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Loss Prevention Takes Flight in Airport Shops Nationwide

The recent success in loss prevention at The Paradies Shops began in 1998 when Darian Griffin joined the company as a loss prevention manager. He quickly gained the attention of the corporate office after rapidly achieving significant shrink results in his location. Shortly thereafter, Paradies executives asked Griffin to begin traveling to other locations to evaluate their LP needs as well, where he was able to achieve similar results.

In 2000, Griffin took the corporate reigns of the loss prevention department as the director. He set aggressive goals to drive shrink below 2 percent in a relatively short period of time. To achieve the goals, Griffin and his staff implemented an aggressive agenda with new programs, new technology, and high expectations.

The ensuing years would be a time of tremendous growth and advances for the company as a whole. The Paradies Shops opened dozens of new stores, began transitioning into a new POS system, and started taking advantage of other advances in technology. From 2000 to 2003, loss prevention’s hard work paid off as shrink numbers fell to record lows.

LP Solutions

Getting Serious about Loss Prevention

So, how did the department do it?

Griffin will be the first to admit that they didn’t reinvent the wheel. It has been a process that took hard work and some convincing. His first request to prove to the company that loss prevention investments pay for themselves met with disappointment.

“I asked for a covert camera system that cost $8000,” says Griffin, “and was denied approval.” But the denial didn’t last long.

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“I approached a camera company I had worked with in the past and asked for a demo system,” says Griffin, “because I was sure I could produce enough cases to get approval for multiple systems. Over one weekend, I recorded four shifts in just one location. Every single person that appeared on the video tape committed a theft.”

Griffin showed the video at a board meeting where he was prepared to propose serious investments in more equipment and in a staff.

“That was an enormous turning point,” he says. “This is a family company that has been in business for over forty years, but this was the first time they had ever watched one of their employees steal from them, and they were hurt.”

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At that point, one of the business partners asked, “How many of those systems do you want?” The Paradies Shops has been serious about loss prevention ever since.

You Can’t Substitute for Experience

The results were not magic. Griffin brought an extensive loss prevention and investigations background to the table having worked for companies like Best Buy, Value City, and Kmart. He had also worked as a special investigator for the city of St. Louis.

As Griffin began rolling out his agenda, he knew he had to put a solid team in place. “I needed a staff that was thoroughly experienced in all levels of loss prevention and operations with a good understanding of all aspects of the retail industry,” he says.  “My regionals are director-level individuals and could probably run the LP departments for many other companies.”

Griffin felt it was important to look for candidates who had started at the store level and worked through the ranks. The department’s four regionals alone represent over sixty years of loss prevention and operations experience.

In addition to experience, he wanted people who shared his philosophies on the industry. “Although we do have loss prevention managers and officers in some locations, I knew we would have to be successful without the luxury of having personnel at every location,” Griffin explains. “I had to have a regional staff capable of effecting locations that are spread out across the country.”

The team he assembled would have the opportunity to build the programs from the ground up. He needed individuals capable of doing the detailed loss prevention tasks like investigating and interviewing and who were also familiar with all facets of operations and capable of everything from writing policy to negotiating contracts.

Assess Opportunities and Control Them

Airport retail is a culture all its own. It has its own set of unique challenges and obstacles pertaining to loss prevention. The sheer logistics alone are a monumental challenge from an LP standpoint. Stores, receiving areas, and cash offices are spread out across terminals and concourses, which make supervision, observation, transporting cash, and communication very difficult.

In addition to these challenges, Griffin adds, “When I came to the company in 1998, the cash register system was on the verge of obsolescence.” This situation created virtually unlimited opportunities for theft.

The department’s first course of action was to begin piling up internal cases in order to “stop the bleeding” as Griffin says. “The first thing we did was simply put the ABCs of loss prevention in place, like accountability controls, reports to look for exceptions on the registers, and the installation of some camera systems,” he recalls. “We started out with monthly ‘round-ups’ in which we would build cases over a period of a few weeks and then pull all the dishonest associates at once and interview them.”

Although the loss prevention staff can’t be everywhere, an LP presence is always felt. It’s that way because LP has become part of the culture.

As the LP department raised awareness, other departments in the company were advancing as well. They began taking advantage of new technologies in many areas, including a new POS system, networked camera systems, and cash safes that utilize touch screens with audit trail locks and cameras.

Additionally, the LP staff developed audits and created new checks and balances for every area of the company. The regional staff began conducting comprehensive audits on each location visit to ensure compliance with the new controls. There is also a location audit that the general manager conducts on a monthly basis and forwards to their regional loss prevention partner.

“One of the reasons for our success is that we are proactive,” says Kevin Murphy, the regional LP manager for the Northeast locations. “We’ve done a good job anticipating our challenges as the company has grown, and we’ve generally been ready with new controls and programs to address those challenges. We don’t want to play catch-up. We strive to stay ahead of the game.”

The department’s philosophy is simple—the company must have thorough systems of control and there must be a high level of accountability. The department has implemented policies that accomplish these two basic goals. First, they provide control over every piece of merchandise as it moves from receiving to the customer at the counter. Secondly, they provide high levels of accountability over every penny that moves to and from the register. And the expectations in place are rigid adherence to these controls.

“Most dishonest associates steal because there is ample opportunity to do so with very little perceived risk,” says Griffin. “Controls ensure we eliminate those opportunities as best we can and our loss prevention staff works hard in the locations to create a perception that causes a potential dishonest associate to realize that there is a marked risk involved.”

Along with the controls, accountability is paramount. “You can have all the policies and procedures in the world, but they mean nothing without accountability,” he says.

Griffin also believes it’s important to know the demographics of each location and study the people to help determine potential theft issues. “I like to deal with things from the human-nature side, which is maybe not typical of past LP departments,” he says. “I try to get into a person’s mind set and figure how they think and why they do what they do.”

Make LP a Serious Part of the Culture

One of the things that Dick Dickson, president of The Paradies Shops, emphasizes is brand. This is a family-owned company with a team atmosphere. Loss prevention is now an effective piece of The Paradies brand, and the current culture of the company is proof. “

I think the primary key to our success was our ability to involve everyone from senior executives to the part-time sales associate,” says Chris Rathgeb, regional LP manager for the Midwest locations, who has been with the department since its onset.

“If we can’t get the part-time sales associate involved in the programs, we can not get our desired results,” Rathgeb explains.

Awareness and participation is at an all time high throughout the company right now. According to Kelly Milhausen, the regional LP manager in the Southeast, that is at least in part due to strong team interaction that encourages creativity. That philosophy is the centerpiece of how the department worked together to design programs that work.

Today, many of the locations have created their own loss prevention bulletin boards and contests. The regional staff takes ownership in their locations and work closely with the general managers to keep them excited about LP initiatives.

“Our general managers are getting the job done in the locations,” says Griffin. “They are asked to wear many hats, and now loss prevention is one of those.” Thanks to the efforts of the LP staff, the general managers have bought into the programs and now, in locations where there is no day-to-day loss prevention staff, they are the ones keeping the loss prevention fires burning. The result is there is an awareness of loss prevention policies and programs as never before.

Utilize Clear Training Objectives and Interesting Programs

In 2003, the loss prevention department tackled two enormous projects. First, they wanted to film their own LP training video and, second, they wanted to go paperless.

“We wanted a LP orientation video specific to our industry and one that our people would connect with,” says Griffin, “so we produced a video that was filmed in our shops, using our associates. Now when an associate views the loss prevention video, he or she sees associates wearing the same uniform as he does, in the same environment, using the same equipment, dealing with the same issues.” The video was a huge hit at the company’s annual meeting in December.

In order to make everyone’s jobs easier, the department put the LP video, loss prevention orientation packet, and all of the LP manuals on a CD-ROM that any associate in any location could pop into a PC and view or print.

“Because our general managers have to wear a lot of hats, we wanted to make sure the loss prevention hat is a comfortable one,” says Griffin. “This was an enormous project that took a lot of time and hard work, but I think the CD-ROM itself raised awareness ten-fold.”

The central piece of almost any loss prevention departmentis its programs. Every company utilizes an array of programs to keep associates involved and aware. The Paradies Shops is no different.

“Our programs are designed to be simple, yet useful,” says Rathgeb. “What good are programs if they don’t draw the kind of interest we need? Many companies put programs in place and demand participation, but we wanted programs that would draw participation and be as interesting as they are informative.”

Griffin concurs. “Part of getting people to take ownership in what we’re doing is giving them the opportunity to have input in the design of the programs. That makes them everyone’s programs.”

Following is a list of some of the LP programs currently in place:

  • Shrink Bonus Program—One enormous incentive for management is the shrink bonus program. All location managers can increase their annual bonus by coming in at or below their shrink target number.
  • Shrink Bank—This program invites associates to be on the lookout for “shrink-causing” issues. When an associate discovers an issue, she fills out a shrink-bank ticket and turns it in. Associates can earn points that are redeemed for prizes purchased from a catalog.
  • Shrink Associate of the Month—One associate from each location is recognized as the shrink associate of the month and awarded 3500 points.
  • Shrink Associate of the Year—One associate is recognized by the company at the end of the year and awarded the shrink associate of the year award as well as 10,000 points.
  • TPS Response Line—The department has a 24-hour toll-free number that can be used by associates to anonymously report theft or other dishonest activity. Associates are rewarded monetarily for their information.
  • The Plane Truth—A monthly newsletter called The Plane Truth is written by one of the regional loss prevention managers on assorted topics and distributed to all locations. It is utilized to promote awareness and a great tool for continuing training. The newsletter is also used to recognize a company-wide shrink associate of the month. Each location maintains a poster with the previous year shrink numbers, current newsletter, and other loss prevention information.

Have a Zero Tolerance for Theft Policy

Griffin believes that you have to be serious about your message. As in many retail sectors, internal theft is the single greatest cause of shrink at The Paradies Shops.

“One message that every associate gets loud and clear is that theft, in any form, will result in the loss of your job,” says Rathgeb.

Although the loss prevention staff can’t be everywhere, an LP presence is always felt. It’s that way because LP has become part of the culture. General managers are paying more attention and fellow associates are keen on loss prevention procedures. In addition, many successful location blitzes by the loss prevention department have assisted in keeping everyone on their toes. A powerful message is now conveyed by the company that theft and carelessness are no longer acceptable.

The department’s philosophy is simple—the company must have thorough systems of control and there must be a high level of accountability.

Make Time for a Little R and R

Many of the company’s customers are en route to or from a little rest and relaxation. But inside The Paradies Shops, R and R stands for their emphasis on rewards and recognition.

“One thing that motivates associates and managers is recognition,” says Griffin. “And we don’t do it to help spark more involvement. We do it because the people that are working hard deserve the recognition.”

One can see the theme of reward and recognition in every loss prevention program utilized. Beyond that, emails are shot across the company on a regular basis recognizing managers and associates for their LP accomplishments.

Put Your People in the Field

Although many programs are born at the corporate office, Griffin believes the regionals should work in the field. He does so in order to keep the “vision” in the field, where it needs to be. Having the regionals rooted in the field gives a loss prevention boost to the large locations where they are based, and makes them more accessible to other locations. Things are happening constantly in the field and Griffin wants locations managers to know that his staff is on the move and ready to respond quickly.

Keep Improving

Griffin and his loss prevention department have accomplished four major goals.

  • They have set an agenda using sound loss prevention strategies learned from traditional retailing, with additional ideas specific to the airport retail industry.
  • Griffin put together a loss prevention team with a tremendous level of expertise and used them as the conduit to implement solid controls and programs.
  • The department provides strong leadership from the local to the corporate level.
  • They have achieved uncommon shrinkage results in a company and industry that is relatively new to the world of modern loss prevention.

The Paradies Shops loss prevention team remains proactive and is working hard to pump more results to the company’s bottom line. To date, the department has far exceeded the goal of driving shrink below 2 percent.

One of the things that Dick Dickson, president of The Paradies Shops, emphasizes is brand. This is a family-owned company with a team atmosphere. Loss prevention is now an effective piece of The Paradies brand, and the current culture of the company is proof.

With a new POS system in use, Griffin would like to see a network in place that would streamline critical information to his department and make exception reporting better. It would also make remote camera access possible at every location. While these are large tasks considering the logistics issues in airports, Griffin believes, “We’re well on our way to getting this done.”

The department is constantly on the lookout for ways to improve its programs and incentives. With strong leadership, an enthusiastic staff, corporate support, and a proven track record in such a short time, the department will continue to work toward aggressive goals that will only entrench it further into the successful culture of The Paradies Shops.

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