EDITOR’S NOTE: Scott Glenn, JD, LPC, is vice president of asset protection at Home Depot. He has over twenty-five years retail loss prevention experience with Sears Holdings, Kohl’s, TJ Maxx, and Target. Glenn is a member of the Loss Prevention Foundation executive committee and LP Magazine editorial board.
JIM LEE: Scott, how long have you been at Home Depot in your role as head of asset protection?
SCOTT GLENN: Believe it or not, it’s been a little over three and a half years, two of which have unfortunately been through the pandemic.
JIM: Talk about some of your previous experiences that prepared you to take on such a monumental leadership role at Home Depot.
SCOTT: I’ve had a similar journey as many of my peers with maybe a few different twists. Like many in college, I thought I’d work for one of the law enforcement agencies, and I did for a short time with the Bureau of Alcohol, Tobacco, and Firearms. I had been catching shoplifters while I was in college at Target and knew people there. When I decided the government wasn’t my long-term plan, I made the switch back to Target.
I spent about almost five years there and then met my wife who was an ASM. You don’t want two people working in the same environment, so I had the chance to move over to Kohl’s. We had 250 stores when I joined the company and a thousand when I left ten years later. During that time, I decided to go to law school as it was something I always had an interest in. I did that nights and weekends and received my JD. A few years later, a very interesting opportunity came around and I moved over to Sears Holdings to take on a role with a bigger company. I ended up spending another ten years in various levels of leadership, leaving as the chief security officer. I was blessed that Home Depot came calling at the right time for me, and I was privileged to move into this role for such a great company.
JIM: Leadership is a key term there. One of the privileges of working in loss prevention and asset protection is the opportunity to work with and learn from exceptional leaders. Who are some leaders that you respect and model yourself after?
SCOTT: While I have had the opportunity to work for and with so many great leaders, there are two people who stand out in my career; I have talked about these two previously and will again. The first one is Genny Shields, who hired and promoted me at Kohl’s. Basically she taught me the ABCs of people management in retail. Everybody thinks they’re a good leader until they get a few smacks in the eye for going off course. Genny was that one that gave me those smacks early in my career and showed me how to lead people the right way and to really understand what motivates folks to be their best.
The second person who was instrumental in my career was Jim Hayworth. Jim was formerly chief operating officer at Walmart US. He came over to Sears as the head of stores and COO. The thing that Jim taught me was how to navigate leadership, the executive team, the boardroom, and the political side of the business. He took me under his wing and invested time with me. After board meetings, we would go to lunch, and he would point out little things that I may have said or done that resonated or could have been better. I know that is where I learned how to be effective with senior leaders.
JIM: The world of asset protection has changed quite a bit since your early career. Is that a positive or a negative?
SCOTT: It’s probably both. The industry has gone through fits and starts and ditch to ditch over the years. On the good side, the business has matured. The value of asset protection—from being predominantly a security function to now a holistic approach to total loss, margin management, profitability—while still in its infancy, is moving in the right direction.
When I talk to our leadership team, we talk about shrink, of course. But, we talk just as much about margin protection, brand protection, people protection, and safety. I really feel like it’s maturing in the right direction.
On the negative side, we can sometimes forget that there are bad people in the world who do bad things in our stores, whether that’s the way they treat our associates, the harm that they cause, or stealing product from us. I think sometimes we lose sight that we still must deal with that. That said, we’re being pulled back into the malicious side in terms of organized retail crime (ORC) and its toll on the industry. In the end, it’s a cycle, and we are figuring out how to get more effective in dealing with that over the last couple of years.
JIM: What are the key issues that asset protection is fighting these days?
SCOTT: ORC is not going away. To be honest, I wasn’t a big believer in ORC before I came to Home Depot. I thought it was maybe a bit overblown. But in today’s environment, I’m a believer. We are a big victim and are going after it aggressively.
The online aspect is out of control. It’s a net positive as it relates to driving the customer growth side of the business, but it also provides anonymous ways for people to resell product that was either taken from our stores, diverted through our supply chain, or counterfeited as one of our private brands. Online provides a whole different level of challenge for the AP world.
Then again, protecting people and the brand never goes away. It continues to be more and more important. Customer sentiment these days is very particular. It moves rapidly. If you’re not trusted by the public, you can lose business quickly. Some of that is about how you treat and protect people in your stores. Those things are critically important to a brand’s reputation.
JIM: What is being done at Home Depot or throughout retail to reduce the impact of ORC?
SCOTT: Right now, we’re in education mode. From a public and government relations standpoint, my partners have been fantastic, and we have been pounding the pavement. I have met with dozens of governors, attorneys general, and DAs as well as members of Congress trying to help them understand that ORC is not a victimless crime. They need to understand that we are in the midst of a perfect storm—COVID, drug availability, and decriminalization have created an ORC boom and this is not something that can be overlooked. There is a pass-along cost to the consumer, and it does eat into tax revenues. We’re going to continue pushing until we get the right level of legislation and education out there.
JIM: ORC has a huge impact on shrink, and a retailer’s ability to fight ORC is often reflected in their shrink results. What are you doing to fight shrink?
SCOTT: Our approach is twofold. Obviously, we’ll continue to do what we can to make the bad guys uncomfortable in our stores, make them think twice about coming into our facilities. We have big buildings with a lot of ins and outs and valuable products, so we’re going to be a target. There’s no question about that.
We’re also leaning into the operational side of shrink. We’ve grown sales by over $40 billion in the last two years. When you do that, things don’t always go the way you expect them to. We have to make sure that we close all the avenues of loss, that our disciplines are in place, and our people are trained.
To support that growth, we’ve hired 150,000 people over the last two years. They’re new and don’t always understand how we do things. We’re doubling down on the training, making sure that they understand our operating processes and how we do things from an accuracy perspective on the front end. On-hand and pricing accuracy are critically important to our shrink performance. We’re reinvesting time into training our associates, our field teams, as well as the stores to get back to the basics on operational shrink.
JIM: If you look at LP twenty years ago, a lot of people said employee theft was the major problem. Do you think that’s flipped today to external theft and operational issues?
SCOTT: I think that the contributors ebb and flow with the times. I believe that the employees who don’t steal from this company, don’t because of the great culture here. They are owners of the company and are invested in the company. So for us at Home Depot, while we certainly have associates that steal from us, I don’t know if the internal theft piece is as big of a contributor as other retailers.
Now that said, we can’t and don’t ignore internal theft, and I’ve talked to our leadership team about that. We must do a better job with the right tools and the right systems to weed it out and make sure we are not taken advantage of. At the end of the day, the contributors are what they are. They are the same as everyone else is dealing with; it’s just the contribution amount that varies.
JIM: We’re going to interview some of your key reports for this article. What are you doing as a leadership team to make AP more effective at Home Depot?
SCOTT: Listen, here I’m the rookie. There’s a lot of tenure in this company. Most of my direct reports have ten, fifteen, in some cases twenty-plus years of tenure with this organization. They know how this company works inside and out. They have helped me adapt to the culture and what gets things done within the company. But it also can understandably at times give us a bit of tunnel vision. My last three predecessors were long-term Home Depot associates.
I like to think that one of the things that I’ve helped bring to the organization is an industry perspective. How can we take some new ideas? How do we approach the business a little bit differently but within the guardrails of the company’s culture, and the way we’ve been successful as an organization?
My team is fantastic in terms of the way they approach the business from a customer and associate-centric perspective. We’re moving in the right direction, but big companies don’t move as fast as smaller ones. Plus, we’ve been dealing with a pandemic. So, there are things that we’re challenged on and will continue to push forward, but I feel that we are going to like the results at the end of 2022. I’m quite comfortable with our team and progress.
JIM: You’ve been one of the outspoken supporters of diversity and inclusion in asset protection. What are you doing to support that philosophy here?
SCOTT: I’m just practical, I know in my heart that you have to represent the population at large to address the problems we face in retail. As a result, I have always been a supporter of the places that provide us with diversity; whether that is diversity of background, culture, race, or gender. I’m a supporter of the International Organization of Black Security Executives (IOBSE) because I love what they do, and I’ve gotten great talent from that group, many times over. We’ve also been supporters of historically black colleges and universities and have established relationships with them to be a talent incubator. We have been actively working to bring more female talent into not only Home Depot AP, but the industry at large.
I also like to go find talent in different parts of the business. That’s where, let’s face it, our AP industry has not been a great talent generator. You must go find that talent and bring those skills into your department. I think, historically, we’ve been okay at it but got a little sidetracked during the pandemic. We’re doubling down on it now and have initiatives within the organization, broader than just asset protection, that are going to help bridge that gap to bring diverse talent into the AP organization.
JIM: You were an active board member with the Loss Prevention Foundation. How has the foundation enhanced the world of asset protection and your own career?
SCOTT: Our industry, in the past, has been monolithic. The foundation’s approach is developing broader leaders from a people, skillset, and technical perspective. The foundation has really helped us to standardize that and make it credible, similar to other professional organizations out there. That, in turn, helped us widen the lens in the industry, bring in more talent, and put us in places where we haven’t necessarily been before. Academia is a place where we’re getting a lot of traction. We’re bringing a whole new generation of students into an industry that maybe wouldn’t have been exposed to it in the past. I believe that’s one of the biggest benefits of the foundation.
JIM: Tell us what you see in the future for asset protection or retail in general.
SCOTT: The future of retail is whatever the customer wants, direct to the consumer. Stores will always be important but less than they’ve been. They will be the short-term fulfillment option. We think about providing customers product the way they want it, when they want it—whether that’s same day or next day. It might be somebody who is building an entire office building and needs to have product delivered on a very specific timeline—that is what we are working toward with our supply chain buildouts. I think that the supply chain is going to take on a bigger and bigger piece of retail, and if you are a leader of AP, you better figure out that part of the business. Whether you own it or don’t own it, you need to understand it because it is that blending of the online experience with the direct fulfillment expectations of customers that is the future.
Again, I’m not trying to say that stores won’t be important. Shoppers will still want to go out and browse the aisles, but that’s not going to be the primary way that people get product in the next five years. We saw it during the pandemic—you didn’t have to go into stores to get what you wanted. People who were traditionally a bit timid about shopping online became comfortable over the last couple of years in the online shopping process.
If we hadn’t started a $5-plus‑billion supply chain investment five years ago, we would be behind the eight ball, like a lot of companies, but we were actually really well prepared. I think that is the future of where retail and the AP leadership teams need to function.
TERRY SULLIVAN: How are you attracting talent to your AP team today? Why do people want to come work for Home Depot?
SCOTT: First and foremost, it’s really hard to get people to work these days. You’re seeing this shift in the world. I don’t want to say people have given up on careers, but there’s a lot less availability of talent out there.
We are a $150 billion company. There are other big companies out there, but I think what makes this place special is that the values we have as an organization are real. Every company you go into has a culture of its own values, but I’ve never seen it more embedded within the DNA of an organization than here. I think that’s what gets people here, and when we say, “take care of the customer,” “entrepreneurial spirit,” “customer service,” or “do the right thing,” we mean it. There’s no ambiguity around that. I think that honesty and transparency of the organization’s values, culture, and the way we take care of people—that’s how we win. That’s how we bring talent into this organization.
It takes a leap of faith because we have to get you in the door before you can see it in action. But you know it’s real when you’re in the elevator with the CEO or any senior leader, and they are talking to you like a friend you’ve known for years. These are very real people here, and the leadership team is down to earth and humble.
TERRY: Safety is a growing concern for both associates and customers. What’s changed?
SCOTT: Honestly, I think the world has gone a bit mad in the last several years. I don’t know if it’s social media or if it’s the generation. I may sound a little bit old here, but I don’t know when or how people became so emboldened to the levels that they are today. There used to be a bit of shame around coming into a store and stealing. There used to be an avoidance of confrontations over ridiculous, inconsequential things. But you see it every day now. People have come into our stores and almost come to blows over a refund or a price or the fact that they weren’t serviced quickly or the way they were looked at by another customer.
The world has changed its approach, and I don’t have my finger on exactly what it is. But I can see the outcomes of it have made people aggressive, bold, and confrontational. Unfortunately, that puts our associates in harm’s way. Sometimes it puts our customers in harm’s way. We’re having to mitigate a lot of that day in and day out.
TERRY: Home Depot is ahead of the curve on activation at the point of sale. Talk about that.
SCOTT: The concept of benefit denial has been around for a long time. We are in stores now with products that are chipped. The intelligence is built into the product—unless it has an interaction with a transaction at the register, it’s a brick; it doesn’t work. We do believe that this has a long-term application. It will take some time for adoption, for our vendors to really see the full value of something like this. We believe that if we can’t control the outside environment and what happens to us, we can control the inside environment and what we allow to happen within our four walls.
Activation, serialization—things that allow us to have better visibility of our product—will help us with inventory management through the supply chain and within the store, making sure that product is available. On the theft side, it’ll give us visibility to when we are missing product, when product is removed from our stores, and how we can help recover our product. When you go into a large ORC warehouse operation that’s been disrupted, sometimes we sit there with our retail partners and go, “Which one’s yours, and which one’s mine?” This process can have a preventive benefit and also provide visibility.
TERRY: Do you find customers understand what benefit denial is at the point of sale?
SCOTT: We’re building the process so that it doesn’t matter. There’s an extra step today that the customer must do because you’ve got a traditional UPC. Then we put an individual serialized number on it that forces them to do an incremental scan. But in the future, the customer will not have to do anything different. So, if the customer is in self-checkout, all they’re doing is scanning the barcode, which activates the process behind it. Once payment is received and validated, then the product becomes live. The customer sees that the product is active and ready to use. If it’s an assisted transaction with our associate, even better because the customer doesn’t have to do anything.
TERRY: Let’s talk about your team. What does your AP organization look like?
SCOTT: The way we’re structured is pretty traditional with several verticals within the organization. I’ll start with the field, which is led by John Chiasson, a twenty-plus-year veteran of Home Depot. He’s been in many different parts of the business. John helps keep our field team focused on core AP responsibilities, training, development, growth—all the different functions for the thousands of associates out in the field.
Next, we have Sarah Hix and her team. Her group is a bit of the hub for the rest of the organization. She has operations, learning and development, analytics—all the different things that touch every part of the organization within her responsibility.
Mike Combs runs our national investigations team, whether that’s internal investigations or supporting the field on more complex external investigations. ORC and all the different aspects of that fall into his world. Mike also runs our overnight center of excellence that helps us manage law enforcement liaisons and prepares packages for prosecution. They also own alarm management and the video alarm verification processes. More recently they have taken on a new responsibility for what we call “remote accuracy observations”—looking at video to make sure that point-of-sale accuracy observations or behaviors are done properly. This one is interesting since point of sale is the last interaction people have with us before they leave the store, so getting that part of it right is something that Mike and his team have taken on.
The last piece is our supply chain organization, probably the largest-growing piece of our organization. As we’re building out those capabilities that I talked about earlier—same day, next day delivery, responsiveness to our consumers and our pro customers—there’s a lot of movement in that space. We are moving fast in the supply chain to keep up with that growth velocity.
JIM: Let’s talk about the supply chain function. What are your major supply chain initiatives?
SCOTT: Our growth in supply chain has been a multi-year, multi-billion-dollar investment. Our publicly stated goal is to be able to service 90-plus percent of our customers with same-day or next-day capabilities. As a result, you have a massively growing, fast-moving operation.
The first initiative had to be investment in talent. Home Depot has always been an organization that prides itself on growth and promotion from within so that is where we started. But based on the speed we are growing, it required us to balance that with external talent additions.
Next up is accuracy, making sure that everything that we touch is what and where we expect it to be—whether that is direct to consumer or what we send to our stores. We are pretty good at this point, but the challenge is to maintain accuracy levels in a period of expansion and in an environment where we are adding thirty to forty buildings per year.
Lastly, and probably most importantly, is safety execution in supply chain. There is just nothing more important than making sure that every one of our associates, vendors, and third-party providers go home in the same condition they came to work. We have massive multi-million-square-foot facilities, some of which quite literally have trains running through the building. Plus, there is significant material handling and automated equipment running 24/7. This certainly creates a high-risk environment, and it is our jobs to make it safe.
JIM: My experience has been that people in supply chain and logistics will often say they have shrink under control in their facilities, that it’s the stores causing a shrink problem. How would you react to that here at Home Depot?
SCOTT: I would agree in concept. Our shrink numbers are really good in our facilities and that makes sense because we are self‑controlled environments. We don’t have the complexity of customers freely waking in and out of our facilities at scale, but we would be naive to think that we don’t contribute to shrink.
Lack of accuracy will always contribute to shrink whether its inbound from the vendors, human errors at loading, or the back and forth that happens with customer orders. Our conversion to automated facilities certainly has created some transitional pressure as we learn how to do that better.
Like many others, we do blind receiving at stores, so that’s a minor disadvantage. The stores must accept whatever the paperwork says is shipped to the building. The only way to fix that is to completely detail what is received. You could do it through technology, but we’re not there yet.
TERRY: Is there any exception like price point to the good faith receiving at store level?
SCOTT: We do have some random auditing for our non-certified vendors. But we do a lot of vendor direct-to-store deliveries that are generally received blind. Of course, we have agreements and allowances in place with our certified vendor community, so we get generally whole on the gross margin side. They have showed us over time that their accuracy is great; therefore, we think the current process makes sense for us.
JIM: What are the broader supply chain issues today from a positive and negative standpoint versus where supply chain was a few years ago?
SCOTT: I would start with talent. There used to be resistance to store-to-DC cross-pollination. But today, we see what some call “the Amazon effect” coming into play and that dynamic is changing. I would argue that supply chain is becoming more attractive. While warehouses are still warehouses, they are starting to become high‑tech, shiny objects.
During COVID, we had a great need to pull store associates into our facilities to keep product flowing. Many decided to stay. They have seen that the direct‑to‑customer world is blending roles. Its creating a huge demand, and we are seeing some of these barriers start to break down. We aren’t there yet, but its easing.
Next is data and access to data. We have a lot of work to do to move from a “pull environment” to a nimble, outlier-based “push environment.” Data here, particularly on the supply chain side, has been decentralized. I remember when I first got here asking what I thought was a simple question, I couldn’t get a quick answer because the data wasn’t stitched properly. We’ve had to find the data, build the platforms, and decide how to return the proper answer. We’ve made some investments and are making progress, but data is still an opportunity in general.
The evolution of supply chain AP is one that basically says, “I don’t really care if you call it a store, a distribution center, or a warehouse. It’s a cog within the holistic supply chain.” We now have stronger expertise in the broader supply chain, it’s no longer just logistics. And the people who are sitting in AP roles in supply chain are true subject-matter experts of logistics, whether it’s in distribution or transportation.
TERRY: What does your supply chain AP team look like?
SCOTT: As I said, we are growing and expanding rapidly. We have an ongoing analysis of what we need in the next couple of years and beyond. Today, and certainly in the near term, we will have a traditional corporate team with a field structure. Corporately, the team oversees infrastructure, technology and innovation, and a group who handles transportation, security, and compliance. That’s a relatively new role and something that we have learned quickly that we were underinvested in. We also have a reverse logistics organization that handles the whole environment from moving product back from stores to working with our vendors to obtain credits to managing our liquidation process
Our field leaders are multi-channel senior managers who are geographically situated and responsible for $70-plus billion worth of goods flowing and oversight for about 220 facilities. If you layer in the yards, that’s another 100 or so buildings. So that’s 320-plus assets. They are responsible for total retail loss—be it people, places, things, and data under our care and custody. They manage a team of managers, supervisors, and auditors, which is about 600-plus associates.
TERRY: Home Depot was on the cutting edge of building fulfillment centers many years ago. Do you have teams in every fulfillment center?
SCOTT: Yes and no. We certainly have our traditional large direct fulfillment centers where there’s pick, pack, and ship functionality. These are our big boxes. But we also are building out our feeder market distribution and operation centers that handle all the appliances and large bulky product direct-to-home delivery. They are smaller, nimbler facilities that do not have day-to-day AP presence. Those are overseen by supervisors that report to the senior manager group.
JIM: Moving on to the team, let’s start with Sarah. What is your title and how long have you been with Home Depot?
SARAH HIX: I am senior director of asset protection, and I’ll have my twenty‑year anniversary with Home Depot in August.
JIM: And why is that?
SARAH: I get asked that question a lot. It is an amazing company to work for. I went to school locally, graduated on a Saturday, and started on a Sunday in the stores, never once dreaming that I was going to work at Home Depot for a living, but it very quickly changed from a job to a career. The way they develop associates, the opportunity for growth and advancement in the organization, the variety of things that you can do—there’s never the same day twice. That is a big piece of it, but it’s more the culture, the values of the company, the way we take care of our people. I have lots of family members in the organization that have been here double-digit years as well. It’s just a great place to be.
JIM: How did you end up going from store operations to asset protection?
SARAH: Almost eight years ago, I got a phone call that said, “Hey, you’ve been working in operations for the last decade building people‑process technology. We’d like you to come upstairs and help us unwind the net through the systems and the people and the process to see where the opportunity for shrink and loss is.” I didn’t have a background in AP or any of this, but they said, “Come and take a look at it through a different set of eyes and tell us where we have opportunity.” So about eight years ago, I came upstairs, and I’ve been here since then.
JIM: What are the key areas of your responsibility?
SARAH: I support five different pieces of the organization, starting with the programs and communications team. What’s our procedure look like? How do we train, our licensing, our curriculum, not only for our AP associates but also our field associates to make sure that they understand what loss prevention is, what shrink is, what we’re up against? That team also helps support all our systems and the databases that we use.
I have a team that supports store operations—anything that they’re doing, implementing new technology or a new process or department changes, roles, and routines. We make sure we have a seat at the table to talk about what risks exist, not to say we can’t do something but to ask how we mitigate them. We work together to say, “If you do something, you’re opening yourselves up for exposure, and here’s where we need to look.”
It also helps us on the software and technology side as we’re rolling things out that might have defects in the first round. How do we make sure we’re looking for defects to make sure everything goes smoothly? We’re retail accounting, so there are a lot of opportunities. If things don’t go the right way, then there are areas of exposure. That team also supports the physical inventory process in the store side. A different team owns the third-party relationship of the actual counting, but we own all the prep leading up to the day of, and then the post inventory reconciliation as well.
We have a team that does all things physical security, technology, and innovation for the stores—our guard resources, burglar alarms, the camera systems, the cameras themselves. All of that comes up through my organization. A lot of the innovation tests that we’re running right now for the perimeter security and different things like that are on that team as well.
The fourth team is our merchandising protection team, kind of your traditional LP. How do we protect the product in the stores but also do some new and innovative things with activation and different pieces like that? So we’re constantly working with our merchant organization to make sure that we can sell what they want to sell, where they want to sell it, and that it’s on the shelves.
And then the fifth is our analytics team. We work closely with our finance partners and our bigger organizational analytics team to go through all the data.
JIM: If I asked most people what the three most critical issues for asset protection are in terms of exposures, they would likely say ORC, shrink, and safety for associates. Because you’re nodding your head, I suspect you believe that as well. What specific ways are your teams battling those issues?
SARAH: ORC falls more under Mike’s, John’s, and Scott’s camps, but certainly we support them as we do a lot of the lobbying and conversations around legislation that needs to change.
From a shrink perspective, we get as much exposure as possible with the executive leadership team to talk about what we’re doing, how we’re going to work on it. We pull the other teams together. Scott does a phenomenal job with his peers and each of the other organizations to where they have a vested interest in what we’re doing. We always say it’s a team sport. I can do my part, but if everybody else isn’t doing their part, then it’s going to be harder to tackle. This organization does a really nice job of bringing everybody to the table.
And then from the safety standpoint, that’s our message every day. Product is replaceable. Shrink is absorbable. We can grow, so we can do whatever we need to do. But at the end of the day, we’re ensuring that we’re keeping our associates and our customers safe. I think everybody gets that. They understand it. And that’s what we’re charged with above everything else.
JIM: How has the pandemic and remote working changed what you and your people do?
SARAH: We didn’t skip a beat. We continued with our weekly touch‑bases. With the drive-bys, instead of it being in the office door, it was the quick, “Hey, can I call you on Teams?” We still had all our team meetings and recognition and development and all those pieces. That’s not to say that we weren’t talking about coming back into the office. It’s awesome to be able to shake somebody’s hand. It’s awesome to be able to swing by and draw on somebody’s whiteboard to say, “Here’s what I’m trying to convey.”
But we didn’t skip a beat, and a lot of that was through necessity at the beginning. We created an app to count customers in and out of the stores. And we set the parameters on where to come in and where to go out and what stores looked like and how we were going to protect them. We went through times of civil unrest at the beginning, and all of that centered around our team, so we didn’t have a choice. But we adapted very quickly.
JIM: Let’s shift to investigations. That’s your world, Mike. We’ve introduced you to our readers on several occasions, particularly when you were on the supply chain side. How long have you been in this role, and what functions do you currently have in investigations?
MIKE COMBS: I’ve been in this role for four years and spent a little over ten in our supply chain. We have a central investigations team of thirty-five or so for internals. Another function is the ORC investigations team that sits out in the field. And then the third function is a 24/7 law enforcement support, investigative-support function. We call it the National Investigation Center.
JIM: You, along with others, had a big part in developing that, correct?
MIKE: Absolutely. And when Scott got here, we expanded it to do a little bit more, support some operational things like alarm calls overnight and things like that.
SCOTT: And that’s honestly just something from the pandemic. It was a necessity because we didn’t want managers to have to go into the buildings overnight. Most alarms overnight are false alarms. Mike and his team have done a phenomenal job of intercepting false alarms and validating whether they need dispatch or to send somebody out there before. We’ve all been in retail a long time. There’s nothing worse than getting that alarm call in the middle of the night and going in, and then nothing happens.
JIM: Would you say that the world of ORC occupies most of your team’s time?
MIKE: I would say probably 70 percent, and the pandemic made it worse. You think that people would go to their houses and be safe, but no, they came out of the woodwork. Also, there’s the fact that everybody’s willing to shop online. The world of e-commerce works great, so the criminals have all started unloading their product online, which has allowed them to do it quickly. The thing that’s blown me away is they will literally steal anything and get rid of anything. It’s not just the stuff that we’re used to seeing out there online. It’s anything from two-by-fours to power tools. They’ll steal it and sell it.
JIM: Your team obviously conducts the investigation when something happens, but how much are you involved in the upfront ORC prevention, whether through technology that you put in place or relationships you have with law enforcement and prosecutors?
MIKE: We’re connected across the board, and then we’re connected with Sarah’s team to work with the store operations team to make sure they’re learning from our investigations. Some of the things we’ve locked up, some of the processes in the stores are all based on the information that we share. We do what’s called an after-action review on every big ORC case. What have we learned? What went wrong? How do we prevent this in the future? That has been helpful for us across the board. That was something that Scott introduced when he got here.
From a prosecution and criminal justice side, we’re connected tightly across North America. It helps that at least half our team was recruited from that environment. Half of them are AP associates moving up the ranks. The other half are ex-law enforcement, ex-FBI, or ex-prosecutors. We have a great connection with that industry, and we spend a lot of our time maintaining and marketing those relationships.
A big part of mine and Scott’s time is awareness and education to the legislative and criminal justice world on what the problem is, why it’s a big deal, and how it’s changed in the last five years. I still think there’s a big perception from police and prosecutors that this is a sixteen‑year-old kid coming in to steal a candy bar. At Home Depot, we don’t see those types of cases. Our issue is professional, sometimes multi-national organizations who exist to steal to support even larger crimes. All of this is fueled by money, power, drugs, guns, and online proliferation.
JIM: How do you view Home Depot’s efforts with tackling the ORC issue, and how do you view the overall efforts by the retail industry?
MIKE: I’m very happy to be working here because they’ve given us the tools and manpower that we need. And again, we’ve expanded. If anything, Scott is asking me, “Where do you want to go next, Mike?” I’m holding back because I want to measure and see how we’re doing. We’ve just expanded into some second-tier markets to see how much success we can have there. I’m very happy with the success there and the support we get from the company.
I think we’ve been a little slow in retail overall, as well as society, to adapt to how fast it’s changed in the last five years. When we talk about ORC, the fact is that the accountability behind theft in retail has just gone away, and people have started making a living doing it. It’s not just making a hundred thousand dollars. Our cases are in the millions of dollars. People are making a lot of money off stealing and reselling.
SCOTT: I would issue a little bit of a friendly challenge to the rest of the industry. Don’t sit back and let it happen to you. Go on the offensive and be proactive and loud with the power of your organization. But some companies are not as engaged on the front end with law enforcement, with governors, and with legislators. Our government relations team comes to me at times and says they wish that some of the other retailers could be more aggressive in backing the things we’re trying to get done. Home Depot can be the squeaky wheel, but if it’s just Home Depot, nothing’s going to change. I don’t mean to imply that it’s just us engaged, but I would argue that only three to five of the Fortune 100 retailers are truly active in this space.
TERRY: Years ago, refund fraud was a major issue, especially in the home improvement space. What have you done to mitigate that? Is that still a major focus?
MIKE: It’s part of the story, but it’s not the same problem we had five or six years ago. Sarah is the expert on that. As we move toward non-transferability of store credits, that really helped us in that game with gift cards and store credits. For the most part, what we see is people stealing and reselling the product. You see a lot of credit card fraud. That’s not really what my team focuses on in ORC. We typically just work with the banks on those.
SCOTT: From a refund perspective, we’ve done some things to make it less of an issue. Today, it’s mostly around arbitrage that we tend to see. Scenarios where someone overbuys product they don’t need, gets discounts, then tries to return product back and get a refund at full price. The rationalize that “I didn’t steal it; I just paid less for it.” That’s one of the things we’re really going after because it’s big margin dollars we’re giving away. We see that at a larger scale today than the typical steal a product and return it without a receipt.
JIM: The media has given smash and grabs a lot of attention over the last several months. I, for one, think it’s a real positive that we’re getting media exposure, so people understand the nature of theft in the retail environment.
MIKE: I agree with you a hundred percent. But the fact is that ORC is happening every day, and that’s just one method of ORC. The ones where they’re running out fire doors with product, or they’re just walking out with a shopping cart full of product, maybe they have a gun or mace, and then they resell within a couple of hours—those are the cases we’re going after. That’s what’s impacting Home Depot.
JIM: Are there things that Home Depot takes the leadership on and can help others in retail give that exposure for the media to tell the whole story of ORC?
MIKE: I think just our willingness to share our story, and now we’re starting to share videos more. We’re also part of the RILA IBM info-sharing project on ORC. We’re one of the stakeholders in that session over the last year, trying to get us all to share information, because we found pretty quickly in that project that the people who are stealing here are stealing at the other retailers too.
SCOTT: I give our executive leadership team a lot of credit for being early on the messaging on this. Craig Menear, our prior CEO, is now in the chairman role. He came out at major investment conferences with our investors and said, “We have a problem with this, and we’re going to address it.” I think that surprised a lot of people. But then you saw others, Best Buy’s CEO Corie Barry came behind him as well as others to start to talk about it. It was not the dark secret anymore. It is something people are talking about more openly but still not as many as should be at this point.
JIM: Again, the media has given some attention to the lack of prosecution for the retail thieves, particularly with $1,000 or $1,500 felony thresholds. Is that a significant issue when it comes to ORC or shoplifting in general?
MIKE: I think it’s an issue on both sides because the ORC criminals are stealing multiple times per day, per week. Every time they get caught, they’re being let out. So, it’s the aggregation of all those events. It’s almost like the different cities and jurisdictions don’t have visibility to the fact that this person just got caught with felony theft three days earlier in another part of the state. It’s part prosecution and part just letting them go instead of stopping for a second and asking, “How big is this criminal I have in front of me?”
JIM: Have the changes in prosecution made this more difficult?
SCOTT: I think it has, Jim. I don’t think it’s the biggest nugget, but it has certainly emboldened a portion of the bad actors to be more aggressive. The online marketplaces are really a big enabler though, they’ve allowed people to make a killing and be invisible.
TERRY: Are there any cities or counties that you’re aware of that have backed felony thresholds down?
MIKE: We haven’t spent a ton of energy at Home Depot worrying about that specific issue, felony thresholds detract from the argument these days. What we’ve been doing is spending time educating attorneys general, building task forces, and adding resources so that we can investigate the big cases. We’ve seen no pushback on that.
SCOTT: I believe that the felony threshold conversation is a bit of a poison pill with most of the attorneys general. Our angle has been about aggregation. That’s the piece where we can be multijurisdictional and have reach. That’s why we’ve been focused on the state-level AGs and local DAs. It’s a whole different conversation at the federal level. We’ve had some nice success in Washington state, New Mexico, Utah, California, Texas, Illinois, New York, and to a certain degree, Florida, in getting them to get behind the task forces and supporting legislation that goes through the aggregation piece of it. If you ever start a conversation about felony thresholds, most of them kind of tune out, it’s politics.
MIKE: The other lesson I’ve learned, sadly, in the last three years is just because you’ve improved the law in a certain state, let’s say around ORC and aggregation, the police community and then the prosecution community may not even be educated yet. Even though it got passed through the legislature, we literally have had to start attending police chiefs and district attorneys conferences just to remind them, “Hey, this is the law. This is how you work a case. Here’s an example of a case.” And then we start seeing traction.
TERRY: From a technology standpoint, Mike, are you currently doing or testing anything that you see as making an impact or preventing losses from ORC?
MIKE: I think sharing case information among retailers is a big one with the RILA project. We aren’t using facial recognition, but that may be a future benefit for ORC. One day when that’s all regulated in a way that everybody feels comfortable around the country, I think that’ll be a big benefit. We also have a superb case management and intelligence system. We’re just starting to leverage all the attributes there to tie in the intelligence in our own system. We still make over a hundred thousand shoplift apprehensions per year. The question is how do I use all that information to make sure that I know who the ORC criminals are and that I’m working the right cases first?
SCOTT: We’ve tested a lot of the different technologies out there. Some work, some don’t, and some are not ready for prime time. And then some just have enough concerns around them that you don’t want to go there right now. To Mike’s point with facial recognition, a lot of law enforcement folks are still using it, and they can continue to use it. I don’t know that it’s ready for us yet. Hopefully, we can get past some of the legal, privacy, and accuracy barriers down the road to be able to leverage.
JIM: Let’s turn to John now. How long have you been with Home Depot, and what roles have you held?
JOHN CHIASSON: I have been with Home Depot for twenty-one years. I am currently the senior director of field asset protection, a role I have held for the past three years. I began my journey at Home Depot as a divisional AP director and then transitioned to store operations where I held various roles, including senior director of operations for the Southern division, regional director of operations, district manager, and store manager. My experience in AP helped me as an operator as I was able to utilize the “influence without authority” leadership skills we learn in AP while I was a store manager and district manager. Spending over sixteen years in operations helped me become a better AP leader. Having spent that time in the stores gave me a new perspective of what it takes to manage a sound AP program.
JIM: What roles and responsibilities come with the senior director of field asset protection title?
JOHN: My team is responsible for establishing our core strategy that impacts how our field store asset protection specialists and our multiunit AP managers spend their time impacting theft, fraud, operational shrink, and safety. This includes developing targeted strategies to impact high-theft categories while balancing time ensuring basic operational processes are followed to prevent shrink. We spend a considerable amount of time working on AP development to provide our teams with the knowledge and leadership skills needed to lead successful stores and districts. Our three-pronged approach of having the right people in the right place, hardening the target, and mitigating total retail loss allows us to effectively deliver results to the bottom line.
JIM: What was your experience in the industry prior to Home Depot?
JOHN: I spent over ten years with Walmart stores and held various roles, including store loss prevention associate, district LP manager, and regional LP manager. During that time, Walmart was continuing rapid expansion on the West Coast and beginning the expansion of the supercenter concept. I was fortunate to be able to learn the ins and outs of asset protection from some great AP leaders during my time with Walmart.
JIM: What are the top issues your field organization is facing today?
JOHN: One of the biggest issues we face is developing strategies to maintain a frictionless shopping environment that keeps product on the shelf for paying customers while reducing the opportunity for theft. By implementing the right strategies, our AP team can focus on the professional shoplifter versus the opportunists while the paying customer can easily complete their transaction.
We also need to continue to strengthen our relationships with local law enforcement. Police departments are operating at full capacity, and response times have increased significantly over the past several years. We want our law enforcement partners to know us by name and know that when a call comes in from our AP team, we have an iron-clad case. We do not want them to have to complete our investigation. We did our due diligence and put together a solid case, and they can feel confident in the charges.
Lastly, we need to be mindful of the safety of our AP and store associates. Criminals have become more brazen in recent years, and they are quick to make a threat. Teaching our AP associates how to quickly identify a situation and deescalate the risk will protect our AP team, our associates, and customers.
TERRY: What is your organization doing to keep employees and customers safe?
JOHN: As I said, the safety of our associates and customers is always top of mind at Home Depot. A safe shopping environment starts in the parking lot, and we have made several enhancements to provide a customer-friendly environment. We also have created some great associate awareness campaigns that educate our associates on what to do, and not do, in situations that are escalating. Our store AP team has regular contact with store associates to discuss how to deal with suspected shoplifting, robbery attempts, and general safety precautions. The more associates we can educate, the less the chances of someone being injured.
TERRY: How have your field team adapted to ORC?
JOHN: While ORC has been around for decades, the use of technology has made them more efficient at what they do. We also have become more efficient as an AP organization to address the trend. By reviewing data provided by store associates, known thefts, and BOLOs, our team can be more efficient while they are in a store. We have the intelligence data to know if a store is more active in the morning, afternoon, or evening, and we can adapt schedules to impact those times. We have also improved our method of communication with our ORC team to be able to provide two-way, real-time information about known subjects. This has enabled us to gain valuable intel and resolve cases in a more efficient manner.
In addition, our AP leadership and government relations team has been very effective in educating local, state, and federal officials on the impact of ORC. Our local AP teams get the chance to meet with our government relations team and public officials to walk stores and discuss the efforts we are putting in place to combat ORC. It is a great time to ask for their support of legislation that positively impacts ORC.
TERRY: How do you see asset protection changing in the future?
JOHN: AP will continue to evolve with the ever-changing technology that hits the market to make our jobs easier. We have the resources to direct us to the merchandising categories that are being impacted by theft. We know the days, times, and in many cases the subject we are looking for. Utilizing that information to build solid theft cases on repeat offenders will change how our AP teams manage their time.
JIM: This has been a real privilege, Scott, to visit with you and your team. Thank you for your time and best of luck to the entire Home Depot organization.
