“It’s All Cool”—Starting Loss Prevention for a Hot Brand at Oakley Retail Stores

17_copy_copy_copy

A conversation with Maggie Newton is fast moving, informative, fun, and asymmetric. Upon reflection, this is not surprising, because it seems to mirror what her employer, Oakley, Inc., is all about, and why it is so remarkably successful. It’s also why Newton’s loss prevention program for Oakley’s retail stores is so successful.

“Oakley is an innovative place. It is all about risk taking,” Newton explains. “There are a lot of young and highly motivated people here. There are also people who have been here for many years. They have huge product knowledge and true love of the company. We have never had a lot of turnover. People are not here just because of money. We are all fanatics who believe in the company.”

The building of the loss prevention program for Oakley retail stores is the story of Newton’s energetic and common-sense approach to this unique challenge—How to institute LP into a “cool” retail company that is going 150 mph at all times and that has one of the strongest and most distinct company cultures in retail industry.

- Sponsors -

“I Knew How to Observe Behavior.”

Maggie Newton brought a customer perspective to her job at Oakley. “Before I worked at Oakley, I was already a customer of their goggles for skiing and board shorts for surfing, but I did not know anything about the company’s culture or what it did with loss prevention,” she explains. “When I did interview with Oakley, it sounded like the right position for me at the right company. I felt my background was well-rounded enough to take on the position they described; that is, joining a fast-growing, high-energy company and building an LP from the ground up.”

Newton was not coming to Oakley with a lofty pedigree of heading up large retail loss prevention programs. Instead, for almost fifteen years, she had worked on the LP battlefield, learning the craft and the profession on the frontlines.

Newton grew up in and around Orange County, California. Her college education was at the Fashion Institute of Design and Merchandising in Los Angeles, with the initial idea of a career in merchandising. But in 1994, after a brief part-time stint of serving subpoenas, she took a position as store detective with JCPenney. “Our on-the-job training was about observing people’s behavior. I was good at it and usually caught at least one shoplifter every day.”

Newton eventually abandoned thoughts about a career in merchandising and moved through the LP store and district ranks at T.J. Maxx and Loehmann’s. She became a district LP auditor for Stein Mart. Then Oakley spotted her resume posted on Monster.com and called her in for an interview. It was love at first sight for Newton.

“I loved what I was doing and had always wanted to keep adding to my knowledge. I believed that I was ready to lead the LP retail store program for Oakley.”

Building LP at Oakley Retail Stores

Even though Newton is a native of southern California and grew up in its often exaggerated “sand and surf” environment, nothing quite prepared her for Oakley. Newton vividly recalls her first visit to Oakley’s headquarters in Foothill Ranch, California. “It’s an awesome building. It’s a huge concrete and stainless steel grey fortress and there is a torpedo-shaped sculpture in front of the main entrance.”

Over its 35 years, Oakley has become a powerful global brand known for its high-tech products and high-profile sports marketing and distribution. However, it has been in the direct retail business for less than a decade. When Newton joined Oakley in 2006, it already had almost fifty stores, including its Oakley Stores and Oakley Vaults, all of which were located along the coastal areas of the U.S. With the Oakley brand already well established and its products distributed through leading retailers worldwide, Oakley’s own retail locations immediately enjoyed explosive growth. It experienced the growing pains as well.

“Every department was inventing itself as the retail division took off. Our store managers were just focused on serving the customers and the department managers were just focused on building their departments to meet the demands of the stores. It seemed like it was semi-controlled chaos for awhile,” Newton says.

Not surprising, loss prevention was a big issue. As anyone with an eye for brand-name, designer eyewear appreciates, Oakley products are always in demand and at a premium price. “Even with an extensive loss prevention program, any store with merchandise like ours would be susceptible to internal and external loss,” said Newton.

Taking a methodical, deliberate, approach during the first six months after she arrived at Oakley, Newton developed the building blocks of a loss prevention program for the Oakley retail division, which was adding stores at a fast clip.

First, she developed a set of audit logs that applied an audit discipline to a store’s daily operations. The new audits also addressed many of the internal control issues raised in Sarbanes-Oxley requirements.

Second, Newton contributed to the Oakley retail store division’s policy and procedures manual by developing an official loss prevention policy. The policies and procedures highlighted in the manual provided guidance on how store managers deal with local alarm, security officer providers, armored car services, and with the security departments at the malls where most of the Oakley shops are located.

The third building block of Newton’s master plan was training. “As I developed each audit log and section of the policies and procedures covering that log, I worked with our training department to make sure that we had a training module ready to roll out. We could not just announce new reports and policies without also making sure that everyone understood the purposes behind the new requirements and were trained in how to use a specific audit.”

Designing Stores, Service, and LP around the Customer

Even during Newton’s relatively brief tenure at Oakley, she has had to adapt the fledgling LP program to radical changes in Oakley’s store layout and merchandising approaches. “With Oakley’s initial start-up, the stores took a simple approach to serving customers. A staff member greeted a customer and stayed with the customer until the customer completed a purchase or left the store,” she explains.

“At most of the stores there were just two walls of merchandise, with no center aisle racks. Originally, we had locked displays, so the associate unlocked and removed the merchandise from the cases. This system was effective only to a point. At peak periods, it became difficult for associates to provide the amount of attention they wanted to provide.”

When the stores moved to open merchandise displays and gradually added a two-sided middle aisle rack, so that many of the stores now had four racks of display shelves, the challenge of service and LP became even more daunting. “We developed a new customer service procedure and training that uses a zone system. Staff members are assigned to zones and associates are assigned as ‘designated ringers’ to cash registers and switch off with the associates zoned on the sales floor when it gets busy. They are trained to handle multiple customers at the same time, by positioning their bodies to face all the customers in their assigned zones. If they get called over to another zone in the store, they switch zones with an associate or a designated ringer. It’s similar to how a soccer team passes the ball around during a game…teamwork. They especially focus on customers that exhibit ‘alert signals’ for abnormal behavior. Face the customer at all times and interact with the customer as much as possible.”

Newton adds, “We teach our associates the art of observing suspicious behavior. We teach them to interact with customers to the fullest extent possible and to call mall security or the local police department if there is an incident.”

Supporting Oakley’s Retail Growth

Newton says that Oakley’s retail store LP program is still a work in progress. Right now, she is still officially a department of one, her title is still officially “loss prevention auditor,” and she reports directly to the director of operations of the stores organization.

Newton says her greatest personal focus and source of satisfaction is working with the store managers. “Our goal is to train the store managers to be their own LP departments. The tools and procedures are there to help them fulfill that aspect of their responsibility. We want them to be fully empowered to handle LP in their stores, particularly to train their store sales associates on how to observe behaviors and circumvent incidents. In that way, LP becomes one of many tools the managers can use to drive their stores’ growth. Our most successful stores tend to be the ones with managers who take LP personally and spend time training their people.”

The Oakley retail store LP program is streamlined, in a sense, just like its approach to merchandising—simple, direct, sleek. LP is a major topic on the agenda at quarterly meetings of the store managers. The stores division keeps a list of “intensive care” stores…not a list that store managers want to see their store appear on. These are high-loss stores that command Newton’s attention. “We look at the logs from the intensive care stores to spot the trouble areas. We move quickly to help those managers address them. We usually see positive results right away. This is not rocket science.”

Walking the Talk about Empowerment and Innovation

It is clear that empowerment is one of Oakley’s core values. The extensive patents for technology and design that its product developers have produced over the past decades are testimony to the company’s commitment to challenging its people to innovate.

Newton herself has caught the innovative spirit. Later this year, Oakley retail stores expect to start phasing in new LP initiatives. However, Newton will not prognosticate about the future of Oakley’s LP program. The company today has nearly 150 stores, triple the number from when Newton joined. “We’re still in analysis mode and at the same time we’re part of the team effort to grow the company. LP is now better understood and there are definitely positive results. So far, we know that LP can fit into our company culture. After all, we love our products and our customers. It’s all cool.”