MGM MIRAGE: Roll the Dice, Bad Guys Lose

MGM MIRAGE: Roll the Dice, Bad Guys Lose

Aspiring shoplifters should be advised that the odds for getting away with shoplifting at one of MGM MIRAGE’s 105 Las Vegas retail shops are very low—probably lower than the chances of hitting the largest jackpot on Megabucks. That’s due in large measure to the efforts of the MGM MIRAGE loss prevention team over the past ten years.

Nora Whipple, MGM MIRAGE corporate director of loss prevention in Las Vegas, and her team have been planning, building, and constantly evolving an LP program that has been thoroughly and seamlessly integrated into MGM MIRAGE’s fast-growing and hugely profitable Las Vegas-area casino and resort operations.

Las Vegas Icon and Destination

To the world of loss prevention and security—and probably to the world at large—Las Vegas is the living icon of an industry about which no one feels completely neutral or indifferent. For many, the casino/resort industry is an ultimate product of an ultimately decadent culture.

- Sponsor -

 

It is still widely perceived as a kaleidoscope of over-indulgence of every human sense and appetite. Las Vegas and its famous twelve-mile “Strip” along Las Vegas Boulevard is a magnet drawing people from a wide assortment of lives, ranging from the Wall Street investment billionaire who flies his Lear jet to McCarran International Airport or the retired couple who takes a chartered bus trip from somewhere in middle America. The Strip, of course, is where today’s parents used to go as rebellious young adults and where they now fear their own kids are headed for spring break.

Thanks in large measure to Hollywood, Las Vegas folklore is deeply, if not darkly, burnished with countless tales of fortunes won and lost, old love rejuvenated and new love  found, and crime of every type and degree of severity.

MGM MIRAGE: Roll the Dice, Bad Guys Lose

On the other hand—and this is the real story about Las Vegas—this city is no longer strictly about gambling and gaming. It is really about the casino/resort industry and what tens of millions of people from the United States and abroad today think is a “good time.”

Over the past few decades there has been a dramatic restructuring and convergence of the gambling, resort, and entertainment industries. Companies have been investing billions into creating “destinations” that are designed to motivate guests to live and spend intensely during a typical three-to-four-day “getaway.”

Today, while Las Vegas is a city of about 535,000 permanent residents living within the 84-square-mile city limits, its population on any given day can swell by a million, primarily concentrated within those towering casino/resorts on the Strip. According to the Las Vegas Convention and Visitors Authority, every year about 39 million people visit Las Vegas, spending an average of $545 on gambling at the city’s 1,700 casinos and other gambling venues, $86 per night for one of the city’s nearly 137,500 guest rooms, $238 per day on drinks and food, and over $124 on shopping. Therein lies the challenge for loss prevention.

The Rise of “Shoppertainment”MGM MIRAGE: Roll the Dice, Bad Guys Lose

Ten years or so ago, Las Vegas shopping was largely limited to hotel logo merchandise (shot glasses and toothpick holders were particular favorites) and personal sundries and snacks. Back then, the MGM properties, including MGM Grand, New York New York, and others, were some of Las Vegas’ biggest attractions. But this was well before the MIRAGE acquisition in 2000 that more than doubled the size of MGM Grand, Inc., which was rechristened MGM MIRAGE. As with other gaming giants, MGM MIRAGE’s strategic intent was to attract as many guests and their vacation dollars as possible. In fact, the real idea was to motivate guests to spend as much time on a single property as possible.

With a new definition of “Las Vegas vacation” evolving, casinos dramatically increased the scale and scope of their operations. Old hotels and casinos came down with controlled dynamite blasts, replaced by far larger and higher complexes of gambling floors, hotel towers, exotic gardens and fountains, theaters, and even bowling alleys. While visitors could still find a cheap meal, they had to walk past more and more swank eateries bearing the eponymous names of some of the world’s most famous chefs. It is also no surprise that shopping showed up on the megaresort/casinos’ list of guest experiences that could be transformed and intensified, as well as made extremely profitable.

Today, retail is a billion-dollar industry in Las Vegas and has steadily become a sort of “pilgrimage” destination for serious shoppers both to ogle in amazement and purchase with little regard to price tag A recent New York Times article coined the term “shoppertainment” to describe the Las Vegas shopping experience, saying that “Las Vegas shopping is like most things the town does well: It’s simply bigger, better, and more fun.”

Today, every brand of merchandise with any panache at all is available in Las Vegas, often in its own boutique. Shoppertainment is the enthusiastic spending of money onevery conceivable product, from an Hermes scarf to a platinum Rolex to a retro toothpick holder with hotel logo, combined with Las Vegas-style merchandising in which products are “showcased” with the Strip’s signature energy and creativity, if not high drama.

Today, retail is a billion dollar industry in Las Vegas and has steadily become a sort of “pilgrimage” destination for serious shoppers both to ogle in amazement and purchase with little regard to price tag. As Andrew Hagopian, MGM MIRAGE’s retail vice president, says in understated terms, “Retail venues have become a destination adding to the overall guest experience.”

The MGM MIRAGE Retail and LP Story

 

MGM MIRAGE, like its Strip competitors, obviously appreciates the magic and necessity of shoppertainment. From the gigantic 5,034-room MGM Grand to the highly refined 3,933-room Bellagio to the older icons on the Strip, Treasure Island and Circus Circus, shopping is big and serious business. And so is loss prevention.

As Whipple explains, “When MGM MIRAGE began to establish a much larger, more upscale, retail business in its Las Vegas properties—Golden Nugget, The Mirage, Treasure Island, Bellagio, and McCarran International Airport—it did not initially set up the loss prevention program on the same scale.” But it was not long after they took one of their first physical inventories, which produced results they didn’t like at all, that the MGM MIRAGE controller pushed for a professional LP function.

Whipple was with Saks Fifth Avenue in Las Vegas at the time when MGM MIRAGE called her about building its loss prevention program. “It was a new and exciting opportunity that I couldn’t resist,” she says. “The challenge was to take what I had learned in ten years of doing loss prevention at Saks and apply it to this new, quite different environment.”

MGM MIRAGE: Roll the Dice, Bad Guys LoseJust getting a clear sense of MGM MIRAGE’s retail business is not the easiest task. None of the Las Vegas casino/resort giants report in their press releases in detail about retail sales at individual properties. In its 2004 annual results press release, MGM MIRAGE reported $181 million in retail revenue for all of its casino/resorts, which include the Las Vegas properties as well as properties elsewhere in Nevada, Mississippi, Michigan, Illinois, and New Jersey. That revenue seems small in comparison to the company’s other revenue flows, such as its $2 billion casino and $833 million hotel revenues. However, a visit to any popular Las Vegas casino/resort establishment confirms that retail, in the form of shoppertainment, is a huge element in its recipe for success.

“My team and I are responsible strictly for loss prevention at the 105 stores that MGM MIRAGE actually owns and operates within our ten properties here in Las Vegas,” Whipple explains. “At our company, loss prevention reports to retail operations. I have counterparts throughout the company’s other casino/resort properties. At most of our Las Vegas properties, there are also leased stores like Tiffany, Chanel, Prada, and Hermes, as well as leased restaurants and clubs. All of these establishments have their own loss prevention programs.”

As one would expect, guest and employee security and safety at MGM MIRAGE’s properties is a top priority. Guest security and safety starts when the guest arrives on the propertyand continues through every aspect of the guests’ use of the property facilities.

As at other casino/resorts, security is at all times extremely visible…and invisible, too, as properties use plainclothes and undercover personnel throughout their operations.“Loss prevention and security are partners, even though our operations are separate,” Whipple says. “At Saks I controlled my own cameras, but here we run them through the hotel’s monitoring operations. Although there is a very clear separation of duties, our common focus is on the comfort and safety of the guests. We report incidents occurring in our stores and we also hear about individuals and unusual behaviors elsewhere on the properties. From that standpoint, we are all doing our individual jobs, but also working as a safety net for guests and employees.”

MGM MIRAGE Retail LP: Innovation and ControlMGM MIRAGE: Roll the Dice, Bad Guys Lose

One-size loss prevention in MGM MIRAGE’s retail environment does not work. Each one of the 105 branded MGM MIRAGE Las Vegas stores is distinct. Some are huge and sell many lines of high-end merchandise. Others are designed specifically to offer interesting, but definitely lower-priced shopping. And then there are the traditional small sundries and magazine shops scattered throughout the grounds.

In talking about the challenges of casino/resort retail loss prevention and how it might be different from loss prevention at Saks Fifth Avenue and other more traditional retail venues, Steve Lojewski has some firm ideas. Recruited by Whipple in 1998, Lojewski is loss prevention manager at Bellagio.

“One of the strongest aspects of loss prevention at MGM MIRAGE is that we are constantly changing the program,” says Lojewski. “That’s been the hallmark of Nora’s approach.

“First, we really appreciate that every store is different in terms of size, theme, and location within the complex, price range, and types of merchandise. They all attract different types and combinations of customers.

“Second, we’re constantly evaluating what works and what doesn’t. As the vulnerabilities and threats that we face change, we’re constantly looking at new technology to help us be in better control. For example, our team frequently evaluates and brings in everything from new digital recorder systems and monitoring equipment, to display cases with hardened windows, and new sealants, to specialized sensor tags and merchandise cabling devices,” Lojewski says.

While conventional shoplifting by customers and theft by employees is still a core loss prevention focus for Whipple and her team, credit and gift card fraud and identity theft are as popular here as anywhere else. “Our staff is highly trained to follow strict procedures for credit card authorizations,” says Whipple. “Our surveillance cameras capture all cash register transactions, so that greatly increases our control.”

Real-time communications is also a key deterrent to credit card fraud and other incidents. Without going into detail, Whipple and Lojewski both note that their specific retails stores and all MGM MIRAGE Las Vegas properties are “networked.” For example, if there is an incident at one of their jewelry stores involving false identity or unauthorized credit card transaction, all the MGM MIRAGE, as well as other casino/resort companies’ stores, are immediately alerted.

That appetite for change and control certainly seems consistent with MGM MIRAGE’s and, indeed, the casino/resort industry’s non-stop building, remodeling, and expanding. InLas Vegas alone, MGM MIRAGE just completed a $375 million Bellagio expansion, which includes substantial new retail space. It is digesting its 2005 acquisition of the Mandalay Resort Group, which includes the huge Las Vegas Mandalay Bay Resort and Casino. And it is planning a new $5 billion residential and shopping complex called “Project CityCenter.”“We’re always working with retail operations on concepts and designs for new stores,” says Whipple. “Loss prevention is a big consideration in store design and location and even in selection and placement of merchandise. As we learn from our other stores, we build in the most effective loss prevention systems and processes we can find.”

Hands-on the Store Floor

If there’s one aspect of MGM MIRAGE’s Las Vegas retail loss prevention that especially seems to be in alignment with the company’s energy and focus, it is loss prevention’s day-to-day involvement with operations throughout the stores.

“Most outside retail environments don’t have loss prevention associates take their physical inventories and reconcile them, but we do both,” says Lojewski. “We deal more with internal investigations as well as pay close attention to any and all movement of merchandise in and out of stores and in and out of our warehouses. We concentrate on paper flow, input errors as well.”

Lojewski sees distinct differences in their loss prevention approach as compared to traditional retail. “I used to be in loss prevention for an outside retail store,” he explains. “We pretty much concentrated on external and internal apprehensions and surveillances. We never got as in-depth in that setting with regards to paperwork monitoring, assisting accounts payable with research for payments, and physical inventories as we currently do with my auditors in the casino retail environment.”

MGM MIRAGE’s loss prevention and retail audit teams are particularly synchronized. In fact, they work with a new sales audit software application and a specialized loss prevention application that uses the same transaction database. Whipple is also pleased to point out that LP has trained every auditor to do investigations. The retail operations’ sales audit software is exception-based, which makes it possible to quickly identify missing transactions or transactions that are out of line.

Each store’s loss prevention staff follows a detailed daily regimen of audits and reconciliations, including checking all cashiers’ media on a daily basis, looking at post-voids, returns, no sales, proper signature authorizations, and other issues, trying to spot trends or inconsistencies that can lead to bigger investigations. In addition, all electronic systems logs are checked, tapes reviewed, and inventories planned and performed on a scheduled basis.

Winning with Innovation, Discipline, and Focus

Loss prevention specialists are coming to recognize that loss prevention programs are almost never “pure vanilla.” They tend to acquire the tenor and tone of the companies to which they provide service. That’s certainly true of MGM MIRAGE’s loss prevention program. The program mirrors and reflects the company, and to some extent the casino/resort industry itself.

Specifically, one aspect in which the casino/resort industry is unique is that it is driven by two oddly diverse and powerful forces. The business success of a casino/resort company is driven by constant innovation and remodeling. This huge effort and investment is in pursuit of providing unique entertainment experiences and capturing as much customer spending as possible.

At the same time, casino/resort companies are heavily regulated and monitored. Federal, state, and local regulatory bodies and legislatures, as well as insurance companies andlenders, impose the strictest operating and reporting practices imaginable. Success and even survival depend on innovation and discipline.

The MGM MIRAGE loss prevention team, like the company itself, is noticeably committed to continuing, even restless, about innovation and improvement at the same time that itis noticeably disciplined and focused. “People ask us if our department is also involved with risk management or aspects of security, such as celebrity protection,” says Lojewski. “We are only focused on inventory control, inventory handling, and store investigations. This focus is important to our success.”

The odds are that even an experienced shoplifter or an employee who is determined to manipulate the cash register is going to lose against the innovation, discipline, and focus of the MGM MIRAGE team.

Stay Updated

Get critical information for loss prevention professionals, security and retail management delivered right to your inbox.