September - October 2018 by Loss Prevention Magazine

SEPTEMBER-OCTOBER 2018 | V17.5 LOSSPREVENTIONMEDIA.COM

LOSS PREVENTION MAGAZINE THE AUTHORITY ON ALL THINGS ASSET PROTECTION

AN ABOUT-FACE FOR LP? ADVANCES IN IDENTIFICATION TECHNOLOGY LET RETAILERS GET PROACTIVE

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TABLE OF CONTENTS 6 EDITOR’S LETTER

Reactions to Women of LP Survey

By Jack Trlica

10 RETAIL SPONSORS

An About-Face for LP? Advances in identification

12 INTERVIEWING

Hello Ladies…and Gentlemen By David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP

technology let retailers get proactive

24 CERTIFICATION

By Garett Seivold, Senior Writer

Remaining Engaged and Accountable Interview with Tyson Robertson, LPC, Amazon

26 LPM EXCELLENCE

LPM “Magpie” Award: Applauding Excellence Featuring Steve Longo and Steve May

A Lifetime of Learning Chad McIntosh reflects on lessons

36 EVIDENCE-BASED LP Everything Is Connected By Read Hayes, PhD, CPP

learned among big brands and respected industry leaders

38 ASK THE EXPERT

By James Lee, LPC, Executive Editor

Outsmarting Cyber Criminals Interview with Rhett Asher

50 FUTURE OF LP

How ORC Fuels Human Trafficking

Partnering Science, Data, and AP to Tackle Retail Shrink RILA Student Mentor Program

By Tom Meehan, CFI

56 SOLUTIONS SHOWCASE - Detex - Appriss Retail - AFA

integrates the insights of retail, solution providers, and academia

60 LPM DIGITAL A New Reality

By Clarissa Franklin, Rajat Malhotra, Dani Diehl, and Raksha Pai, The University of Texas

By Kelsey Seidler

61 PRODUCT SHOWCASE 62 CALENDAR 63 PEOPLE ON THE MOVE 64 ADVERTISERS

64 SUBSCRIPTION FORM

Why Do People Steal? Examining the Robin

65 VENDOR SPONSORS 74 PARTING WORDS

Liberty Bell, Rocky, Independence Hall, Cheesesteak, and LPM

Hood complex

By Jim Lee, LPC

By Mike Giblin, Loss Prevention Research Council SEPTEMBER–OCTOBER

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EDITOR’S LETTER

Reactions to Women of LP Survey

s mentioned in this column in the May–June 2018 edition, the US magazine undertook a survey of women working in the loss prevention industry seeking to understand what issues or challenges women have encountered in their LP careers. The original survey results were summarized in a cover article in that issue, and a follow-up article providing reactions from retail leaders was published in our July–August 2018 edition. For those who have not read the articles, I want to offer here some of the reactions as reported in our follow-up article, including actual quotes from respondents, because of the importance of this topic. Both articles are available on the magazine website LossPreventionMedia.com.

stated they feel that while there has been a significant improvement in recent years, there remains a subculture that appears to carry an exclusive bias, intolerance, misconception, or misunderstanding of others. “I don’t think our teams hear enough from the leaders in our industry. We have to make people feel more than included. We must give them a sense of belonging.”

The Blind Spot Many women believe that a “good ole boy” network still exists in loss prevention that somehow excludes women and/or others outside of the group. While others wouldn’t specifically refer to it as a “good ole boy” network, every industry leader that responded

Mentorship Programs When asked whether organizations should support mentorship programs, industry leaders made it very clear where their thoughts lie. Every leader offered an unequivocal “yes.” “I’ve had mentors and sponsors in my life that knew more about my potential than I did. Every organization should have a program, and they should invest time and money into it.”

The Value of Diversity

Recruiting and Developing Talent While the response to this issue was mixed and most feel that significant strides have been made, many respondents also agree that this remains an area of opportunity. “Generally, I think retailers are doing a good job in this area, but there are still some pockets where there is very little female representation. I don’t think retailers are doing a great job with developing females beyond middle-management positions. There are still far too few women in senior levels of leadership in retail loss prevention.”

you do for better or worse, reject entitlement, embrace inclusion, be a team player first, and pick your battles. If you embrace these simple rules, gender shouldn’t matter.”

Leaders Stepping Up Promotions and other advancement opportunities should always be based on merit, productivity, commitment, potential, flexibility, ingenuity, and other performance-based factors. Overcoming disparities requires that we develop strategies that focus on engaging all talented individuals in growth opportunities regardless of gender or other nonperformance issues. “There is no doubt that where you work and for whom you work will have an impact on your opportunities for advancement. But you control what you do and how you do it. Everyone needs to do the job, be present, show up, go above and beyond, own everything SEPTEMBER–OCTOBER

The issue of integrating diverse populations into the retail enterprise is an ongoing challenge. We believe this survey provides insights that all loss prevention leaders and organizations should consider as they seek to enhance the productivity and success of their teams. We encourage you to download the full report at LossPreventionMedia.com/free-reports. There are seventeen pages of statistics and quoted responses on a variety of questions for your consideration. We also wish to thank Tyco Retail Solutions and Protos Security for sponsoring the women of loss prevention survey. We plan to address other topics in future surveys. Any suggestions for survey topics that will impact the LP community are welcome. Send your suggestions to JackT@LPportal.com.

Jack Trlica Managing Editor

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EDITORIAL BOARD Charles Bernard Group Vice President, Asset Protection and Comprehensive Loss, Walgreens Erik Buttlar Vice President, Asset Protection, Best Buy Jim Carr, CFI, CCIP Senior Director, Global Asset Protection, 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 Regional Vice President, Store Operations, Academy Sports Scott Draher, LPC Vice President, Loss Prevention, Safety, and Operations, Lowe’s Scott Glenn, JD, LPC Vice President, Asset Protection, The Home Depot Barry Grant Chief Operating Officer, Photos Unlimited Bill Heine Senior Director, Global Security, Brinker International Frank Johns, LPC Chairman, The Loss Prevention Foundation Paul Jones, LPC Director, Asset Protection and Risk Management, CKE Restaurants Holdings Mike Lamb, LPC Vice President, Asset Protection, The Kroger Co.

David Lund, LPC Vice President, Loss Prevention, DICK’S Sporting Goods John Matas, CFE, CFCI Vice President, Asset Protection, Investigations, Fraud, & ORC, Macy’s Chris McDonald Senior Vice President, Loss Prevention, Compass Group NA Randy Meadows Senior Vice President, Loss Prevention, Kohl’s Melissa Mitchell, CFI Director, Asset Protection and Retail Supply Chain, LifeWay Christian Stores Joe Schrauder Vice President, Asset Protection, Walmart Stores Tina Sellers, LPC Director, Asset Protection, Retail Business Services LLC, an Ahold-Delhaize Company Hank Siemers, CFI Vice President, Global Retail Security, Tiffany & Co. Quinby Squire Vice President, Asset Analytics and Insights, CVS Health Mark Stinde, LPC Vice President, Asset Protection, 7-Eleven Paul Stone, CFE, LPC VP Security, Goodwill Industries of SE Wisconsin Pamela Velose Vice President, Asset Protection, Belk Keith White, LPC Senior Vice President, Loss Prevention and Corporate Administration, Gap Inc.

Loss Prevention, LP Magazine, LP Magazine Europe, LPM, and LPM Online 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

LOSS PREVENTION MAGAZINE 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 EXECUTIVE EDITOR James Lee, LPC JimL@LPportal.com EDITORIAL DIRECTOR Jacque Brittain, LPC JacB@LPportal.com MANAGING EDITOR, DIGITAL Kelsey Seidler KelseyS@LPportal.com RETAIL TECHNOLOGY EDITOR Tom Meehan, CFI TomM@LPportal.com SENIOR WRITER Garett Seivold GarettS@LPportal.com CONTRIBUTING WRITERS Read Hayes, PhD, CPP Walter Palmer, CFI, CPP, CFE Maurizio P. Scrofani, CCSP, LPC Shane G. Sturman, CFI, CPP Bill Turner, LPC David E. Zulawski, CFI, CFE CHIEF OPERATING OFFICER Kevin McMenimen, LPC KevinM@LPportal.com DIRECTOR OF DIGITAL OPERATIONS John Selevitch JohnS@LPportal.com SPECIAL PROJECTS MANAGERS Justin Kemp, LPQ Karen Rondeau DESIGN & PRODUCTION SPARK Publications info@SPARKpublications.com CREATIVE DIRECTOR Larry Preslar ADVERTISING MANAGER Ben Skidmore 972-587-9064 office, 972-692-8138 fax BenS@LPportal.com SUBSCRIPTION SERVICES

NEW OR CHANGE OF ADDRESS LPMsubscription.com or circulation@LPportal.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 LPMsubscription.com. The publisher reserves the right to determine qualification standards. International print subscriptions are available for $99 per year payable in U.S. funds at circulation@LPportal.com. For questions about subscriptions, contact circulation@LPportal.com or call 888-881-5861. Periodicals postage paid at Matthews, NC, and additional mailing offices.

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SEPTEMBER–OCTOBER 2018

INTERVIEWING

Hello Ladies… and Gentlemen

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

e read with interest the Women of Loss Prevention survey in the May–June and July–August 2018 editions of LP Magazine. From our own experience during the last thirty-five years, we have seen a significant change in the genders, racial mixture, and ages of those attending our training programs. When we first started in business, older white males almost exclusively held the top slots in loss prevention and police. Our participants in our classes were also largely males, again mostly white. But times have changed, and for the better we think. Women now hold top positions in loss prevention and influence changes in our field. Our classes reflect the impact of these changes with the number of women taking our programs often equaling the men. Part of this change can be attributed to the attendance of human resource professionals, which in many organizations is staffed by a majority of women, but even adjusting for that, females in our field are

generally stay with one department for their entire careers to obtain a pension, thus turnover is generally low. Thirty years ago an open police position might have 300-plus applicants vying for the single position, and there were almost no women seeking this type of work. If the officers didn’t retire until twenty to thirty years later, there were just no open slots for women. Additionally, the opportunity to advance was limited to openings in that department since most agencies did not hire from the outside, except perhaps for a chief of police position. This thinking has eased in some agencies where officers can make some lateral moves from one organization to another. Others agencies still have union rules where experienced officers lose their tenure thereby starting at the bottom of the pecking order again if they join a new department. One other factor that slowed women’s advancement in law enforcement was the physical challenges necessary to get the job. The physical agility tests for hiring were often too difficult for women to pass resulting in them not making the hiring list or landing very low in the standings. Another factor was the institutional thinking of government agencies, which was difficult to change because there was little turnover, resulting in a business-as-usual attitude. It took years of steady pressure for a law enforcement departments’ thinking to change and realize women could handle field situations and need not be relegated to only child abuse or family issues. Clearly, law enforcement is changing, but the change is much slower, in some cases glacial. The change in the private sector relating to women has been more rapid because of people’s ability to change jobs, advance, and bring new ideas to the organization.

“Although at the time I did not perceive joining different associations was a form self-marketing, in retrospect that’s what occurred. The broader your base, the more knowledge you gain, the more areas you find to connect with others, which grows your network and ultimately promotes yourself.”

Certification

– Kathleen Smith, Safeway increasing. In the public sector females are also taking a leadership role assuming the chief of police positions in some major departments. The private sector has changed much faster than the public sector when including women in leadership positions and in general hiring. Law enforcement positions by their very nature discourage leaving the job for another position. Officers

SEPTEMBER–OCTOBER

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.

We were pleased to see that in the Women of Loss Prevention survey, 90 percent agreed that advancement was attainable with 70 percent believing they had the same promotional opportunities as a man. Almost 80 percent of women responding to the survey felt their organizations were doing an effective job of recruiting female talent into loss prevention and their company was effective at promoting diversity in the loss prevention department. The vast majority of women (92%) felt they had the support and respect of their continued on page 14 LOSSPREVENTIONMEDIA.COM

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Smith continued, “I believe that to grow and develop as a professional in our industry, you must branch out from what you know and what is familiar. I’ve learned something new at every event I’ve attended…even after so many years in this business.” As part of the ASIS Retail Council, Smith said, “Part of what I enjoy and value most about ASIS is that you will never find a more diverse population of security professionals. The directory alone gives you a contact point in company and business across the nation and the world for that matter.” As vice chair of the ASIS Retail Council, this coauthor [Shane Sturman] knows that the Retail Council is always looking for women to join our ranks to diversify our membership and bring new ideas with them. I, personally, am looking for women to join us who can broaden our knowledge and contribute to our positive growth as a council. If anyone has an interest, please contact me at ssturman@w-z.com.

continued from page 12

male peers, and 82 percent also felt they had the support of their male subordinates. While the survey had some disagreement on other topics, we think this shows a positive movement of inclusion for the women in our industry. But there is still a long way to go. So how can women promote themselves? Getting specialized training or certifications is one way to make a resume stand out from the rest. People who take that next step to work toward a certification are saying volumes about their will to succeed. This is extra work above and beyond the daily tasks. Obtaining a certification highlights one’s commitment to the field. Certifications like LPCertified (LPC), LPQualified (LPQ), Certified Forensic Interviewer (CFI), or any of the ASIS International certifications can help your resume stand out from others in the field. Of the current CFIs, almost 560 hold the position of vice president or director, and almost half were promoted to these new roles in the last several years. We’re also proud to say that over 20 percent of CFIs are women.

Mentorship

“I was fortunate to have several mentors during my career. They helped me develop my knowledge and experience, plus they allowed me to try new projects and offered critical guidance.” – Annette Roder, KeHE

Professional Associations Women are finding other ways to set themselves apart from males in our industry. For example, joining associations and looking for opportunities to join committees can be a significant way to further one’s career. Kathleen Smith, CFI, vice president of loss prevention for Safeway, shared, “I joined different associations because I believed that I would gain a different perspective on [asset protection and loss prevention] practices by looking at issues facing broader markets, and not limit myself to just the grocery industry. I know I’ve learned from the entire industry of security, loss prevention, and asset protection professionals that I have met over the years. Plus, this helped me with contacts I could turn to for suggestions that I could possibly apply to my organization’s unique needs. “Although at the time I did not perceive joining different associations was a form self-marketing, in retrospect that’s what occurred. The broader your base, the more knowledge you gain, the more areas you find to connect with others, which grows your network and ultimately promotes yourself.”

SEPTEMBER–OCTOBER

Obtaining certifications and joining associations are excellent ways to market one’s self and make contacts, but certainly there are other equally valuable opportunities to separate from the masses. Annette Roder, former chief talent officer and senior vice president of human resources at KeHE, suggested finding a mentor to help develop a strategic outlook on the business and organizational processes. “I was fortunate to have several mentors during my career. They helped me develop my knowledge and experience, plus they allowed me to try new projects and offered critical guidance. Their advice helped me prepare for my subsequent promotions, but just as important they helped me develop a big picture outlook when working with senior executives,” related Roder. “I can say their guidance played a strong part in my career development and later decision-making. I still keep in touch with them.” Roder helped senior management grow the organization to almost triple its size during her tenure. Today she sits on several boards continuing her personal growth. Another thought we might suggest is stepping outside your comfort zone and volunteering for projects that you might not ordinarily consider, thereby expanding your worldview. It’s easy to do something that you’ve tried before and been successful at but much more difficult to take that step into the unknown. However, by volunteering for assignments outside your expertise, you have an opportunity to meet new contacts, try new things, and perhaps develop a talent you never knew you had. Not just for the women out there but also for anyone looking at their career, create a strategic plan focusing on the skills, contacts, and knowledge you will need to get there. Decide who might make a wonderful mentor and ask them if they have the time. Most people, when asked, are extremely flattered and will go out of their way to help in your development. Consider which associations and certifications fit into your strategic thinking and which contacts will be important to springboard your career. Then take the time to execute your plan. We wish you the best of luck. LOSSPREVENTIONMEDIA.COM

FEATURE

AN ABOUT-FACE FOR LP? ADVANCES IN IDENTIFICATION TECHNOLOGY LET RETAILERS GET PROACTIVE By Garett Seivold, Senior Writer

AN ABOUT-FACE FOR LP?

“

e proved-out that the technology works phenomenally well. The technology is great.” This effusive praise by an LP executive who oversaw a several-store test of facial racial technology is perhaps most noteworthy for the retailer’s ultimate decision against implementation. More than ever, retailers have the ability to shift security upstream—to move from reactive strategies of catching or investigating criminals to identifying them before they ever have a chance to strike. But even if technology is now ready for retailers, are retailers ready for the technology? LP expert and consultant Walter Palmer CFI, CFE, is among those who see both potential and problems for facial recognition technology in retail. “Very Walter Palmer few retailers are using it currently, but manufacturers are promoting it, and there are strong advocates among some LP leaders,” said Palmer. “And I think it’s clear why—the use case is brilliant. Truly. But the question is if we can get there. There are a lot of head winds.” Facial recognition technology (FRT) and other identification technologies (see the sidebar on page 20) clearly have momentum. It has captivated mainstream press attention, has overcome multiple technological hurdles, and has largely addressed the mismatch between promise and performance that held it back in years’ past. All this is leading to some significantly optimistic predictions for FRT.

imagine asking about what it does, how hard it is to roll out, so we’re out there doing a lot of demos and pilots,” explained Peter Peter Trepp Trepp, CEO of FaceFirst, which launched Sentinel-IQ, a facial recognition platform for retail security, in June. “My perspective is that well over half of retailers are at least starting to take a look. They’re beginning to understand the power that it has and learning that they’re not going to be first to use it—because nobody wants to be first. But it’s coming, and I see it accelerating.” Charles Fleischman, COO at DeepCam, an artificial intelligence company, said he’s seeing similar momentum. Charles Fleischman “We finished training at one client, and the head guy kept saying, ‘Wow. How fast can you

do another 100 stores?’ That’s where we’re going very quickly.” It’s probably not just vendors’ wishful thinking. Driven by improved accuracy, speed, and an increased need for enhanced surveillance and monitoring, the global facial recognition market is predicted to grow from $3.85 billion in 2017 to reach $9.78 billion by 2023. “Various applications like homeland security, criminal investigation, ID management, and physical security have made the demand for this technology increase,” according to a market analysis report, Global Facial Recognition Market, 2017-2023. “The market has been growing at a tremendous rate, and the awareness on the benefits of using this technology is increasing,” it notes. Among the various processes like 2D, 3D, or facial analytics, the 3D market holds the most significant share “due to its highly and most accurate face recognitions.” High-profile installations are likely to feed interest in FRT. In August, for example, the executive director of security for the 2020 Olympics said the Games will be using a facial recognition system by NEC Corp. to monitor and speed checkpoint processing of accredited individuals, such as staff, athletes, and media. Madison Square Garden has already used FRT at events to compare individuals against a database of known security risks, according to a report in the New York Times. Momentum is particularly strong in the financial sector and at airports and stadiums, according to Trepp. Retail is not leading the way, but he thinks it’s ahead of most sectors. It’s also big overseas. Property developer China Overseas Land & Investment and JD.com recently announced plans to launch several hundred unmanned convenience stores throughout China that will incorporate facial recognition. In a survey by Opinion Matters of representatives from 150 retail stores in the UK, more than one-quarter said they

Driven by improved accuracy, speed, and an increased need for enhanced surveillance and monitoring, the global facial recognition market is predicted to grow from $3.85 billion in 2017 to reach $9.78 billion by 2023.

A Bright Future “FRT is fairly new for most folks. But we’re getting lots of phone calls—from just about everyone you can

SEPTEMBER–OCTOBER

LOSSPREVENTIONMEDIA.COM

AN ABOUT-FACE FOR LP? have used facial recognition for security and/or sales and marketing. Manufacturers are certainly recognizing the potential. For example, Megvii, a Chinese startup that develops facial recognition technology, is raising $600 million in funding, most of which reportedly will be used on the company’s initiative to sell more of its technology to retail stores. The need for retailers to understand customers at the individual level—not just by zip code, age, or gender—is also likely to fuel interest. A principal analyst at Forrester Research identified that goal as a top technology trend at the 2018 NRFtech conference. Lofty expectations are the result of significant technology enhancements that manufacturers have made. “A lot has happened in the last five years—and even more so in the last two or three years—especially in terms of a big leap forward in accuracy and performance,” said Trepp. “We’ve now gotten to the level that really was sort of the promise all along, that ability to match a person who moves in front of a camera in a real-time environment.” By identifying a face against those contained in a database, and doing so in real time, systems can send an immediate alert to store personnel, which allows LP to monitor or intervene with a suspicious person before a crime is committed. “That has been the big leap,” said Trepp. The enhanced capability is made possible by the shift to neural networks for feature matching and a continued improvement in computing power, according to Don Knasel, CEO and founder of DeepCam, which launched Retail by DeepCam at ISC West in 2018. “All world-class facial recognition is now based on neural networks,” he said. It enhances the value of systems in multiple ways, including being able to make comparisons of partial faces, when faces are captured at an angle, and has improved accuracy across demographics and despite beards, sunglasses, and

hats. Also, it enhances the ability to run recognition on less expensive cameras, said Knasel, “which brings the cost of a system down by an order of magnitude.” The FRT market study made note of the progress manufacturers have made, concluding that traditional technology constraints regarding camera type and lighting conditions have largely been overcome and predicting that improvements haven’t yet hit a plateau. “A lot of research is being done to make the technology more efficient, and huge new players are competing in the market to develop better and more-efficient systems,” according to the study. Moreover, some experts noted that since recognition is based on a fundamental human feature, rather than a type of device they interact with, FRT’s life cycle could be especially long. It’s still a rarity in US retail stores, but some are already having success identifying chronic returners, counterfeiters, thieves, and other persons of interest—and it’s creating interest among others. “We’re making scores of matches every day, and at least once a week, we get a really, really bad guy,” said Trepp. Andrew Chapman

Another great use, according to Andrew Chapman, senior vice president of sales at 3VR, is to identify if an individual who comes in empty-handed is shortly thereafter at the return desk carrying a package. “Some retailers use that to at least reject the return, and for that it’s a great tool,” he said. Better performance, lower cost, real-world uses, early adopter proof-of-concepts—it’s clear why there is a buzz about facial recognition. Joel Rieger, principal consultant for Rieger Consulting, is currently helping several major Joel Rieger retailers examine technology platforms and conduct tests. “The willingness of retail companies to engage with this type of technology is certainly on the increase,” he told LP Magazine. Yet, as it looks to become another standard tool in the LP arsenal, FRT is contending with some significant historic, regulatory, strategic, and public-perception obstacles that has kept many retailers on the sideline.

A Spotty History A lingering hangover of false promises may still afflict some LP leaders’ attitudes toward FRT, contributing to their cautious approach to the technology. “History is against us—this idea that facial recognition technology doesn’t work, it’s too expensive, it doesn’t work on some ethnic groups, that you’re going to get false positives and a false alert two out of three times,” said DeepCam’s Fleischman. He sees confidence in the technology growing but acknowledges it has taken time. FaceFirst’s Trepp admits that five years ago FRT systems were not delivering on their hype, including for real-time accuracy. “It put people off,” he said.

It’s still a rarity in US retail stores, but some are already having success identifying chronic returners, counterfeiters, thieves, and other persons of interest—and it’s creating interest among others.

LP MAGAZINE

SEPTEMBER–OCTOBER 2018

AN ABOUT-FACE FOR LP? Times have changed, however. False alerts were not an issue for one major retailer that ran a test of FRT in several big-box stores, according to its project lead on the test. “We had zero false positives, 100 percent accuracy. And that was great. We were hoping it would be close to that, but the system exceeded expectations. There were no false promises. That was actually the best part of that test,” he said.

Shifting Sentiments Although retail leaders may be impressed by how the technology has progressed, concern over consumer reaction is a significant counterweight as they gauge whether to forge ahead. “Retailers are scared of the public’s perception,” Palmer believes. According to its test project leader, media attacks on companies over privacy issues filtered into the big-box retailer’s decision not to widely implement FRT. He added that the case for the technology would be easier to make if it weren’t for a residual sense of risk from public sentiment and negative brand impact. Moreover, when public attitudes are the issue, criticism can take a toll whether or not it’s earned. Privacy advocates generate a lot of press when they float potential horror stories associated with the collection of biometric data, so the potential of bad press and harm to a retail brand, even if it’s abstract, surely acts as a drag on FRT adoption by retailers. In response, some vendors are taking steps to educate the public, such as using terms like “matching” instead of “recognition.” This may help promote the fact that just because a system can recognize that an individual was previously in a store does not necessarily mean the system knows who you are. Time, however, is probably the surest answer to shoppers’ skittishness. Consumers have repeatedly shown willingness to trade privacy for convenience and broadly participate on platforms that track where they go

and what they do—even after privacy snafus come to light. “The obstacle of public perception [of FRT] is something that could be overcome, I think. There is already a significant part of the population that is comfortable being tracked,” said Palmer, who recalled that initial outcry over public uses of video surveillance waned over time and then largely disappeared. The same, he thinks, could eventually happen with FRT. The “ick” factor is likely to dissipate and may do so quickly if past consumer behavior is a good indicator. Still, it’s not gone just yet, according to data on consumer sentiment. For example, at the start of 2018, FaceFirst surveyed consumers about whether they’d be willing to purchase a device with facial recognition to help protect their privacy, and half said they would not buy a device containing that feature. It’s easy to think that consumers, currently, might be no more favorable to retail stores using the technology for theft prevention.

Regulatory Roadblocks? From a privacy perspective, facial feature matching and other identification technologies can operate as opt-in technologies, flagging only people who commit an offense, and even then, no personal identifying information needs

to be maintained, just a picture with its own unique number and time, date, and location. “It is nothing more than you have from CCTV, and less, because that is actually video of the whole time a person is in a store,” said Fleischman. Rieger said you can’t gain access to law enforcement databases, but that nothing prevents a retailer from creating its own. “Traditionally, LP would bust a guy, take a picture of his license, develop a case log, and take his picture. And nothing prevents LP from doing this same thing enterprise-wide with the help of technology.” He added that nothing prohibits a retailer from then using that data to identify when that person is active, in what radius, and so on. And while LP can’t access law enforcement data, it’s possible to send the data the other way, said Rieger, which could strengthen a retailer’s public-private partnerships and potentially result in the disruption of organized retail crime (ORC) operations. As with consumer sentiment, however, general regulatory uncertainty—rather than the legitimacy of privacy concerns or current law—could be enough to give a retailer pause. “It’s standard in common law that people have no expectation of privacy in a public venue, and the public is an invitee to a store, so there is an ability to disinvite people,” said Palmer. But even if the legal footing is currently solid, recent regulation related to privacy and biometrics in a few states, like California and Illinois, and the prospect of what other states may do, can damper a national chain’s enthusiasm. News items of biometric systems coming under attack surely don’t help, including a proposed class action in August against Crate & Barrel, claiming its use of biometric fingerprint scanners violate Illinois’ Biometric Information Privacy Act. Liquor store chain Binny’s Beverage Depot was also hit with a potential class action under the Illinois law for its fingerprint-based timekeeping system. The New York Civil Liberties Union is trying to block a school district in the western

Jack Patel says he’s also using FRT to notify staff when particularly good customers enter the store, which is particularly useful because his high turnover among store personnel doesn’t allow for this type of valuable customer service to evolve naturally.

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The issues above might not be deal breakers by themselves, but they may add up for some retailers to choose a wait-and-see approach. “As a whole, I think the technology could have a lot of value in targeted markets. If the cost was appropriate and the risks were minimal in terms of public perception and brand impact and changes in legislation, it definitely could have value,” noted the LP executive described at the outset. Ultimately, though, he said his company couldn’t validate the overall value of launching it across the company “and chose not to prioritize it.” For other retailers it has been a good fit, including a major retailer profiled in LP Magazine several years ago. (See “Facial Recognition Security Cameras: A Game-Changing Technology” at losspreventionmedia.com for an in-depth look into this retailer’s experience.) It’s also working for Jack Patel, owner of two 24/7 convenience stores on the East Coast. Jack Patel Patel had been looking for technology to deploy for a while, noting that he’s always been intrigued by facial recognition and was acquainted with its use in other countries. Months after putting DeepCam’s solution in his store, he says he’s getting the results he’d hoped for. By immediately alerting personnel to the presence of known shoplifters, via tablets at the point of sale, his stores have successfully banned problem individuals from entering. And he suspects that word has gotten around among thieves in the area, so deterrence is multiplying the system’s value. “They don’t know about the alerts, but it makes them think that different store associates know who they are and are paying very specific attention. And I’m sure they’re telling their friends, ‘Don’t go in there, because they’ll get you.’”

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part of the state from implementing facial recognition to alert security to the presence of an expelled student, sex offenders, or disgruntled ex-employees. And, under public pressure, Orlando’s police department let its pilot program with Amazon’s Rekognition facial technology expire. The department was testing the service’s ability to aid criminal investigations by recognizing suspects in photos and videos but faced vocal criticism by civil rights groups. While such developments haven’t materially impacted the ability of retailers to make use of FRT, they’re probably not quelling concerns either. “When you have the prospect of laws that could allow for civil damages and the right to sue as an individual, then you’re opening up a whole can of worms,” said Palmer. He said the question for a national retailer is therefore, “Do you make a leap of faith when what and how you can implement is not exactly clear? You have practitioners who like to try all this stuff and evidence it works, but with legal departments concerned with potential liability, retailers might ask the question, ‘Is the juice really worth the squeeze?’”

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AN ABOUT-FACE FOR LP?

Not Just a Pretty Face Facial-recognition technology is one in a class of technologies that are offering stores the chance to be more proactive in the fight against theft and retail crime. Another opportunity to identify shoppers—but sidestep privacy concerns and use existing infrastructure—is via cameras embedded with an algorithm that picks up signals from shoppers’ WiFi- and Bluetooth-emitting devices, like smartphones, Fitbits, and Apple watches. ClickIt’s Virtual Lineup system, for example, assigns each individual a unique but anonymous identifier, which facilitates data collection such as where that individual goes in the store, which aisles they visit, how long they shop, and—so long as they’re in possession of the same device—whenever the individual returns or visits another of the retailer’s locations. But that knowledge is never linked in a database with unique identifying information. The marketing and sales benefits are obvious, and LP has found use cases as well. For example, a criminal who covers his face during a robbery may nonetheless be easily caught by searching for other times his device was in a retailer’s location and reviewing corresponding video to see his unobscured face. Or if a known problem individual enters any of a retailer’s locations, store personnel can receive an alert. There is also face recognition technology that is only interested in seeing a face—without concern for who it belongs to. Tied to an entry door using magnetic locks, “face detection” technology requires a clear facial image of an individual before he or she can open the door. The technology provides convenience and other stores that face a heightened risk of robbery because of late-night hours a method to reduce risk by denying entry to individuals who

wear masks or otherwise attempt to conceal their identity. FKG Oil reported that it’s using First Line Facial Recognition by Blue Line Technology in select Moto Mart locations and, based on positive results, plans to expand its use. Blue Line explains that during overnight hours, store doors remain locked until a surveillance camera outside the store entrance captures a clear image of an approaching customer’s face, at which time

Will I. Steal

Possible Shoplifter

software unlocks the door, “preventing incidents by forcing potentially violent criminals to be videotaped.” There is also recognition technology that doesn’t look at faces. Automatic license plate recognition (ALPR) can play a role in retail’s effort to combat ORC, according to

SEPTEMBER–OCTOBER

consultant Joel Rieger. He has helped major retailers implement systems that use ALPR to create white lists for entry into employee parking areas and for security trendspotting, such as recognizing a car that makes an unusual number of passbys. Canadian Tire is one retailer that reports success using ALPR. Utilizing 3VR’s VIP License Plate Recognition, one store owner says she uses the tool to verify parking lot activity as well as adherence to store policy, reviewing that each car entering a service bay has a valid service ticket. Finally, most FRT systems enable LP to do more than recognize faces. Retail by DeepCam, for example, is designed to tackle shoplifting holistically. First, through its “advise” technology, AI points investigators to video of individuals who were in the store and exhibited suspicious behaviors. If shoplifting is identified, the system’s “match” technology permits the retailer to flag those individuals. If they again enter either that store or any other location with which the data is shared, personnel will receive an alert. Using AI, the system is designed to get better over time at recognizing suspicious behaviors, increasing its benefit to retailers the longer they use it. As such, the ability of a technology tool that can alert a store agent when an individual in aisle 6 is about to steal something no longer seems impossible. With AI, machines can get quite skilled at recognizing when someone looks suspicious in the same way that a good LP agent has always done, said Rieger. “Matching” technology is also likely to change. “As we go forward and evolve this technology as we get the training data, it will be looking at more than the face, such as the whole body positioning or their gait, and use that to be able to say, ‘This is the same person,’” said DeepCam COO Charles Fleischman.

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AN ABOUT-FACE FOR LP? continued from page 19

He says he’s also using FRT to notify staff when particularly good customers enter the store, which is particularly useful because his high turnover among store personnel doesn’t allow for this type of valuable customer service to evolve naturally. Finally, Patel says he’s also finding value from the system as both a timesaver—pointing to problems rather than aimlessly reviewing video—and a driver of better employee behavior. By reviewing video flagged as suspicious, Patel says he identifies a dozen or so people every day who stole from a store. And, for example, by identifying when employees enter and leave the store, Patel observed a problem with one worker leaving the store for extended periods during overnight hours. “This helps me to monitor them in an efficient manner,” Patel said. Fleishman said other stores are using it for similar intelligence, from employees who take too many smoke breaks to clerks who allow friends to hang out in

the store against policy. To date, Rieger says that, surprisingly, using systems for internal purposes is bigger than training them on external populations—for making sure that people in sensitive areas belong there, for validation into a stock room for a large workforce, and similar employee and contractor control. FRT is one in a class of technologies that are offering stores new opportunities to be proactive in the fight against theft and retail crime, to transition from investigating theft to identifying suspects and preventing it from occurring, and to preidentify threats. As plainly preferable as such a move sounds, it also contains layers of strategic implications that can muddy that seemingly compelling strategic shift. For example, while Patel is successfully utilizing alerts to ban problem individuals as they enter his convenience store, the big-box retailer’s test suggested it’s a tougher task in an environment with many entry points and where responding staff isn’t positioned at the front of the

LP MAGAZINE

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store but may, instead, be in an LP office in the back and tending to other duties. “A lot depends on what you’re going to do [when staff gets an alert]. If you’re intent on approaching them and asking them to leave, it’s more challenging. They’d need to immediately drop what they’re doing, and by the time they make it to the front end, the person is probably well within the store. Now they need to look for the individual. And the more time that passes before they find them, the more likely they’re either not going to find them or potentially find the wrong person.” He said that complication doesn’t altogether negate the benefit of getting an alert, but it was among the components that left him with the impression that a smaller, high-risk specialty store might find it easier to realize value. It’s probably inevitable that facial recognition will become a standard tool in the LP arsenal, taking its place alongside video, alarms, motion sensors, and officers to mitigate shrinkage and violent crime. On the road there, retailers

AN ABOUT-FACE FOR LP? are faced with a slew of consideration as they look at if, when, and how best to use the technology. Here are issues and advice offered up in interviews with the top vendors, LP directors who use and have tested the technology, and consultants that have helped clients with testing and implementing FRT systems: ■■ Price and performance. “It’s not CSI yet,” warned Rieger. “That idea that you can take a cloudy image and turn it into a crystal-clear picture…it’s better than it was five years ago, but you’re not going to generate something out of nothing. And with a wig and hat, it’s not going to recognize me.” If there is an insufficient number of points to triangulate, a system can’t generate an informed match, Rieger noted, in which case it can return multiple individuals. “Accuracy isn’t necessarily the problem; it’s more whether you’re not going to get too many false hits and distract staff. That and whether you have the capital expense funds to get the technology you need to make it work.” How much you can spend will influence the speed of the results you’re going to get, he added. ■■ Theft rates. Consider the current amount of store theft to calculate a system’s potential value. “When it comes to alerting if someone previously apprehended enters the building, we would have to enroll a whole lot of people to pay for one store’s system in order to realize an ROI. We simply don’t apprehend that volume of people,” said one system tester. “Certainly any retailer that has an ORC or a local loss prevention problem and high-loss stores is going to see the technology become effective faster,” said Fleischman. ■■ Marketing. Sweetening the business case through marketing and sales uses is an attractive option. As Patel’s real-world, VIP customer enhancement effort indicates, there are opportunities for positive uses of FRT and other identification technologies. Both Palmer

and Rieger think approaching solutions from both marketing and security perspectives can make for a more compelling business case. “Positive uses are available, such as for a loyalty program. The technology can absolutely do it,” said Rieger. ■■ Databases. In examining a prospective system, get clarity on how data is controlled and where matching data comes from. That can be important information to consider alongside an assessment of issues associated with potential changes in privacy law. ■■ Bundling. Investigate the ability to tie in other analytics. Facial recognition, as a standalone, will not provide the same value to LP as bundling it with other data sources to improve its accuracy and broaden its utility, said one expert. ■■ Partnering. For effective applications in retail, LP leaders shouldn’t try to go it alone. “Absolutely, partnerships with IT and working with technology teams is an important part of it,” said Uma Welingkar, Uma Welingkar product manager at 3VR. It seems to be the thing that best enables projects to progress past the testing stage, she suggested.

Maintenance. Pay attention to a system’s need for servicing during a technology trial. “It proved challenging how sensitive the equipment was. Even just the HVAC unit kicking on could blow toward a camera and throw it out of whack and need a service person to adjust it,” said one LP director involved in a FRT trial. “It was more sensitive than I expected and needed fine tuning, although I expect that would have improved over time.” The most critical piece of advice, identified by several experts, is to review and plan the operational aspects of a system and to not just measure the technology’s ability to provide high-confidence matches. They stressed that to accurately assess a system’s potential value you need to know how you can and want to use it: ■■ Can you send an alert to multiple mobile devices? A central location? What does it consist of? ■■ Will you leverage value by assessing patterns, such as the days of the week or the time of day when events are happening? Recidivism across a network of stores? ■■ If you’re going to have staff approach identified suspicious persons, is training sufficient? Is turnover too high? ■■ What are the time constraints of the people who will be needed to manage the process? How long will it take to follow your process for validating an alert? Is it time and resources you have available? To effectively operationalize FRT, planning, policies, and practices need to accompany the technology, warned Rieger, and setting up a pilot with a vendor to test the system and compare it to control stores is a good way to answer those questions. “It’s not a technology that you want to be afraid of,” said Rieger. As a tool against ORC, he thinks it potentially holds significant value for retailers. “But there is a lot to consider, a lot of questions to answer, and departments like HR and legal to get involved. FRT is not a technology that you can just put in.”

■■

The most critical piece of advice, identified by several experts, is to review and plan the operational aspects of a system and to not just measure the technology’s ability to provide high-confidence matches.

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CERTIFICATION

Remaining Engaged and Accountable

Interview with Tyson Robertson, LPC, CFI Robertson has more than twenty years of progressive retail experience in loss prevention, physical security, risk management, and multiunit management with a few of the world’s fastest-growing organizations, including Marshalls, TJ Maxx, and currently Amazon fulfillment centers. He is also a certified forensic interviewer (CFI) and Wicklander-Zulawski (WZ) interviewing certified. He is vice chair for the Loss Prevention Foundation Advisory Council.

Why did you decide to pursue your LPC certification?

works in tandem. I also found the material to be a great resource for expanding the business acumen and internal career interests of an employee facing tremendous company growth or constantly diversifying its business model.

I firmly believe that with every profession and/or passion a person should never stop learning and being curious. I have found the LPC certification to be one of the most educational and comprehensive developmental experiences in building my business acumen. The curriculum provides a great snapshot and refresher of the professional experiences I have had over the past two decades of my retail career.

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

Was the coursework what you expected? The coursework was highly informative. I found the reading material and concepts introduced in each module to be very interesting. Much of the content is relevant and applicable, which is no easy task considering the volatility of the business environment.

Talk about the process of going through the coursework and taking the exam. While the LPC coursework definitely prepares you for the proctored exam, it helps to have a few years of field experience. I found that my personal experiences helped me relate and retain the reading material much better than digesting the content for the first time. Throughout the course and prior to diving in, you are reminded of the most effective study techniques, and my recommendations are consistent with the feedback—read more of what is not already familiar and/or what you are particularly interested in.

What information in the course helped you the most? As previously mentioned, I dove into areas I was least familiar with or at least it had been awhile since I was involved in it. Areas such as certain regulatory guidelines, labor unions, and pharmacy are outside of my expertise. I think these areas helped round off my acumen. I found this information very useful in preparing for and passing the proctored exam.

Risk management and crisis preparedness were probably the most eye-opening sections for me and mainly due to how it helped me realize my organization’s gaps and strengths. I found these sections to be immediately applicable in identifying standard work and leveling up to industry recommendations.

The benefits are definitely most notable in developing a better understanding of how each cross-functional team supports and

SEPTEMBER–OCTOBER

How would you compare the foundation certifications to other educational courses that you’ve taken? Over the course of my career, I have achieved my CFI and have taken all levels of WZ, including advance interrogation and interviewing techniques. The LPC course provides a much broader curriculum than what I have experienced. I realize there are other credentials to consider such as CPP and CFE. In full transparency, additional certifications are on my radar to continue supplementing my education and work experience. The cool thing is that the Loss Prevention Foundation acknowledges other certifications as continuing education units to maintain LPC/LPQ certification.

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

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

What benefits have you seen from taking the course?

Most LPC participants tend to be nontraditional students or individuals who have been out of the educational environment for a few years. I mentioned earlier the benefit in years of work experience, but there is also a downside to this. As a corporate administrator for my organization, I have found that some may find it challenging to approach the content with the level of discipline and time management needed to complete the course in a timely fashion. That means reading, studying, and testing your knowledge during your downtime and in between conference calls or while traveling on business. The LPC course can easily take eight to twelve months to complete, but it should not. Schedule time to get it done.

Although professional credentials are noteworthy and add credibility, investing in the LPC course offers far more than three letters to your name. It keeps you engaged and holds you accountable to a world of continued education and networking opportunities. I would absolutely recommend the LPC course to anyone serious about a career in retail. I think there is tremendous value in the LPC/LPQ course beyond the pursuit of an LP career. The content in this course helps build a greater understanding of how to effectively engage and leverage multiple business partners and functions. It is also very important for today’s leaders to understand how to effectively utilize their people resources.

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Newly Certified

Following are individuals who recently earned their certifications.

Recent LPC Recipients Ryan Clifton Adams, LPC, Amazon.com Matthew Barnett, LPC, Belk Department Stores Emily Buck, LPC, Walmart Stores Sheldon Carlson, LPC, Rent-A-Center Ryan Collins, LPC, Walmart Stores Ernesto Contreras, LPC, Loss Prevention Bruce Couling, LPC, 7-Eleven Joshua Daniels, LPC, Walmart Stores Deanna DeCourcy, LPC, Walmart Stores Christy Dennis, LPC, Walmart Stores John Gosciejew, LPC, Amazon.com John Higgs, LPC, Walmart Stores Michelle Langford, LPC, Albertsons James Lapcevic, LPC, Luxottica Josiah Leite, LPC, Sears Holdings Kevin Lemons, LPC, Walmart Stores William Macaulay, LPC, PETCO Ryan Mogel, LPC, Ralph Lauren Robert Repka, III, LPC, Walmart Stores Jeffrey Rickey, LPC, Walmart Stores Michael Rock, LPC, Walmart Stores Zachary Ryan, LPC, Amazon.com Mark Shorney, LPC, John Lewis PLC Rocky Smith, LPC, Walmart Stores Randall Sneed, LPC, PETCO Keith Snyder, LPC, Walmart Stores Eric Stone, LPC, Amazon.com Mark Tow, LPC, CFI, PETCO Antonio Van Hise, LPC, Amazon.com Barbara Weaver, LPC, Best Buy Shayla Werner, LPC, Walmart Stores Jared Wesselman, LPC, Walmart Stores Christopher Willis, LPC, Walmart Stores

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Recent LPQ Recipients Theresa Ajayi, LPQ, ORIS Media Amy Allen, LPQ, Best Buy Michelle Baldwin, LPQ, Yum! Brands Jeffrey Cashman, LPQ, TJX Pauline Garcia, LPQ, Vector Security Jakob Grun, LPQ, ORIS Media Ron Houk, LPQ, Mattel American Girl Abigail Jagger, LPQ, ORIS Media Donald Lauritsen, LPQ, 7-Eleven Michael McRoberts, LPQ, Law Enforcement Francis Ortiz, LPQ, Walmart Stores Kylie Rudy, LPQ, Kennesaw State University Steven Ryall, LPQ, Goodwill Industries of Sacramento Valley & N. Nevada Mohammadsami Shaikh, LPQ, Bloomingdale’s Nigel Sutliffe, LPQ, ORIS Media Zbigniew Trendak, LPQ, Levi Strauss & Co. Gregory Watts, LPQ, Caffe Nero Allison Wyatt, LPQ, Walmart Stores LP MAGAZINE

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Professional development is key to a fulfilling career. Visit www.LossPreventionFoundation.org to find out more. SM

Educating an industry, one leader at a time. SEPTEMBER–OCTOBER 2018

LPM EXCELLENCE

LPM “Magpie” Awards: Applauding Excellence

The LPM “Magpie” Awards offer a means to celebrate industry accomplishments on an ongoing basis, recognizing the loss prevention professionals, teams, solution providers, law enforcement partners, and others that demonstrate a stellar contribution to the profession. The ability to influence change is a product of drive, creativity, and determination, but

it also requires a unique ability to create a shared vision that others will understand, respect, support, and pursue. Each of the following recipients reflects that standard of excellence, representing the quality and spirit of leadership that makes a difference in our lives, our people, and our programs. Please join us in celebrating the accomplishments of our latest honorees.

Excellence in Partnerships

“Around the age of ten, I started selling software demo kits alongside my dad,” said Longo. “He was a brilliant man, passionately building relationships with innovators in the early days of software development, including (name drop) Bill Gates. Later while still in school, I started working at CAP Index doing a lot of the sales ‘grunt work’ often given to the entry-level guy. Over the past twenty-five years, I’ve continued to work at CAP in various capacities, leading the company’s business development, marketing, event management, industry partnerships, and other efforts.” Longo believes that true partners have a passion for getting involved. “It’s important to come prepared with ideas to share, respectfully participate in the conversation, and actively listen,” he said. “Strong partnerships come from sharing ideas and working together. But the most important trait is balance between the absolute serious nature of what we do in this industry—protecting people, businesses, livelihoods—and levity. Everyone needs a laugh, and it’s a great way to build relationships. When reviewing financials, creating policies, or teaming up with another group or company, a little levity goes a long way in developing strong relationships.” Longo also feels it’s important to pay attention, share ideas, and add value whenever you can. “Get involved, listen more than you talk, and always have a perspective to contribute,” he said. “Be an expert at what you do and interested in learning what others do. Know your business and the value you bring, and you’ll be better able to focus on understanding others. You want to help others succeed. Make friends and have fun, but find a way to bring value. If you can make your customer the hero, you will have a customer for life.”

“I started my loss prevention career working for my father’s small family loss prevention security business,” said May. “This was a great learning experience, providing an opportunity to work in a variety of retail, wholesale, distribution, and manufacturing environments. I learned very quickly that as a service provider, customers could be very demanding—but also very fair.” In 1988, May moved to J. Baker, which he considers the most important move in terms of personal and professional growth. Spending ten years with the company, he climbed the career ladder to eventually become first senior vice president. In 1998, he became a president and CEO at LP Innovations (LPI). After running LPI for over twenty years, he offers some advice for up-and-coming solution providers. “Never assume,” he said. “Solution providers must actively engage with customers on the value of our service, whether or not we’re meeting expectations, and what we can do to help exceed expectations. Always ask how you’re doing, provide customers different ways to comment on their experiences, and act quickly on their recommendations. Most customers genuinely appreciate efforts to raise the bar. You have to believe that the services provided will help them become a better, more profitable business. Rather than simply trying to sell a product, focus on being a genuine partner. Execute, act on their behalf, and become a vital part of their success. “Being a vendor is not a dirty word. You need to believe in your bones that what you’re providing is critical to your customer’s success. It’s your obligation to become a vital part of your customer’s team. You need to be engaged with your customers, recognized as a trusted advisor, a source of information, a problem solver, a professional colleague, and most importantly, a friend.”

Steve Longo, Vice President of Strategic Initiatives, CAP Index

Steve May, CFI, Retired CEO and President, LP Innovations (DTT)

Nominate Your Peers at Excellence@LPportal.com We want this to be your program. Those of you working as LP practitioners witness these exceptional performances on a regular and ongoing basis, and we strongly encourage you to provide us with nominees for each of the award categories. We encourage creative nominations and want the program to cast a positive light on the many tremendous contributions of the loss prevention community. Nominations can be submitted via email to excellence@LPportal.com. 26

SEPTEMBER–OCTOBER

LOSSPREVENTIONMEDIA.COM

INTERVIEW

A LIFETIME OF LEARNING CHAD MCINTOSH REFLECTS ON LESSONS LEARNED AMONG BIG BRANDS AND RESPECTED INDUSTRY LEADERS By James Lee, LPC, Executive Editor LP MAGAZINE

SEPTEMBER–OCTOBER 2018

INTERVIEW

EDITOR’S NOTE: Chad McIntosh is the vice president of loss prevention and risk management for Bloomingdale’s. He has more than forty years of loss prevention experience with companies that include Macy’s, Polo Ralph Lauren, and The Home Depot. Throughout his career, McIntosh has been highly active in the loss prevention industry, supporting the National Retail Federation and Retail Industry Leaders Association and serving as a founding member of the Loss Prevention Research Council. He is retiring in September 2018 but looking forward to remaining active in the industry.

EDITOR: How did you get your start in loss prevention? MCINTOSH: I started forty years ago at Woodies, or Woodward & Lothrop, as a part-time store detective—greatest job in the world. This was in Washington, DC, while I was attending the University of Maryland. Lew Shealy was my first real boss, and he set the foundation for me. Loss prevention was called security then, and he was the type of boss who set a standard of professionalism, excellence, and pride in what you do. He had a way of putting together an awareness campaign that always struck me,

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especially during the holiday season. He was one of the major voices in retail security back then. Woodies was located near the University of Maryland, so it was kind of a college town department store. I had a great experience and some great teachers. In those days, you didn’t have a camera system. You worked the floor and made your cases from the floor, so you had to really learn how to become invisible in a department store to make those cases and be successful. I learned that from a couple of great teachers coming up through the ranks.

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INTERVIEW EDITOR: When did you decide to pursue a career in loss prevention full time? MCINTOSH: I think a lot of us in this business have experienced this—loss prevention kind of gets into your blood. I had actually taken the civil service exam in DC, thinking that I would work for the federal government. In fact, I had some interviews with the State Department to do some security work but had at that point realized that I liked what I was doing in retail. Lew Shealy was offering me advancement opportunities, bigger jobs, more challenging jobs. And at about the same time, I fell in love with my wife of thirty-nine years, Roxanne, who also worked at Woodies. I was at Woodies for about eight years and then went to work at Neiman Marcus for Gary Manson, another great name in our business. He taught me about work ethic and attention to detail. Gary had a passion for what we do in loss prevention that was infectious. Not only was he a good

boss, but he became a great friend as well. EDITOR: What position did you have at Neiman Marcus? MCINTOSH: I came on board at the time they staffed their first regional loss prevention managers. They brought four of us in at the same time. Joan Manson was one of the four. I really learned about onboarding—the process of bringing people into an organization. They spent a lot of time with us before they turned us loose. We learned a lot about the culture, about each other, as well as how to work effectively with each other. It set the standard for excellence for me. Neiman Marcus was also where I first met Ed Wolfe, who was my boss for twenty-six of my forty-year career. I got exposure to a lot of great training and the thought processes behind it. They are just an amazing luxury retailer. EDITOR: After Neiman’s, you went to Home Depot, correct?

MCINTOSH: Yes, where I again worked for Ed. My first responsibility in that organization was to develop their initial training program and establish soup-to-nuts how we trained LP supervisors. Ed taught me how to think big, to look beyond just the obvious. One of his challenges to me and anybody working for him was that whatever you take on, whatever you do, you should distinguish yourself in that process and get recognized for your efforts and what you put together. In looking at my career, it’s also where I really developed an understanding of inventory shortage and how to impact it. And as a byproduct of my development, Ed promoted me to my first director position on the West Coast. It was all about changing opinions about LP, what it can bring to the organization from a profitability standpoint, and how we can be great partners in an organization. I had learned a lot in my experience with Home Depot and got exposure to the international aspect of the business.

It’s absolutely amazing the amount of change that we’ve seen in the last five years and will likely see in the next five years. When you think about it, we’re living in this on-demand economy where 80-plus percent of the population has social media profiles. Everybody’s touching their smartphone on a regular basis, seventy-two times a day on average. It’s changing the dynamic of retail when you look at the omni-channel perspective. LP MAGAZINE

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INTERVIEW I was the first to go into South America to open up stores in Chile and Buenos Aires. Both experiences were just amazing and gave me a viewpoint about loss prevention and security I hadn’t had before. I was at Home Depot almost ten years. That was at a time when Bernie Marcus and Arthur Blank were driving the organization and opening a store every forty-eight hours. It was an amazing pace. And it’s really an amazing organization with an incredible culture that’s still very, very strong today. EDITOR: Where did your career take you next? MCINTOSH: I spent about three years with Polo Ralph Lauren in New York, once again working for Ed Wolfe. It was an interesting organization because Polo’s really made up of three businesses: You have the retail side, which is full price, and discount outlets. Then there is the wholesale side of the business, where they sell to other department stores.

My goal there was about building a team and a program, restructuring things to be effective for everyone. When we looked at the structure at that time, there were about twenty full-price stores, and we had eighty-five loss prevention people in those twenty stores. Then you looked at the outlet side of the business with 200-plus stores with just four people. So we reshuffled the deck to put the resources where the challenges were so that we could deliver results. After the first year of the new structure, the president of retail gave the loss prevention team an award for making the most significant contribution to the business. I was never prouder of a group than I was at that moment, quite frankly. EDITOR: You’ve spent a number of years now at Bloomingdale’s and Macy’s and now finishing your career as the head LP executive at Bloomingdale’s. What changes have you seen in the industry over the years?

MCINTOSH: It’s absolutely amazing the amount of change that we’ve seen in the last five years and will likely see in the next five years. When you think about it, we’re living in this on-demand economy and, 80-plus percent of the population has social media profiles. Everybody’s touching their smartphone on a regular basis, seventy-two times a day on average. It’s changing the dynamic of retail when you look at the omni-channel perspective. We’re actually experimenting with express checkout, which is a bit scary to an LP person, but we’re living in a world today where there are fewer productive stores and fewer productive people in those stores. The challenge for anyone in LP today is being the kind of leader who absorbs the chaos and returns order to the process. With my team here at Bloomingdale’s, I think that’s one of the things I have been able to bring to the organization sharpening our focus. But it’s been a challenge. I try to get my team to think differently. There is an effect called the

I try to get my team to think differently. There is an effect called the “streetlight effect.” It keeps us searching for answers where they’re easiest to find. In today’s world with the movement of merchandise such as with online transactions, pickup in store, or ship to store, you have to think differently about identifying your opportunities to reduce exposure and improve company profitability. It’s not as easy as it used to be. 30

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INTERVIEW “streetlight effect.” It keeps us searching for answers where they’re easiest to find. In today’s world with the movement of merchandise such as with online transactions, pickup in store, or ship to store, you have to think differently about identifying your opportunities to reduce exposure and improve company profitability. It’s not as easy as it used to be. A lot of our LP strategies were built around the fact that you had a 500-pound register that sat in one place on the floor and never moved, and now it’s all about mobile POS. We need to effectively work in LP in an environment where everything is moving. EDITOR: How much has changed in terms of the demands of shoplifting and employee theft? MCINTOSH: I think the shoplifters are more sophisticated. A lot of our loss today has moved toward the fraud arena. That’s an anonymous transaction, and you don’t necessarily have to come into the store and risk being apprehended by a loss prevention person. I think that’s a challenge for every retailer today. The retail environment today is very interesting in that we have four generations working in our department store. Your approach to education and awareness has to be one that will get through to all four generations, so it’s an incredible challenge. Getting people involved, certainly from a dishonest employee standpoint, is still the most effective way to curtail that activity in your environment. I know Dr. Richard Hollinger proved this a long time ago, when he wrote in his study that outlined if the store family says something is not an acceptable behavior, then you’re less likely to have it in your environment. It’s something that we always work for here at Bloomingdale’s to curtail dishonest activity. EDITOR: You’ve worked for some outstanding executives in your career. Can you comment on their leadership styles and what you took away from them? MCINTOSH: Ed Wolfe is a person of vision who always had me thinking differently about process and process improvement. That was very helpful to get to the point where I am today with Bloomingdale’s. And I owe Jay Fogg a lot for bringing me back to Bloomingdale’s from Macy’s—what I call my “Bloomerang”—and for giving me the opportunity, honor, and privilege of being a VP of loss prevention for Bloomingdale’s. Bloomingdale’s is where I’ve had the opportunity to put it all together in my career—everything that I learned along the way from these great leaders: Lew Shealy for setting the foundation; Gary Manson for the passion; Ed Wolfe for the vision; and then certainly Jay Fogg for supporting me in the process of building and reshaping the program here at Bloomingdale’s. I have been blessed. In fact, I’m so thankful to the entire Bloomingdale’s organization and their management

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continued on page 32 LP MAGAZINE

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INTERVIEW

The retail environment today is very interesting in that we have four generations working in our department store. Your approach to education and awareness has to be one that will get through to all four generations, so it’s an incredible challenge. Getting people involved, certainly from a dishonest employee standpoint, is still the most effective way to curtail that activity in your environment. continued from page 31

for what has been an exciting career. I have always felt loved and appreciated here, and so I thank them for that, from the top down. EDITOR: Throughout your career, what accomplishments have made you the most proud? MCINTOSH: I’m going to use some Bloomingdale’s examples because I think they’re the most relevant in today’s world and in the changes we’ve all been through. We use a training and awareness platform at Bloomingdale’s that we partner with a company called Axonify. We call our program Next Generation of Asset Protection Training. An associate will log onto the register in the morning as they’re clocking in, and then we’ll ask them to participate in a training process that they’ll do through the point-of-sale. So we’re able to train them on safety, asset protection, and shortage control issues, and we’ve added in sales and

service as well as new-hire onboarding. With this amazing tool, we’ve been able to really change the culture of the organization and how we approach training here at Bloomingdale’s. I have always taken the traditional approach to awareness, such as putting up a poster in the hallway where the associates came in. Well, nobody was really stopping to read it, so you never really knew who was getting the loss prevention or safety message. Were they understanding it? Were they able to go out and change behaviors and either participate in shortage reduction or make the environment safer? So we tied that into our awareness program that we called Loop, and our tagline was “Keeping You in the Loop.” And we certainly have had a couple of great awareness campaigns that worked in synergy with our next-generation training platform to really drive the message and awareness. We’re at a point now where we have about 70 percent of our associates participating on a regular basis in our awareness program. And

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I could tell you down to the specific associate who is getting the message and whether we are changing their behavior today. That’s one of the things that I’m very happy about. Another achievement is the way we approach active-shooter training in our environment. We have a process where we train twice a year. We want everybody to understand that this is not just a Bloomingdale’s lesson; this is a life lesson. We want you to be aware of your surroundings; we want you to know how to react if you’re faced with an active shooter event so that you’re better prepared. I think our associates are better trained than most today simply because we have this structured process, and we test it a couple of times a year. EDITOR: I know companies do that training in hopes that they never have to use it. Has Bloomingdale’s or Macy’s had to use that training? MCINTOSH: We have had to use the training at Bloomingdale’s. It

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INTERVIEW wasn’t something that happened in a Bloomingdale’s store but in a mall where we had a store. What we learned in the process, from a communication standpoint, is making sure that everybody in management understands what their role is. Going back and reinforcing those good practices with management has been important. Another lesson learned has been, “How do we communicate with the organization that it’s safe, that you can go back to work?” We worked with our Macy’s partners on some communication tools that I believe have helped. And then certainly, “How do you keep management informed of what’s going on, in a timely manner, so that if a decision has to be made as a senior member of your organization, then they have all the information they need to make the decision?” Understanding your role and then ensuring communication are probably the two biggest things that we learned in the process.

EDITOR: You’ve had a lot of involvement in associations, particularly in the Retail Industry Leaders Association (RILA). Touch on why you think involvement in associations is important. MCINTOSH: In my first year at Neiman Marcus, around 1985, I was brand new to the Neiman Marcus culture. The National Retail Federation (NRF) that year was in Washington, DC, and because I was living there, Ed Wolfe and Gary Manson took me to that event. So I had exposure to the NRF early in my career. Both the NRF and Bob Moraca do an amazing job. Lisa LaBruno and RILA also do an amazing job. Both organizations are so important to our industry, and it’s always been aspirational for me to be involved in them. Once I got my foot in the door, I was all in with both organizations. And they do such important work in elevating the professionalism of the asset

protection industry that we love. Not only that but they work very hard to help us solve some of the big problems we’re facing, such as organized retail crime, and are so important to our success in department stores and in retail in general. I encourage everybody to participate when they can in RILA and NRF conference calls, webinars, and conferences. They are great educational experiences and really add value to any program. I always walk away with ideas to bring back to my organization, to improve performance, and help me find a new approach to the strategy we’re working at Bloomingdale’s today. Both organizations deserve a lot of credit. I think they’re doing a lot of great things for our industry. EDITOR: You are also on the board of advisors with the LPRC. MCINTOSH: I have been involved in the Loss Prevention Research Council

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LP MAGAZINE

SEPTEMBER–OCTOBER 2018

INTERVIEW (LPRC) since the beginning. I think Dr. Read Hayes and I are the last two active founding members. Eighteen years ago, I sat in a classroom at the University of Florida with eight other retailers talking about this concept. Today there are 141 members, fifty-nine retailers and eighty-two solution providers, that help us apply science to our strategies. I have done this myself. For example, typically when retailers have a problem, we throw three or four possible solutions at it. We’ll impact the problem or the challenge, never quite sure which approach was the most effective. The LPRC allows us to analyze where we ought to make our investments going forward, applying science to the strategy and the technology to understand what has had the most impact. There are so many avenues for growth and development in our industry today that weren’t around when I started. For example, LP Magazine and the Loss Prevention Foundation both bring other opportunities of development and growth to our industry. We have utilized Wicklander-Zulawski, developed their interviewing skills, and used them as the gold standard. There are so many opportunities to continue to grow in the business. That’s how you hold onto people, quite frankly. If you keep them growing and learning, they’re going to stick around. It’s a challenge with millennials today—how long will you keep them? EDITOR: What is your vision of the next five years? What kinds of changes do you expect to see in the industry? MCINTOSH: I think more than ever, we’ll need to adapt to the customer. How and when do they want to buy your merchandise, and do you have vehicles that respond to the way they want to shop in today’s world? I think it’s important that your company has a strategy for that thought process.

it looks like when they’re working well. You’ll understand when they’re not working and then react to those issues, so you can continue to make your company more profitable.

Bloomingdale’s is where I’ve had the opportunity to put it all together in my career—everything that I learned along the way from these great leaders: Lew Shealy for setting the foundation; Gary Manson for the passion; Ed Wolfe for the vision; and then certainly Jay Fogg for supporting me in the process of building and reshaping the program here at Bloomingdale’s. And if you’re a department store, do you have a strategy to make it a great experience when the customer comes into your store to shop? Do you have a culture that supports that experience to keep them coming back into your store? From an LP perspective, it’s keeping that streetlight effect in mind. It’s not looking for the answers where you can see them but instead taking the processes apart in your retail operation and really understanding how they work, and knowing what

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EDITOR: You are getting ready to start a new chapter in your life. Tell us about what you hope to do in the next chapter in your life. MCINTOSH: This is a very exciting time for Roxanne and me. One daughter lives just outside of Charlotte, North Carolina, with her husband and young son, our first grandchild. Our desire to spend more time with them is driving my decision to retire and move south. So we recently closed on a house in South Carolina just outside Charlotte and are very excited to be closer to them and our younger daughter, a recent Georgia State graduate who resides in Atlanta. She is a Georgia peach and has accepted a job in the city. We look forward to being near our girls as they continue to grow in their careers and raise families of their own. But at the same time, I don’t think I’m done. I love what we do. I love our industry. I think I have a lot to offer. I haven’t really defined what that will look like. Maybe it’s teaching; maybe it’s helping organizations in developing strategies or managing projects. Two of the skills that I celebrate are attention to detail and follow up—following up with people and getting them answers to their challenges. So I’m excited to see how I can be involved with LP Magazine going forward, and groups like RILA, NRF, and the LPRC. I know I’m going to continue to participate and help people apply science to their challenges and develop great strategies going forward. EDITOR: Congratulations on an outstanding career and best of luck going forward. We look forward to having you in the Charlotte area.

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Everything Is Connected

by Read Hayes, PhD, CPP Dr. Hayes is director of the Loss Prevention Research Council and coordinator of the Loss Prevention Research Team at the University of Florida. He can be reached at 321-303-6193 or via email at rhayes@lpresearch.org. © 2018 Loss Prevention Research Council

hen we’re looking to grow a business at the store or enterprise level, we should strive to envision that entity’s place and role in an ecosystem. With stores, nearby people drive sales, crime, and loss levels. Ease of access and egress plays a role. Nearby stolen-goods fences and other built features, like laundromats, vacant buildings, c-stores, and malls, generate good and not-so-good activity. To support our businesses, loss prevention and asset protection works to reduce problems that disrupt the business. Problem-solvers first analyze the situation. Who, what, when, where, why, and how should be defined and described as much as possible. The more we know about a problem’s dynamics, the more precise and impactful our solution set will be.

Nesting

Thinking about our problem in context can also be labelled nesting. Think of how stores are nested in parking lots, lots in blocks, blocks in a neighborhood, neighborhoods in communities, and so forth. We can also examine how stores are nested in districts, regions, and divisions, or are served by different distributions centers, for example. It is important to take this phenomenon into account since problems arise in part due to what that location is exposed to, and different locations are exposed to different people, places, and processes. This exposure explains part of the variance in problem intensity and begs differing solutions.

Problems and problematic people cluster in place and time. Most places are statistically immune, while others are chronic victims. The distribution of crime events rather than the quantity drives this. Visualize

A key problem-solving exercise includes plotting meaningful data on a map. Seeing nesting and what a location is exposed to, what’s happening (or not happening) nearby is huge. We can not only measure differences but also see them. And this all helps us plan accordingly. Each store- or district-level LP member should develop maps. What is going on inside and around a given location? What is pushing problems our way? Why are problem people coming our way? What is going on in similar sites? Get police data and map theft markers in your store, like discarded packaging and EAS tags or wraps. What are they taking? Where are

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they exiting the store and parking lot? Regularly talk to surrounding LP professionals. Problems and problematic people cluster in place and time. Most places are statistically immune (not much bad ever happens there), while others are chronic victims. The distribution of crime events rather than the quantity drives this. So we look to understand why certain places generate or attract frequent problems. Now we address risk factors at those places.

A Research and Results Community

The Loss Prevention Research Council (LPRC) membership continues to grow, with over sixty retail chains, seventy solutions organizations, and several manufacturers and industry group members, over 145 members strong. The LPRC community is an information-driven space where LP and law enforcement practitioners work side by side year-round with leading solution designers and scientists to deconstruct how theft, fraud, and violence problems arise and spread, as well as to design, test, and adjust targeted solutions. The 2018 LPRC Impact Conference to be held October 1–3 on the University of Florida (UF) campus is also evolving and will feature a record ten thirty-minute, interactive Learning Labs this year. We’re also featuring a solution experience zone where solo- and poly-anti-crime treatments are featured in the five zones of influence. We’ll also showcase live, in-depth, internal offender interviews designed to tease out how deviant employees start and progress and what they respond to during their employment. The brand new Mad Scientist gamification will help tie together important concepts in a fun and rewarding way. University of Florida faculty are engaging over thirty-six LP executives in their strategic research designed to back how top protection decision-makers can better support their multidomain enterprises as they adapt to provide customer needs and wants. UF’s Mike Scicchitano, PhD, will facilitate STRATEGY@. This exclusive program is made possible by UF, LP Magazine, the Loss Prevention Foundation, LPRC, and a generous grant from Tyco. We hope to see you in Gainesville this fall to learn and build together with LP executives from over sixty retail and restaurant chains, seventy solution-tech companies, and multiple research scientists.

Working to Reduce Violence Together

In the next issue, I will describe the LPRC Anti-Violence Innovation Chain Summit held September 12, 2018, in Baltimore. Almost 100 professionals from multiple chains and law enforcement agencies met together to plan their joint anti-violence research and development efforts. LOSSPREVENTIONMEDIA.COM

Portable

LPRC Research in Action Electronics product theft continues at high rates. Traditional protective efforts that increase an offender’s perceived risk of apprehension and sanction—like EAS, CCTV, and merchandise alarms—don’t always deter theft attempts. Likewise, retailers are reluctant to restrict shopper access to products due to lower sales and satisfaction. So some companies are working to trial benefit-denial technologies that render protected items less desirable or valuable. This early-stage exploratory project was designed to collect evidence on priming mechanisms like signage to deter would-be offenders and help shoppers realize a protected asset will not function unless purchased.

Prevention

Context The LPRC conducted a series of in-person survey interviews in the Gainesville, Florida, Innovation Lab and a nearby store to understand how benefit-denial box marks placed on packaging impact offender and customer perceptions and likely responses. Additionally, feedback from twenty LP executives was polled to gather industry opinions of five potential symbol templates. The LPRC then tested the three highest of these box marks, collecting data from six active offenders (shoplifters) and thirty-seven customers. An LPRC Research Scientist collected the data from August to September 2015. This report details survey results. Research Goals ■■ Do active offenders notice (See It) the box mark? ■■ Do offenders understand the exact implications (Get It) of the box mark, as well as perceive it to be a credible threat to their personal intentions for a protected item (Fear It)? ■■ Do customers notice (See It) and understand the exact implications (Get It) of the box mark? ■■ What small changes can enhance the box mark’s effects?

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Box Mark 1

Box Mark 3

Major Findings ■■ Box mark 4 is the most noticeable by both offenders and customers, by a large margin Box Mark 4 for customers. ■■ Box mark 4 was the strongest deterrent for offenders. ■■ Once noticed, box mark 1 provides the best balance of aesthetics and clarity for customers but not offenders. ■■ Box mark 1 was rated most favorably by twenty LP executives. Recommendations LPRC recommended either box mark 4 with the current color scheme and boarder or box mark 1 with the following enhancements: enlarged text, reduced keyhole size, and dashed boarder. Consideration should also be made to adding the word “locked” to the beginning of the message to eliminate some of the alternative interpretations we encountered. This brief is just a small part of the entire research report. The full report is one of over 350 now located in the online LPRC Knowledge Center.

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ASK THE EXPERT

Outsmarting Cyber Criminals

Interview with Rhett Asher Asher is the executive vice president and director of retail solutions for Fortalice Solutions. He has over twenty-five years of leadership experience in the fields of retail, sales, and business development. Prior to joining Fortalice, Asher served as the director of business development for CONTROLTEK, USA and was vice president of several national industry trade associations. He can be reached at rhett@fortalicesolutions.com.

How does cyber security impact the retail industry? Fundamentally, we view cyber security as a brand-protection issue. Many people get lost in the technicality of the cyber world and forget that, at its core, cyber is about protecting people, their data, their privacy, and, ultimately, their choices. This is especially true in the retail industry when cyber criminals can extrapolate patterns about someone’s life from their purchase history, which could be used to exploit or victimize them. Retailers who protect their customers’ choices ultimately provide a superior customer experience and are able to maintain the level of credibility, loyalty, and trust they’ve built. Unfortunately, it only takes one data breach to cause significant, and sometimes irreparable, damage to a company’s reputation.

How do retailers know what to protect first? For smaller businesses, adding cyber security to the list of things to be worried about may seem overwhelming. I get it. But the reality is that cyber security is so deeply intertwined with the rest of asset protection and loss prevention—think about things like gift card fraud, supply-chain management, social engineering, credentialing theft, skimming, and so forth—that you may already be tackling it unknowingly. The most important thing is to determine what your two or three most precious digital assets are and devise a strategy to protect those first, then move down your list as time and resources allow. For some businesses, it could be customer financial data or buying history; for others it will be merchandise integrity and employee access. I highly recommend partnering with a cyber-security professional-services firm that allows you to customize offerings that tailor to your specific needs.

How do we integrate different teams within the company on cyber security? I hear this a lot and know that diverse organizations, especially those with multiple locations like retail, struggle with how to best communicate cyber-security policies and procedures across the company. The first thing I’d suggest is to hold a one- or two-day tabletop exercise where all parties involved come together and practice a digital disaster. Think of this as your dress rehearsal if you ever find yourself in the middle of a breach. You certainly don’t want to be figuring which teams do what when you’re in the midst of a crisis. This way, everyone from legal, marketing, C-suite, loss prevention, IT, and so forth all know what part they are to play. They can practice how to communicate effectively and ultimately can mitigate damage quickly and efficiently.

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Where do you think retailers should start in fighting cyber crime? I am a big believer in the fact that you can’t know what to do to stop a breach until you know where you are vulnerable, and for that reason I highly recommend every company complete a full-scale cyber-risk assessment with a penetration test. Basically, that is an audit of places in which your company is vulnerable and where a cyber criminal could exploit you most easily. A fascinating example I tell often is that the Target breach—one of the most notorious in recent years—happened because a cyber criminal was able to find a vulnerability in one store’s HVAC system and move from there into the main network. That’s how they got all the customer financial information! Cyber criminals and hackers thrive on being able to outsmart their adversaries, so it’s up to us in the asset protection and loss prevention industry to partner with our cyber-security teams in an effort to outmaneuver criminals and think one step ahead.

I am a big believer in the fact that you can’t know what to do to stop a breach until you know where you are vulnerable, and for that reason I highly recommend every company complete a full-scale cyber-risk assessment with a penetration test. What is your advice to LP professionals to translate their expertise in loss prevention into the technical or cyber-security world? There are a lot of correlations from the physical security world to the cyber-security world, so many loss prevention and asset protection professionals are more in touch with cyber security than they may give themselves credit for. These men and women are natural investigators, so they already have that creative “criminal posture” critical thinking needed to assist and get involved. They are always searching for the criminal’s end game, anticipating their attack vectors and how to plan for and mitigate them. As their companies and the world becomes more digitally interconnected, I see it as a natural progression for their unique “brand protection” skills and expertise. LOSSPREVENTIONMEDIA.COM

FEATURE

PARTNERING SCIENCE, DATA, AND ASSET PROTECTION TO TACKLE RETAIL SHRINK RILA STUDENT MENTOR PROGRAM INTEGRATES THE SKILLS AND INSIGHTS OF RETAIL, SOLUTION PROVIDERS, AND ACADEMIA By Clarissa Franklin, Rajat Malhotra, Dani Diehl, and Raksha Pai

PARTNERING SCIENCE, DATA, AND ASSET PROTECTION TO TACKLE RETAIL SHRINK

ver the course of the past half year, we have been working closely with The Kroger Co. and the asset protection team utilizing analytics to drive insights from data that lead to better overall understanding and decisions regarding a problem common to the entire retail industry—retail shrinkage, or shrink. The produce department, in particular, is susceptible to loss and represents a disproportionate amount of shrink relative to the entire Kroger enterprise. Addressing shrinkage within the produce department will help Kroger reduce costs and improve profitability. The goal of this capstone project is to utilize data science and analytics to better understand the relationship between inventory, sales, produce freshness, customer satisfaction, and shrink.

Exploratory Data Analysis

Our first step was to better understand the business and determine the need. Due to the lack of bar codes, the variety of products and vendors, and the perishable nature of the products, produce department data can be extremely problematic. We needed to understand the departmental structure at Kroger, financial data, how Kroger measures and records produce inventory, and how to calculate shrinkage at a granular level. This information played a crucial role in understanding which questions to ask next, which direction to take the analysis, and ultimately which recommendations to provide. Good practice dictates exploratory data analysis (EDA) when starting any analytics project to better understand your data. As a first step in our data analysis we decided to analyze data at the overall store level, focusing on the big picture and looking at trends that affected each location as a whole. Our questions included: ■■ Which stores were performing the best and worst in terms of shrink results? ■■ Do these stores have any clear physical relationship? ■■ How do average shrink results vary depending on store type,

produce square footage, number of deliveries per week, and seasonal considerations? ■■ Are there correlations between produce freshness and wastage? This analysis resulted in some interesting takeaways. First, stores that carry more value-based items had shrink results higher than more upscale stores. On average, stores that received six to seven deliveries per week had better shrink results than those with fewer deliveries. Perhaps these stores order less per delivery and carry less on the floor anticipating that another delivery will be made soon. Further, on a seasonal basis, shrink as a percentage to sales tends to be lowest in February through May. This may be due to a difference in product mix or other seasonal effects. However, while the results of the preliminary analysis may display general patterns of shrink performance by varying characteristics, the purpose of the exploratory data analysis was simply to uncover major trends and answer relevant questions rather than determine causal relationships.

Digging Deeper

Our next step was to analyze more granular data based upon sales, inventory, and cost factors for item-level data. We uploaded over 300 item-level data files, calculated shrink at the item-level based on the given information, and calculated aggregate statistics at the subcommodity level. As an enterprise, Kroger anticipates which commodities and subcommodities result in the most waste based on the experience and expertise of the employees. Some store managers claim there are items that are restocked solely to throw away again. Through data analysis we can provide greater accuracy regarding the wastefulness of each product and use quantitative analysis to support employee experience and expertise. Where is Kroger’s shrink in the produce department coming from? Our first objective was to determine which commodities contributed the most to Kroger’s total shrink. The dashboard created will then allow Kroger to mine deeper into each commodity to see the true problem

Dashboard: Which commodities contributed the most to Kroger’s total shrink? Commodity 001 Commodity 002 Commodity 003 Commodity 004 Commodity 005 Commodity 006 Commodity 007 Commodity 008 Commodity 009 Commodity 0010 Commodity 0011 Commodity 0012 Commodity 0013 Commodity 0014 Commodity 0015 Commodity 0016 Commodity 0017 Commodity 0018 Commodity 0019 Commodity 0020 Commodity 0021 Commodity 0022 Commodity 0023 Commodity 0024 Commodity 0025 Commodity 0026 Commodity 0027 Commodity 0028

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PARTNERING SCIENCE, DATA, AND ASSET PROTECTION TO TACKLE RETAIL SHRINK Dashboard: Which products experience a high shrink percentage? Commodity 001 Commodity 002 Commodity 003 Commodity 004 Commodity 005 Commodity 006 Commodity 007 Commodity 008 Commodity 009 Commodity 0010 Commodity 0011 Commodity 0012 Commodity 0013 Commodity 0014 Commodity 0015 Commodity 0016 Commodity 0017 Commodity 0018 Commodity 0019 Commodity 0020 Commodity 0021 Commodity 0022 Commodity 0023 Commodity 0024 Commodity 0025 Commodity 0026 Commodity 0027 Commodity 0028

subcommodity. By reviewing the results for each commodity and subcommodity, Kroger can better determine what is happening in stores, investigate results that appear problematic, and make informed decisions based on the available data. We then addressed whether certain products were being restocked solely to be thrown away, as well as the shrink cost per commodity. As depicted in the Tableau visual above, we were able to identify certain products that experience a high shrink percentage in the produce department. While clearly problematic, this insight creates a valuable business opportunity based on a data-driven decision. Based on this analysis, Kroger has the opportunity to reconsider best practices and improve results at every location where the product is available and all new locations where the products will be stocked moving forward. Similarly, we created a second dashboard representing the percent of waste within each commodity and subcommodity allowing Kroger to review and compare the performance of each group of products.

subcommodities and visually identify strong performance and problem areas. This dashboard allows for easy comparison between stores and much faster identification of problems in the field, providing awareness and visibility into performance at a granular level and offering high-value information to Kroger.

Predictive Modeling

In addition to exploratory data analysis, predictive models were developed for the Kroger data to help answer key questions and provide additional visibility into Kroger operations. While this analysis can show what’s happened in the past, predictive models will determine the average expected result (shrink percentage) for a given set of conditions. Additionally, a well-fitted predictive model will quantify the impact of a change in a factor (such as moving a store from a high-risk neighborhood to a low-risk neighborhood) when all other conditions For example, upon determining that a remain equal. large portion of a certain product goes to The first predictive model used waste, data mining was able to reveal the was a multilinear regression. We used primary problem by narrowing it down multiple linear regression to model the to a few select items with extraordinarily relationship between several explanatory high shrink-to-sales ratios. This may lead variables (including store type, store area, to critical business decisions, including delivery schedule, customer satisfaction the possibility of adjusting delivery sizes scores, and more) and the desired or frequency for these products to better response variable—produce shrink. match inventory with demand and to The resulting regression describes reduce shrink. The Tableau dashboard how mean responses vary in response can be a crucial tool allowing store to changes in the explanatory variables. managers to visually observe trends in The model predicts whether shrink their produce departments. will increase or decrease when a given The final dashboard (see next variable changes and quantifies the page) depicts a map of stores in expected magnitude of change. Further, a Kroger division, color coded by it can determine which variables impact shrink results with red representing shrink, allowing Kroger to better the worst-performing stores and understand factors affecting shrink rates. grey representing the best. Using We modeled shrink rate, expressed as the dashboard, regional managers basis points rather than the monetary will be able to visualize how the value of shrink, so conclusions would division is performing and which be easier to translate from one store to areas need attention. Store managers the next. can compare performance to that of Explanatory variables included neighboring locations and immediately produce department square footage, identify problem commodities and store employee turnover rate, percentage subcommodities. Employees can of produce department area relative to click on individual commodities or overall store area, number of produce LP MAGAZINE

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PARTNERING SCIENCE, DATA, AND ASSET PROTECTION TO TACKLE RETAIL SHRINK Dashboard: Which stores in this division perform the best?

Commodity Category 1 Commodity Category 2 Commodity Category 3 Commodity Category 4 Commodity Category 5 Commodity Category 6 Commodity Category 7 Commodity Category 8 Commodity Category 9 Commodity Category 10 Commodity Category 11 Commodity Category 12 Commodity Category 13 Commodity Category 14 Commodity Category 15 Commodity Category 16 Commodity Category 17 Commodity Category 18

Commodity Category 1a Commodity Category 2 a Commodity Category 3 a Commodity Category 4 a Commodity Category 5 a Commodity Category 6 a Commodity Category 7 a Commodity Category 8 a Commodity Category 9 a Commodity Category 10 a Commodity Category 11 a Commodity Category 12 a Commodity Category 13 a Commodity Category 14 a Commodity Category 15 a Commodity Category 16 a Commodity Category 17 a Commodity Category 18 a

deliveries per week, the risk tier for the store determined by the asset protection team, store type, inventory, charges, ratio of sales to inventory, net sales, and customer satisfaction score. The first four explanatory variables were determined to have no significant effect on the shrink percentage. The following explanatory variables were all found to be significant and are discussed in more detail below. In these relationships, the impact of these variables is expressed “cetereis paribus,” or when all other things are equal. Due to the confidential nature of company records, actual figures will be replaced with X, Y, or Z. The actual value of X, Y, and Z varies for each factor. ■■ Risk Tier. Based on various metrics at the discretion of the asset protection team, there are four risk tier categories: low risk, medium risk, high

risk, and max risk. Our model found no significant differences between shrink rates at low- and medium-risk stores. High-risk stores are expected to have X basis points more shrink, and max-risk stores are expected to have Y basis points more shrink, compared to low- and medium-risk stores. ■■ Store Type. Our analysis included five store types, categorized 1–5, where store type 1 corresponded to the most upscale stores, and store type 5 corresponded to the least upscale stores. Transitioning from store type 1 to 5, each change in store type corresponds to a reduction in shrink by X basis points. For example, consider a store that is type 1 and has 600 basis points of shrink. If all other explanatory variables (risk tier, inventory, and so forth) are held constant, but the store type changed

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to type 2, the expected average shrink would be (600-X) basis points. If the store type changed to type 3, it would be (600-2*X) basis points, and so on. ■■ Inventory, Net Sales, and Charges. These explanatory variables are expressed in thousands of dollars per period. The shrink increases by X basis points for each additional $1 million inventory, decreases by Y basis points for each additional $1 million net sales, and increases by Z basis points for each additional $1 million sales. ■■ Sales Per Inventory. Sales per inventory is expressed as a ratio of sales during a given period ($) to the value of the inventory on display at the end of the period ($). For example, if there were $800 in sales during the period, and $1,000 of inventory was on the shelves, the sales per inventory figure would be 0.8. For each unit increase

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PARTNERING SCIENCE, DATA, AND ASSET PROTECTION TO TACKLE RETAIL SHRINK in sales per inventory, the average shrink is expected to decline by X basis points. ■■ Customer Satisfaction. The produce freshness score from customer feedback was used as a proxy for customer satisfaction. For each 1 percent increase in the average customer satisfaction score, the average shrink decreases by X basis points.

Decision Tree: How do variables interact with one another to classify a store into various levels of shrink? Rules From DT 1

Sales/Inventory Ratio < Average

Turnover > Average

$ per SQFT < Average + 15D

Customer Ratings < Average

Store Inventory < Zone inventory by 30%

Store Type = 1, 2

Sales/Inventory Ratio < Average

Turnover > Average + 15D

Decision Tree Model

The second predictive model used was a decision tree. We used decision trees to understand the relationship between various factors like shrink, sales, and inventory, and produce freshness, customer ratings, and produce per square foot. Store-level shrink (%) was divided into three categories namely low, medium, and high. A decision tree with shrink categories as the target variable was plotted to understand how

Shrink

Customer > Average

Sales/Inventory Ratio > Average

High

Store Inventory < Zone inventory by 65% Store Type = 3, 4, 5

Store Inventory < Zone inventory within 65%

GM% < Average

$/I Ratio > Avg - 25D

Customer Ratings < Average + 15D Customer Ratings > Average

GM% > Average

Customer Ratings < Average

High

Low Low

$/FT > Average

Store Inventory > Zone inventory within 10%

Low

$/FT < Average

Store Type = 1, 2, 3

Low

Turnover < Average Turnover > Average

$/FT > Average

Low Low

They have a great shopping experience.

You have greater peace of mind with a solution that secures your profits and property. Bosch empowers you to build a safer and more secure world with solutions that enhance safety, reduce shrink, and help you improve merchandising, operations and customer service. Bosch integrated security and communications solutions enrich the customer experience and deliver valuable data to help you increase your profitability. Learn more at http://bit.ly/BoschSolutionsforRetail

RETAIL_Half-page_7x4.625_Global_URL.indd 1

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8/14/18 12:42 PM

PARTNERING SCIENCE, DATA, AND ASSET PROTECTION TO TACKLE RETAIL SHRINK the variables interact with one another to classify a store into the various categories of shrink. The decision rules were identified leading to shrink categories, which would help Kroger make data-driven decisions. Sell-through was revealed as the most important factor when categorizing shrink followed by employee turnover rate and customer ratings. For example, if a store’s sell-through is below average compared to other stores, employee turnover is much higher than average, and the store is a type 1 or type 2 location (upscale stores), the store will likely experience high shrink.

Recommendations

A dashboard was then created to identify problem areas at the individual store level, sorted in high-to-low shrink order, with red indicating poor performance and yellow signifying good performance for factors like sales, inventory, customer ratings, and so forth. Maintain good sell-through. Introduce emplyoee benefits program, which could decrease attrition. Stores which have lower general manager percentages need to concentrate more on produce freshness. Be mindful of the store inventory levels with respect to peer stores.

Collaborating with Tomorrow’s Industry Leaders By Ed Tonkan, President, Zebra Retail Solutions

The annual Retail Industry Leaders Association (RILA) Asset Protection Conference provides attendees with exceptional opportunities to connect with peers on the most pressing issues facing the industry while exploring the innovative technologies currently transforming asset protection. However, the event also provides a unique opportunity to collaborate with tomorrow’s leaders through an innovative program. Founded under the guidance and direction of Lisa LaBruno, senior vice president of retail operations, the RILA Student Mentor Program was established to integrate the skills and insights of a prominent retail chain, a retail solution provider, and academia as part of a semester-long project. Each year the program focuses on a major area of interest for loss prevention professionals, with the students presenting their findings at RILA’s annual Asset Protection Conference. Participating students are selected from The University of Texas at Austin, McCombs School of Business, where they are pursuing their master’s degrees in business analytics. The master’s program produces data scientists and was recently ranked second of its kind globally. Michael Hasler, PhD, director of the program at McCombs, has supported the RILA Student Mentor Program for the entirety of the collaboration and has developed it into a capstone project for his students. Over the past seven years, retail participants have included JCPenney, 7-Eleven, The Home Depot, and most recently The Kroger Co. under the leadership of Mike Lamb, LPC, vice president of asset protection. Aaron Medley, the senior manager of asset protection analytics, was also very involved with the students throughout the project as they applied their advanced analytical skills to over 25 million rows of data. Along with the respective retailers, I’ve had the privilege of serving as comentor for the program each year and have seen it become a valuable opportunity for all involved. In addition to presenting at the conference, students have the opportunity to become fully immersed in this top retail loss prevention event, engaging with both retailers and solution providers at the show. The retailer also receives key insights from these data scientists that it can leverage to improve business operations. I’m personally inspired by the results of RILA’s college student program as the students work with industry mentors to complete these research projects.

Clearing at the right time is important.

The third decision tree shows low-shrink stores that have above-average performance across the columns. This dashboard is interactive, and one can click on each store to find the problem products and how they vary across peer stores and peer commodities.

Limitations

Due to the nature of the retail industry, accurate data collection can be difficult and impractical

Pictured left to right are Ed Tonkon of Zebra Retail Solutions; Rajat Malhotra, Raksha Pai, Dani Diehl, and Clarissa Franklin of The University of Texas; and Aaron Medley of Kroger. SEPTEMBER–OCTOBER

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PARTNERING SCIENCE, DATA, AND ASSET PROTECTION TO TACKLE RETAIL SHRINK Decision Tree: What are the problem areas at the individual store level? Store Mask 00145 00162 00086 00063 00132 00011 00091 00127 00136 00110 00126 00179 00004 00101 00117 00133 00147 00002 00166 00055

Store Type 1 1 5 1 2 1 5 2 3 5 2 5 3 5 5 4 1 1 5 3

Shrink

Sales

Inventory

Ratings

Turnover

GM%

$/Produce SQFT

Inventory Category | Ratings Category | Turnover Category | Shrink Category | Sales Category Above Average Average Below Average

when considering the bottom line. For example, determining the precise quantity of gala apples present in each store on each date may not be cost

effective considering the benefit of having such detailed records. Produce in particular can present a daunting task considering the multitude

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of vendors delivering the product. There may be five different vendors providing strawberries, tracked by different SKUs. For other items such as potatoes, it’s

PARTNERING SCIENCE, DATA, AND ASSET PROTECTION TO TACKLE RETAIL SHRINK Decision Tree: Which low-shrink stores have above-average performance? Store Mask ????? 00033 00182 00070 00095 00093 00003 00104 00079 00008 00183 00165 00010 00094 00059 00102 00029 00078 00125 00124 00047 00056 00177 00184

Store Type 3 3 3 3 2 3 2 3 1 5 3 4 3 4 3 3 3 2 2 3 2 3 3 3

Shrink

Sales

Inventory

Ratings

Turnover

GM%

$/Produce SQFT

Inventory Category | Ratings Category | Turnover Category | Shrink Category | Sales Category Above Average Average Below Average

nearly impossible to determine the original vendor once the product is on display leading to overlap or confusion between different items and different vendors. Due to these and related issues, the physical inventory conducted every cycle faces similar limitations. Another common issue with produce is the exchange between different categories. For example, a store may order organic grapes but receive regular grapes. This can lead to inconsistencies in billing for inventory and sales. Further, an item can be modified in some manner leading to a different label when the item is finally sold. For example, whole pineapple is cut and sold as precut fruit to customers. Similar issues happen with juice bars, prepared foods, and the deli. Kroger is aware of these issues and makes corrections to their financial records at the commodity level. However, these corrections cannot fully capture all the unique scenarios that arise in produce retail and cause noise in the data. Additionally, it’s not uncommon to see negative inventory figures as a result. To compensate for these issues, we have rolled the

data up to higher levels, joining items or subcommodities together, or averaging over longer periods of time. This reduces the noise and extracts a stronger signal from the data but also conservatively limits our analysis and recommendations. We elected to provide higher-level analysis for the data at a level we are comfortable with, rather than risk overfitting our models to extremely noisy item- or cycle-level data. These decisions are supported by cross-validation and out-of-sample testing during our analysis.

We presented our findings to a crowd filled with experts from the retail industry. It was well received and a proud moment for the team. The conference also had an exhibition hall with solution providers showcasing their products. Donning different caps for each event, we loved learning something new from each and every person we met. Overall, it was a great learning experience and we enjoyed the conference thoroughly.

Final Thoughts

Our project benefitted immensely from a close partnership with the Kroger team and their willingness to provide Experience at the support and in-depth information. Many RILA Conference of the most rewarding aspects of our Our presentation was scheduled for work were only possible because Kroger the afternoon of day one of the Retail was willing to provide us with weekly Industry Leaders Association (RILA) sales data for each item at every store. conference in Orlando. As part of the The success of every analytics project conference, we had the opportunity to attend a plethora of events, ranging from depends on the quality of the data, and we were fortunate to have access to such talks given by distinguished speakers detailed records. from the retail industry, to networking “We were delighted to support this events where we could meet people and initiative, both for the benefit of the exchange information regarding the continued on page 48 innovations in the retail industry.

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#MeToo

Investigations today go beyond just theft. Investigators need to be prepared to help prevent, as well as investigate the seriousness and sensitivity of #MeToo incidents and other critical issues (or cases) within your organization. No matter what role you’re in: loss prevention, human resources, risk management or fraud, you must be ready. IAI is your resource to fully prepare and equip you with the necessary tools to meet the challenges associates with sensitive investigations.

Join IAI to access your toolkit today: Toolkit resources include topics related to sexual harassment, workplace violence, interviewing complainants, victims and much more.

Actionable video tips Specific rationalizations Discounts on classes across the country On-demand expert webinars Expert educational blogs Online training

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PARTNERING SCIENCE, DATA, AND ASSET PROTECTION TO TACKLE RETAIL SHRINK continued from page 46

students and the value we derived from their efforts and expertise,” said Mike Lamb, LPC, vice president of asset protection with Kroger. “We know that in order to stay ahead of the ever-changing environment that affects shrinkage and waste, the benefit of analyzing our data in a meaningful and thoughtful way allows us to take a proactive versus reactive approach in mitigating our shrink. This not only serves to improve shareholder value from a profitability point of view but also enhances our in-stock position and product freshness focus.” Analytical, data-driven investigations are important to the entire retail industry. Shrink exists in all sectors of retail, and this type of project benefits the entire industry. Through accurate root-cause analysis, we can help individual stakeholders identify different pain points and achieve a level of detail that was not

previously possible. In addition, these methods provide tools that allow greater visibility into the business, making retail processes more efficient. With the diversity of products and vendors, seasonal variations, and highly perishable goods, the grocery industry can be extremely complex. This project demonstrated that signals can be found even in this noisy produce data and reflects how similar methods can be applied to other retail sectors. Investing in analytics can benefit retailers in many different ways, whether in terms of reducing losses, being better prepared for future issues, understanding the retail customer, and running more efficiently as a whole. Finally, we would like to thank each and every person who helped in this project, including our sponsors at Kroger, Aaron Medley, Jason McClure, and Mike Lamb—thank you for supporting our team and answering our endless questions

regarding the data and work at Kroger. Ed Tonkon, our sponsor from Zebra Technologies—we appreciate your Mike Lamb time and thank you for your ideas, feedback, and comments. Our sponsor at RILA, Ellen Jackson—thank you for listening in on every call and coordinating our trip to the conference in Orlando. Finally, Dr. Mike Hasler and Dr. Ramesh Rajagopalan at The University of Texas for guiding us through this project, providing us with critical feedback, and helping us provide the most value through our work. CLARISSA FRANKLIN, RAJAT MALHOTRA, DANI DIEHL, and RAKSHA PAI are students pursuing their master’s degrees in business analytics in the McCombs School of Business at The University of Texas at Austin.

Don’t Miss LPM Online An All-Digital Magazine with All-New Content

LPM Online is an all-new magazine experience. LPM Online publishes every other month on even-numbered months in between our print editions. The inaugural edition went live in August. You can view it and our current edition on the LPM Online tab on our website, LossPreventionMedia.com, or by entering LPM-online.com in your browser.

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FUTURE OF LPVIEWPOINT ACADEMIC By Tom Meehan, CFI

How ORC Fuels Human Trafficking

Meehan is retail technology editor for LP Magazine as well as chief strategy officer and chief information security officer for CONTROLTEK. Previously he was director of technology and investigations with Bloomingdale’s, where he was responsible for physical security, investigations, systems, and data analytics. He currently serves as the chair of the Loss Prevention Research Council’s innovations working group. Meehan can be reached at TomM@LPportal.com.

she asked me if the police could help her get out. The NYPD assigned a specialized detective to her case.

hat comes to mind when you think of organized retail crime (ORC)? High-shrink items with high-resell values, such as razors, baby formula, jeans, and such? Or fencing operations, whether online or at the corner store? Recently I wrote an article about the broader scope of ORC and the narrowing gap between ORC and cyber crime. In this article I will dive deeper into another aspect of ORC not often thought of, which is human trafficking. Last January, the New York Daily News ran a story about how a runaway’s arrest for shoplifting resulted in an arrest of a sex trafficker. A fourteen-year-old girl was caught at Macy’s for shoplifting. While being interviewed, she revealed that she was forced into prostitution. The New York City Police Department has detectives assigned to a human trafficking unit, and they quickly apprehended the suspect.

How to Spot Human Trafficking

Back in February, NPR published a good interview with a criminal investigator from Minnesota, and the topic was the connection between the Super Bowl and sex trafficking. The conversation revolved around how at-risk youths caught shoplifting are befriended by traffickers and then manipulated into prostitution. The journalist asked the investigator, Marc Chadderon, whether there are signs that can help cops (and in my view, asset protection professionals) to spot a victim of human trafficking during interviews. Chadderon offered several potential giveaways: ■■ Presence of multiple phones on the person (“burner” phones for short-term use and one personal one), ■■ Presence of an older person near a younger female who possibly don’t even know each other’s real name, ■■ Large amounts of cash or prepaid credit cards, and ■■ Motel keys. This list is certainly not exhaustive, but it’s a very good start.

More and more police departments are including specific interview questions into their routines that can reveal human trafficking, and I think it makes sense that ORC investigators consider doing the same.

Third-Largest Criminal Enterprise

I know that ORC investigators already have their hands full, so it’s not my intention to add yet another thing to worry about during interviews. But according to Laura Lederer, a leading State Department official on human trafficking, this is “the third-largest global criminal enterprise, exceeded only by drug and arms trafficking.” I also know that it is often missed during the interviews of ORC suspects. More and more police departments are including specific interview questions into their routines that can reveal human trafficking, and I think it makes sense that ORC investigators consider doing the same. Most importantly, if you suspect that someone could be a victim, report it.

This reminded me of something I witnessed in person. A group of females ranging in age from fourteen to forty-eight were arrested as a part of a large credit-card fraud ring operation in Queens, New York. It turned out that they were buying goods with stolen credit cards by day and were forced into prostitution at night. I personally interviewed one who told me, “I thought America was going to be safer than anywhere else in the world. I was wrong.” She went on to explain how she started working as a cook, then was recruited to shoplifting, and before she knew it, she was a prostitute. At first, I wasn’t sure what to believe, but then

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EDITOR’S NOTE: For links to the articles referenced in this column, see the August 2018 edition of LPM Online at LPM-online.com. |

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FEATURE

WHY DO PEOPLE STEAL? EXAMINING THE ROBIN HOOD COMPLEX By Mike Giblin

WHY DO PEOPLE STEAL?

nterviewing active shoplifters is the most interesting part of my job. For an hour, I speak as seldom as I can. Instead, I listen and observe. What they have to say is fascinating. Their actions and mannerisms weave together with their words like a code waiting to be cracked. Why do people steal? The interview starts with me doing most of the talking. I attempt to make them comfortable and fill them in on what I’d like to know, were I in their position. I speak and watch carefully as they try to decide whether I’m an authority figure or a guy who just wants to shoot the breeze and hear about their craft. Jokes help. Compliments help even more. I make it clear that this isn’t a confessional. They don’t need to apologize to me, or fear me, or even try to impress me. I just want them to relax and talk to me like I’m an old friend. Once they settle in a bit and are convinced that I’m not a cop, I shift the primary speaking role to them. Ten-second questions and prompts are met with two-minute responses. I try to unravel the true meaning behind their words and actions. Through hundreds of interviews, a common theme emerges.

It’s Us versus Them

In other words, it’s normal, hardworking, everyday people versus rich, greedy corporations. In fact, I began to realize that the primary function of calming a shoplifter down during the beginning of an interview was convincing the individual that I wasn’t one of “them.” That I wasn’t part of the corporate machine. That I could understand their plight. Here’s an example of this interchange with an active shoplifter we will call “Bob.” Mike: Thank you for being here today! We do research on this kind of thing, and your honest feedback is incredibly helpful to me. Could you tell me a bit about your shoplifting experience?

Bob: Um, yeah, I just mostly took things that my family needed…uh used to—I don’t anymore. Tylenol when the baby had a fever, you know. Just what we needed. This would usually start with a testing of the water. They would tentatively throw out a comment about the price of what they stole being unfairly high or that they had a family to feed. I’d respond compassionately, then down the

rabbit hole of the underground corporate complex resistance we’d go. Mike: Sure, I can definitely understand that. Tylenol is expensive! I’m not here to judge anyone or to take sides. Tell me more

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about that experience. How would you go about taking it? What would have stopped you? Bob: Its crazy expensive! Uh, I’d just grab it and put it in my pocket, then buy a pack of gum or something and leave. Mike: Oh, okay, that’s smart. You wanted to avoid suspicion, so you’d buy something. What time of day do you like to shop? Long checkout lines are the worst! The person started this interview out as an apologetic wrongdoer answering to an authority figure, downplaying the severity of their habit, and claiming they no longer do it. Then after a few minutes, we were just two guys trying our best to get by in the world. Bob: Yeah, I like going in the afternoon when everyone’s still at work. These stores, man, there’s never any employees around, and they pay them so little that the ones who are around could care less. It’s adding insult to injury, gouging us on prices and making us wait in line to pay them. Like yesterday, I put a pack of condoms in my pocket; there was an associate twenty feet away from me, busy stocking shelves. I didn’t even exist to them. I could have been a normal customer. I could have needed help, you know? Mike: I can definitely understand where you’re coming from. Do you ever take items for people other than you and your family? Friends maybe? Have you ever sold something after you got it? Some would take it a step further. Greedy corporations are the real wrongdoers here, right? I stick it to them by taking from them, right? What do you call someone who fights wrongdoing? Who steals from the rich and gives to the poor? Their body language tells the story—from closed and embarrassed, to neutral, to proud, condemning the condemner with vindication. Bob: Oh, yeah, all the time. My friends, I mean the neighborhood,

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WHY DO PEOPLE STEAL? you know? It’s run down. They can’t afford to pay thirty bucks for laundry detergent. My girlfriend and I opened up a little store in our garage. Detergent, household stuff, things people need every day—we sell it to them at half of whatever the store is charging them. It’s great for both of us. They save fifteen bucks on a $30 bottle of detergent, and we make a little money for our time. I’ll take shopping list orders from some elderly people in the neighborhood. Again, I ask for half of what the store charges. I’m not greedy. These people rely on us to get by. Mike: I had no idea! What do you think those people would do without you and your girlfriend? Bob: I mean, they’d go without basic necessities, right?

Why Do People Steal? Robin Hood? Really?

Let’s break down what just happened, aside from Bob illustrating that he isn’t aware of off-brand, inexpensive laundry detergent options. Every decision we make has a decision-making process. I believe we arrived at the end of the interview at a genuinely held belief of how a series of events making up their decision to steal unfolded. The belief goes, as follows, in order of where they believe it appeared in their decision-making process. Decision Process: “Robin Hood Complex” as Motivation 1. I believe corporations are evil, and I’m going to do something about it. 2. I believe shoplifting is the best way to act on my belief. 3. I might as well take products I need or desire. 4. [theft occurs] This process specifies a desire to act on a moral principle as the motivation for their act of theft. Anyone who buys this account of events can stop reading now. For the

rest of us, here’s our best guess of what is really going on, formulated through our own scientific studies and a review of existing literature. Decision Process: “Robin Hood Complex” as an Excuse 1. I need or desire this item. 2. I’m unwilling or unable to pay for it. OR I simply enjoy the thrill of stealing. 3. [theft occurs] 4. [guilt and cognitive dissonance set in]

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5. I feel bad about this. How can I make that feeling go away? 6. [seeks defense mechanism; chooses “Condemn the Condemner/Justify Actions”] 7. I believe corporations are evil, and I’m going to do something about it.

What Can We Do?

It can be frustrating or even comical to watch the mental gymnastics someone will go through in order to avoid negative feelings like guilt. However, it’s important to keep in mind that all of us use defense mechanisms to alleviate negative feelings and resolve cognitive dissonance. If we meet an offender’s mindset with a desire to understand it, instead of frustration, we can harness that knowledge and turn the tables on them. Below are proposed actions we can take as retailers, followed by an example of what “Bob” and his band of Merry Men had to say about these interventions throughout multiple interviews. Please note that quotes from “Bob” are censored, abridged, and otherwise cleaned up to improve the understandability of their primary points. ACTION 1: Greet Them at the Door. Employees are innocent, normal people. In the story the offender has fabricated, they’re a righteous person, and righteous people don’t harm the innocent. Bob: That person recognizes me now. They could pick me out of a lineup. It also makes me feel guilty, like I’m stealing from them. The store put some effort in. When they show effort like that, I reward it by going somewhere else. ACTION 2: Focus Signage on Guilt-Based Messages. Has anyone tried a sign that just says, “Please don’t steal from us”? It won’t work on everyone, but some may feel obliged to reward your courtesy. The Loss Prevention Research Council

WHY DO PEOPLE STEAL? (LPRC) is currently researching humanizing signage where you talk to the customer directly, joke with them, or even compliment them. Bob: I know what I’m doing is wrong, and I’m trying to ignore that as I do it. I don’t like anything that reminds me of it. If you make me feel like I’m stealing from a person, I’ll go elsewhere. ACTION 3: Show Them the Victims and Consequences of Shoplifting. When theft is high, prices go up. Shelves don’t get stocked, and items don’t get sold. Stores go out of business. Normal people lose their jobs. This isn’t a victimless crime. Consequence research is ongoing at LPRC. Bob: I have friends who are cashiers. I guess it affects them when someone steals; I just don’t think of it that way. If I did, it would be harder to do. Action 4: Avoid Overstocking When Possible. It’s human nature to feel worse about taking the last slice of pizza than when there’s plenty to go around. Avoid having too much of the same product out, not only because it’s harder to protect but also because it becomes psychologically easier to justify stealing. Bob: These corporations make billions of dollars. I’m not hurting anybody by taking one or two things. I’m taking one and leaving ninety-nine. No harm done. ACTION 5: Reach Out in Your Community. Big retail corporations can do an awful lot of good. Most already are. Advertise what you’re already doing more clearly and strategize ways to touch these individuals’ communities in positive ways. LPRC is conducting two research projects in 2018 on this topic. Bob: Before their big store opened up, there were three other stores on

that site—stores that didn’t pay their employees minimum wage. They provide a service, I guess. I’d have to go across town if they weren’t here. I just don’t usually think of it that way. ACTION 6: Make an Effort to Head Off the “It’s Like They’re Asking for It” Excuse. Things like a messy store and inattentive

Affecting the general public’s perception of what an offender’s true motives are is a pivotal step in unweaving the Robin Hood narrative. Let customers know that most offenders aren’t taking necessities in modest quantities for personal use. Let them know that most shoplifters are fueling a less honorable habit than feeding babies.

SEPTEMBER–OCTOBER

associates can unwittingly send both good customers as well as offenders the wrong message. Bob: They just make it so damn easy. It’s like they’re not even trying, like they want you to steal from them. Or they’ve made the decision not to care. I’m not saying that makes it okay. What I’ve done is wrong, and I’ve got to answer for those things when I meet my maker someday, but I would’ve never done it if it weren’t so damn easy. Just do something, anything to show you’re making an effort. ACTION 7: Change the Conversation Employees Have Outside of Work. Telling your friends about how fairly you’re treated at work is generally not a popular topic of conversation. Not only can your employees turn sour and actively assist others in defrauding you, but also their unkind words about how unfairly they’re paid or treated can give members of their social circle just the sense of moral high ground they need to feel okay about stealing from you. Bob: My friend works as a cashier there. He doesn’t help me take things, but he knows I do it. He thinks it’s funny. I wouldn’t ask him for help. I don’t need it and don’t want him to risk his job. It doesn’t hurt people like him. It just makes the CEO bonus a little smaller each year. ACTION 8: Consider the Message You’re Sending When You Lock Something Up. Retailers have every right to lock items up based on what’s on paper. Its high shrink or above a certain price threshold, so we lock it up. However, it’s important to understand the message you’re sending both customers and offenders when you protect certain items. The average customer isn’t aware of the aftermarket value of things like laundry detergent,

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WHY DO PEOPLE STEAL? razor packs, diapers, or infant formula. They view these items as staples and may find it shocking to see them locked. It could be seen as “overkill” and could fuel the Robin Hood narrative. If you do lock them, consider adding signage with a help line if the customer needs government assistance for staple items. Bob: They’re locking up baby formula. Catching moms trying to feed their starving babies is how they choose to spend their time? Shouldn’t that kind of stuff be free? Whether or not your baby gets to eat shouldn’t depend on how much money you make. All these guys see are dollar signs. They don’t see people. They don’t care about us.

guilt-reducing narrative but also cutting away at acceptance or support from the general public. When customers think of a shoplifter, they should conjure an image of an affluent organized retail crime group, not one of a starving mother. Affecting the general public’s perception of what an offender’s true motives are is a pivotal step in unweaving the Robin Hood narrative. Let customers know that most offenders aren’t taking necessities in modest quantities for personal use. Let them know that most shoplifters are fueling a less honorable habit than feeding babies.

Retailers are already doing an incredible amount for their communities. They care about their customers and would help them find a meal or a shelter if the customer asked. Our challenge is making that positive impact impossible to miss and ignore. We need to work together to push that narrative. Hard. After all, we’re competing with an age-old tale here. For nearly 200 video clips of live offender interviews and access to over 300 research reports supporting these insights, please visit the LPRC Knowledge Center at LPresearch.org.

MIKE GIBLIN is currently a senior research scientist with the Loss Prevention Research Council (LPRC). Holding a background in consumer behavior with an emphasis on consumer psychology, judgment, and decision making, Giblin manages the research team at LPRC where he develops and executes research projects for retailers and solution providers. He also leads several working groups and action teams in collaborative efforts between retailers and solution providers to address industry-specific problems. Giblin can be reached at mike@lpresearch.org.

Robin Hood: A Man of the People

These action items aim at not only disarming an offender’s

Adapt Quickly to Market Dynamics with @Source Tagging CheckpointSystems.com LP MAGAZINE

SEPTEMBER–OCTOBER 2018

SOLUTIONS SHOWCASE DETEX

Is Your Back Door Protected?

etex introduces a maximum security, multipoint lock so big and strong that it stands up to assault by the bad guys and reduces employee and customer theft. Exclusive to Detex, the ECL-230X-TDB is a heavy-duty, easy-to-install, three-bolt, multipoint lock whose construction takes panic hardware to a whole new level of toughness and eases your back-door security worries about the bad guys peeling the bottom of your back door to gain entry. Built for maximum strength, it is designed with a larger deadbolt that goes deeper into the frame than other locks in the category. Connecting rods are solid steel rather than the less reliable, hollow rod/cable construction. Life-safety and code compliant, the new Detex ECL-230X-TDB serves as both panic hardware and a maximum-strength locking device.

The ECL-230X-TDB includes a photo-luminescent sign available in more than ten color and language combinations, a 100-decibel alarm, and three locking points per door: ■■ Top deadbolt—approximately 1-inch wide by ½-inch thick, the top bolt provides additional stability to the top corner of the door. ■■ Side deadbolt—at 2¼ inches tall by ½-inch thick with a 1-inch throw, the side bolt allows for ¾-inches of penetration into strike. (Detex recommends flush installation for maximum security.) With more than 1½ square inches of bolt engagement, the side deadbolt provides superior defense against pulling and prying on the side of the door. ■■ Bottom bolt—this 5/8-inch HEX bolt with ¾-inch throw engages the floor with 5/8-inch penetration and provides better attack resistance and superior defense against the “peeling up” of the bottom of the door. Together, the three bolts withstand 16,000 pounds of pull force. Add suffix DX3 (ECL-230X-TDB-DX3) for six locking points for even stronger security, providing an additional line of defense against break-ins. Even if the exterior door hinges are compromised the DX bolts keep the door locked and secure. These passive deadbolts are easy to install and offer another layer of attack

SEPTEMBER–OCTOBER

resistance. Through-bolt mounting installation improves the door’s holding strength. You choose the right application and level of protection by choosing one, two, or three bolts for a total of four, five, or six locking points. Other 230X models include: ■■ ECL-230X (dead bolt only) ■■ ECL-230X-W (weatherized dead bolt) ■■ ECL-230X-TB (top and bottom bolt) ■■ ECL-230X-W-TB (weatherized top and bottom bolt) ■■ ECL-230X-TD (top and dead bolt) ■■ ECL-230X-W-TD (weatherized top and dead bolt) ■■ ECL-230X-W-TDB (weatherized top bolt, dead bolt, and bottom bolt) Additional benefits include: ■■ Corrosion-resistant alloy lock body ■■ Surface/flush reversible strike ■■ Durable photo-luminescent sign absorbs light, then “glows in the dark” when lights are dimmed ■■ Non-handed ■■ Resetting the alarm can only be accomplished with a control key ■■ Locking and unlocking the dead bolt always arms and disarms the alarm ■■ Accepts 5-pin through 7-pin standard and interchangeable core rim cylinders without using a cylinder collar ■■ Optional inside pull handle Almost all hardware and accessories can be customized with different finishes, colors, sizes, and more. Ask us how this new generation of life-safety and security hardware can make a powerful difference at your back door. For more than a century, Detex has earned the trust of architects and owners who rely on Detex products for the life safety and security of people and property. A USA company, Detex designs, manufactures, markets, and ships products from New Braunfels, Texas. Detex is known internationally for life-safety and security-door hardware, loss prevention and architectural hardware, integrated door-security systems, and guard tour verification. Visit Detex’s website at detex.com or call us at 800-729-3839.

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SOLUTIONS SHOWCASE APPRISS RETAIL

Machine Learning and the Evolution of Exception Reporting

ecent years have seen an explosion of consumer products that incorporate artificial intelligence (AI). Self-driving cars, Alexa, Siri, chatbots, Google search, and smart traffic lights are examples of how artificial intelligence is impacting the world. While artificial intelligence has gained mainstream attention recently, AI applications have been “hidden” for many years in a variety of business applications, such as credit scores, credit card fraud detection, direct marketing, and more. Retail loss prevention has also seen applications of AI in technologies such as facial recognition and return fraud authorization. In this article, we extend the loss prevention professionals’ toolkit and show the results of a machine-learning algorithm (a specific type of AI) developed to detect fraudulent and abusive employee activity. The ultimate objective for developing machine-learning models is to obtain collective intelligence to curb employee deviance. Appriss Retail serves more than ninety retailers worldwide, and this experience provides a solid foundation for such model development.

From Rules and Queries to Predictive Models and Machine Learning

Today, most loss prevention departments use traditional exception-based reporting (EBR) tools to monitor their employees by running queries on point-of-sale data that flags suspicious activities. EBR tools used by retailers are similar to the tools used by the credit card industry in the 1980s to detect fraud. In the early 1990s, the credit card industry mostly abandoned the EBR approach in favor of methods of detection based on predictive modeling and machine learning. A similar trend was seen with health-care fraud about fifteen years ago. Our prediction is that retail loss prevention will evolve in a manner comparable to credit card fraud detection. In a traditional EBR process, a query is run to look for anomalous behavior, and its output is provided to an analyst in the form of a list of transactions or employees

EBR Query on POS Data

Investigation/ Review of Exceptions

LP MAGAZINE

Query Based Investigations

Machine Learning Based Investigations

to investigate. Then the analyst or investigator reviews the exceptions presented and determines, sometimes based on looking at additional information, if the transaction or employee in question warrants further review. Some of the exceptions will result in an action against the employee, such as arrest or termination of employment, which we label as “success” in the flow chart below. The goal of machine learning is to apply a complex mathematical model to the data and learn, using thousands of variables, the most useful elements in an employee’s transactions for identifying cases that are most likely to result in an action. With a machine-learning model, the top-ranked exceptions will have a much higher rate of success than those that are generated from traditional EBR. Over time, an approach with a higher success rate will make loss prevention departments far more efficient and will decrease employee fraud rates.

“In our testing, we saw more than a 25 percent increase in fraud cases identified and a 25 percent decrease in time required to track down the fraudulent activity within many of the cases.” – Department Store Divisional VP of Loss Prevention

Success Found Something to Correct/Termination Failure Found Nothing to Correct SEPTEMBER–OCTOBER 2018

Machine learning exploits the differences between successes and failures 57

SOLUTIONS SHOWCASE APPRISS RETAIL Overview of Artificial Intelligence and Machine Learning

Collective Intelligence

Machine-learning models allow developers to use data from many retailers to create a more powerful solution, and Appriss Retail’s worldwide retailer base is a significant benefit. Each retailer is unique in the exception-based approaches and investigation techniques that result in employee terminations and prosecutions. Combining retailer strategies leads to better detection, including: ■■ Variables resulting from shared questions ■■ Models built on many successful strategies

Artificial intelligence can cover a wide range of tasks. The next diagram illustrates some frequently used components of AI.

Artificial Intelligence Predictive Models

Machine Learning

Deep Learning

Self Driving Cars, Voice Recognition, Text Recognition

Using Dynamic Learning and Feedback

Beyond the collective-intelligence model described in the prior section, a final objective of an AI-based employee-deviance detection system is a feedback loop from the investigations back into the models. During an investigation, the investigator will perform many actions that can be captured in a system and later used to improve system accuracy. For example, the investigator will click on related transactions and individuals, will open a case, will abandon a case or a transaction, and so on. The captured usage activity can be converted into information that a machine-learning model can utilize to improve the models. This type of feedback loop ensures that as new fraud schemes are detected at one retailer, that pattern is captured in a broader model that propagates across all retailers.

Dynamic Learning

Predictive Models and Machine Learning. Predictive models and machine learning are shown in the diagram as almost completely overlapping circles and are very close in definition and purpose. The primary difference between the two is machine learning originated in computer science, whereas predictive modeling was developed in the field of statistics. In the past decade or more, the two fields have essentially merged and now share a highly overlapping definition. Both are concerned with using data to predict or model outcomes, and both are tools used in AI. Deep Learning. Deep learning is a process that uses highly complex model structures to learn patterns in the raw data without any human intervention, thus eliminating the need for derived variables. The difficulty in deep learning is that the more complex models are often more difficult to fit accurately. Dynamic Learning. There are two very different types of model categories: static models and dynamic models. A static model is fit to a static pattern in data. The predictions from a static model can change as the data it is presented with changes, but if the model is presented with the same exact data, it will produce the same exact answer. By contrast, a dynamic model’s prediction can change from day to day even if it is presented with the same information. Dynamic learning is a process by which models are refit or updated dynamically as new data presents itself. This approach is useful when a system is continually bombarded with additional information and the relationships in the data are dynamic and the model itself needs to change to adapt.

SEPTEMBER–OCTOBER

Cases to Investigate

Employee-Based Variables 3,000+ Machine Learning / Predictive Models

+ Known Successful Investigations Across Many Retailers

Feedback loop from investigations improves models and keeps up with new fraud

The Ultimate Objective

As stated above, the ultimate objective for developing machine learning models is to combine many learnings and obtain collective intelligence to curb suspicious employee behavior. In this application of machine learning, a department store chain saw at least a 25 percent increase in fraud-related terminations above what would normally be captured by EBR alone. Visit apprissretail.com to learn more.

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SOLUTIONS SHOWCASE AFA

The True Value of Partnership

erhaps one of the most commonly used yet often misunderstood terms in business today is the word “partnership.” Partnership is a term commonly used to convey a set of mutual expectations in a relationship. It is intended to foster and promote unselfish levels of cooperation and mutual support with the goal of delivering reciprocal value for all parties involved. In a meaningful partnership, each party should feel benefitted by the other and rewarded by a genuine commitment and desire for collective success. All too frequently, however, the word “partnership” is conveyed as more of a wish versus a mutual commitment—a term used in a one-sided manner to solicit a spirit of cooperation yet producing a selfish and one-sided outcome. Needless to say, partnerships of this kind typically result in abusive business relationships and are often short lived.

At AFA, the Word “Partnership” Means More

Exceptional Service, Responsiveness, and Attention to Detail. We take pride in our tireless attention to detail and follow up with our clients and partners. We deliver exceptional service with prompt and forthright response, so you can have confidence that your people and assets are protected. A Heritage of Experience and History of Meaningful Client Partnerships. AFA’s heritage as the nation’s first central-station fire-alarm company is a great source of pride for us. What’s most important are the long-term business relationships we have built with our clients, partners, and employees over the decades. History and relationships matter. It’s the difference between being a number in a computer versus having a long-time personal contact you can take at their word. It’s the stability and reliability that comes with nearly 150 years of experience protecting and serving our clients. Visit afap.com to learn more.

It carries a more profound and special meaning and has done so for nearly 150 years. It is not a wish or a goal but the foundation by which we interact with every one of our valued customers, every minute of every day. When it comes to life safety and asset protection, partnerships matter—partnerships that value the importance of delivering practical and cost-effective solutions, creating a safe environment for employees and customers while ensuring valuable merchandise and assets are kept properly protected and secure. These types of partnerships encourage open and honest communication and include a thoughtful willingness to listen and challenge each other to achieve optimum levels of business results. In addition, these partnerships carry a sense of urgency when responding to all matters regardless of perceived importance. These partnerships result in long lasting relationships.

AFA, a True Business Partner You Can Count on

Thoughtful and Innovative Fire and Security Solutions. At AFA, we find the right technology, best approach, and solutions to help you ensure your most valuable assets are fully protected. LP MAGAZINE

SEPTEMBER–OCTOBER 2018

LPM DIGITAL Kelsey Seidler

A New Reality

Seidler is managing editor, digital. She manages the magazine’s digital channels that includes multiple daily e-newsletters featuring original content and breaking news as well as pushing content to various social media platforms. Seidler recently earned her master’s degree in technology and communications through the University of North Carolina’s School of Media and Journalism. She can be reached at KelseyS@LPportal.com.

ollowing are a few article summaries that can provide you with a small taste of the original content available to you every day through our daily digital offerings, which are offered free through LossPreventionMedia.com. In addition to our daily newsletter, a comprehensive library of original content is available to our digital subscribers at no cost to you. Visit our website to gain access to all of our content. You can also follow us on Facebook (search LP Voices), Twitter (@LPMag), and LinkedIn.

Industry Pioneer Bill Cone Leaves Behind Admirers

Scott Glenn Named Vice President of Asset Protection at Home Depot

By Barry P. Grant, COO, Photos Unlimited

By Loss Prevention Media Staff

Scott Glenn, JD, LPC, has been named vice president of asset protection at The Home Depot. Glenn was formerly the corporate vice president of asset and profit protection and chief security officer with Sears Holdings, where he was responsible for asset and profit protection, safety, business continuity, and crisis response functions, as well as online fraud prevention and Scott Glenn payment systems. He began his career as an intern analyst with the Bureau of Alcohol, Tobacco, and Firearms (ATF) in 1990 (when it was still part of the US Department of the Treasury pre-9/11) before joining Target’s asset protection team in 1991, where he served as an executive team leader. He then joined TJ Maxx as a regional investigator in 1996, managing organized retail crime and high-level internal investigations. In 1998, Glenn moved to Kohl’s Department Stores, accepting roles of increasing responsibility and assuming loss prevention leadership as director for the southeastern and mid-Atlantic regions. Glenn joined Sears Holdings in 2008 as divisional director of loss prevention and safety, was promoted to senior director of loss prevention operations, finance, and analytics in 2009, divisional vice president for Kmart Corporation in 2011, and then to corporate vice president of asset and profit protection and chief security officer in 2013. Glenn is active throughout the loss prevention and asset protection community, serving as an executive board member with the Loss Prevention Foundation, editorial board member with LP Magazine, and board member with the Retail Industry Leaders Association (RILA). He holds a bachelor’s degree in criminal justice from the University of North Carolina at Charlotte and executive juris doctor in law from Concord University School of Law. The Home Depot is the world’s largest home improvement retailer with nearly 400,000 orange-blooded associates and more than 2,200 stores in the United States, Canada, and Mexico. The typical store averages 105,000 square feet of indoor retail space, interconnected with an e-commerce business that offers more than one million products for the DIY customer, professional contractors, and the industry’s largest installation business for the do-it-for-me customer.

SEPTEMBER–OCTOBER

Bill Cone regrettably passed away at age seventy-five on Friday, July 20, 2018. The industry has lost another legend and friend. Bill was the vice president of loss prevention for AutoZone where I had the distinct pleasure and honor to work for him as a young LP executive for nearly ten years. Bill was my mentor, my friend, and my inspiration in this Bill Cone business. His ministry to serve others was how he lived his personal life, as well as his professional life. Bill was a perennial loss prevention committee member and speaker at Retail Industry Leaders Association (RILA, formerly the IMRA) and the National Retail Federation. He was the leader that brought many procedural ideas to AutoZone that made us a “best in class” LP organization, not only in our industry segment but also in all of retail. Many of those who worked under Bill went on to lead their own LP departments. What I learned most from Bill was his love and commitment to his team member’s success and well-being. Bill first hired me as a young rookie, a week out of college. He took a chance on me when few in the industry would hire a 23-year-old to a district LP role. It was also Bill who gave me the confidence and knowledge to persevere and prosper and never give up. It was Bill that always pushed me and gave me encouragement that one day I could achieve anything I wanted in my career. He sent me and some of my colleagues to industry trade shows or encouraged us to submit articles to LP Magazine. He wanted us to get the credit for getting published or for getting a speaking role. He always gave his team credit for shrink reductions or for a great case we closed. Bill served our country in the Air Force, where an injury eventually led to him being honorably discharged. He was a graduate of the University of Georgia where he earned his bachelor’s in business. He loved motorcycles, Georgia Bulldog football, and his place on Bear Creek on Pickwick Lake in Tennessee. He loved nothing more than his sweetheart of fifty years, Alice, his two kids, Tom and Shannon, and his six grandchildren. He will be sorely missed not only by this author but also by others who had the good fortune of knowing Bill Cone. Thank you Bill for everything you did for me, my family, and the loss prevention industry.

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PRODUCT SHOWCASE The Battle of the Sexes in the Interview Room By Stefanie Hoover, CFI

Who’s better at interviewing: men or women? You’re probably thinking that a post written by a woman would contain a clear-cut answer, firmly tilted toward women. This should be a slam dunk, no-brainer, obvious as can be. Even though I do like clear-cut answers to my questions, the answer to this one was a little more slippery than I thought it would be. I had heard from other practitioners over the years that in their experience, female interrogators do indeed have an advantage. And I went along with this theory, throughout my career, happy to believe this urban legend. Aren’t women indeed more nurturing, more caring, more empathetic, better listeners, more patient, and so forth? Or are these just stereotypes? So I began a search for scientific studies that would back up my initial thought: women were indeed more effective interrogators. There exists quite a bit of anecdotal evidence but very little hard science. As I searched, I was astounded at the amount of interview and interrogation material out there that made blanket statements about women interrogators with nothing other than some case examples to back up their theories. My position has now changed to the following: there are so few female interrogators that those who do exist have become successful because they employ those traits aforementioned that make them the most effective. In other words, they are good at what they do because they had to figure out the best way to be successful in a competitive arena, not just because they are women. In a male-dominated profession, you can be a mediocre male interrogator; you have the numbers on your side. Further, I posit that if we took a company or government agency and suddenly hired equal amounts of female and male interrogators from a pool of inexperienced candidates, and then we gave them the same training, chances are pretty good the perceived effectiveness for both males and females would be similar. Of course, this is only my opinion; maybe someone can conduct this experiment—in my lifetime. Since I couldn’t find studies on the topic, I conducted a semi-scientific poll and asked a few people I know, men and women, their opinions on this topic. I was especially interested in hearing from the team at Wicklander-Zulawski: what was the word on the street, so to speak? Did they get a lot of questions about the topic during their seminars, or did they themselves observe one population or another to be better or worse at interviewing? Good, straightforward questions, one would think, but the answers were all over the place. I heard quite a few expected responses that women are more empathetic and better listeners. One interesting point was that “people would rather talk to a woman.” There have been some studies around this point; when shown pictures of men or women and asked who they would rather talk to, the study participants chose women over men the majority of the time. This may give the female interviewer an edge at the beginning of an interrogation, but the skills needed to be successful are learned, not decided with a chromosome split. Some other comments shared were about difficulties female interrogators have; evidently, it’s not all confessions all the time for us. “They lack confidence when they interview men.” “Women aren’t raised to be confrontational.” “Male suspects will try to continued on page 62 LP MAGAZINE

SEPTEMBER–OCTOBER 2018

WATCHING OVER YOU SINCE 1873 • Underwriters Laboratories Listed •

Factory Mutual Approved

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SIA Certified Operators

At AFA, we deliver superior levels of customer service. If you don’t believe us, ask our customers!

8 6 6.232.628 5 www.afap.com

Organized Retail Crime in Idaho 3rd Annual Conference

CALENDAR

Washington Group Plaza, Boise orcaid.org

continued from page 61

September 20, 2018 Retail Council of Canada Retail Secure 2018 International Centre Mississauga, ON rcclpconference.ca September 23–27, 2018 ASIS International Global Security Exchange Las Vegas (NV) Convention Center gsx.org September 25, 2018 Cyber Security Summit: New York New York Hilton Midtown cybersummitusa.com October 1–3, 2018 Loss Prevention Research Council IMPACT 2018 University of Florida, Gainesville lpresearch.org October 3–4, 2018 Carolinas Organized Retail Crime Alliance 3rd Annual Conference Sheraton Imperial Hotel Durham, NC corca.org

Credit Card Chip Technology Has Been Effective at Reducing Fraud. But… By Bill Turner, LPC

We know that the United States was late in adopting widespread use of EMV (chip) credit cards. Finally, in 2015, we began catching up to the rest of the world when it came to the implementation of credit card chip technology. The results have been positive. According to Visa, counterfeit credit card fraud dollars at US merchants that completed the chip upgrade dropped 76 percent between December 2015 and December 2017. The number of US merchants accepting chip cards jumped from 392,000 in September 2017 to 2.9 million in March 2018. As of March 2018, 97 percent of credit card transactions in the United States were made with chip cards. BizTech reports that at the end of 2017, there were 7.1 billion EMV-enabled cards in circulation worldwide. Despite all of these positive numbers, however, the United States is still lagging behind the rest of the world in total EMV saturation.

October 8–11, 2018 Coalition of Law Enforcement and Retail (CLEAR) 9th Annual Training Conference Crown Reef Beach Resort and Waterpark Myrtle Beach, SC clearusa.org October 10–12, 2018 LP Magazine Annual Editorial Board Meeting The Warwick, Philadelphia, PA losspreventionmedia.com

Drawbacks to Credit Card Chip Technology

October 16, 2018 Cyber Security Summit: Phoenix Renaissance Phoenix Downtown cybersummitusa.com October 24, 2018 Florida Retail Federation 2018 LP Conference Rosen Shingle Creek, Orlando, FL frf.org November 6–8, 2018 Anti-Counterfeit and Currency Expo North America Las Vegas (NV) Convention Center anticounterfeit-expo.com November 29, 2018 Cyber Security Summit: Los Angeles The Beverly Hilton Beverly Hills, CA cybersummitusa.com

take advantage during an interrogation.” But couldn’t all of these observations apply to any individual regardless of their sex? One thing I’ve noticed during my career is that we all have an Achilles heel that we self-impose. Whether it’s interrogating men, women, minors, elderly, or people of another race, we tend to pick a group and tell ourselves that we have a hard time dealing with them. I had my own early on, and guess what? I overcame it. I believe that this occurs when we have a failure with one interrogation and blame it on the fact that the suspect was A, B or C, instead of looking in the mirror and figuring out what it was that we did wrong. From there, it becomes a self-fulfilling prophecy. Countless cultural elements factor into an interrogator’s confidence, too many to count or go into here, plus none of it is backed by scientific research. They are just things that as a society we believe to be true. Now, before you pound out your letter to the editor, let me finish by saying that, yes, in my experience, female interrogators do have an advantage. But the really interesting question is—why is that? Is it due to their sex, or is it due to necessity?

So EMV cards have had a dramatic effect on reducing credit card fraud in the United States. But are there any downsides to the adoption of credit card chip technology? As with anything new and revolutionary, the answer is yes. Here are a few. EMV cards are driving fraudsters to “card-not-present” fraud. Experts say this will be a growing problem for years to come. Javelin reports that card-not-present fraud is now 81 percent more likely than in-person fraud at point-of-sale terminals. New account fraud has seen more than a 100 percent increase since EMV cards became mainstream. It now accounts for over 20 percent of all fraud losses involving credit cards. Because EMV cards are hard to duplicate, fraudsters are honing their skills in pure identity theft. According to BizTech, identity fraud victims increased by 8 percent in 2017, affecting 16.7 million consumers. TechCrunch reports that more and more “shimmers” are being placed inside ATM terminals by fraudsters. The shimmers cannot read chip data but can read magnetic data still present on most cards. Phony magnetic cards can then be produced. Magnetic cards are still widely accepted. TechTarget reports that on some smart cards not all data is encrypted, which weakens the strength of the card’s protection. EMV cards have gone a long way to prevent credit card fraud, especially the once common practice of card counterfeiting. But, as we’ve seen, fraudsters are creative and can find numerous ways around chip-implanted cards. So now what?

SEPTEMBER–OCTOBER

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PEOPLE ON THE MOVE Brent Smerczynski, LPC was promoted to corporate asset protection manager of operations, safety, and regulatory compliance, and Lauren Freede was promoted to asset protection manager of investigations and anti-money laundering at 7-Eleven. Jochen Koedijk was named chief marketing officer at ADT. Brian Harvell was named chief

technology officer at Agilence. Ron Bigelow was named

corporate security at Aldi USA. Lisa Albers, LPC and Gene Snavely were promoted to regional loss prevention managers, and Katie Shephard is now a regional loss prevention manager (United Arab Emirates) at Amazon.

Carl Rysdon has been promoted to vice president of RFID solutions at Checkpoint Systems.

Camille Bauer was promoted to senior area loss prevention manager at Harbor Freight Tools.

Vianey Martin is now a regional

Donnell Murphy PCI, LPQ, CORCI

loss prevention manager at The Children’s Place.

Christopher Dyess is now

Bob Casar, CFE was promoted

a territory loss prevention manager at Claire’s Inc.

to territory director of loss prevention at HS Brands International.

Christie Hale has been named

vice president of internal audit and loss prevention at Cracker Barrel.

Jake Crank and Mark Garcia are now district asset protection managers at L Brands.

Damien Jones was promoted

David Clark was promoted to district asset protection manager at Lord & Taylor.

to regional asset and profit protection manager at David Jones (Australia).

Osmany Benitez, CFI is now

a regional manager of asset protection at Luxottica.

Steven Bedi is now divisional

loss prevention director at Dollar General.

Admir Mehmedovic is now a regional asset protection manager at Dollar Tree Stores.

Ben Borer, LPC was promoted to director of loss prevention, and Kate Dove, LPQ was promoted to regional loss prevention manager at American Eagle Outfitters.

David O’Brien was named director of human resources of retail at Duluth Trading Company.

Kelly Murphy-Iversen has

O. Keith Wanke was promoted

been named director of loss prevention at American Freight, Furniture & Mattress.

Jesse Stevens was

to senior vice president of loss prevention, audit and firearms compliance, and Thomas Cairns, CFI was promoted to director of loss prevention, audit and firearms compliance at Dunham’s Sports.

Luke O’Reilly is now AVP regional

Christian Placencia is now corporate loss prevention manager at Estee Lauder.

Christopher Hoffman is now senior

program manager at Appriss.

promoted to divisional investigator at AutoZone. security manager at Barclays UK.

Steve Welk, CFI was promoted to

senior director, loss prevention at Barnes & Noble College.

Stephen Hall was promoted to director of loss prevention, Lance Lee, CFI was promoted to loss prevention training and audit coordinator, Ryan Barthel was promoted to field training and development manager, and Darryl Keister, CFI was promoted to loss prevention regional investigator at Beall’s. Sean Kecskes was promoted

Kevin Ward was promoted

promoted to field manager of asset protection at Cabela’s / Bass Pro Shops.

Tony Zenari, CFI is now a regional

asset protection manager at Carter’s / OshKosh B’gosh.

Tracey Garnett was promoted

to regional loss prevention manager at Michael Kors.

Rachel Hoffman is now a

regional loss prevention manager at Moblelink.

to national director of investigations, and Sean Schmidt is now an area loss prevention manager at Nordstrom.

Andy Stofanik was promoted

Shannon Hunter has been

to vice president operations, safety and loss prevention at Floor & Décor.

promoted to vice president of loss prevention and sustainability at Office Depot.

Veronica Harden is now

Bruce Pyke has been named director of loss prevention, and Adam Burkhart is now a district loss prevention manager at Ollies Bargain Outlet.

district director of loss prevention at Gabe’s.

Jarrod Fullerton was promoted to

John Bellefeuille was promoted

Anthony Dentler, LPQ was

Kimberly Sanders was named loss prevention field director at Michael’s.

to regional loss prevention manager, and Michael A. Fortune, CFI, CFE is now a market loss prevention investigator at Family Dollar.

Michelle McKernan was promoted

are now district loss prevention managers at Burlington Stores.

were promoted to regional directors of asset protection, and Tymothy Conklin was promoted to regional organized retail crime manager at Macy’s.

John Morris was promoted

business development manager, signature brands at Genetec.

Justin Ponzini and Ki Johnson

Wallace Parks and Rey Rodriguez

Ryan Coller is now a division loss prevention manager at NAPA Auto Parts.

to senior loss prevention manager at Belle Tire.

to multi-unit loss prevention manager at Blain’s Farm & Fleet.

is now an organized retail crime investigator at The Home Depot.

to associate vice president of loss prevention at Giant Tiger Stores Limited.

Chris Ota has been named vice

president of loss prevention at Pacific Sunwear.

John Carro, CFI is now a regional loss prevention manager at Pep Boys.

Lawrence Hartman, CFI, LPC is now director of risk

management, loss prevention, and safety at Goodwill Industries of Central Florida.

Gary Johnson, CPP, CFE has been named director of loss prevention at Guitar Centers.

Nathan Hamblin, LPC, CORCI was promoted to senior regional loss prevention and safety manager of supply chain, and James Skinner is now a regional loss prevention and safety business partner at PetSmart. Kris Vece, LPQ was promoted to

vice president of client relations, and Sally McGuffin was promoted

to vice president of vendor relations at Protos Security. Jennifer Goodwin and Neil O’Neill, CFI are now area loss prevention

managers at Ross Stores.

Keith Long is now a district asset

protection manager at Safeway.

Sean O’Dell, LPC is now a regional asset and profit protection manager at Sears Home Services. Kory Best, CHS was promoted to national account manager at Securitas Security Services. Chip Chiappetta was promoted to senior regional loss prevention manager at Sephora. Jesse Forgays was promoted

to senior manager of asset protection and safety video analytics, and Freddy Perez and Paul Evans, CFI were promoted to regional asset protection managers at Southeastern Grocers. Kevin Foote, LPC has been

promoted to manager of workplace violence prevention and threat assessment at Staples.

Michael Monaghan is now

corporate loss prevention manager at Steve Madden.

Nicole Garcea, Doug Ronspies,

and Tim Begor are now district loss prevention managers at TJX Companies. Eddie Foley has been promoted to vice president of loss prevention at Tractor Supply Company. Michael Mayernik, CFI was promoted to director of loss prevention, and Misty Davis, CFI was promoted to regional loss prevention manager at ULTA Beauty. Robert Hurd is now a regional asset protection manager at Victoria’s Secret/Pink Stores. Miguel Falcon, LPC is now a

multidistrict asset protection manager, Guelmy Jimenez is now an area asset protection solutions partner, and Hany Farah was promoted to asset protection district manager transition lead at Walgreens. George Savage was promoted to director of global business services, and Jesse Futch and Brittany Davis were promoted to market asset protection managers at Walmart. Ian Waller was promoted to regional investigations manager at Walmart Canada. Dave Wilkinson is now a regional loss prevention manager at Williams-Sonoma.

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

LP MAGAZINE

SEPTEMBER–OCTOBER 2018

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LP MAGAZINE

SEPTEMBER–OCTOBER 2018

PARTING WORDS

Liberty Bell, Rocky, Independence Hall, Cheesesteak, and LPM

hat to do this October in Philadelphia? Visit the Liberty Bell and see the crack in the bell. Visit the Museum of Art and run up the Rocky steps. Stand where a nation gave birth to Independence. Order up a Philly cheesesteak. And attend the LP Magazine annual meeting at the Warwick Hotel October 10–12. There will be over 125 attendees including the industry’s leading asset protection executives, board members of the Loss Prevention Foundation, members of the Retail Industry Leaders Association’s Asset Protection Leaders Council, and the top solution providers in retail. There will be lots of conversation (some meaningful, some not so much), multiple learnings, plenty of food and drink, and tons of laughs. That is the way it was last year in Nashville, and more of the same is expected this year in the city of the NFL champion Eagles.

Memorable Interviews

In the past year the magazine has distinguished itself with memorable executive interviews. Here are a few excerpts from those interviews. If you haven’t read the entire interviews, check them out at LossPreventionMedia.com. Scott Myers of Hibbett Sports—“I liked [LP because] there was a different challenge every day. It was never boring….We have several goals that the company wants us to achieve. Some of it obviously is shrink related, but a lot of it is to [improve] profit and margin. We have a lot of conversation about total retail loss.” Kevin Valentine of Signet Jewelers—“I am a strong supporter of education and continuing education for team members. A number of department team members have taken advantage of tuition reimbursement and received either a bachelor’s or master’s degree…[or] their LPC or CFI certifications.” Mike Grady, LPC, of Vector Security, Rex Gillette of ADT/Protection 1, and Kevin Lynch, LPC, of Tyco Retail Solutions—Grady: “I most respect [LP executives’] ability to develop teams that are cross-functional and engaged in multiple aspects of the business….They are exceptional head coaches and team managers.” Lynch: “The best LP executives

SEPTEMBER–OCTOBER

Jim Lee, LPC Executive Editor

aren’t afraid to step out and try new things….I want the LP executive to know that I have his or her back.” Gillette: “Our LP executives come from within the industry. Most started out in store-level positions and have worked their way up to executives based on their track record, experience, and knowledge. I respect and admire that attribute in our industry.” Dan Faketty of Southeastern Grocers—“There have been a lot of conversations over the past few years about loss prevention programs being downgraded or even eliminated, based on changes in retail. I don’t believe that will be the case at all. If I could recommend anything to anyone in our business, it would be to look for nontraditional ways you or your department can enhance your company’s profitability, even if that means taking on what you may feel is not in your job description.” Paul Jones, LPC, of CKE, the home of Carl’s Jr. and Hardee’s—“[As a founding member of the Loss Prevention Foundation,] I am proud that we have never strayed from our mission. It isn’t about making money or prestige. It’s about taking care of this profession and making sure that it continually grows, that it’s professional, and that it’s taking on new challenges.” So I hope we meet in Philadelphia in October. Like the executives above, we are not here just to fill space or be in the background in someone else’s life. Nothing would be the same if you did not exist. Everybody you have had a relationship with and every place you have been would have been different without you. Some believe that “things happen for a reason,” that there is some mysterious energy that causes an action or creates a result. Maybe there is, maybe not. But for sure each of us has had an effect on others because of what we have done. So in the words of Elton John, “Oh Philadelphia freedom, shine on me.”

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September - October 2018

Articles inside

PEOPLE ON THE MOVE

CALENDAR

EVIDENCE-BASED LP

LPM EXCELLENCE

FUTURE OF LP

EDITOR’S LETTER

SOLUTIONS SHOWCASE

PRODUCT SHOWCASE

LPM DIGITAL

CERTIFICATION