Loss Prevention Strategies Take on New Meaning When Your Inventory Is Alive

Tom Floystrop is an inherently practical loss prevention professional with an interesting approach to loss prevention strategies and the challenges of the LP industry. He is also someone who got his start in the business in a most unconventional way.

On a quiet afternoon in East Brunswick, New Jersey, Floystrop was on a coffee break from his then employer, a prominent regional supermarket, when an altercation occurred. “Two men came barreling out of the front entrance, and one of them tackled the other to the ground,” Floystrop recalls. “The front-end manager turned to me and asked me to help the man who had tackled the other one. ‘Who is he?’ I asked.”

The front-end manager told Floystrop that the aggressor was actually a store detective. So, Floystrop sprang into action, subduing the man who was trying to escape, and with the help of the store detective, brought the shoplifter into custody. “Once we had him in custody, the store detective looked at me and asked, ‘Who are you?’ I’m Tom from frozen foods,” responded Floystrop.

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The process of bringing a shoplifter into custody as well as the investigation that ensued was fascinating to “Tom from frozen foods,” and he pursued a career in security work. A few years later he was presented with an offer to join the loss prevention team as a store detective

From there Floystrop went on to a series of store security and store detective positions, starting at Kmart and rising to regional loss prevention manager at Strauss Discount Auto. Floystrop later became an area loss prevention manager at auto parts giant Pep Boys and subsequently did work for Bed Bath & Beyond as well as HS Brands’ The Mershimer Group.

To say he’s no stranger to LP is an understatement. His varied career has given him the insight he needs to tackle his most challenging loss prevention job to date; one in which he would be thrust into the number one chair for the first time.

Pet Supermarket

Most retail establishments don’t have to deal with the peculiar challenges and loss prevention strategies that are inherent in a store chain that stocks merchandise that is capable of leaving the store under its own power. It’s this environment that Floystrop is now tackling. He currently serves as director of loss prevention at Pet Supermarket, a pet specialty retailer with 140 stores in a half dozen states, with a handful of single store markets sprinkled here and there.

Founded in 1974 as Pet Circus by owner-operator and former deputy sheriff Chuck West, Pet Supermarket is a privately owned retail chain that Floystrop describes as “your neighborhood supermarket for pets.” Pet Supermarket adopted its current name in 1986 after West’s focus gravitated towards the specialty retailer concept. “The vision of the chain was to create a pet-oriented version of an Office Depot or Staples,” says Floystrop, and that vision is more or less complete today.

The chain bills itself as selling more than 8,000 different pet-care products, including food, medicine, and toys, and also offers grooming and other pet-care services. Additionally, Pet Supermarket sells live animals, such as tropical fish, rabbits, hamsters, ferrets, birds, and guinea pigs, and works with local animal rescue groups to find homes for dogs and cats in need. “We pride ourselves on our comprehensive pet knowledge and exceptional customer service,” says Floystrop, who has been with the company for two years.

While some conventional loss prevention strategies most definitely apply to Pet Supermarket, the fact that the store carries live animals, some of which are extremely expensive, such as a $1,500 African Gray parrot for example, poses an interesting challenge for the company’s LP department.

The LP operation is a lean, yet resilient one comprised of Floystrop, two regional loss prevention managers, and a loss prevention analyst at Pet Supermarket’s corporate headquarters in Sunrise, Florida. The department contends with all of the same issues that any retailer would face—refund fraud, shoplifting, organized retail crime, normal everyday shrink—yet the fact that Pet Supermarket is in the business of selling what can only be termed as “livestock” presents some peculiar challenges. States Floystrop, tongue in cheek, “You can’t Spider Wrap a ferret.”

Store Audits—The Core Strategy

When Floystrop joined Pet Supermarket in 2011, he found the LP department and shrink to be reasonably under control, yet there were still many battles to be fought. “The program was in need of new leadership when I arrived,” he says, “and needed more presence in the field. In fact, the LP department operated almost exclusively out of headquarters, with two loss prevention associates based in corporate.”

One of Floystrop’s first moves was to deploy his personnel to the field, so that they could better rein in and assess the situations at the store level, while utilizing another LP professional in Pet Supermarket’s 225,000-square-foot distribution center in Florida. And that’s when Floystrop began the practice of store audits, one of his best weapons in his never-ending quest to eliminate shrink while at the same time providing an excellent customer experience.

Floystrop most certainly didn’t invent store audits. The principle of quantitatively scoring a retail store on a regular basis is not a new one, yet it is amazingly fine-tuned at Pet Supermarket. Whereas other loss prevention professionals scan exception reports or analyze shrink by dollar amounts and other similar loss prevention strategies, Floystrop does all of those things, but primarily focuses on the proprietary store audits that he created. “We have found a direct correlation between a store’s audit score and its shrink,” states Floystrop.

The audit itself is proprietary to Pet Supermarket and is comprised of a 100-point, 60-question system in which each store is scored on a variety of factors. Audits are done on a quarterly basis, meaning that each of Pet Supermarket’s 140 stores will be audited four times per year. If this gives you the impression that Pet Supermarket’s loss prevention staff is very busy, you’d be correct.

Floystrop’s audit approach is different than most traditional store audits because the point system includes items that fall outside the realm of your classic loss prevention criteria. “The sixty questions that are asked on the store audit include things like store condition [from a cleanliness standpoint], financial documentation, and employee dress code,” says Floystrop. Employee dress code is hardly a common factor on what is supposed to be a loss prevention store audit, but Floystrop states that it’s necessary to cover the visual aspects of the store, since a dirty store and sloppily dressed employees do, in fact, affect the bottom line. “Things like that are sales inhibitors. Effective loss prevention strategies include limiting sales losses from ill kept stores and personnel,” he states pragmatically.

Floystrop’s audit deployment methodology is also different from what you might think your average audit would look like. While the term “audit” invokes images of rabidly aggressive tax auditors and a slew of punitive measures for failure, Floystrop sees it differently. “It’s not about seeing how many points you can take away,” he says, speaking of the fact that each deficiency found on the audit results in a subtraction of points from the total score. “It’s about turning a ‘gotcha’ moment into an ‘aha’ moment.”

While each audit could be seen as a chance for an individual store to shine, there is also the flip side of wearing down store managers with consistently low scores. The sheer frequency of these audits gives one the initial impression that they would be burdensome upon the store managers, and create a sense of enmity between the manager and the regional LP managers who perform the audits, but Floystrop states this isn’t the case. “The store managers view the LP team as their partners.”

Another area where the store audit has produced excellent results is in the review of damage and expired product. The store audit includes a substantial review of product expiration dates. This has enabled the LP team to partner with store operations to enhance the process of rotating products with expiration dates.

These loss prevention strategies have resulted in a 40 percent reduction in expenses related to damaged and expired product as compared to the prior year.

The extensive audits are also used as a mechanism to train employees—a method to transform what would normally be viewed as an infraction into a teachable moment. “The most important thing is to train our associates one on one,” says Floystrop of the auditing process.

If you thought that a loss prevention professional observing and logging things such as employee dress codes and store cleanliness is a tad unconventional, Floystrop further smashes the barriers of traditional loss prevention strategies to eradicate shrink by introducing other bottom-line criteria into his auditing process. While his audits contain conventional items like scoring a store on functioning lights in the parking lot, they also contain some interesting LP twists, like having the store auditor sift through the garbage bins behind the store in search of merchandise or sales receipts, both of which could indicate employee theft or fraud.

They even question employees on recent store accidents. “We ask them if they know and can describe the last accident that happened in the store, and the question is worth six points on the audit,” he says. Employee knowledge of the previous accidents that occurred is a key demonstration of how Floystrop’s loss prevention strategies function not only for loss prevention, but for risk management as well. The consequences of a store accident and the failure of store employees to take note and plan to avoid similar accidents in the future represent a direct threat to the bottom line.

“We’re focusing on loss prevention as a whole rather than playing cops and robbers,” says Floystrop, who recently coauthored the safety manual at Pet Supermarket. “This safety manual is read by all new hires and reviewed periodically by all store employees. We have training that focuses on ladder use and material movement, as these are huge exposures for injuries.”

Analyzing the Date and Acting on It

Loss prevention and safety audits at Pet Supermarket are done with such regularity and frequency that the natural purpose of these loss prevention strategies are to encapsulate the data in a database and analyze it, which is exactly what is done. The scores and questions are all individually weighted such that they can immediately discern trends that directly affect the bottom line. After the audit results are entered into the database, a top-ten list is generated each quarter, and it’s this list that Floystrop uses to focus on issues that need to be addressed.

In essence, using all of the data accumulated, Pet Supermarket is able to arrive at an accurate picture of what the most pressing threats to its profitability are, even if some of those items may not be what are traditionally considered to be part of a loss prevention manager’s purview. “Our data says that on a three-year spread, shrink has gone down while audit scores have gone up,” states Floystrop proudly. “Our team reviews audit results with their operations business partners, which allows us to increase our focus whether on a chain-wide level or by region or district.”

The LP team’s audits are designed to produce a list of actionable items that the operations team and the LP department can use to increase profitability while improving customer satisfaction. Pet Supermarket’s specialty stores operation includes the selling of live pets. Keeping live animals represents not only potential loss prevention issues, it also presents potential public relations situations should animal care not be perfect.

Because of Pet Supermarket’s rigorous demands in the handling and care of live animals, Floystrop’s team helps ensure that the level of care in the stores meets the company’s standards. “Pet Supermarkets’ number one priority has always been, and will always be, the health and welfare of pets,” Floystrop states.

The audits include multiple sections of scoring on criteria such as animal welfare and cage cleanliness as well as documented animal feeding. Pet Supermarket works closely with area veterinarians to ensure that each animal in stock is perfectly healthy, as each animal has a dual role—first as a living thing and then as merchandise. Pet Supermarket’s passion for its animals has resulted in a near perfect record of care. “Our animal-care program is so thorough that we rarely experience issues,” says Floystrop.

Even so, occasionally some of Pet Supermarket’s costly living and breathing inventory can go missing. Recently, a case occurred where an African Gray parrot was stolen from a southwest Florida location. The $1,500 bird was later located with the help of Pet Supermarket’s LP team and authorities, who identified the parrot by a distinctive ankle bracelet on the bird’s foot and CCTV footage of the theft.

“The minute the store manager alerted us of the incident, we were dialed into their remote-view DVR and had pictures of the suspect in the hands of law enforcement before they completed the police report.” Events like these led Floystrop to roll out CCTV systems in the stores that experienced the most thefts.

The retail pet chain experiences shoplifting theft of high-dollar items just like any retail store does, except at Pet Supermarket, the items most frequently stolen aren’t iPods or Crest White Strips. They are medicines and flea collars, pet heat lamps, and electric clippers.
Floystrop also has to contend with traditional loss prevention issues such as employee theft and fraud. Recently an employee was found selling duplicate receipts to organized retail criminals for use in a refund fraud scheme.

Poised for Future Success

After two years in the director’s chair, Floystrop has taken well to the position, as Pet Supermarket continues its aggressive growth with more store rollouts planned. Floystrop is quick to point out that his two regional LP managers and his analyst are responsible for much of the success and also deserve credit for their efforts.

Floystrop and his immediate supervisor, Todd Donaghue, director of strategic planning, worked together to ensure that the LP model included more than just traditional loss control. Recently the LP audit was renamed the “Loss Prevention and Safety Audit” to further drive the ability of LP to be of service to the store operations teams.

The company’s loss prevention strategies have adapted to the core principles of Pet Supermarket and are very much a player in its success. Animal care, safety of the stores and associates, and security of assets such as cash and inventory are all hot topics on the LP and safety audit.

Pet Supermarket represents an interesting and not often seen take on the traditional loss prevention paradigm, albeit one that Floystrop is becoming increasingly comfortable with as time goes on. Let’s face it—it’s not every day that the topic of ferrets arises in an LP meeting.

This article was first published in LP Magazine in 2014 and updated December 14, 2015.

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