alarm?” Coordination is just as vital, he said. For example, if a weather emergency is forcing a store to close but will also shut down public transportation, “You want to close the store several hours in advance; you don’t want your employees to be stuck.” And employee absences resulting from disruption in local transportation systems can have a far-reaching impact and need to be accounted for during emergency preparations.

Five-Step Model

The flexibility that Walgreens has built into its approach is a critical—but

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often forgotten—piece of the crisis preparedness puzzle, according to Regina Phelps, president of Emergency Management & Safety Solutions, a crisis management, exercise design, business continuity, and pandemic planning firm. There are five steps in the crisis management model—risk assessment, prevention/mitigation, preparedness, response, and recovery—and companies need to individually address each step for every threat they face, according to Phelps.

For example, retail locations that face a risk from earthquakes should take specific mitigation measures against that

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CRISIS MANAGEMENT threat, such as implementing restrictive “overhead policies” and securing tall items, and specific preparedness activities, such as earthquake awareness training. Retailers must avoid generic emergency management planning that doesn’t acknowledge that different types of disasters warrant different prevention measures and response planning and create standard operating procedures for identified credible hazards.

“Too many companies have one emergency plan for every type of disaster and focus on some aspects of emergency management, such as evacuation, but ignore others, such as training,” said Phelps. Retailers that are truly crisis-ready take action at all steps along the crisis management continuum—for each threat they face.

Incorporating Lessons Learned

7-Eleven and Walgreens possess another marker of crisis-ready retailers.

Their plans and policies are in constant motion, incorporating lessons learned

after every event and reviewing and improving their plans regularly. A post-mortem is a critical part of crisis management—what worked, what didn’t, and what should change for next time. Corporate crisis teams need to establish a system through which it will share solutions throughout the organization.

The crisis-related lessons you learn during one event in one location need to improve preparedness at all other appropriate locations. Which is why, after the recent political conventions, Walgreens went back to its field organizations to ask critical questions, said Colen. “We asked our teams: Did you feel prepared? What can we do better? How was the quality of the communication? Was the amount of information appropriate, or were you inundated?”

One planning expert at FEMA offered a related recommendation for becoming a crisis-prepared retailer: “Don’t let the crisis management plan get ahead of personnel.” In other words, retailers

should assess the extent to which plans may just be empty words—or if they are actually integrating the plan into the entire enterprise. A few questions can help guide that assessment: ■ How well does senior management support the responsibilities outlined in the plan?

■ Have emergency planning concepts been fully incorporated into the facility’s accounting, personnel, and financial procedures?

■ How might processes for evaluating employee performance and defining job classifications better address emergency management responsibilities?

■ Are there untapped opportunities for distributing emergency preparedness information, such as through company newsletters, employee manuals, or employee mailings?

■ What kinds of safety posters or other visible reminders do you have?

■ Do personnel actually know what they should do in an emergency?

Have you surveyed personnel to assess their knowledge?

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CRISIS MANAGEMENT

Crisis teams have grown more accustomed to tracking weather events, but these, too, are commanding more attention than ever. Between floods, wildfires, tornadoes, and hurricanes, extreme weather events now trigger corporate crisis management plans more frequently than ever before.

Creating those lines of communications with employees and identifying responsibilities are critical, according to 7-Eleven’s Byron Smith.

When the threat of a crisis event arises, 7-Eleven stores are obligated to call into a company crisis hotline, which they staff with a live operator 24/7.

Using Technology

Crisis-prepared retailers also make smart use of technology. While planning, preparation, and training are at the core of crisis preparedness, technology can make crisis teams more effective in each discipline, as well as enhance risk assessment. For example, Smith’s department constantly monitors active weather areas that might impact its franchisees, employees, corporate headquarters, and distribution partners.

“We have become really good at reacting to severe weather be it hurricane or winter storm season, floods, or fires.

For the last couple of years, we have used a wonderful tool called Riskpulse that has given us a total view of all our

52

locations and partners’ distribution facilities,” he explained. “The asset protection field teams have the same visibility for their areas, and it’s like having you very own weatherman in your back pocket.” Recently, Smith’s team shared the tool with its partners in Mexico. “It’s already becoming beneficial for them,” he said.

In addition to aiding risk assessment and helping prevention/mitigation, 7-Eleven leverages technology for insight during emergencies, relying on its IP camera system to get a live look at unfolding situations, for example.

During Hurricane Sandy evacuations, the company’s IT team pinged T1 lines for a clue as to whether affected stores had power and refrigeration and to inform recovery planning.

Both 7-Eleven and Walgreens also rely on social media monitoring tools to give the corporate crisis team insight on what’s going on in the field and to enhance its understanding of developing situations. 7-Eleven uses a social software platform called Sprinklr

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that provides social media marketing and social advertising and can also help track keywords to get upstream alerts in unfolding crisis events. “It gives us a one-screen view of what’s going on,” said Smith.

In addition to monitoring social media to assess risk, retailers might examine harnessing social media to enhance emergency operations. It’s something some experts think is a missing piece, exacerbated by the fact that a company’s most senior executives are often the least knowledgeable about social media tools and its potential uses.

Individual departments may be examining how to use social media, but maximizing its effectiveness requires consultation between members of the disaster team, human resources, business continuity leaders, loss prevention executives, and corporate communication and public relations teams. Working together, crisis management representatives should jointly develop

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continued on page 54

CRISIS MANAGEMENT continued from page 52

strategies for using social media in crisis management, potentially using social media platforms for generating alert messages, confirming personnel and other asset accountability, and keeping key stakeholders—including the general public—informed on crisis events.

many things companies can do to mitigate loss from disruptions, from improving the accuracy of demand forecasts to investing in logistics technology. A review of suppliers and partners—to assess their ability to meet the organization’s security requirements—is also a critical component in building resilience (see charts on page 48).

Ongoing Program Reviews

The Role of Senior Management

Conducting frequent program reviews is another activity common among those retailers best prepared to handle a crisis. Both 7-Eleven and Walgreens review, assess, and improve their crisis preparedness plans annually or more often. Such reviews are indicative of a mindset that lies at the heart of true preparedness, according to Peter Power, chairman of the 2016 World Conference on Disaster Management and managing director of Visor Consultants. He says the most-prepared companies never complete emergency planning. They perceive emergency planning not as a project to complete but as a process that must continually be refined, reviewed, and improved.

The risk from different disasters fluctuates, new technology can offer better options for mitigation or prevention, and no company has a continuity program that doesn’t have room for improvement, he said. “Too many companies still perceive emergency planning as having a beginning and an end with an occasional update,” he warned. In addition to an annual or more frequent review, emergency planning requires ongoing, active management.

The interconnectedness of business operations makes it important for retailers to examine not only the risk to their own operations and facilities, but also the risk to key suppliers. Resilience is not solely dependent on how well you can handle a crisis, but also how well key suppliers and business partners can. Smith says 7-Eleven takes the role of suppliers seriously, reviewing its third-party program annually, assessing their plans to respond to disasters, and fostering communication between the company’s logistics department and its partners. There are

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Finally, the role of senior management is a critical—and often tricky—component of crisis readiness.

As with security, it can be difficult to demonstrate a direct connection between preparedness activities and their value, especially when management spends money to prepare for a potential crisis that doesn’t materialize.

Managing the perception of risk can also be complicated, especially in a twenty-four-hour news cycle environment.

“The media can be a friend and an enemy,” said Colen. “We find out about threats from the media, but executives are getting the same information, which means we can find ourselves playing catch-up, trying to provide some context about upcoming events.

It’s also true that an event’s recency can play tricks on risk perception.

Because recent disaster events are easier to recall, those types of events seem more numerous or dangerous to casual observers. While an event’s occurrence might indicate an increase in its probability potential, it may not. In that case, there is greater risk from letting the fact that it just happened alter a rational risk approach.

LP leaders and other crisis managers must ensure that disaster planning does not place undue attention on a recent event to the detriment of planning for more probable events that are less fresh in the company’s consciousness.

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How Will You Do?

A disaster event is likely to expose which type of retailer you are—one that seems ready or one that is. Although it can be tough to know exactly which you have until a crisis happens, a company’s approach to disaster planning is its best indicator. At retailers where readiness is ingrained in the culture, emergency planning is a process. At retailers where preparation looks better on paper than in practice, emergency plans are a project.

Although there is a lot that LP leaders and other crisis team members can do to enhance a retailer’s readiness, there is—unfortunately—a limit. Research by the Center for Catastrophe Preparedness & Response and the Public Entity Risk Institute reveals that any company’s degree of crisis readiness is not solely based on its crisis readiness activities. Crisis readiness is the sum of readiness activities plus organizational characteristics—the two cannot be separated. “Crisis readiness cannot be found easily in poorly performing organizations. It is not something that can be grafted onto an organization in disarray.

Even as it contributes to high performance, crisis readiness is also a consequence of high performance,” concludes the research.

Hence, while specific preparedness activities like conducting exercises are critical, a retailer must also infuse readiness into its core, and make it as central to its mission as other areas of focus. To reach maximum readiness potential, a retailer’s crisis preparedness program would have the same priority as other mission-centered activities, such as marketing and branding, have an identifiable line in the budget and not subsumed in another budget, and the discipline’s leaders would be given the power to make and enforce decisions. At crisis-ready retailers, a crisis management team has not only the responsibility to improve organizational readiness, but also the authority and resources to make it happen.

GARETT SEIVOLD is a journalist who has been covering corporate security for industry professionals for eighteen years. Since 1998, he has served as the principal writer and editor of Security Director’s Report, a monthly publication highlighting trends and best practices in corporate security management.

Seivold has been recognized by several organizations for outstanding writing, investigative reporting, and instructional journalism. He has authored dozens of survey-based research reports and best-practice manuals on security-related topics. Seivold can be reached at GarettS@LPportal.com. |

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LEGENDS IN LP

Revisiting the Legends in Loss Prevention T

By John Velke Velke is a more than 40-year veteran of retail loss prevention currently serving as the VP of loss prevention and safety for Total Wine & More. He is the author of two nonfiction books, The True Story of the Baldwin-Felts Detective Agency and the recently released textbook Prove ‘Em Innocent: The Art & Science of Workplace Investigations. He can be reached at jvelke@proveeminnocent.com.

little better. Twenty years later Shealy was retired and living in Alabama. I was a short distance away working at Saks, Inc., headquartered in Birmingham. Getting reacquainted with him and writing an article on him seemed the logical thing to do.

en years ago I floated the idea of a series of articles called Legends in Loss Prevention to Jack Trlica, managing editor of this magazine. I was approaching my fiftieth birthday and realized that those who had pioneered the retail loss prevention field were not getting any younger. I felt then, and still feel, that were it not for the efforts of a few industry leaders, I might have ended up spending a lifetime doing something a lot less fulfilling. I wanted to pay tribute to these individuals and recognize them for the path they blazed for many of us.

I offered to write the series on one condition: I did not want my name appearing as the author of the articles. My reasons were simple. If readers associated me with the series, I would have been bombarded with “suggestions” on who else should be profiled. Or equally distracting, I might have received calls or notes from people who thought someone else was more deserving of recognition or, even worse, letters and phone calls from people who had something unkind to say about those I admired.

Trlica agreed to my condition, and we began the process of selecting those I would write about. In the beginning, I did not have a number of articles in mind (it ended up being six), but I had initially envisioned writing the series until we ran out of worthwhile candidates to choose from. Although I soon realized that I would not have exhausted the deserving candidates for a few years, writing as a hobby is hard work, and I had other interests and demands on my time. So after six articles, I was ready to do something else. In hindsight, I wish now that I’d written at least a few more articles.

Choosing whom to write about was not an easy task. We agreed that we would start with industry pioneers who were no longer retail loss prevention practitioners. We also agreed that I would start by writing about Lew Shealy, the only one of the “legends” I wrote about whom I knew personally beforehand. Although I never worked with Shealy, we both worked in the Washington, DC, area in the mid-1970s—I as store detective at Lord & Taylor, and he as director of loss prevention at Woodward & Lothrop. In fairness I should say that I knew of him in those days, but he had no idea who I was. In the mid-1980s our paths would cross in Chicago, Illinois, while he was in charge of loss prevention at Marshall Fields and I was a regional loss prevention manager at Lord & Taylor. We both participated in the Illinois Retail Merchants Association, where we got to know each other a

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Lewis “Lew” Shealy

Shealy was profiled in the September–October 2006 edition: “Shealy did not approach becoming successful haphazardly. He obtained some of his best advice from his uncle, who told him to listen to those who are twenty years older than he until he was about fifty, and listen to those who are twenty years younger than he from then on. Shealy also recognized the importance of having a mentor and knew that to be successful he needed to have both a professional and a personal relationship with each of his bosses.”

After writing about Shealy, I fell into a rhythm. At the end of each interview I’d ask, “Is there someone else you think I should do a Legends in Loss Prevention article about?” I’d usually get multiple suggestions. After conferring with Trlica, I’d contact one of the individuals, explain the project, and ask if they would submit to an interview.

Every single one of those I contacted initially protested that there were others more deserving than themselves. But I was persistent and overcame their initial reluctance.

George “Pops” Luciano

Luciano was profiled in the November–December 2006 edition: “Joe Matthews, director of loss prevention at Academy Sports, put it this way, ‘Pops has the unique ability to adapt to any business situation.’

He went from being a cop to working in a |

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grocery store, department stores, home centers, and pet stores, and then as a consultant and successful business owner, making life-long friends every step of the way.”

While Luciano and the others I profiled were gracious with their time and politely answered all of my questions, they were all exceedingly humble. I learned pretty quickly that if you really want to get to know someone, talk to their significant others, their peers, and those that worked for them. I made it a point to include a quote from one of these individuals in every article. But choosing the best from the many I had to choose from was not an easy task.

Charles “Chuck” Sennewald

Sennewald was profiled in the January–February 2007 edition: “Sennewald took some of his lessons for managers and turned them into ‘16 Jackass Management Traits,’ a collection of cartoons that further illustrate the importance of making learning memorable. He used these lessons and many others as the founder and first president of the International Association of Professional Security Consultants and while president and member of the International Foundation of Protection Officers.”

One of the things that fascinated me about Sennewald and the others I wrote about was their capacity to be successful in multiple endeavors simultaneously. Whether it was serving as a teacher, author, volunteer, coach, or parent, each individual devoted time to a successful retail loss prevention career but was also capable of defining themselves by more than their paid employment. None of the legends were so engrossed in their jobs that they completely consumed their lives—a lesson important to all of us.

Earl “Duke” Welliver

Welliver was profiled in the March–April 2007 issue: “It was 1948.

John Wayne, Henry Fonda, and Shirley Temple were starring in the just-released movie Fort Apache.

Young Earl Welliver was fourteen, living in south central Los Angeles and hanging out with the Hoover Street Gang.

Although his nickname came later and had nothing to do with the famous actor he looked up to, young Welliver knew that he wanted to be a good guy, not a

hoodlum. He went to his parents and told them that if he didn’t get out of there, he wouldn’t make it to fifteen.

His parents enrolled him in a military academy and thus altered the course of history. A teenager headed for trouble became a good student and later a Marine.”

Another interesting phenomenon of all the legends I featured was that they all did something else before landing in retail loss prevention. The variety of experiences they had ranged from digging swimming pools to professional sports to military service to public law enforcement. By the time many of us reading this magazine entered the workforce, many companies had a clearly defined career path for loss prevention executives, often brought about by those featured here. They were in unchartered territory and navigated their way to the top of the profession.

John Christman

Christman was profiled in the May-June 2007 issue: “[Mike] Keenan says that Christman helped him grow by requiring solid preparation before launching new programs, and he credits Christman with teaching him ‘the importance of networking and giving back to the industry.’

Christman’s management philosophy was simple: ‘You begin with people,’ he says. ‘The best programs and techniques in the world are worthless without properly trained and supported people to manage and operate them.’”

Despite their many differences there was one thing expressed by each of the legends I interviewed. Each one made it clear that whatever success they achieved in loss prevention was the result of surrounding themselves with high-caliber people. And when I talked with many of those people, I heard over and over again how they credited the legend with advancing their careers.

Jack Hayes

Hayes was profiled in the July-August 2007 edition: “One of Hayes’ greatest legacies is that, during his twenty-seven years as a consultant, he recommended the creation of numerous senior-level loss prevention executive positions and convinced companies that the wise investment of capital and expense funds, combined with appropriate standards and accountability, would improve shortage and

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increase profits. His often-repeated truism—‘inventory shortage will rise to its level of tolerance’—convinced senior corporate executives to invest time, money, and personnel on security and loss prevention. In other words, he did not just do a job; he opened the door of opportunity for many of you reading this magazine, and you might not have even known it.”

Getting to know these leaders and sharing their stories with Loss Prevention magazine readers through the Legends in Loss Prevention series made this one of the most rewarding writing projects I’ve ever undertaken. You might like a brief update on each.

Where Are They Now?

Shealy is still living in Alabama, spending his time gardening with Bettie, his wife of sixty-four years. He enjoys fishing, dining out, and keeping up with his five grandchildren.

Luciano and his wife, Jacqui, love to travel and spend time with their four grandchildren and two great-grandchildren. They spend every August on Balboa Island to escape the heat at home in Palm Desert. Next year they hope to cross a river cruise off their bucket list. Pops still has his sense of humor. Within earshot of Jacqui he told me he has a police report on file for spousal abuse because she won’t fix him pasta anymore.

Sennewald has been beating lung cancer for the last year and a half while working on a collection of short stories he hopes to turn into an autobiography. With ten books to his credit already, he said, “I can’t help but write.”

Welliver is now in his thirteenth year leading the Peaceful Warrior Martial Arts Academy in San Clemente, California. More than 700 underprivileged kids have gone through the program with seventy-five of them receiving black belts. A year ago at age eighty, Welliver was honored by the South Korean government with a seventh degree black belt and the title of grand master. Although he is in great shape, he had to give up triathlons a couple of years ago because “there was no one left in my age group.”

In 2008 Christman moved from California to Gold Canyon, Arizona, where at the age of eighty he assisted the Pinal County Sheriff’s Office as an active member of the Gold Canyon Citizens Patrol. He passed away on July 11, 2013, at age eighty-four.

In the more than ten years since retiring, Hayes has authored five nonfiction books, two business-related books, and three books he describes as his “fun books” on major league baseball. He and his wife, Darlene, live in The Villages, Florida, where he continues to write while she creates art, some of which is used to illustrate his books.

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FEATURE

ORC AND DIVERTERS CLOSING THE LOOP THAT’S PUTTING STOLEN GOODS BACK ON RETAILERS’ SHELVES ByLPChris Trlica, Contributing Writer MAGAZINE | SEPTEMBER–OCTOBER 2016

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ORC AND DIVERTERS

O

rganized retail crime (ORC) has been in the crosshairs of shrink reduction efforts for a long time now. But for many retailers, battling ORC has seemed less like a victory story and more like an arms race—for every stride made, the opposition adapts. ORC is a part of the retail marketplace, and it operates under the same basic principles as retailers. There is an opportunity to make a profit by supplying a demand, so various ORC players take it upon themselves to become the suppliers.

But where exactly is that demand?

It turns out that a significant portion of the demand that ORC players are supplying comes from retailers themselves. Retailers are fueling the ORC system by buying product that may well have already been on their own store shelves, stolen, and completed a round-a-bout loop through the ORC underworld.

Tony Sheppard, LPC, national manager of the Organized Retail Tony Sheppard, LPC Crime Unit at CVS Health, has taken it upon himself to combat this self-defeating loop. “Companies are very often unintentionally purchasing stolen product,” he said. “And if they are, they’re the ones creating the demand to steal that product.”

He explained, “A retailer puts product on the shelf. A booster steals that product and sells it to a fence. That fence can turn around and sell the product right back to the consumer. That could be at a flea market, online, in mom-and-pop stores, and other places. But when it comes to health-and-beauty-aid (HBA) products and over-the-counter drugs (OTC), typically this stolen product goes from a mid-level fence to a wholesaler. And then the wholesaler packages it in bulk and turns around and resells it to retailers. Sometimes these are national retailers. Usually they are regional

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It turns out that a significant portion of the demand that ORC players are supplying comes from retailers themselves.

Retailers are fueling the ORC system by buying product that may well have already been on their own store shelves, stolen, and completed a round-a-bout loop through the ORC underworld. chains, but that’s not to say that large companies aren’t doing it as well.

Lots of retailers don’t realize that they’re buying stolen or potentially counterfeit product.”

The key to this convoluted scheme, the groups who “launder” stolen product back into legitimacy, are diverters. Diverters go by many names—wholesalers, salvage companies, alternate source suppliers—but they are the end medium through which retailers are buying stolen product and so fueling the demand that powers organized retail crime.

The Booster-Fence Ecosystem

The easiest way to understand exactly what diverters are and how they operate is to take a close look at the ORC ecosystem that they’re a part of. Boosters—the people who steal products intending to resell them—and fences—the buyers of stolen goods—vary enormously when it comes to the scale of their operations. As these actors deal with increasing volumes of stolen goods,

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the geographic area in which they operate tends to increase, as does the sophistication of their techniques.

So for ease of discussion, they can be categorized into a hierarchy of three tiers.

The level 1 booster is someone who steals relatively small amounts, works alone, and operates locally. If they live in Phoenix, they might never leave Phoenix to steal. They might steal things from their neighborhood CVS and walk right across the street to Mom and Pop’s Market to sell them. It’s not uncommon for drug addicts to fall into this category, stealing just enough for them to get by for the day. “To me, anyone who steals something to resell I would classify as a booster,” said Sheppard. “If they come in and steal five packs of toothpaste and sell them across the street, I’d still consider that ORC, because they’re part of the ORC web.”

When a booster begins to travel to nearby cities to steal, when they increase their sophistication and volume, often teaming up with a partner or a group, they can be considered level 2 boosters—regional players. In comparison, the level 3 booster is a team of coordinated criminals who operate nationally and may sell their product directly to diverters.

The level 1 fence is directly reselling product to consumers. They often appear to be legitimate businesses— they might be a local corner market, a swap shop, or a booth at a flea market. They sometimes recruit and train boosters, and they may buy product from level 1, 2, or 3 boosters.

While most of the product a level 1 fence buys goes straight back to the consumer, they may move product daily or weekly to a level 2 fence. “If I bring ten boxes of Crest Whitestrips to him, he may not put that directly on the shelf,” explained Sheppard.

“He may hold it and sell it to a higher level fence.”

The primary function of the level 2 fence is to repackage stolen product and sell it to the level 3 fence—the diverter. They don’t buy from the

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ORC AND DIVERTERS

Path of Stolen Retail Goods

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small-timers. They buy from level 2 and 3 boosters, or in some cases from level 1 fences. “For example, in one case we had a fence that drove around a van every day collecting product that seventeen level 1 fences had bought that day,” said Sheppard.

“Then they repackage it all, and it goes straight to the wholesaler.”

Level 2 fences clean the product, removing stickers, security devices, or other markings that could identify which retailer the product had been stolen from. Then they repackage the product for distribution. They typically operate out of a residential house, a warehouse, or a storage unit.

Storage units are appealing because LP MAGAZINE | SEPTEMBER–OCTOBER 2016

they can be rented cheaply and easily, making it simple to evade detection by switching locations frequently.

Some may rent several storage units and spread their product between them to minimize their losses if they do happen to be raided by law enforcement. The level 2 fence is the middleman between boosters and

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ORC AND DIVERTERS

The cover story of LP Magazine’s inaugural issue fifteen years ago was titled “Organized Retail Theft—From Prison Training Grounds to a Store Near You.” In that article, King Rogers outlined the scope and mechanics of ORC—referred to at that time as ORT—calling for more intensive study, greater awareness, and better legislation to combat ORC. And in that decade and a half, a lot has changed. LP magazine has changed. The LP industry has changed. Retail has changed.

Laws have changed, consumers have changed, and criminals have changed. But the battle between retailers and ORC groups rages on.

While the basic elements of ORC remain the same, its methods have evolved considerably in response to the technological, methodological, and educational deterrents implemented by retailers.

Rogers got his wishes. We have better information about

wholesalers. They typically don’t have a storefront, and though they may sell some of their product online, the bulk is sold to diverters.

The level 3 fences (the diverters) complete the circle, selling stolen product back to retailers. They operate as a legitimate wholesaler or distributor, mixing legitimate product with stolen product and selling it back into the retail commerce stream. In many cases, they don’t know that the product they’re buying was stolen, though they probably begin to suspect so.

“A lot of these companies don’t realize that they’re inadvertently buying stolen or counterfeit product,” said Sheppard. “They see a good price, and it’s hard to fathom that someone stole four pallets of Mucinex, so they buy it. I think that the majority probably are suspicious, but they just don’t think about it that much. Over the course of time, maybe they notice irregularities, like a label

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P R E M I E R

I S S U E

LossPreventionMagazine.com

ORGANIZED RETAIL THEFT From Prison Training Grounds to a Store Near You

By King Rogers

A CONVERSATION WITH DAVID MYERS LOWE’S INTRANET LP AUDIT CALCULATING ROI GETTING MISCONDUCT ADMISSIONS COLUMNS BY HOLLINGER WELCH SPAIN TULGAN WICKLANDER-ZULAWSKI

ORC—universities, industry groups, law enforcement, and internal organizations have all studied the problem extensively. We have better awareness. ORC is one of the most talked about and targeted avenues of loss. And we have better legislation.

Federal and state laws have been implemented that address ORC directly, as well as provide a legal

that hasn’t been removed, or they get suspicious based on the prices. I think they probably get an idea that something’s wrong eventually, but they just look the other way.”

Why Do Diverters Exist?

So why do diverters exist in the first place? Why does the retail marketplace tolerate an avenue for stolen merchandise to be resold to them?

“People may ask, ‘How could somebody possibly buy from these places? They must know these goods are stolen.’ But there are other reasons diverters are able to sell goods more cheaply than manufacturers,” said Sheppard.

Diverters exist because smaller retailers—local and regional chains—rely on them as suppliers. If you’re a local retail chain with ten stores, you can’t buy directly from the manufacturer because you can’t meet their minimum order requirements. So the diverter will buy from the manufacturer and

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framework for associated issues.

There is more work to be done on these fronts, but progress has been made.

But it hasn’t been enough. ORC hasn’t gone away, and some might argue that, in fact, it has increased.

If anything, it is now at least a known quantity. Maybe ORC is a permanent fixture in the retail arena.

Or maybe the ever-accelerating technological revolution will one day render ORC a solved problem.

In any case, successfully fighting ORC will depend on tackling both ends of the supply chain—boosters taking product out of the store as well as diverters shipping product in to the store. This conclusion is as true today as it was fifteen years ago, when Rogers ended his article with this: “There is an old saying that you can’t kill a snake unless you cut off its head. In the case of organized retail theft, until the illicit wholesalers are dismantled, the problem will continue.”

then resell to you and a dozen similarly sized companies.

But diverters acquire legitimate products from other places too—anywhere they can get products cheaply enough to resell at a profit. They buy closeout goods. If a manufacturer is set to release a new season’s line of razor blades, they aren’t going to just throw away last season’s razors. Instead, they sell them to a diverter. Similarly, when a large national retailer buys product embedded inside a display, the retailers sells the inevitable excess to a diverter.

Retail overbuy is another source of legitimate product. Massive international retail companies get the absolute lowest prices from manufacturers because of the unrivaled scale of their purchase volumes. Because of their volume discount, they know that they can sell to diverters at a profit, so they may buy an extra million pieces beyond what is needed for their own purposes because reselling to the

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ORC AND DIVERTERS diverter can easily make small margin at very little risk or effort. This allows other retail chains to get legitimate product from a diverter more cheaply than from the manufacturer.

And that’s what it comes down to—buyers are incentivized to find the lowest prices for the products they decide to stock. For certain products, diverters will have the lowest prices. So retailers will continue to buy from them. “I think the bulk of retailers are clueless about diverters,” said Sheppard. “The buyers don’t work in LP, and I don’t think the thought that the product could be stolen crosses their minds. All retailers buy from diverters, though they don’t like to advertise the fact. Sometimes it’s for no other reason than the manufacturers being out of stock of a product.”

Reboxing and Counterfeit Goods

Diverters buy the cheapest goods they can find. With so many different avenues for legitimate goods to be resold, is it

any wonder that stolen product gets mixed in? Even when diverters rebox product, they’re not trying to claim that it’s from the original manufacturer.

Some companies, like CVS, won’t accept product unless it’s in a manufacturer spec case—a precaution against, among other things, counterfeiting—though most retailers don’t have that requirement. So how do retailers know that they’re not buying counterfeit goods when buying from a diverter?

Counterfeit goods do occasionally enter the US retail stream. But diverters want nothing to do with anything counterfeit. If retail buyers learn that they received counterfeit goods from a diverter, they’ll spread the word, and that diverter will be blacklisted.

“I’m only aware of a few instances of counterfeit. It only makes sense for specific items and price points,” said Sheppard. “The fact is, when you buy something from somewhere other than the manufacturer, you’re taking that risk.

You’re not certain of where that product

LP MAGAZINE | SEPTEMBER–OCTOBER 2016

comes from. But the diverter is never going to knowingly buy counterfeit product. They’ll get cut off completely.”

If counterfeit goods do show up, it’ll be the level 2 fence bringing them in from overseas. Some diverters have substantial programs in place to inspect incoming goods, specifically looking to make sure they’re not buying counterfeit.

And, of course, manufacturers are also very concerned with keeping counterfeit products off retail shelves.

“Most manufacturers are very helpful with these cases,” said Sheppard.

“They’re very concerned with brand integrity. During one of our investigations, we sold a fence tens of thousands of dollars of product, and 95 percent of that product was donated from the manufacturer. They have a vested interest in protecting their brand.”

Online Marketplaces and Meeting Places

Counterfeit goods can be sold online, as can product stolen by ORC

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ORC AND DIVERTERS actors. While some amount of stolen product is posted for online sale by fences of all levels of sophistication, the bulk of it ends up back in the retail supply chain.

“If that sheer amount of product is being stolen, where could it possibly be resold? The bulk of HBA and OTC online is stolen product. You’ll sell some there. But even though online is popular, you’re not going to compete with Walmart. So to sell that much Prevagen, Prilosec, Claritin, or Zyrtec, you’ll have to sell it to retail,” explained Sheppard.

The more important aspect of fences having an online presence is, just like with so many other groups, networking. Occasionally, people who have experience operating with ORC and the grey economy will train level 2 fences and will tell them who the diverters are. But usually diverters find fences online. “If a booster comes in and steals twenty boxes of Prilosec from ten stores, people think that ends up all being sold online,” said Sheppard. “But without question the bulk is sold offline. I do think some investigators spend inordinate amounts of time going after online fences who, from a volume standpoint, aren’t massive pieces. No, the online world is more of a meeting place between the booster and the fence or between the level 2 and level 3 fence. If I am getting started as a fence and list product on eBay, these diverters will buy that product from me. Then they’ll reach out to me privately and say, ‘Hey, any time you have forty-two-count Prilosec, I’ll buy as much of it as you have, no questions asked.’ Well, then I want more of that product, since it’s a guaranteed sale.”

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What to Do?

To whatever extent retailers are bringing in stolen product from diverters at the loading dock, they are fueling external theft from their shelves in the front of the store. This cycling of product is an ORC engine that can be stopped—or slowed—at either end. But while most retailers have worked extensively to battle external theft, how much effort has been put toward battling the symmetric problem of unknowingly buying stolen products?

According to Sheppard, “I feel that’s the biggest opportunity—the point between the wholesaler and

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the retailer. I think that if we the retailers just scrutinize who we’re buying product from, then that’ll go a long way toward eliminating these issues. I’m not saying we shouldn’t buy from diverters, because everybody does, though some will tell you they don’t. I’m just saying we should take basic steps to make sure the people we’re doing business with are legit.

There are companies who are literally buying 20 or 30 million dollars of product from people who they’ve met one time, and they don’t even know where their warehouse is.”

One issue is that it’s a tough topic to discuss. Naturally, retailers aren’t thrilled with the idea of sharing all

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ORC AND DIVERTERS

Diverters exist because smaller retailers—local and regional chains—rely on them as suppliers. If you’re a local retail chain with ten stores, you can’t buy directly from the manufacturer because you can’t meet their minimum order requirements. So the diverter will buy from the manufacturer and then resell to you and a dozen similarly sized companies. the information of their suppliers with customers or competitors. If a customer goes to buy an OTC drug from the store, that customer assumes that they’re buying into an unbroken chain of custody—from the manufacturer to the store to their shopping basket. “Retailers just don’t like to talk about this,” said Sheppard.

“They want you to continue to assume that everything you buy

comes in pristine, straight from the manufacturer. One of the arguments that’s made against buying stuff online is you don’t know who you’re buying from—it could be counterfeit, it could be stolen—but that’s true of retailers too. It’s one of those topics that’s taboo. They don’t want to advertise it to the average consumer.”

And that’s when the retailer is aware of the issue. Remarkably,

many retailers don’t even know that they are opening themselves up to this kind of exposure. Or if they do, that knowledge might be limited to certain individuals or teams within the organization. “A lot of companies don’t even know they’re buying from diverters,” said Sheppard. “When it comes to small chains, they don’t have much of a choice in who they’re buying from, and they don’t have a clue that they’re buying this stolen product. At most retail companies, not even LP is aware this is happening, or if they are, they don’t have a seat at the table. Some retailers have small dedicated teams that pursue diversion losses aggressively. But others don’t think that it’s as big of an issue as we here at CVS think it is. They focus on internal theft. External theft is seen as a cost of doing business.”

So what can a retailer do to ensure they’re not contributing to the demand for stolen products? “There

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LP MAGAZINE | SEPTEMBER–OCTOBER 2016

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ORC AND DIVERTERS

A company doesn’t know if diverted goods originated on their shelves or their competitor’s.

And to some degree, it doesn’t matter since in either case it’s incentivizing ORC actors to continue to operate. Closer collaboration with buyers within the company, as well as fellow LP professionals across the industry, can help to slow this ORC engine and reduce loss for everyone.

are a number of steps they can take, like we’ve done here at CVS. I think the first step is they should scrutinize who they’re buying from,” Sheppard advised. “They should know where the wholesaler’s warehouses are, and they should inspect those warehouses.

Is there a vetting process? Do they run background checks on the owners? Do they look to see if the company has ever been sued before? Do they check to make sure there aren’t seven different lots of Prilosec in the same box?

“Finally, I think the communication piece is a big part of the solution.

That’s why CVS lets me talk about this. Any company reducing demand will benefit everyone. If we get more companies to scrutinize their diverters,

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it’s going to benefit CVS because it’s going to reduce theft. If people were more aware and more open about what’s happening and get together and look at this stuff together, without question there’d be a drop in this level of activity. When any one large retailer takes a look at their suppliers and finds an issue with one and stops buying from them, that translates into an instant reduction in demand for items targeted by ORC. It’s a simple chain of cause and effect—stop buying, less stealing.”

Like many issues in retail loss prevention, the issue of injecting demand that ORC feeds off of is an industry issue as well as an individual company issue, and one that can only

SEPTEMBER–OCTOBER 2016

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be truly addressed industry-wide. A company doesn’t know if diverted goods originated on their shelves or their competitor’s. And to some degree, it doesn’t matter since in either case it’s incentivizing ORC actors to continue to operate. Closer collaboration with buyers within the company, as well as fellow LP professionals across the industry, can help to slow this ORC engine and reduce loss for everyone.

CHRIS TRLICA is a business and technology analyst based in North Carolina.

He is a contributing writer to LP Magazine focusing on emerging technologies. Trlica can be reached at chris.trlica@gmail.com

LOSSPREVENTIONMEDIA.COM

DIVERSITY IN LP

By Mimi Welch and Nicole Rogers

Infusing Wisdom into Potential O

ver the past fifteen years, our focus has shifted from women making it in male-dominated industries to older/younger generations trying to figure each other out. This is where my attention is aimed given that the leaders who come to me often want coaching on how to crack the code of intergenerational craziness.

Nicole Rogers, cofounder of GenIN Solutions, is a wickedly savvy millennial executive who is running a start-up aimed at capturing and cultivating the voice of younger generations. I’ve teamed up with her to reshape how we leverage the best of all ages by infusing the wisdom of older generations into the potential younger generations believe in. Together, we’re working to give each of our own generations a new way of appreciating and engaging the other.

Passing on Wisdom

Here’s Nicole’s take on absorbing the wisdom older generations have to offer.

When your mom told you to wear a helmet while riding your bike when you were a kid, it’s not because she didn’t have faith that you could ride. She knew the risks, and she knew the odds from life experience. Perhaps

Though I’m not sure what the next fifteen years will bring, I do know our younger generations will be taking our place. I plan to do my part to learn how to share my wisdom in a way that helps shape the business culture, so we all succeed. Partnering with millennials seems like a wise investment in the possibilities that exist between us.

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SEPTEMBER–OCTOBER 2016

Mimi Welch is president of Transition Dynamics and provides coaching and consulting to leaders who are spearheading major change initiatives and culture changes. She specializes in intergenerational engagement and executive presence. Welch can be reached at Mwelch@TransitionDynamics.net.

Nicole Rogers is cofounder of GenIN Solutions, a professional development company specializing in intergenerational dynamics and creating purpose-driven organizations through coaching, workshops, advisory services, and e-coaching programs. Contact Rogers at nicole@genINsolutions.com.

she, herself, had fallen off and gotten hurt in her past.

You saw nothing but potential—how fun it was going to be soaring down that hill with the wind in your hair.

She saw the realities of the world—that hat falling off and hitting your head isn’t fun for anyone. And often, the risk has nothing to do with you, but the danger resides with the careless car driver not on the lookout for you.

I find myself like a kid with a bike quite often in the corporate world. I see what things could be and don’t always understand the risks and challenges that have shaped the way things are. I sometimes assume policies, advice, even feedback passed down from older generations is antiquated concern, obsolete in today’s world. And perhaps a small portion of it is, but the vast majority it is valuable life and business experience being served to me on a silver platter.

This ought to be received graciously, respectfully, and with a curious mind. What have they seen that I have not yet? What is the equivalent in the world of today? While it feels you are taking a step back in time, understanding how that same challenge may resurface in today’s business world actually puts you ahead of the game. The feedback and guidance are not negative perceptions of your abilities and potential, but rather a way to help ensure your potential doesn’t get hit by a car.

When I show up to work, I’m excited. I’m confident.

And those are great things to be. But just like young me on the bike, I’m not invincible. I can make an unnecessarily risky move or a wrong turn, and I’d be a fool not to absorb the wisdom offered to me like a sponge. The older generations imparting the wisdom have likely learned the hard way. They have the scars to prove it. You have the opportunity not to. All you have to do is listen.

Millennial-Taught Insights

Here’s my millennial-taught insight on potential.

Here comes that twenty-something teammate who is all lit up with a new idea. She’s on fire about how to do it, how much it will help our customers, and that it’s never been continued on page 70 |

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WEBINARS

continued from page 68

done before. Her energy is like a huge campfire—bright, jumping flames—and it immediately draws me in.

I watch myself move right to whether this new idea will work. Right away I jump into the questions: How much will it cost? Are you sure no one’s doing it? Have you verified your assumptions are accurate? I’m trying to help. I don’t want the idea to fail. Though if I were paying attention, a shift happens, and the shutdown begins.

Quiet seeps in, excitement fades, and yes/no answers start.

I didn’t stay in the potential of success long enough to convey my support and that I’m open to the exciting idea my twenty-something is truly passionate about.

October 5, 2016, 2:00–3:00 p.m. Eastern

1

Workplace Violence and Active Shooter Developing a Culture of Preparedness in the LP Industry In an active shooter scenario, preparation is the key to survival. Would you know what to do in the event an active shooter targeted your office or store? Does your organization have an emergency preparedness plan?

This webinar will focus on:

When I show up to work, I’m excited. I’m confident. And those are great things to be. But just like young me on the bike, I’m not invincible. I can make an unnecessarily risky move or a wrong turn, and I’d be a fool not to absorb the wisdom offered to me like a sponge.

■ The multiple types of workplace violence ■ How to plan and develop an Active Shooter Preparedness Program ■ How best to communicate and develop effective liaison with internal and external stakeholders, law enforcement, and other first responders ■ Best practices for training employees and recognizing signs of potential workplace violence

SPONSORED BY

October 19, 2016, 2:00–3:00 p.m. Eastern

2

I’ve learned the hard way that questions can open up potential or shut it down, that feedback about a new idea is a form of recognition, and that promoting success versus avoiding failure all keep me connected to my twenty-something partner. The best way I can affect the actions of my younger colleagues—that is to lead them—is to use more influencing skills rather than those directing and managing skills I’ve been using for years.

Yes, it takes more time and special attention, but if you want to leverage the potential our younger generations offer, it’s non-negotiable.

Though I’m not sure what the next fifteen years will bring, I do know our younger generations will be taking our place. I plan to do my part to learn how to share my wisdom in a way that helps shape the business culture, so we all succeed. Partnering with millennials, like Nicole, who’s also working to “get” those ahead of her, seems like a wise investment in the possibilities that exist between us.

Sears’ Positive Experience of Moving Security Tagging from Store to Factory Source Hear Sears Holdings asset protection executives share their experience of moving security tagging from an in-store task to a factory-source application that saved the company millions of dollars annually. The benefits and return-on-investment areas that will be covered include: ■ Reducing and re-assigning labor ■ Shrink reduction ■ Sales lift ■ Minimizing damages ■ Improved morale

SPONSORED BY

Mimi Welch was a contributing writer for Loss Prevention magazine starting in our premiere Fall 2001 issue until 2005. She authored a Women in LP column as well as feature articles on diversity like the cover story in our May–June 2002 issue shown here.

These webinars are presented by Register today on the Events page at LossPreventionMedia.com/events 70

SEPTEMBER–OCTOBER 2016

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LOSSPREVENTIONMEDIA.COM

SOLUTIONS SHOWCASE BEST SECURITY INDUSTRIES

Worldwide Golf Enterprises Partners with BSI to Rejuvenate Its Aging EAS Infrastructure

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or nearly thirty years, Best Security Industries (BSI) has been helping retailers control losses from shoplifting with innovative and cost-effective loss prevention solutions. One such retailer is Worldwide Golf Enterprises.

Worldwide Golf Enterprises is one of the nation’s largest discount golf equipment retailers with eighty-five stores in eighteen states. Its stores operate under the names of Edwin Watts Golf, Roger Dunn Golf Shops, The Golf Mart, Van’s Golf Shops, Golfers’ Warehouse, and Uinta Golf. It is also an authorized dealer for all major golf brands including Titleist, Ping, TaylorMade, Callaway, Nike, Puma, and Adidas. With its huge selection of golf products, apparel, and accessories, it is tremendously popular with its customers but unfortunately with shoplifters too.

The Challenge

Worldwide Golf Enterprises has deployed electronic article surveillance (EAS) systems in many of its locations to help protect its high-end, highly sought-after merchandise. Its merchandise is not only coveted by the avid golfer, but also can fetch a fair price on the grey or black market making it a target for both amateur and professional shoplifters. The problem Worldwide Golf’s Director of Loss Prevention Mike Mata faced was keeping his fleet of EAS systems in proper working order to maintain their effectiveness while staying within the allocated budget.

Over the years, he found that many of his original EAS systems no

“I must admit I was skeptical when I first heard about the certified, pre-owned EAS option that could replace my non‑working EAS system as well as add an additional system for the store entrance for about the same price as the original equipment manufacturer’s repair bill. I thought it was too good to be true. As it turned out, it wasn’t.”

- Mike Mata, Director of Loss Prevention, Worldwide Golf LP MAGAZINE | SEPTEMBER–OCTOBER 2016

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SOLUTIONS SHOWCASE BEST SECURITY INDUSTRIES longer worked, and the problem was growing, leaving much of his valuable merchandise unprotected.

The Solution

As he was considering his options, Mata met with BSI Director of EAS Sales August Polito to review a proposal to replace his existing non-working EAS systems with BSI-certified, pre-owned Ultra PostTM units. In addition to replacing the original systems, Polito also proposed adding another pre-owned system to provide additional coverage at the front of the stores, all for a cost that would be comparable with just repairing the old system.

“I must admit I was skeptical when I first heard about the certified, pre-owned EAS option that could replace my non-working EAS system as well as add an additional system for the store entrance for about the same price as the original equipment manufacturer’s repair bill,” said Mata. “I thought it was too good to be true. As it turned out, it wasn’t.”

Certified, pre-owned EAS systems offer retailers the ability to extend their original investment in their EAS infrastructure. BSI specializes in providing hard-to-find legacy equipment, completely refurbished and delivered in “like new” condition with a warranty that is comparable to ones that are provided with new products.

BSI also offers accessories like detachers, deactivators, and tags.

Certified, pre-owned EAS systems can deliver significant savings while offering the same quality as new systems. All of BSI certified, pre-owned systems and accessories are re-conditioned back to their original specifications and subject to stringent testing to guarantee the highest quality. BSI also offers new and pre-owned accessories

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like detachers, deactivators, and a wide variety of EAS tags and labels to help secure hard-to-protect merchandise such as golf clubs.

Additionally, the company offers a bench repair program where defective deactivators and detachers can be sent to the BSI warehouse for repair or replacement, often with same-day turnaround.

BSI also recycles and repurposes older legacy systems for use as replacement components within a retailer’s existing footprint. As part of the depot program, BSI will remove EAS systems from closed locations, refurbish them to original specifications, and warehouse the inventory until it is needed in new locations.

The Results

Mata choose to deploy BSI’s Certified Pre-Owned Ultra Posts in several locations where the original equipment was no longer operational. He believed that this was a win-win option for his organization where he would be getting a working EAS system along with additional coverage from a “new” EAS system at the front entrance. Mata was impressed with the fact that the certified, pre-owned systems looked new and brought his boss to a location to see first-hand how the systems looked and operated. Mata also choose the optional advertising sleeve for the pedestals as a way to generate additional funding by selling advertising space to his suppliers.

“We have been very happy with the quality of the systems and the professionalism of the BSI team. We are pleased with our partnership with BSI and continue to add additional BSI certified,

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pre-owned EAS systems to our other stores. These systems are an option worth considering. You save money and reduce shrink, and they look great,” concluded Mata.

About BSI

Best Security Industries (BSI) is the premier EAS reseller providing hard-to-find legacy solutions through its certified, pre-owned systems and components. The company is now the largest independent distributor of EAS systems, hard tags, labels, and accessories.

Additionally, BSI manufactures its own line of private-label EAS systems and components that are compatible and interchangeable with Sensormatic® and Checkpoint® tags and systems. Its products include EAS systems, security tags, detachers, deactivators, lanyards, security labels, benefit-denial ink tags, and other peripherals. Its value-added services also include express exchange and repair on most EAS deactivators and detachers, a depot program for refurbishing and warehousing a variety of EAS components, consulting, and integrations. The company also offers comprehensive trade-in and lease options as well as a full procurement program where it will buy excess inventory from the retailer.

BSI offers a full suite of analog and IP-based video systems and advanced analytics. The company specializes in analog-to-IP phased upgrades as well as design and installation of new, high-definition IP solutions, cloud-based services, and open architecture platforms.

For more information visit bsi-eas.com.

LOSSPREVENTIONMEDIA.COM

SOLUTIONS SHOWCASE DETEX

Securing Your Business Is Hard—Let Detex Help

B

usiness owners understand the need to protect their inventory, customers, employees, and facilities. Today, more than ever, that need is as important as the business itself.

Whether your business is a chain of casual restaurants, a group of big-box stores, or a single fashion outlet, life safety and security door hardware is a necessity. Not just for back doors, Detex door hardware is engineered precisely for certain retail situations, but also provides choices for a wide range of functions and costs. Our retail customers are often surprised to learn that we can supply most of their door hardware needs.

Many of our hardware products have been developed specifically for retail applications. These are the solutions to problems that stores, restaurants, and other retailers must address every day, such as loss prevention, access-controlled customer entry, emergency exit control, merchandise deliveries, employee entrances, trash removal, securing outside gates, and more. Their design has evolved with the help of customer input, seasoned with our decades of experience in the marketplace.

Most businesses have at least two of the five types of openings: ■ Front entrance ■ Rear entrance or receiving door ■ Emergency exit ■ Restricted access ■ Outdoor area gates Detex is proud to offer solutions for all these applications.

1. Front Entrance

The front doors are what 99 percent of people see first, so they should be good looking and functional. The Advantex line of superior heavy-duty exit devices

from Detex is available in stainless steel, with beautiful yet rugged vapor deposition finishes, and industry-leading electrified options, engineered for high-use and high-abuse life safety and security door hardware applications.

Available in rim, mortise, surface vertical rod, and concealed vertical rods, Advantex exit devices are an excellent choice for both function and beauty.

Detex Low Energy Automatic Operators are heavy duty for high-use and high-abuse applications and are easy to install. The AO19 Series meets requirements for ANSI/BHMA A156.19 (American National Standard for Power Assist and Low Energy Power Operated Doors) and provides standard features that meet the requirements of the American Disabilities Act.

2. Rear Entrance or Receiving Door

How do you allow employees to walk the trash out or vendors to come

LP MAGAZINE | SEPTEMBER–OCTOBER 2016

in with new product, but still secure this door? A simple solution is the EAX-3500 Hardwired Timed Bypass Door Alarm. This unique alarm is designed for applications where the door needs to be held open for an extended amount of time, but will only do so with the proper management.

A manager can activate timed bypass, which bypasses the alarm, allowing an employee to take the trash out or a delivery to be made. After an allotted amount of time, the EAX-3500 will go into alarm, reminding the manager that the door needs to be closed and secured.

For those back doors that don’t really need to be opened except in the case of emergency, but need to be protected from outside break-in attempts, Detex offers the ECL-230X. This unique exit control lock is built to withstand the most aggressive attempt to break through rear doors. The ECL-230X-TDB maximum locking strength multi-point panic hardware is engineered with

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SOLUTIONS SHOWCASE DETEX an extreme-duty, triple-bolt design that, when combined with three hinge side bolts (DX bolts), can withstand 16,000 pounds of pull force.

3. Emergency Exit

The National Fire Protection Agency (NFPA) and the International Building Code (IBC) both state that doors leading to the outside must allow someone to exit during an emergency without any special knowledge. Enter the Detex Value Series line of secure and durable panic and fire exit hardware.

For an economical price, Detex secures emergency exit doors with either the V40 rim device or the V50 surface vertical rod device. Both the V40 and the V50 are fire rated up to three hours.

4. Restricted Access

Such openings might include a door to a stock room or office. How does one allow employees to enter and exit as needed, but keep customers out? Detex’s answer is the ACDxV40EX EasyKit, a code-compliant, industry-proven life safety and security hardware system for high-use, high-abuse doors with a cost-effective access control solution.

For authorized access to the stock room, a code (set by management) will need to be input, bypassing the alarm and allowing entrance for fifteen seconds

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before the alarm will sound. Employees enter a common access code, temporarily bypassing the alarm and allowing an employee to enter the stockroom without sounding the alarm. A stockroom keypad is no longer required, and the employee can quickly and easily return to the sales floor without fear of an alarm sounding. Customers trying to enter the stockroom will cause an alarm to sound, which can only be reset by an employee entering a common access code.

SEPTEMBER–OCTOBER 2016

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5. Outdoor Area Gates

Where there’s an outdoor retail space, there’s a security risk. If left unsecured, anyone can walk out with product. If secured wrong, it presents a fire risk. Detex offers the Weatherized Delayed Egress EasyKit. This EasyKit provides a secure locking system with a fifteen-second delay and 100-decibel alarm when someone attempts to exit.

One easy-to-order, easy-to-specify part number includes all the components and support documents needed to install and maintain the Weatherized Delayed Egress components. Two kit configurations are available—one with a weatherized electromagnetic lock and one without. All kits include a logic controller and power supply, Advantex weatherized rim exit device, exterior horn, and keyswitch with exterior cover.

Support documentation includes riser illustrations and wiring diagrams.

For more applications and solutions, visit www.detex.com/retail1 or call 866-927-8712.

LOSSPREVENTIONMEDIA.COM

SOLUTIONS SHOWCASE PROTOS SECURITY

A Profile in Partnership

Protos Security and Advance Auto Parts Deliver Superior On-Demand Guard Service

(Left to right) Protos Security’s cofounders, Chris Copenhaver and Patrick Henderson, and Advance Auto Parts’ Marc Patrouch, manager of asset solutions and analytics, and Jeff Carr, asset protection solutions engineer.

T

en years ago the asset protection team at Advance Auto Parts, a leading automotive aftermarket parts provider in North America, sat in a room with the founders of Protos Security preparing for an uncommon sales pitch. Protos was a small start-up with a vision for improving the security guard acquisition and management process, but they were still looking for their first customer. They asked the Advance team to consider the potential value of an on-call partner that could quickly place pre-qualified guards at any site around the country, proactively monitor performance, and provide a level of detailed performance insight that would make accounting both more accurate and more efficient.

The Advance Auto Parts Asset Protection team had already recognized that to successfully fulfill last-minute requests for guards at any one of their many stores, located in diverse and remote locations across the nation, was a challenging and time-consuming process. Each time the need arose, the team had to review and approve the request, find qualified guards, vet background and credentials, negotiate a contract, and schedule the shift. And, of course, these assignments had to be tracked to ensure everything went as planned and was properly invoiced.

LP MAGAZINE | SEPTEMBER–OCTOBER 2016

Advance Auto Parts wanted faster placements, better quality control, more performance accountability, and better cost management. They decided to give the small start up with a passionate vision, a small subset of stores in a variety of high-risk localities to prove that their business model could meet those needs.

As Advance Auto Parts introduced Protos to new markets, Protos was able to quickly develop the industry’s largest network of verified security guard vendors that they could then call on to negotiate competitively priced service anywhere in the country.

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SOLUTIONS SHOWCASE PROTOS SECURITY

National Expansion

After watching Protos successfully manage the security needs of all of the pilot program assignments, Advance staff saw an opportunity to effectively consolidate monthly billing, performance reporting, and insurance coordination for nearly sixty locations with ten providers down to a single guard management supplier.

Advance offered Protos the opportunity to take over guard management across the entire nationwide portfolio of stores.

And, by outsourcing the day-to-day management of their guard program, Advance’s in-house asset protection team was able to focus on more strategic priorities.

“Protos exceeded our expectations and gave us confidence in them as a third-party vendor,” explained Mike Cox, vice president, real estate and asset protection at Advance Auto Parts.

Relentless Innovation

From the very beginning, Protos and Advance also partnered to develop and test innovative new systems to meet the changing needs of the security industry nationwide.

They developed new methodologies and proactively leveraged emerging new technologies. They deployed new techniques to improve time tracking and validate invoices. In those first few years, Protos was able to provide significant, program-wide cost savings to the Advance Auto Parts asset protection department.

From On Call to Front Line Defense

In 2009, Advance Auto Parts invited Protos to once again expand their support. They added the management and ongoing security requirements for distribution centers to their existing contract, requiring the management of their nationwide store portfolio,

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which required guard support for both standing guard assignments and emergency placements.

By using a third party in this capacity in their supply chain, Protos helps Advance maintain US Customs and Border Patrol C-TPAT certification that provided significant additional corporate value and protection from distribution channel disruption.

Strategic Partners from the Start

From the beginning, Protos joined Advance security’s strategic planning meetings. They worked side-by-side with the in-house team to brainstorm and recommend outside-the-box opportunities to address challenges, increase transparency, and provide continuous value.

In one such instance, Protos addressed Advance’s need to ensure field coverage was in fact being executed as scheduled, by building a tool that would seamlessly triangulate the position of the officer’s cell phone and validate the location against the assignment protocol.

“All of our tools and services are a result of listening to the needs of our clients to make a better program and exceed the expectations of our customers,” stated Chris Copenhaver, Protos cofounder.

Continuous Performance Improvement

Early on, Protos’ primary value was in placing emergency guards, but by focusing on measurable process improvements, automation, and transparency, they’ve built industry-leading systems and methodologies that are saving their clients significant sums and increasing accountability at worksites all across the country.

Advance’s Mike Cox, added, “They deliver certified guards

SEPTEMBER–OCTOBER 2016

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and conduct their own due diligence to make sure we get the service we expect.”

Protos trains security guard vendors to Advance Auto’s standards and in its proprietary management systems. They ensure distribution security staff are trained to thoroughly inspect trailers and document those personnel entering secure areas according to US Department of Homeland Security standards.

If issues occur, Protos quickly rectifies the situation by addressing it with the security vendor. They are quick to replace guards and/or drop a vendor relationship where necessary.

“Our customers rely on us, so they can focus on other parts of the business,” said Patrick Henderson, cofounder of Protos Security. “We take our responsibility to deliver the highest quality guards on every assignment very, very, seriously.”

Measurable Business Impact

Protos Security’s innovative and transparent security solutions have created multiple layers of efficiency, reduced program costs, and dramatically improved communications for Advance Auto for more than ten years.

Protos has grown from a small start-up with just one visionary customer to an industry-leading supplier of more than 2,500 high-quality security guards nationally.

“We are truly passionate about protecting our team members and our stores,” Jeff Carr, Advance Auto Parts asset protection solutions engineer explained. “[Protos] managing security support staff and vendors has allowed me to look at the outliers to truly maximize coverage where it is needed and eliminate excess for a more fiscally responsible and solid security function.”

LOSSPREVENTIONMEDIA.COM

SOLUTIONS SHOWCASE INSTAKEY SECURITY SOLUTIONS

Key Control Efficiency through Digital Resources David’s Bridal’s Loss Prevention Team Is Unsurpassed in “Doing More with Less.”

I

n late 2014, David’s Bridal’s loss prevention team was reallocating internal resources and projects and felt that they needed to focus on improving their key management program. They looked for a program that would centralize management controls on keyed access for 300-plus stores nationwide. The program needed to provide visibility of key holder assignments while saving expense on the number of rekeys taking place. InstaKey’s KeyControl® program was selected and implemented for all stores in 2015.

The program’s unique combination of digital management resources and lock hardware technology improved the overall efficiency of the lock-and-key program and has allowed the LP team more time to focus on other vital job functions.

Embracing the Digital Resources

Loss prevention and operations began by utilizing a revolutionary Digital Site Survey (DSS) process to collect each store’s lock hardware imagery. Store managers utilized the camera on their portable tablets to capture images of existing locks and doors. These images were uploaded through the DSS application into InstaKey’s cloud-based SecurityRecords. com® software. This simple digital process saved David’s Bridal significant time and labor costs that would have otherwise been incurred by arranging for locksmith services to conduct the surveys.

Joseph Flynn, director of loss prevention, referred to InstaKey’s Digital Site Survey process as a “seamless exercise” for store management. “The entire process took less than ten minutes

for each store to complete—it’s just that simple.” As a result, stores were converted in a quicker turnaround time with improved installation accuracy. It Joseph Flynn also reduced upfront data collection costs and time-on-site installation concerns.

After installation, the LP team implemented InstaKey’s Digital Key Holder Update feature that allows stores the ability to assign keys to key holders also through their portable tablets. This improved tracking of keys at store level provides visibility for the LP team to remotely audit key holder data and compliance. “The digital key holder application helps me to maximize my time, so I can focus more on managing LP responsibilities versus managing our locks and keys,” said Michelle Wallace, loss prevention manager. Michelle Wallace

Rekeyable Lock Technology Speeds Up Store Efficiency

InstaKey’s simple rekeyable lock technology has also contributed greatly in maximizing productivity for store management. “With InstaKey, the total time invested to help a manager rekey their store is now a few minutes as compared to a process that used to take us hours,” Wallace expressed.

“And our safety and security is immediately restored,” she continued.

InstaKey’s Rekeying Kits are kept LP MAGAZINE | SEPTEMBER–OCTOBER 2016

in each store’s safe for emergency rekey events. Store managers and associates can now perform a rekey themselves in the event of a lost, stolen, or unaccounted-for key and no longer have to wait for locksmith services or changing of any hardware.

And if keys are returned, there is no need to rekey. “With these improved practices in place, I will probably be retired by the time the locks need to

When Joseph Flynn was asked to sum up David’s Bridal’s InstaKey partnership, he replied, “Simplicity.” be changed out,” said Flynn jokingly.

InstaKey’s client partnerships are developed through open communication of goals, execution, and satisfaction.

InstaKey is more than a lock vendor, as they charter to provide resources for each client to customize key control solutions designed around the client’s return-on-investment goals. The LP team’s goals to reduce management, perform at improved efficiencies, and provide simplified key control practices at store level have resulted in better time and resource management for themselves and their operations.

When Flynn was asked to sum up David’s Bridal’s InstaKey partnership, he replied, “Simplicity.”

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By Jacque Brittain, LPC, and Kelsey Seidler

The Daily Pulse of Loss Prevention T

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

We never know what we’re walking into when we attempt to detain a suspected thief. We can only guess at the circumstances that led them to this ill-advised situation and the potential consequences of their actions. We’re trained on how to manage these situations and how to take the necessary precautions to avoid JDFerguson risks and injury. But the harsh reality is that tragedy can still strike at any time. It could have happened to any one of us—likely on any number of occasions and in any number of different situations.

There are times when loss prevention can be a dangerous profession, and the last thing that any of us wants is a reminder like the events that unfolded on the evening of April 10th.

But the tragedy reaches beyond the events of that day.

his magazine launched a comprehensive new digital technology platform last year that offers our digital subscribers a wide array of compelling daily content. Our “Breaking News” content highlights the stories and critical events that affect the industry on a daily basis, sorting through the mountain of available news to bring you the top events that are influencing the industry and the profession.

In addition to sharing the daily news, we provide resources that support learning and career development through articles and video that help expand your base of knowledge. We offer highlights of ongoing industry events from across the country, webinars with subject-matter experts discussing the latest industry trends, and conversations that reach across the spectrum of loss prevention through our multiple social media groups.

Original content isn’t exclusive to our print resources, and the library available to our readers is growing each day. The following article summaries simply provide a small taste of the dozens of original articles that are available every month through our digital newsletter and the online version of LP Magazine. We invite you to take a closer look and read the complete articles by visiting us at LossPreventionMedia.com.

Honoring the Family

Jaseramie Dion “JD” Ferguson had worked at the store for seven months when he was shot. But it was much more than a young career that JD was launching. A married father of three, he left behind his wife, Tiana, a three-year-old daughter, Aryana, a one-year-old son, Jordan, and their three-month-old daughter, Ava. We lost a member of our extended family with the passing of this young man. But we must also remember that a wife lost her husband, and three children lost their father.

Representing the Loss Prevention Foundation and the Loss Prevention Benevolent Fund, I had the distinct honor of visiting with JD’s wife, Tiana, back in May. She requested to meet me at the very store where JD lost his life. And while I was taken back by the courage that this young woman has shown and the dedication that she has for her young family, I was overwhelmed by the gratitude that Mrs. Ferguson expressed when the Loss Prevention Benevolent Fund presented her with a check for $10,000 to help assist with the financial responsibilities that she was facing in the wake of this difficult time.

No one should feel that pain, and the financial assistance that was provided can never make up for this family’s loss. But the relief and appreciation that rushed across her face was overpowering.

Tiana was accompanied by her loving family, who showed the support that I knew would help her get through these difficult

When Tragedy Strikes the Loss Prevention Community

By Bill Davis

On the evening of April 10, 2016, a shoplifting suspect was attempting to steal three flat-screen televisions from a metro Atlanta Walmart when he was confronted by JD Ferguson, one of the store’s asset protection officers. As he approached the suspected shoplifter and asked for a receipt for the TVs, the situation quickly turned violent when the Bill Davis man pulled out a gun and shot Ferguson in the abdomen. Ferguson was immediately rushed to Gwinnett Medical Center, but died a short time later from his injuries.

This is how quickly that lives—and families—can change forever. This is the same type of situation that almost all of us in the loss prevention community have faced on countless occasions in retail stores all across the country. Many of us can tell stories about situations that escalated, facing desperate individuals that take foolish steps to avoid apprehension and the potential loss of personal freedom. Unfortunately, there are also those of us that can no longer share such stories.

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times. On behalf of the LP/AP community, we would like to send our heartfelt thoughts and prayers to the Ferguson family.

Social Media Monitoring and the Power of Information

By Brittany Griffin and Read Hayes, PhD

Facebook, Google+, Instagram, Twitter, Tumblr…these social media entities are readily becoming an essential unit within the business world. Woven into the very fabric of data collection, social media monitoring is being utilized as a data extraction tool to better predict, collect, and analyze various data events within any organization. By enabling users to better predict patron purchases, collect useful information from potential threat sources, and analyze current industry trends, social media monitoring is widely adaptable.

Social media has become synonymous with the way information is communicated during this day and age. Unlike the mediums for communication in the past, social media information is instant, easily disseminated, widespread, and has now become an essential intelligence resource for any organization.

Awareness Is Key

Awareness is a key factor when it comes to understanding the full benefits and potential consequences that social media can have on the loss prevention industry. It is imperative for each organization to understand and adapt to the various capabilities that social media monitoring resources available today have to offer. Such awareness, if only at the aggregate level, will create a foundation for asset protection/loss prevention professionals to utilize when gathering intelligence for their organizations.

This intel will catapult the level of communication amongst the users of social media within the organization. It will be paramount with respect to the analysis, dissemination, and more importantly, the collection of data. Brand message and identity can be better protected, and transferal of data-sensitive information can be more closely monitored. Potential threats made against organizations can be tracked down to the source as the existence of a loss prevention tool is created.

The Role of LPRC

LPRC researchers are working with multiple retailers to enhance situational awareness for loss prevention/asset protection professionals in the field. By utilizing a resource that has the ability to forewarn companies of individuals on their way to steal or attack a store location, by detecting risk through social media and the dark web, retailers are better able to keep employees and customers safe while mitigating potential risk and loss. Early warning allows local and corporate leaders to respond more rapidly, implementing a strategic plan of action and a more efficient response.

Social media monitoring can play a critical role in the safety and protection of the retail environment. Offenders often signal their criminal intent by recruiting, scouting, or bragging online, providing actionable pre-event indicators. Retailers should then work more closely with law enforcement to identify and define possible threats, and implement an appropriate response. This is a key proponent of LPRC research efforts.

Gift Card Cloning

By Bill Turner, LPC

While effective in driving sales, gift cards have also caused fraud headaches for retailers for years. Gift card fraud can range from physical theft to exploiting errors on the merchant side. One newer gift card scam involves gift card cloning.

To clone a gift card, thieves steal information from inactivated cards on stores shelves, duplicate the cards using a magnetic card reader/writer, and wait for the cards to be activated.

Once activated, they spend the cloned gift cards before the purchaser tries to use their legitimate card. One of the biggest mistakes retailers make is the open display of inactivated gift cards, making them physically accessible to thieves.

Consider a 2009 case from Beaverton, Oregon. Sealtiel Chacon Zepeda was standing at a Fred Meyer sales register spending a gift card when curiosity struck. He wondered how gift cards worked, how the little magnetic stripe on the back of them turned cards into store credit, and how easily he could reproduce the information stored on the card. Twenty hours of Internet searching sparked an idea that led to Zepeda stealing $6,000 from local stores and causing numerous customers to be holding useless gift cards they had legitimately purchased or received as gifts.

When backtracking the rash of customer complaints, fraud investigators detected that the cards had been tampered with when they saw that each card in question had racked up many balance inquiries per day. The culprit was a computer program that Zepeda downloaded to electronically check each card’s balances hundreds of times a day. Police were able to link Zepeda to the crime through his computer’s Internet protocol address combined with in-store video surveillance.

After being caught, Zepeda agreed to give the police a full description of his gift card cloning activities. After researching how gift cards work, he purchased a magnetic stripe reader online. He then began stealing blank gift cards on open display at numerous retailers and scanning them through his reader.

He would return some of the scanned cards to the stores and wait for the computer program to alert him to when the cards were activated and loaded with money. Using a magnetic card writer, Zepeda then rewrote a leftover stolen card’s magnetic stripe with the activated card’s information, a classic example of gift card cloning. After his arrest, police found about 1,000 stolen gift cards from many retailers at Zepeda’s residence.

Gift card cloning continues to become more popular, and all merchants need to take basic precautions to prevent gift card cloning. Cards should be secured, so they are only accessible to store employees. Requiring a PIN also offers an additional layer of protection, as the redeemer needs to have the physical card in their possession in order to use it. Retailers should also implement programs and procedures to identify computer-generated gift card balance checking, thus signaling potential criminal activity.

What Is a Loss Prevention Manager?

By Jacque Brittain, LPC

What is a loss prevention manager? What might appear to be a fairly simple question now requires a much more

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complicated answer in a new age of retail where roles and responsibilities are changing on a regular and consistent basis.

taking a more active role in the business of retail and becoming a balanced, flexible, and open-minded professional.

A Common Misconception

Cyber Crime and Ransomware: No Business Is Immune

To the average consumer, a loss prevention manager is often perceived as a “security guard,” a reactionary presence in a retail establishment whose primary responsibility is to apprehend shoplifters. Tales of shoplifters subjected to heavy-handed forms of justice and employee investigations that often result in nothing more than a simple slap on the wrist have been viewed by many as the norm—and why not? Shoplifters are primarily kids stealing candy bars and lipstick, right? Does it really make that much difference if an employee borrows a couple bucks from the register to buy their lunch once in awhile? The profession can be perceived as a necessary but unattractive and largely unwanted cost of doing business—a value measured simply by the extent of its potentially negative impact.

Those who have filled these roles have often been seen as uneducated, inexperienced individuals who are passing the time waiting to finish college or for an opportunity to become a public law enforcement officer, an individual that “wasn’t good enough” to serve in law enforcement, or a former law enforcement officer biding their time until they retire. They are often viewed as rigid, authoritarian, and one-sided. They have a singular objective and an inflexible view of right and wrong. They “look for the worst in people” and are frequently discriminatory in their approach to the customers visiting their stores. What would make someone pursue a job like that?

By Bill Turner, LPC

LP Insider has featured many articles on cyber crime, data protection, and data corruption. Business giants and the government continue to be the primary targets of criminal hackers. But any business or individual able to pay a ransom to hackers who “hijack” valuable data and hold it hostage can fall victim to ransomware.

Ransomware is defined as “a type of malicious software designed to block access to a computer or entire system’s data until a sum of money is paid.” Early incidents of ransomware mainly targeted individuals. Perpetrators of this type of cyber crime are now targeting businesses, obviously because businesses are perceived to have more money and more to lose than most individuals. The FBI estimates that ransomware extortion tactics will cost business over $1 billion in losses going forward.

And no business is immune from cyber crime and ransomware, not even the sports industry. NASCAR racing teams constantly face complicated technical challenges to optimize their vehicles for peak performance. But rarely has there been a problem quite like the one Circle Sport – Leavine Family Racing (CSLFR) faced earlier this year. Much of their critical data was held hostage. It began in April when the team’s crew chief noticed some unfamiliar files on his computer. Not thinking much of it, he continued operating as usual, compiling data that teams typically use for races including track data, information from test facilities, and personal files. An engineer on the team later noticed a cache of files being uploaded to the team’s Dropbox account and got suspicious that something bad was happening. Sure enough, when the crew chief later accessed his computer, he found that his files were inaccessible. Only one file would open. That file issued instructions to the team to either pay a ransom within forty-eight hours or lose the files forever.

The files held hostage included everything pertaining to the racing team. Detailed setups involving their race cars, lists of parts, and custom simulations with value in the millions of dollars were encrypted by the virus. The team would be severely crippled without access to the data being held hostage. In an amazing twist, cyber crime didn’t pay much this time. The hackers only demanded $500, payable in bitcoins. The team paid the ransom and got access to their data back. The unusually small demand in this case is rare, however. The ransom demanded is usually in the millions, if not tens of millions of dollars.

No individual or business is immune to cyber crime. And we know that there are many companies and services available to aid in identifying and correcting existing troubles and preventing future cyber attacks. It behooves every individual and business to be sure they have resources to fully protect their computers and systems from the sophisticated and serious threats posed by criminal hackers. Is your personal computer safe? Is your company’s data security ensured? If you don’t know, find out.

The Real Role of Loss Prevention

In reality, these perceptions are far from accurate. Serving in a position as a security guard is a fine and important profession, but respectfully is absolutely nothing like serving as a retail loss prevention manager any more than making cars is the same job as selling cars. There may be a common gear, but there are some significant differences that distinguish one profession from the next.

Loss prevention managers and police officers often work together in various situations and while conducting certain investigations. There are different aspects of the profession that require similar skills, mutual respect, and strong working relationships. But that doesn’t mean that every loss prevention professional has the desire to serve as a law enforcement officer. In fact depending on the retailer and the specific role, a background as a law enforcement officer might not be a good fit for the company or a good fit for a former officer looking to pursue a second career.

The role of loss prevention is to enhance the profitability of the business—just like every other role in retail. To a large extent, this involves exploring opportunities and implementing plans that result in the reduction of retail shrink, and all of the various issues that can result in retail losses whether the result of external losses, internal losses, operational and paperwork errors, and any and all other potential sources. It encompasses the protection of all company assets, as well as our customers and employees. Often there is a significant responsibility for safety, various audit functions, employee training and awareness, and other responsibilities within the business. Ideas, responsibilities, approaches, philosophies—they’re all going to vary slightly based on the individual program. But ultimately loss prevention requires

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PRODUCT SHOWCASE

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

acy’s Shoplifting Penalty M Challenged in New York

■ What ■

Is Omni-channel Retailing?

etail Theft Statistics: R Staying Focused on What’s Really Most Important

■ The

Retail Industry Continues to Chase Amazon Debate over Restorative Justice Programs

Career Development As part of the magazine’s mission to promote career growth at all levels, our LP101 article series address base LP knowledge and career advice: ■ Taking

the Next Step along Your Loss Prevention Career Path

■

P101: Embezzlement in L the Retail Environment

■

Resignation Letter Should A Help Move Your Loss Prevention Career Forward

■

LP101: Credit Card Fraud

■ The

■ Want

to Know How to Reduce Shrink in Retail?

■

very Crisis Management E Plan Needs to Address Workplace Violence

■ Terrorism, Workplace Violence,

and Insurance Implications

■

atigue, Pain, and Loss of F Productivity in Retail Work

■

re Thefts by Senior Citizens A Rivaling Juvenile Shoplifting?

EyeOnLP Videos Our original content includes videos produced by the magazine’s EyeOnLP team as well as from Wicklander-Zulawski: ■

■

■ The

Crossroads along a Loss Prevention Career Path

■

ompleting the Loss Prevention C Job Search: Preparing for Your Resignation

■

I n a Job Interview, Appearance is More than Just the Way We Look

LPM Voice Our LPM Voice articles offer in-depth discussion of key topics of interest to LP professionals: ■

ow Sears Holdings Changed H Its View on First Offenders and Earned "Gushing Praise" from Law Enforcement

■

I ncrease ROI and Uncover Issues through Video-Based Operations Audits

yeOnLP: Leading Professional E Development Change with Game Changers

■ Technology,

yeOnLP: ORC Management E and Successful Civil Recovery

■

verybody Wins: A Fresh Way to E Manage the Scourge of Shoplifting

■

Tips to Protect Profits during 8 the Back-to-School Rush

■

oss Prevention Technology That’s L Expanding Our Video Solutions

/ IAI Interviewing Tip: Translate Your WZ Skills

ROI Driving CA Partnership Program Participation

■ WZ ■ WZ

/ IAI Interviewing Tip: The Innocent’s Fear of Being Disbelieved

■ WZ

/ IAI Interviewing Tip: The Agitated Interviewer

To subscribe to LP Magazine’s digital channel, visit LossPreventionMedia.com and choose the SUBSCRIBE NOW link. By subscribing, you will have unlimited access to all current and archived articles in both the web and print editions.

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INDUSTRY NEWS

Loss Prevention in the New Millennium

and the US military. While retail security practitioners continue to spend most of their time protecting assets and preventing losses, they must devote more resources toward the safety of customers and employees—a trend that will only get more important over time.

Changing Retail Landscape. The 2002 recession caused a violent and long-lived retail contraction, causing a number of store closures, bankruptcies, and mergers.

Most notable were Kmart’s Chapter 11 bankruptcy filing and the merger between The May Department Store Co. and Federated Department stores, both occurring in the first quarter of 2002. Retail Forward Inc. predicted an extra $1 billion in shoplifting losses in 2002 alone.

The great recession of 2008 forced consumers to “trade down” from their normal shopping venues in a search for better value, deep discounts, or every-day low pricing. Thanks to the burst of the housing bubble and the precipitous drop in the stock market, consumers had far less disposable income. Comparable sales and store counts began to contract in a broad spectrum of regular-price vertical markets. For a few years, the off-price, discount and dollar stores vertical markets benefitted from the shift, resulting in more new stores, a broadening of product mix, and positive financial results. Unfortunately, the economic slowdown dragged on for such a long time that by 2014, even deep value chains like Rent-A-Center and Family

By Bob DiLonardo

L

oss Prevention magazine launched its first issue in the fall of 2001. I had the good fortune to contribute to that edition and author the Industry News column continuously until retiring in 2015.

Given this is the 15th anniversary of the magazine, we thought that the readership would enjoy a retrospective look at a few of the major world events, notable retail trends, and technological advancements influencing the retail security industry chronicled in these pages since the turn of the new millennium.

My vote for the next important amalgamation of technology is real-time location systems (RTLS). In layman’s terms, it is a combination of RFID, small-scale global positioning (GPS), and tracking.

World Events

Global Economic Issues. The dot-com era came to an end in 2000, and the stock market crashed. Interest rates were 6.5 percent, and inflation exceeded 3 percent.

The economic situation worsened over the next two years, causing retail theft to rise and comparable store sales growth to fall. By the time Loss Prevention magazine first published, the US was in the beginning stages of a recession. Commerce improved markedly between 2003 and 2006, fueled by business tax cuts, lower unemployment, and consumer and military spending.

By mid-2008, insolvency in the financial industry, a breathtaking drop in housing values and stock prices, and the equally breathtaking rise in unemployment frightened the populace and caused severe demand destruction for retail merchandise and other manufactured goods.

Problems in the US quickly spread to the rest of the world. This was the beginning of a long, slow decline in wages and purchasing power that continues to this day.

Terrorism. The 9/11 attacks and the subsequent War on Terror caused the retail security industry to address the issue of potential attacks in and around stores and malls. In response, the International Council of Shopping Centers held a series of anti-terrorism seminars that included training previously reserved for Israeli police

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Dollar reported revenue decreases and store closings in the US market. The situation has yet to measurably improve.

Internet Power. Around 2003, retailers began to expand the design, construction, and operation of e-commerce sites. Since then, Internet sales growth rates have dwarfed those of brick and mortar stores. Omni-channel retailing is arguably the biggest game changer in the retail industry over the last fifteen years. Amazon’s stock market value has now surpassed Walmart’s, and its revenue has grown from zero in 1996 to over $107 billion in 2015.

The growing use of the Internet has given rise to cyber crime. Over the last fifteen years, several retailers have experienced large-scale hacks of their customer databases. |

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In 2005, online transaction fraud reached a critical mass—accounting for loss rates of about 1 percent of sales.

Process Changes Stimulated

by Technology

Data Mining, Reporting, and Management. The magazine’s premiere issue featured a story about Lowe’s implementation of an Intranet-based system for managing loss prevention, safety, and hazardous materials compliance.

This was the first of many such positive case studies.

Since then, computer-based data management systems have become indispensible to security and non-security professionals in every corner of retail. In my opinion, these systems have been the most important diagnostic tool added to the asset protection arsenal in the last fifteen years.

Hiring Practices. In 2003, Albertson’s supermarket announced that it was going to deploy a comprehensive, web-based human resources management system, with a goal of automating all human resources data.

Today, virtually all multi-unit retail chains employ these systems in some form or another. Background screening activities have become simpler and less costly, but much more comprehensive as a result.

Pervasive Use of Video Surveillance. Around 2004, taking a cue from the UK, large US cities such as Los Angeles, Chicago, New Orleans, and Washington, DC, began to deploy state-of-the-art, police-monitored video systems with cameras trained on city streets. These systems are now ubiquitous, inside and outside of retail. Advances in digital camera design and recording technology and the proliferation of WiFi and cellular communications gives anyone the where-with-all to record and upload virtually any image or video stream using a smart phone.

Mobile Point-of-Sale. In 2001, mobile payments were a vision, not yet a reality. In 2015, about half of all online purchases made on Black Friday were with mobile devices. That year, holiday online sales exceeded $600 billion. Unfortunately, customer convenience has given rise to an increase in fraud. Experts estimated that up to 25 percent of these transactions could potentially be fraudulent. According to a report by Javelin Strategy & Research, card-not-present fraud, which includes online transactions, is expected to be nearly four times greater than point­-of­-sale card fraud by 2018.

Identifying and Tracking Inventory. My vote for the next important amalgamation of technology is real-time location systems (RTLS). In layman’s terms, it is a combination of RFID, small-scale global positioning (GPS), and tracking. Over the past five years, a few retail security equipment manufacturers have developed RTLS systems to identify, track, and protect merchandise; to manage specific safety and operational issues; and to take advantage of merchandise marketing opportunities. One well-known department store has been using RTLS for about four years to locate, track, and manage the movement of expensive handbags. Another has used it for display compliance in its shoe department. The key drivers of the future growth of RTLS systems will be the proliferation of

the cloud and the Internet of things (IoT). The cloud has simplified data storage and connectivity issues and made everything much more affordable and less complex. IoT has built-in intelligence, communications, and tracking capabilities that should lower the cost of providing RTLS by the eventual elimination of a separate tag.

The Cost of Cash

Ineffective strategies for processing and managing cash could be eating into retailers’ revenues according to the findings of a brand new survey conducted with senior loss prevention, operations, and finance professionals across the US and Europe. The research, conducted by cash management solutions provider Tellermate, suggests that the average major retailer could be spending up to $5.9 million per year on inefficient and under-optimized cash management processes.

The findings may come as a shock to many businesses that have actively shifted focus away from cash management and toward contactless and mobile payments in recent years. Implementing contactless readers, Apple and Android pay technology, and self-service kiosks has required big investments from retailers, restaurateurs, and banks alike. But the decision by many to neglect cash management in favor of re-allocating resources toward more modern methods of payment could be both premature and ill-advised as cash continues to play a big role for global businesses.

More than half of those businesses surveyed (53 percent) in The Tellermate Cost of Cash Survey said that the majority of their businesses’ takings were still in cash.

And while this does indicate that cashless transactions have increased in frequency over recent years, it’s important to note that cash is still the primary method of payment globally, yet one that businesses are quick to overlook.

From the point of payment to the process and banking, cash is a big expense for businesses. It incurs a cost every time it is counted, reconciled, or moved—and especially when it cannot be accounted for through malicious or non-malicious loss or shrink.

And when the processes for managing this cash are stagnant, or under-optimized, the result is a function that “costs” a business in terms of time, money, and resources.

Cash Loss

The survey highlights that cash loss is a big concern for global businesses, with 70 percent of respondents admitting that addressing cash loss was a strategic priority for the next twelve months.

Of this cash loss, 80 percent said that their losses occurred at the point of sale (POS), suggesting that respondents were aware that the majority of their cash loss occurs largely at the hands of cashiers. But when asked whether this cash loss was a product of internal theft or human error, the jury was split: 37 percent believed that their cash loss was deliberate, while 34 percent said it was accidental. A further 29 percent said it was probably a mixture of both.

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Move Toward Cash Management Technology

The survey carried out between spring and summer of 2016 also highlighted that less than a tenth of retailers’ losses required a full investigation according to those polled, while 26 percent said there was always a full investigation. This finding suggests two schools of thought: the zero-tolerance approach and those who only investigate major losses.

Another critical finding, however, was that only 23 percent of businesses perform spot check.

This lack of due diligence opens up big windows of opportunity for malicious cash loss and poor cash handling to go under the radar.

With the cash management function still largely consisting of inefficient manual tasks, such as reconciling cash drawers, setting start-of-day banks or processing change deliveries, many businesses are now realizing that adopting cash management technologies that can automate these labor-intensive processes is often a surefire way to streamline operations and generate efficiencies.

In fact, 85 percent of the businesses polled were looking to invest in cash management technologies in the near future, a factor that may have been influenced in the US by the recent hikes in minimum wage across a number of states.

Those companies polled may indeed be looking to use greater back-office technology to count and reconcile cash, enabling them to eliminate those labor hours “wasted” on inefficient activities and in turn slash their labor costs.

Time Is Money

The average cash loss, the survey suggests, takes one to two hours to investigate, but 20 percent of respondents said it took more than a whole day and up to a week on average. Plus, it is not only loss prevention that feels the fallout from this; such investigations also eat into the time of operations, finance, and human resources functions according to the respondents.

US versus UK

But not everyone is in consensus around the effectiveness of cash management technology. The survey revealed some interesting differences between the UK, Europe, and the US when it came to cash management.

For example, the UK is more convinced by the effectiveness of cash management technologies than their North American or EU counterparts.

Respondents in the UK said that getting real-time visibility of their cash was their biggest challenge. However, in the US and EU, streamlining cash management processes for better operational efficiency was more important.

This could indicate that UK retailers have already streamlined their cash management through the early adoption of cash management technology and are continuing to innovate in their function—with real-time visibility of cash being the next step toward ensuring that every penny taken makes it to the balance sheet.

Another noticeable difference was the fact that in the UK, the majority of respondents believed that most of their cash loss was unintentional, whereas the North American majority answered that it was intentional.

This divergence of opinion could be indicative of the fact that US companies seem to employ more zero-tolerance policies, with the majority (29 percent) saying that all cash loss incidents require a full investigation. In the UK, loss is seen as more nuanced and could be identified as more of a compliance issue or process failure than straightforward theft at the POS. Dave Lunn, global director at Tellermate, said, “Cash continues to pose a big expense for businesses, and it will continue to do so for many years to come. The costs associated with processing, counting, reconciling, banking, and even transporting cash all add up. But the greatest cost comes not from any of these elements individually, but from inefficiencies across each and every aspect of the cash management process.

The research, conducted by cash management solutions provider Tellermate, suggests that the average major retailer could be spending up to $5.9 million per year on inefficient and under-optimized cash management processes.

When asked about whether they were confident that all cash management tasks were being performed to a satisfactory standard in their stores, 53 percent answered in the affirmative, while 26 percent said the opposite and were not confident at all. The rest, predictably, were on the fence.

Of the operations teams that were surveyed, 85 percent said that improving store efficiency was a key priority for the next twelve months. And when asked about their key challenges specifically relating to the cash in their stores, the majority concluded that reducing instances of cash loss was the biggest challenge they face.

Perhaps those in finance have a greater understanding of just how much businesses spend on managing their cash. Of finance executives surveyed, 58 percent agreed that reducing the cost of processing cash was a key priority for the next twelve months.

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“Even when there is no hard cost involved, manual cash management tasks such as counting cash still take up valuable labor hours, which ultimately results in a cost.”

– Dave Lunn, Global Director at Tellermate

“Even when there is no hard cost involved, manual cash management tasks such as counting cash still take up valuable labor hours, which ultimately results in a cost. Retailers who automate these manual cash management tasks often see huge time savings, and when these time savings are converted into decreased labor hours or more staff deployed on revenue generating activities, the return on investment can be great.”

Cash loss is no longer the sole preserve of the LP manager, but many other functions of the business, as there is now a need for greater transparency and accountability as businesses strive to drive down costs.

“Tying people’s time up with cash management detracts from the customer experience and takes employees’ focus away from revenue generating activities,” Lunn continued. “As people are a business’s greatest—and most expensive—asset, they need to be more customer focused, not less.

Today’s retail is all about selling more and losing less and the most effective way of achieving this simple equation.”

To receive a copy of the survey from cash management specialists Tellermate go to tellermate.com/cost-of-cash to register for a copy.

CALENDAR September 7–8, 2016 International Supply Chain Protection Organization 2016 Conference Fossil Group Headquarters Richardson, TX iscpo.org September 8, 2016 Carolinas Organized Retail Crime Alliance Annual Conference Renaissance Charlotte (NC) Suites Hotel corca.org September 12–15, 2016 ASIS International 62nd Annual Seminar and Exhibits Orange County Convention Center Orlando, FL asisonline.org September 15, 2016 Retailers Association of Massachusetts New England Loss Prevention Expo DCU Center, Worcester, MA orc.retailersma.org

September 21, 2016 New York Cyber Security Summit Grand Hyatt New York cybersummitusa.com September 26–28, 2016 Consumer Returns 2016 Conference Hutton Hotel, Nashville, TN consumerreturns.wbresearch.com September 27, 2016 California Organized Retail Crime Association First Annual Conference Pasadena (CA) Convention Center cal-orca.org September 27–29, 2016 Loss Prevention Magazine Loss Prevention Foundation Annual Meeting Sanibel Harbour Marriott Resort & Spa Fort Myers, FL info@lpportal.com

September 29, 2016 Retail Council of Canada Loss Prevention Conference The International Centre Mississauga, ON rcclpconference.ca October 3–5, 2016 Loss Prevention Research Council 12th Annual IMPACT Conference University of Florida Reitz Union Gainesville, FL lpresearch.org October 20, 2016 Los Angeles Cyber Security Summit Loews Santa Monica Beach Hotel Santa Monica, CA cybersummitusa.com October 25–28, 2016 Coalition of Law Enforcement and Retail Seventh Annual CLEAR Training Conference Silver Legacy Resort Reno, NV clearusa.org

For more information about these and other industry events, visit the Events page at LossPreventionMedia.com.

LP MAGAZINE | SEPTEMBER–OCTOBER 2016

85

PEOPLE ON THE MOVE Michael Mainville, CFI is now a Zone AP Specialist with 7-Eleven.

Nathan Anderson, LPC was named Director of Field AP, and Sharon Cruz is now Manager, AP-DC & Supply Chain at 99 Cents Only Stores.

Ellie Bravo is now an Area LP Manager at 99 Ranch Market.

Eric Woodward and Octavio Andres Garcia Torres were made District Managers of AP at Abercrombie & Fitch.

Amazon promoted the following people: Shaun Belk to Senior Manager, Global Security Operations & Support, Andreas Seidel to Senior Regional LP Manager, and Ivana Kaiserová to LP Specialist.

Chris Strongman was named Director of LP at Aritzia.

Jason Philpott is now Regional LP Field Coordinator at AT&T Mobile Tel. Ian Dill was named VP of LP, while Armine Esackanian, MBA and Janos Arcia are now District LP Managers at BCBG Maxazria.

Zak Brownlee, CFI, LPC; Lance Lee; Beth (Milwee) King, CFI; and Canaan Peacock were promoted to Market LP Managers at Bealls.

Steve Sell was named VP, Global Sales and Marketing, and Bané Obrenovich was named Director of Marketing at CONTROLTEK USA. CVS Health announced the following changes: Matt Farley to Regional LP Manager, Scott Johnson to Regional LP Manager, Kyle Norman to Market Investigator, and Xavier Soule, CCIE, CHTI to District Market Investigator.

Timothy Rout, LPC was promoted to Area LP and Operations Support Manager, while Howard Weisel, Aaron McAloon, and Jill Ellison were promoted to Market ORC Managers at Lowe’s.

Jessica Censoplano is now District LP Manager at Lucky California.

Molly Gottlieb, CFI is now Regional AP Manager at lululemon athletic.

Shanel Alaniz is now a District LP Specialist at Smith’s Food & Drug Centers.

Tony De La Riva was named Regional LP Manager at DHL eCommerce.

Victoria Anguiano was promoted to District LP Supervisor at Marshalls.

Tony Raab was named Senior AP Manager at Spencer Gifts.

Steven Turner, CFI, Joseph Ledesma, and Chris Hyde, LPC are now District LP Managers at DICK’S Sporting Goods.

John Schroeder was named Director of LP, while Scott Yancy III, J.C. Felix, and Dennis Lonergan, CFI are now Regional LP Managers at Mattress Firm.

Florentino Posada is now Regional Investigator at Stage Stores.

Rod Fulenwider was promoted to Executive Director at D & L Protective Services.

Jed Weinstein is now Regional Security Manager, US Security at McDonald’s.

William Penn, CFI was promoted to Supply Chain Investigations ManagerNortheast at Gap Inc., and Lorenzo Gonzalez was promoted to Market LP Manager at Gap Inc./Old Navy.

Brigham Roberts, MA, LPC is now Manager, LP & Safety at Michaels.

William Connors is now a District LP Manager at Giant Eagle.

Deidra Grier was appointed Director of Marketing at Nedap.

John Akopyan, MBA is now Regional LP Manager at New York & Company.

Ashley App was promoted to Senior AP Analyst at Big Lots.

Michael Loox, CFI was named Director of LP for BLD Brands.

Adam Wollman, LPC is now Regional LP Manager at GUESS?.

Joseph Horton was promoted to Director of Market Operations at Bloomingdale’s.

Perry Smolinski was named Director of LP & Safety at Harbor Freight Tools.

Andrew Zahorsky, LPQ was promoted to District LP Manager at Pacific Sunwear.

Joel Cirbo is now Multi-Regional LP Manager at Boot Barn.

Jeff Hunter was named Director of LP at Helzberg Diamonds.

Steven LaPres is now Regional LP Manager at Petco.

Tiffany Wimbish is now Regional LP Manager at Brooks Brothers.

CJ Denton, CFI was promoted to Senior Director of LP at Hermès of Paris.

Kevin Krotenberg, CFI is now Sr. Regional LP & Safety Manager, and Chad Evans is now Cyber Crimes Investigative Specialist at PetSmart.

Angela Bisland, CFI was promoted to Divisional Director of LP at CarMax. Sam Raper was promoted to Southeast Regional Account Manager, and Greg Edelson is now West Coast Regional Account Manager at Catalyst.

Rick Mitchell was named Director of LP at Charming Charlie.

Keith Johnson is now a District LP Manager at Citi Trends.

Edwin Saul was promoted to Director, AP & Risk Management at CKE Restaurants.

Don Wuchter, CFI is now Director of LP - Midwest Division - The Americas Group at Sherwin Williams.

Mitchell Wigler is now District Manager of Investigations at Macy’s.

Gary Evaniuk, CFI is now Regional LP Manager at The North West Company.

Mark Delgado is now Area LP Supervisor, and Efrain Villanueva, Jr. is now District LP Manager at Burlington Stores.

Chip Chiappetta is now Regional LP Manager at SEPHORA.

Gustavo Montanez is now Area LP Manager with dd’s Discounts.

Max Salata is now the Director of AP of South Central Wisconsin, Bruce Grundy was named Director of Risk Management & LP for San Antonio, and Daniel Justice was promoted to LP Regional Supervisor at Goodwill Industries.

Lani Lautoa was promoted to Corporate LP & Fraud Manager for bebe Stores.

Rudy Mazak was promoted to VP/GM of Stores: Sears Hometown Stores, Appliance and Hardware, and Home Appliance Showrooms.

David Mulliner, CFI was promoted to Assistant VP, LP and Safety at IEH Auto Parts.

Chad Scott and Michael Babineaux were promoted to Area AP Managers, Carl Veld and Chris Dickman are now District LP Managers, and Janeen Collins is now Regional LP Director at JCPenney.

Mark Crowley was promoted to Head of Profit Protection at John Lewis Department Stores.

Glen Canarte is now Operations & LP Manager at Kiehl’s/L’Oreal Luxe Division.

Paul McQuillan was promoted to Sr. Manager, LP at Loblaw Companies.

Michael Jergensen, CFI is now District LP Manager at Ocean State Job Lot.

George Burns was promoted to National Director of LP at Pep Boys.

Suzanne Castillo was promoted to Director, AP - Investigations & Systems at Ralph Lauren.

Jeff Fulmer was named Senior Director of AP, while William Berger is now District AP Manager at Rite Aid. Jacy Krogh, CFI is now Regional AP Manager at Safeway.

Jamie Bailey, CFI was named Director of LP Scrubs & More.

Frank Benesz was promoted to National Manager AP Learning & Development, and Rocco Speziale was promoted to Director of AP Learning and Development at Sears Holdings.

Carson Altice, LPC was promoted to Sr. Manager of Field Operations Global LP at Staples.

LeeRoy Hegwood, CFE, CFI, EnCE is now a Senior Manager of Partner & AP at Starbucks.

Alexandros Glitsos, MBA, CEFI was promoted to Senior AP Business Partner, ORC Investigations at Target.

Ryan Haysley, LPC is now a District LP Manager at TJX. Andrew Grummett was promoted to Regional Investigations Manager, while Ahlam Elhammiri was promoted to Regional ORC Supervisor at TJX Canada/Winners Merchants International.

Raks Mohit was promoted to District LP Manager with TJX Europe.

Michael Monaghan is now a Regional AP Manager at Toys“R”Us. Brian Flannery was named Director of LP, and Matthew Pistel, NCCP is now Area LP Manager for ULTA Beauty.

Jodi Palermo is now Senior Investigator and Doug George is now District LP Manager at Victoria’s Secret.

Walmart announced the following changes: Chris Sparks, CFE to Director of Global Investigative Governance; Paul Chrisman, CFI, CPP, PCI to Senior Manager I, Environmental Health and Safety Compliance; Corrie Tallman to Senior Strategy Manager, eCommerce Store Operations; Levi Turner to Area Manager of AP, Logistics; and Alex Patterson, Kyle Millican, and Carlos Rico to Market AP Managers.

David Glass was promoted to Senior Regional Manager of AP at Winn-Dixie.

Nicole Schmitt was named National LP Manager at Wireless Vision.

Gerry Nevarez is now Regional LP Manager at Yusen Logistics.

Jean-Louis Kibort was named Group Head of Security for L’Oreal.

LP MAGAZINE | SEPTEMBER–OCTOBER 2016

87

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LP MAGAZINE | SEPTEMBER–OCTOBER 2016

89

PARTING WORDS

The Next Fifteen Years of LPM R

Kevin McMenimen, LPC Chief Operating Officer

EyeOnLP video channels, all bringing you news, information, alerts, education, interviews, conference recaps, press releases, readership surveys, webinars, product knowledge, and more.

The where and the how we say it has had to expand based on what needs to be said, not only in keeping up with evolving technology and new social habits, but also because all of this change has created so much more content. As an industry, our roles have changed to include safety, risk, disaster recovery, IT security, and finance, all of which has added to our library of content as LPM has also expanded, making sure we are inclusive to the content needs as roles have expanded and new challenges and opportunities emerge.

The magazine comes from humble beginnings—a couple of guys who wanted to create a magazine for the loss prevention professional that could serve as an outlet to foster communication and education within the industry. It’s a simple idea that even today remains at the heart of what we do. This simplicity is reflected in our commitment to our products and in how we manage our business today.

While simple, it is still rewarding to see the impact that LPM has on so many people. It is amazing (and humbling) how, after fifteen years, we can go to almost any LP executive office in the country and to many solution providers and find the magazine in their lobbies or on their desks. It is almost always dog-eared or indexed with sticky notes, with leaders and peers sharing the magazine and passing it around, sharing the value it brings to them professionally. And for many it’s even personal, which is just how it is for us—it’s personal.

We take our commitment to you to heart, and we invest ourselves fully to being that resource for you. We see and we experience a connection with you, and it is reciprocated so easily as soon as we say “LPM.” We go to conferences and visit with LP professionals around the world, and almost immediately we hear another story of how LPM has helped them, how an article affected them, or how LPM supports their department.

We count every subscriber, every supporter, and every advertiser as a friend. We appreciate you, and we thank you for your support, your input, your advice, for sharing your best practices, for making your contributions, for your feedback, and most of all for your friendship. We share with each of you this fifteenth-year anniversary, and we say, with deepest sincerity, “Thank you.” We look forward to another fifteen years together.

ealizing that there are many readers who turn first to the back of the magazine for Jim Lee’s Parting Words column, while you may be disappointed to find we have hijacked the column for this issue, we hope that you will not be disappointed by the story we share. In this issue celebrating the fifteenth anniversary of LP Magazine, with Jim Lee’s interview a focal point of the content, we decided to share our own Parting Words as we look at what the magazine has become and how it is positioned for the future.

Over the past fifteen years, and in particular in the last three years, our business strategy, like yours, has had to change.

As we all become more digital, living online, dominated by social media, email, and apps, we have been dedicated in making sure you get what you need from us the way you need it. In just the last few years, we have transformed what was a website that was focused on housing our archived print editions to one that is a robust resource and platform for content including the addition of the first LP mobile app for LP news and education, and adding thousands of followers to our LinkedIn, Twitter, and Facebook pages and groups.

We have progressed well beyond what was originally just a print magazine to grow into a media company with multiple print and digital outputs and channels.

We have progressed well beyond what was originally just a print magazine to grow into a media company with multiple print and digital outputs and channels. Committed to delivering quality, original content and education while keeping on top of the top news in the industry, today LPM reaches tens of thousands of subscribers and supporters with daily e-newsletters, weekly recaps, mobile apps in the US and UK, print magazines in the US and abroad, social media channels, and LPM

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Merek Bigelow Director of Marketing

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