Managing Asset Protection at SUPERVALU

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EDITORS NOTE: Carol Martinson isvice president, asset protection group, forSUPERVALU, where she oversees retail lossprevention operations, operations safety, foodsafety and quality assurance, and corporatesecurity. Prior to joining SUPERVALU in 2005,Martinson was with Lund Food Holdings,where she designed and implemented a newrisk management function in the areas ofsecurity, theft, fraud, workers compensation,and liability. She also held a number ofsecurity positions with Target Corporation,including investigations, training, regionalasset protection teams, headquarters securityoperations, and security effectiveness designfor that companys supply chain. Prior tobeginning her career in retail, Martinson wasvice president of corporate security for FirstBank System in Minneapolis.

EDITOR: What is SUPERVALUs size and scope?

MARTINSON: SUPERVALU is a public company with both national retailand supply-chain divisions. The retail outlets have about 2,500 sites in 48states. When you add our supply-chain division, we provide groceries andrelated services to about 5,000 endpoints for grocery retailers across 49states.

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SUPERVALU started its life as a wholesaler, but the Albertsonsacquisition, which closed in June 2006, has changed the mix of retailand wholesale. We are now a retail company with a largesupply-chain backbone to support both our corporate retail banners andour independent retailers. We have about 200,000 employees, both unionand non-union, across the companys retail and supply-chain operations.Our corporate headquarters is in the Minneapolis area. We also have alarge presence in Boise, Idaho.

We have fifteen retail brands across the United States, with the majority holdingeither the number-one or number-two market share in their respectivemarkets. They range from Shaws and Star Market in New England toAlbertsons in Southern California [see About SUPERVALU sidebar].

EDITOR: What is the breadth of your responsibility at SUPERVALU?

MARTINSON: My official title is vice president of asset protection andthat includes the typical loss prevention and security issues as well assafety and food safety

EDITOR: I understand you began your career outside of retail. Tell usabout your background.

MARTINSON: I spent the first twenty years of my career in banking. Istarted out as an internal auditor and then transferred into the securityfunction. Im a product of a very good affirmative-action program. In 1976,First Bank Minneapolis was looking for someone to become anassistant security officer. The security director at that time was aretired FBI agent. The bank also decided it needed to diversifymanagement within the security function because there were nowomen. Then it decided to choose someone who knew banking,which auditing teaches you, and teach the new person security,rather than choosing another law enforcement person andteaching him or her banking. Thats how I landed in that job.

At the time, we had a 24-hour operation with uniformedarmed guards. Wed just opened our own central station withno operations, no proceduresnothing. We were startingfrom ground zero. I worked for First Bank Minneapolis until1984 when I went to work for First Bank System, the holdingcompany. Thats when we were going from single-unit bankingin the state of Minnesota to branch banking. We put togetheran operations group that put back-room operations under oneumbrella. We did that with the corporate security function.

From 1984 to 1993, I put together First Bank Systems firstunified corporate security function, which included the two largeorganizations in Minneapolis and St. Paul who both had theirown security functions; very tradition-bound histories that wentback to the turn of the century. Minneapolis and St. Paul aretwo very different cities and putting together the two functionsthat had worked for decades separately was a challenge. Wealso did acquisitions in Colorado and Wisconsin. We built a newcentral station and got rid of three 24/7 centers. We had all thepieces you can have in a security function, including IT security,recovery, investigations, physical security, and central station. Ialso had the dubious distinction of being the security directorwhen the chairman was kidnapped, so I learned a lot aboutputting an executive protection function together.

EDITOR: How did your transition to Target take place?

MARTINSON: I was looking for a professional change. A friendtold me about a retailer in Minneapolis looking for someone todo investigations and training. I threw my hat in the ring witha recruiter and it ended up being King Rogers at Target. I wentto work for Target to deploy their investigations and trainingprogram uniformly across the company. Starting in 1997, I puttogether Targets first market investigations teams and firstnational organized retail crime team. I left Target in 2002 andwent to work for a locally-owned, family-owned grocery storecompany in Minneapolis as the risk management director.I joined SUPERVALU about eighteen months ago as its firstcorporate security director.

EDITOR: You were vice president of security at the bank, buttransitioned to a director-level position. Most people would notmake that kind of change. What were the factors that led you tomake that decision?

MARTINSON: The scope of the companies was different. FirstBank System was not as large as Target. So, although it was alower-level position at Target, the scope of the job was bigger.It was also the opportunity to start a new function. I like totake pieces and put them together. It was also a chance to learnanother industry.

 

EDITOR: What was the transition from banking to retail likefor you?

MARTINSON: Let me answer that with a story. During my firstweek at Target, Im walking around stores and back rooms. It wasincredibly eye opening to go from one industry to the other. Atthe end of the first week, King asked me, What do you think?I said, Im a bit in culture shock. In banks, we put the valuablesin a vault and lock the door at night. You guys let them sit onshelves. Your idea of a lock up, which is chicken-wire mesh andtwo by fours, is not my idea of a secure lock up. And why dontwe have cameras on the dock doors? He looked at me and said,Youre right, Carol. There are two holes in a Target storeone inthe front and one in the back. Weve concentrated everything onthe front because of the cash, but we havent concentrated on theback where the product comes and goes. The result of that wasTarget now has cameras on its dock doors. Im not the only reasonthat happened, but I certainly had some impact on it.

If you truly want to be a loss prevention innovator, rememberthat you can bring things to one industry from another. Takeadvantage of your past experience. I looked at my first Targetstore through the eyes of a banker, which allowed me to seethings differently and ask questions. For example, banks putin cameras and leave them. They dont move them. Retailersmove cameras all over the place. Which is the right tactic to bestachieve your security strategy?

If youre truly going to look at this as a career and aprofessionwhich I doI dont look at it as loss prevention forFirst Bank system or Target or SUPERVALU. I bring to the tablea professional base of experience and education that can beapplied anyplace. Crossing industries gives you a chance to learn,grow, and keep your horizons broader.

EDITOR: What positive changes have you seen in the assetprotection profession over your years in banking, massmerchandising, and food retailing and wholesaling?

MARTINSON: Asset protection has become a profession.When I started in banking, if you werent a retired FBI agent,you couldnt get a job at the top level. There is a point in timethat you need to be a business manager, whether its assetprotection or media relations or any other type of function. Theother big change is that people in loss prevention have trulybecome business partners in organizations. Those are the twobig changes.

EDITOR: You mentioned affirmative action. Over the past fiveyears, weve interviewed dozens of loss prevention executives,but only two or three of those were women. In your opinion,how has the profession done at promoting women andminorities to the executive level?

MARTINSON: Weve done a terrible job. Its a challenge for us.At Target, we had Women in Leadership seminars that workedat growing people from the base level up through the ranks.We had success as long as there was somebody supporting theprogram and as long as there were mentors and role models.

Women and minorities need to recognize asset protectionas a career option. We need to get into college criminal justiceprograms to tell students there are other options to being apoliceman or probation officer. Students also need mentors androle models. Thats one of the things that people like me reallyneed to bementors and role modelsand work on it everyday so that people know that they can make it.

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EDITOR: At SUPERVALU, you are responsible for both the retailand supply-chain divisions. Is that evenly balanced in terms ofyour role of managing asset protection in both areas?

MARTINSON: My role, when I came here, was to work acrossthe company. As weve gone through the Albertsons acquisition,weve looked at best practices from both companies that we canbring forward to create a best-in-class asset protection group thatspans corporate, retail, and supply chain.

Our retail loss prevention managers within the store bannersare available to help with supply-chain issues in their geographicmarkets. We will make more formal assignments with those typesof things as we move forward. For example, if youre workingretail loss prevention in Chicago, then know that youre going tohelp with supply-chain loss prevention at the distribution centerin Melrose Park.

EDITOR: Are there LP directors at SUPERVALUs variousbrand stores?

MARTINSON: Yes. We have safety and food safety peoplein each division as well.

EDITOR: Do they have a functional or direct reportingrelationship to you?

MARTINSON: On the retail side, its direct; on the supply-chainside, its functional.

EDITOR: What do you see as the objectives of a food retailerfrom an asset protection point of view?

MARTINSON: We want SUPERVALU to be the best place towork, shop, and invest. If we do our jobs well in the assetprotection function, it allows people who do the merchandisingand selling to work in a safe and secure environment in whichthey can succeed.

From a business standpoint, the first objective is controllingshrink. Shrink is impacted by the obvious factorsperishablesand food handling issues. Both food safety and employee andcustomer safety touch that. For example, were askingAre weloading food properly so it arrives undamaged? Are we checkingtemperatures all the way through? Do we have good cold chainmanagement? Then there is loss prevention, which focuses at thesite and deals with control of the physical building and inventoryto minimize shrink through loss.

Another important factor is anticipating and minimizing risksto people, property, products, and information. Asset protectionis all about protecting the people who shop with us or workwith us. Its also about protecting the property and safeguardingour information, which ties to our brand. Safeguarding thecompanys brands is an important aspect of our asset protectionprogram.

EDITOR: What are some of your more significant shrink-relatedinitiatives?

MARTINSON: One of the initiatives that Albertsons has hadunderway, and its one that were looking at as a new enterprise,is an equipment upgrade adding digital video recording andputting in a central station alarm system to monitor our ownalarms.

In all our divisions there has also been extensive work donegetting everybody on the same inventory system so we canactually understand what our shrink is. Albertsons put in place aholistic approach to shrink reduction at the retail end by puttingloss prevention specialists in place. Many of their groups did nothave field people who worked and looked at shrink. These arentthe people catching shoplifters; these are the people going into understand whats going on in that store, working the POSexception reporting, looking at inventories, those kinds ofthings. Thats been a very successful program for them. Wewill be putting all of our retail brands on the same POSexception-reporting platform.

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EDITOR: Whats the role of management in the food retailworld when it comes to shrink and asset protection?

MARTINSON: The more well run the store is, the better theshrink is. Thats true whether youre in mass merchandiseor food. Whats the difference between loss if the product iselectronics or bakery? It boils down to management beinginvolved in understanding shrink and performing their role inpreventing it.

EDITOR: Mass merchandisers are getting into food and foodretailers are getting into mass merchandise. Both are getting intofront-wall businesses, such as pharmacy and banking. Are thosedevelopments posing new challenges for food retailers?

MARTINSON: Yes. Weve had banks and pharmacies for sometime. We need to look more closely at how these businessesfit into the front end. We need more prototype work. One ofthe loss prevention challenges, particularly with pharmacies,is understanding how to work with a pharmacy in doing aninvestigation. How do you work with controlled substances? Onthe supply-chain side, how do you secure them? How do youmove them around?

EDITOR: Do you have people in your organization focusedsolely on pharmacy or is it spread across functions?

MARTINSON: It is spread across, but we also have people whocame out of the pharmacy industry who are exceptionally helpfuland know our pharmacy people very well.

EDITOR: Are the pharmacies in your locations owned bySUPERVALU?

MARTINSON: Generally, theyre ours.

EDITOR: Is that the case with banking?

MARTINSON: No, we lease them space. They are responsible for their physical security because of the regulations. We assistthem if something is going on, but theyre responsible for theirown spacesecurity, alarms, cameras.

EDITOR: Theres been much discussion in this industry aboutorganized retail theft issues. Is that a significant issue for you?

MARTINSON: Yes, it is a significant issue, and one that wewill continue to collaborate with the industry on. We haverepresentation on the National Retail Federation ORC task force,and weve joined RLPIN [Retail Loss Prevention IntelligenceNetwork] so we can start collecting that data and learning whatsgoing on.

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EDITOR: Can you talk about your companys crisis planning andhow you manage that part of your responsibility?

MARTINSON: We have a corporate emergency response team.It includes business continuity and disaster recovery people frominformation technology as well as representatives from functionalareas across the company. At the division level, we have localemergency response teams. They have contact lists and scenariosthey use for planning. One of our challenges is to ensureconsistency of response across the organization.

EDITOR: Given SUPERVALUs recent acquisitions and the size ofyour company now, given everything your organization touches,you have quite a challenge in front of you.

MARTINSON: Yes, but its exciting. This is a wonderful companywith a tremendous culture. It has a long tradition, but is nowforging a new tradition. Its keeping the best parts of what bothcompanies brought to the table.

There are five core values that this company has that definesits actions, decisions, and goalspassion, focus, urgency,standards, and integrity. These values and traditions are whatmake working here fun, and they are what will make this newenterprise work.

From an asset protection perspective, we have a hugeopportunity to impact the business, and we are very excitedabout it.