Asset Protection in a Convenience-Store Environment

A Conversation with Mark Stinde of 7-Eleven

EDITOR’S NOTE: Mark Stinde is vice president of asset protection for 7-Eleven, Inc. He has over 24 years of experience in loss prevention, safety, and store operations management roles for various retailers, including Circuit City, Sears Holdings, The Home Depot, Toys”R”Us, and others. Stinde serves on the Asset Protection Leadership Council for the Retail Industry Leaders Association and the editorial board of LP Magazine, and has been active in many other LP trade organizations.


EDITOR: I’m sure most of our readers have visited a 7-Eleven store at some point, if not on a daily basis. How widespread is 7-Eleven today?
STINDE: The brand of 7-Eleven has grown to over 50,000 stores worldwide in sixteen countries. In the United States and Canada, which is specifically my area of responsibility, we have more than 8,000 stores. Just last year we grew by close to 1,000 stores. Obviously, we have a heavy focus on convenience. However, our goal is not only to be the best convenience-store retailer in the world, but also the best retail company in the world. We are known as a beacon in the night for our customers, or guests as we call them, who are looking for a place to get a cup of coffee, a cold drink, or something good to eat at any time of the day or night.

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EDITOR: Who are your typical customers?
STINDE: For some guests, we’re their neighborhood grocery store. For others, we’re just that convenient place where they get a meal, a cold drink, gasoline, or a Slurpee® beverage.


EDITOR: Ah, the Slurpee. What’s the story behind that?
STINDE: Years ago, the owner of one of our stores had the idea that if he took the syrup that is used to make fountain drinks and chilled it, that it would freeze and make a great product. He tried it actually using a car air-conditioning unit the first time, and it worked. That product is what we know as the Slurpee today.


feature2side1Most people think of 7-Eleven as a small-box retail store and think that the issues we face are scaled down the same way. But we do a lot of things in our stores and face some complex issues. We sell food items, which involves food-safety issues. We sell tobacco products, which come with regulatory concerns. We sell gasoline that comes with environmental challenges. On top of that, we’re a 24-hou7-eleven-Logor operation that brings in guests at allhoursof the day and night, which presents a number of issues.


EDITOR: Before we go in-depth into your current role, tell our readers how you got into loss prevention originally?
STINDE:
I came home to Federal Way, Washington, from school one summer and needed a part-time job. I responded to an ad for hourly associates at a Mervyns store and took a job in their shoe department as a salesman. I stayed there for a couple of years. While I was there the LP staff often asked me to assist in apprehensions. Eventually, the LP district manager, Mark Thomas, asked me if I had any interest in loss prevention. He was very instrumental in my career. So, I interviewed and took a role as a store detective in a new store in Puyallup, Washington, and my LP career was born.


EDITOR: And that career has taken you to work for what other companies?
STINDE: I spent seven years with Mervyns, and then took an opportunity with a company called Lamonts Apparel in the Northwest as a loss prevention investigator. I was promoted within the year to shrinkage control manager, and then about a year later to regional LP manager. When they filed for bankruptcy in 1995, I went to Toys”R”Us for three years, then to Home Depot where I spent a total of seven years.

A couple of opportunities with Home Depot that gave me experience outside of the LP arena, were the roles I held as senior director of safety and as district manager of operations. The role in safety was very fulfilling, and we made huge progress as an organization not only in the area of safety, but also in the area of environmental compliance. Two years after taking the safety role, the company decided to move safety back into loss prevention. My division president offered me a district manager role in operations in St. Louis. I spent two years there before the LP bug bit me again.

At that point I went to Sears as division vice president of full-line stores. I was at Sears for a short time when Circuit City recruited me for the top LP role. I started as the director, but was promoted to vice president eight months later. I was with Circuit City until they closed in the spring of 2009. The bankruptcy wasn’t fun to go through, but it was a huge learning opportunity for me. When they went out of business, I worked for Protiviti as the associate director of the loss prevention practice for a year and a half before I got the phone call from 7-Eleven.


EDITOR: What enticed you to go to a convenience-store-type operation?
STINDE: When I first learned of the opportunity, I asked questions like: Is it a growth company? Do they have a good strategy? What’s the leadership like? Would this be a place that I would want to spend some years of my career? Can I make an impact? After my research, I knew that it was a great company. I also thought that it was a great opportunity to bring some ideas and best practices from the LP industry into their asset protection program to make it even better. 7-Eleven had always had a senior director of loss prevention, but never a vice president. I came in as senior director and within a year was promoted to vice president.


EDITOR: How is loss prevention at a convenience store different from a traditional retail store?
STINDE: Most people think of 7-Eleven as a small-box retail store and think that the issues we face are scaled down the same way. But we do a lot of things in our stores and face some complex issues. We sell food items, which involves food-safety issues. We sell tobacco products, which come with regulatory concerns. We sell gasoline that comes with environmental challenges. On top of that, we’re a 24-hour operation that brings in guests at all hours of the day and night, which presents a number of issues.

So, as I came into the company, it didn’t take me long to understand that it’s a complex business model even though it’s a small store. And I’ve always believed that even though my function within the company—asset protection—is a support function, the best way for me to do my job is to have a true understanding of what it takes to operate the business. In fact, in my first ninety days with the company, I spent sixty days in a store learning the business, all the way from how you order donuts to how you clean the grill to food temperature expectations. The operational knowledge that I gained early on helped equip me to better manage asset protection and better support the business.


EDITOR: Many people might imagine robberies to be a significant problem. Is that true?
STINDE: If you go back to the late 1970s, our robbery rates were challenging. The company engaged not only some consultants to help them with the problem, but they actually went into the prisons of America and interviewed felons convicted for robbery. They asked them things like “What compelled you” and “Why did you choose one place to rob over another?” Some of the insights that they discovered include how well a store is lit, both inside and outside. How clearly you can see in and out of the store is important. Making sure our associates are aware of and address every guest that comes in. We also determined that it was important to keep cash levels low, because even if a robbery occurs, if that person only gets say $35, they’re going to figure out over time to avoid 7-Eleven because we don’t have much cash on hand.


EDITOR: How did the 7-Eleven LP team respond when you came in?
STINDE: When I got here, it was clear to me that we had really smart people in the organization who wanted to do great work. One of the things that I pride myself in is trying to cast a good vision. Our goal is very clear if you ask any of them. It’s to make 7-Eleven’s asset protection team not just best-in-class in convenience stores, but in all of retail.

Day one was an assimilation day before we spent two days talking strategy. In that first discussion, the team sent me out of the room to develop questions. One of the questions was, “Do you have a trailer full of people parked around the corner that you’re going to replace us with?” Here’s what I told them. The expectations of an asset protection executive in this organization will consist of three things. First, you must be a great leader, be good to people, and work well with others. Second, you must have a strong business acumen; not just asset protection acumen. You have to understand why it’s important for the operator to be selling fresh food, understand margin, and understand what a P&L looks like and how to contribute to the P&L. And third, and least important of the three, is that you are a highly functioning asset protection practitioner. If you have all those things, I have no need to replace you because you have all the skills to do a great job.

I also stressed the need to not only develop a partnership within the AP organization, but within the corporate organization. Early on in my career, I learned to distinguish between a relationship and a partnership. You can have a relationship with someone, and yet you’re not always mutually committed to the resolution of something. For me a partnership consists of shared goals, shared responsibility, and shared accountability. To get there you have to both understand what you’re trying to accomplish, to make sure everyone buys in and is committed to their role in success, and to make sure we are holding each other accountable for the outcomes.


EDITOR: What are some of the financial and operational accountabilities that asset protection has accepted responsibility for?
STINDE: All our investments require certain return. And that return is distilled down to a performance scorecard. The team is held accountable month to month on what it’s going to take to get that financial return. With our P&L and scorecard reviews, there’s a very clear understanding that if they don’t meet their financial return, that this will impact their performance.


EDITOR: What’s changed over the past three years with the asset protection program at 7-Eleven?
STINDE: When I came into the organization, during that first meeting with the team, we took an article out of LP Magazine that talked about the nine consistent attributes of best-in-class loss prevention programs [see “Lessons from Low-Shrink Retailers,” September-October 2007 page 56]. During those two days, we went through that list of nine things, working together asking, “What are the actions we need to take to get from where we are today to best-in-class?” We really had some honest conversations about where we were as an organization, and that was the genesis of our new strategy for the department. I challenged the team to focus, not on what others could do for us to make us best-in-class, but what we could do independently as a department to get there.


EDITOR: What were some of those key LP initiatives that you implemented?
STINDE:
I believe in trying to make it as simple as you can, so as a team, we tried to take that nine-element approach and distill it down to determine what it would look like in 7-Eleven. We came up with what we call our “four-pillar strategy,” which starts with people and ends with people.

feature2side2The expectations of an asset protection executive in this organization will consist of three things. First, you must be a great leader, be good to people, and work well with others. Second, you must have a strong business acumen; not just asset protection acumen. You have to understand why it’s important for the operator to be selling fresh food, understand margin, and understand what a P&L looks like and how to contribute to the P&L. And7-eleven-Logo third, and least important of the three, is that you are a highly functioning asset protection practitioner.

We start with the foundation of our strategy, which is the asset protection team. This team consists of all of our key team members, which begins with the associate who interfaces with our guests day to day. The team includes the franchisees and store operators, the field operations team, the store support center; really each and every member of the 7-Eleven team. Each team member most know their role in keeping our stores safe and minimizing loss in our stores.

The first pillar is what we call revenue-and-profit assurance, which is focused on making sure that what gets reported in the stores, whether it be a sales number, a profit number, a mark down, or a write off, is all reported correctly.

The second pillar is what we call our inventory variation control. Most companies would call that shrink control. But for us, any variance says there’s something wrong in the business that needs to be identified and corrected. This means the team is focused as much on overage as they are on shortage in the stores.

The third pillar of the strategy—incidents and investigations—is not only investigating, but really doing the work on the back side of that to understand what occurred and what mitigation strategies we need to put in place to either engineer out the risk for the future or put in operational controls to control the risk.

And then the last pillar is safety and asset protection awareness. That’s making sure that we engage our associates on what it is they need to do that will keep them safe and prevent loss. We distribute monthly posters to our stores that tell the story from a safety perspective, from a fraud perspective, and from an operational loss perspective. We look at the different components of the business so the associates in the stores, every day, can learn to better control those areas of the business.

EDITOR: What was the greatest adjustment you had to make to manage risk at a convenience store?
STINDE: We have 1,000 customers a day come into an average store, 24 hours a day, at five dollars a transaction, so you have to look at that kind of business differently than a lower velocity business. Plus, being open overnight adds a myriad of other issues. So I had to adjust, personally, to make sure we built a strategy to fit our specific situation. That’s actually one of the nine components of that LP Magazine article. One thing I’ve emphasized whenever I talk about the 7-Eleven AP strategy is that it isn’t my strategy; it’s our strategy. We built it together. For example, at first, I had shortage control as the second pillar. The team said, “Oh, no. At 7-Eleven it’s got to be inventory variation control.” It’s a different business. I learned I couldn’t just come in and plug-and-play my philosophy of what loss prevention was, because in convenience-store retailing there are unique issues.

EDITOR: How do you measure your success?
STINDE: I think back to my early career, when it was all about stats—how many shoplifters did you catch; how many internal theft cases did you resolve? While all of those do have some contribution to the financial success of the company, if that’s the only place you find value in your program, you’re missing the mark. We can’t just be a cost center in the organization; we really should be an income center. Also, you have to consider if asset protection in any way negatively impacts the customer experience in the store. Are there unintended circumstances where we might win financially in the program itself, but lose somewhere else? So, you have to look at it with an all-inclusive lens, trying to better understand the value of the program as a whole.

EDITOR: What technologies have you adopted in your time at 7-Eleven?
STINDE: One of the nine elements in that best-in-class article was using data to drive decisions. The asset protection group lacked the data needed to support the business. For example, we didn’t do any exception reporting. So, we purchased a new state-of-the-art exception-based reporting system called SecureTM from Sysrepublic. This system integrates our ClickIt DVR technology that we engaged Tyco Integrated Solutions to deploy in 2012. The Secure system also is integrated into our APIS case management system. Each technology improvement provides great value to our program, but the effective integration of all of these tools is really what makes the system powerful and adds value.


EDITOR: What have you done with it?
STINDE: The nice thing about the Secure system is the ability to integrate to any type of data that we need to bring in. We bring in Oracle feeds, mainframe feeds, and flat-file feeds. It’s flexible enough to take any data source, map it to our database, and run exceptions on the data.

We had opportunities to automate our case-management process, which had previously been merely a manila file folder in the file cabinet or document stored on the desktop of the computer. APIS enabled us to now track incidents and cases all the way from cradle to grave.

Many of our stores were still using out-of-date VHS video technology…if you can say “VHS” and “technology” in the same sentence. Bringing all of our stores into a digital video format was a huge investment. But we worked with senior leadership and last year spent $40 million on new digital video technology for stores. This did not include the nearly $10 million we spent in new stores and acquisitions. We’re about to embark on another phase of DVR upgrades later this year.

We made sure that all these new technologies were compatible with each other and were able to integrate together. The real power of this technology is to have these systems all working together.

feature2side3Early on in my career, I learned to distinguish between a relationship and a partnership. You can have a relationship with someone, and yet you’re not always mutually committed to the resolution of something. For me a partnership consists of shared goals, shared responsibility, and shared accountability. To get there you have to both understand what you’re trying to accomplish, to make sure everyone buys in and is committed7-eleven-Logo to their role in success, and to make sure we are holding each other accountable for the outcomes.


EDITOR: How did you deploy your digital video?

STINDE: First of all, I have to recognize Tyco Integrated Security, who did a flawless job on the integration of 4,000 systems in nine months in our stores, which was a Herculean effort. We have two IP cameras in every store. That may sound like a small number, but we’re a small format store. One of them is a 360-degree camera, and one is a 180-degree analytics camera at the front door. We have the ability to measure traffic, dwell time, and other analytics from the systems. Not only do we have remote access to the systems, but we have integrated this video into our Secure exception-reporting system.

EDITOR: Is anyone inside the company outside of asset protection making use of that information?
STINDE: Absolutely. The customer insights team, the innovations team, the new store design team have all tapped into it. There are many examples of how we are putting this valuable data to use to better understand our stores and our guests.


EDITOR: What do you see as the vision in the next 12 to 18 months?
STINDE: We always have to stay vigilant to some of our key robbery-prevention procedures because of the fact that we operate 24/7 in all different parts of the country. We will continue to focus on safety. Can we do a better job when we design a store? Operationally, can we put better standards in the store?

We’re also still in the very early stages of what we can do with data. We’re doing a great job around the point of sale, but what additional things can we do around some of the other components in the business?

Then, how do we bring in some of the best practices from the larger LP industry? How do we leverage our RILA, NRF, and FMI partnerships to learn from what other folks are doing in our space? And even if they’re not doing it in the convenience-store space, how can we take what others are doing outside convenience and adjust it to meet a need within our business?

EDITOR: Are there any other programs that are important to your asset protection organization?
STINDE: We see law enforcement as partners in the stores. For example, we try to be that beacon in the night for the law enforcement officer who wants to come in and get a cup of coffee and do a report, which gives our stores a good visual deterrent at the same time. We are very proud of our Operation Chill program. This program gives us the ability to engage two very important groups—law enforcement and youth. 7-Eleven donates one million Operation Chill Slurpee coupons annually to law enforcement agencies in the communities we serve. The law enforcement officer is to “catch” a young person in the act of doing something good and then reward them with an Operation Chill coupon that can be redeemed for a Slurpee. This is a huge hit with our guests and with our law enforcement partners.


EDITOR: It’s obvious from this discussion that you’ve developed into a strong LP executive. What one or two people have been most influential in your professional development?
STINDE: The first person who really lit the fire under me as a young loss prevention practitioner was Mark Thomas, my regional asset protection manager at Mervyns. He encouraged me that every day I came into the store to ask the store manager what the sales were for the day before. To talk to the assistant managers to find out the challenges they were dealing with and how you could support them. He taught me from the start how important it was to be that cross-functional partner. I also learned a lot from Ed Wolfe when I was at Home Depot. He’s a guy who always stood for quality in his organization, and he promoted me to my first divisional director role. But truthfully, I learned more about what it takes to run an effective loss prevention program in the eighteen months I worked for Bill Titus at Sears than I learned anywhere else.

EDITOR: Finally, I know that family is an important part of your life.
STINDE: Yes, my family and my faith have been very important to me throughout my life. I am more committed to each of these in recent years, and my wife and I are very involved in a local Christian church. There are a lot of people who have helped me along the way. The principles I learned as a young child growing up in the church are things that I try to apply every day in both my personal and professional life. My wife Niki and I will be married three years next October. I have two beautiful children, Katelyn, who is 24 and lives in the Seattle area, and a two-year-old, Connor, who is my wingman. Katelyn graduated from the University of Puget Sound and followed her dad into retail at Target. I am very blessed in so many ways.

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