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Profitect Wins First Retail Asset Protection Innovation Award

Twelve industry solutions providers were finalists in the inaugural 2016 Retail Asset Protection Innovation Award competition at the Retail Industry Leaders Association (RILA) Asset Protection Conference in Dallas. The award program is intended to recognize the most visionary technology solutions presented at the conference.

“Our industry has to continue to innovate to stay ahead of the pace at which retail is changing,” said Lisa LaBruno, RILA’s senior vice president of retail operations. “I congratulate the finalists for developing cutting-edge technologies to address emerging asset protection risks. Their solutions stood out among a crowded field of qualified applicants.”

RILA’s horizon committee reviewed the entries and narrowed the finalists to 12 solutions:
– Axis Communications’ Zipstream technology
– Centronex’s retail employee safety service
– Checkpoint Systems’ iSAutoPeg tag solution
– ClickIt’sVirtual LineupTM consumer tracking application
– Dataminr’s social media monitoring analytics
– Digital Signal Corporation’s facial recognition technology
– DiSa Digital Safety
– Prism Skylabs’ video compression and analysis solution
– Profitect’s prescriptive analytics technology
– Snaptagg’s light-based self-alarming tag
– Zebra Technologies’ AirDefense network protection platform
– Zebra Technologies’ MPACT device tracking technology

A team of industry judges as well as horizon committee members voted for their top three solutions. Retail attendees also voted on their top choice for the Retailer’s Choice Award. Profitect won both the judge’s top vote as well as the Retailer’s Choice Award. ClickIt was the judge’s second choice and Prism Skylab came in third. The award winners were announced by LaBruno at the close of Tuesday’s conference activities.

Image Caption: Guy Yehiav, chief executive officer of Profitect, receives the top innovation award from RILA’s Lisa LaBruno.

Genetec Announces Technology Partnership with Allegion

Genetec™ now has plans to support the Allegion Schlage® AD-Series of hardwired and wireless locks. Through this integration, the Schlage AD 300 and 400 Series can be seamlessly integrated into Genetec Synergis™—the IP-based access control module in Genetec Security Center, the company’s unified IP security platform that combines access control, video surveillance and automatic license plate recognition (ALPR). This integration will offer a cost-effective and scalable solution for a wide range of customers, including higher education, healthcare and commercial real estate institutions. Customers can expect to enroll Schlage AD-Series into their Synergis™ access control system in Security Center version 5.5 (expected in Q2 2016), and will be available through the Genetec™ Channel Partner Program.

The addition of Allegion to the Genetec technology partner ecosystem will also give systems integrators access to a greater choice of industry-standard hardwired and wireless electronic locks. In many cases, overall system design and deployment will be simplified, allowing Genetec certified channel partners to leverage wireless locks that significantly reduce installation time and labor costs typically associated with hardwired solutions, without having to compromise on reliability.

“We are excited to announce our partnership with Genetec as a leader in access control solutions providing end users with enterprise-class software coupled with responsive and durable locks. The integration with Allegion Schlage AD-Series locks with the Genetec Synergis access control platform enables organizations to extend the reach of their locks without compromising security,” said Robert Gaulden, director of aftermarket and electronic sales at Allegion Inc.

Through this integration, users will be able to leverage interchangeable reader modules that integrate legacy card technologies with newer ones as budgets permit for a phased implementation of new IP-based technology. Existing Allegion customers will also be able to migrate to a true IP access control solution while maintaining their existing investment in Schlage access control hardware.

“Genetec is pleased to be able to team up with Allegion to offer our end-users a greater choice in access control hardware, whether they are designing a new physical security system or updating an existing one,” said Derek Arcuri, product marketing manager, Genetec Inc. “Now, customers can leverage the Synergis access control solution in Security Center to deploy a scalable IP-based system that brings together both traditional wired access control with Allegion’s family of hardwired and wireless electronic locks.”

When Synergis and Schlage locks are deployed alongside Genetec video surveillance products, users will be able to view all of their lock events and activities seamlessly linked with live or recorded video, giving security professionals a more complete, unified view of their organization’s security.

The Centronex Retail Employee Safety Service (CRESS)

Safety is always a concern when a retail employee is closing or opening a store alone. With the Centronex Retail Employee Safety Service (CRESS), a wearable tag that connects to an employee’s smartphone can alert a network of responders by the push of a button if a dangerous situation occurs. Responders receive GPS information about the employee’s location and can listen in to an audio feed coming from their smartphone. The WearSafe Tag is capable of sending email, text, and push notifications. In addition, the tag provides discreet haptic feedback to the employee that the request for help has been received.

For more information about the WearSafe Tag, click here.

For more information about Centronex, click here.

Image Caption: The WearSafe Tag

Candidate Recruitment: Learning to Close the Deal When Filling Loss Prevention Job Openings

Being able to identify talent is certainly a valuable skill, but it does us very little good unless we are able to bring that talent to the table. This is a critical aspect of the hiring process that is undervalued and often overlooked when filling our loss prevention job openings.

When we interview a candidate for a position, we are ultimately determining their overall ability to fit the job. We look at the different qualities that the person possesses, evaluate the skills and abilities that they have to offer, and couple that with factors both tangible (such as salary) and intangible (for example: potential) in order to reach a hiring decision for our loss prevention job openings.

But by the same respect, an interview is an interaction. This is a two-sided process that holds deep-seeded implications for the program, the company, and the relationship. The candidate is also making an evaluation of your company as a whole—and of you as a potential supervisor—to determine whether your program offers the right match for them.

An honest and open conversation regarding company culture and departmental philosophies should be part of the interview process. Every interaction should be perceived as an opportunity to share the positive attributes of the company and the program with the loss prevention community as a whole. Once we have identified candidates that we feel will best fit our needs, these efforts should become more focused to help assure the candidate that joining your team is the best move for their loss prevention career and their future as a whole.

The best candidates typically have options. They are not simply looking for another job; they are looking for an opportunity to move forward in their career. They want a company that they can grow with, and a position that offers advancement potential. They want to work with others who share common goals and interests. They want to work for supervisors whom they respect—and who respect them. They want to work for an organization that is stable, yet flexible and open-minded.

As the hiring manager, it is up to you to communicate those attributes to your potential candidates. Instead of simply thinking, “They need to convince me that they’re worth hiring,” we also must consider, “I need to convince them that we’re a company and a program that they will want to work for.” All of us understand that we should hire individuals who want to work for our company, and show their passion and enthusiasm for the position. But it is just as important that we communicate our desire to have them as part of our team; as well as expressing our passion and enthusiasm for our department, our stores and our company.

Stressing the importance of hiring the right candidates is a simple concept to understand. But we must also keep the perspective of the candidate in mind. By changing jobs, they are making a potentially life changing decision, and they want to be sure that they are making the right move. When you’re good at your job, comfortable in your position and successful in your field (as many of the best candidates are), you are looking for the right motivation to make the decision to leave your current position and join another company. Sometimes it’s just that little shove that will make the difference, and convince you that you are making the right choice.

As the hiring manager, it’s up to you to provide them that motivation by showing the type of leader that you are, the quality of the program and the company that they will be joining, the character of your team and the potential that it holds in building their career. This helps to set the right tone for the candidates that you ultimately hire, and will help those candidates make a smooth and productive transition as well.

For more tips on the hiring process and how to hire the most talented professionals, read the LP Magazine article “Learning to Hire Talent is Key to a Successful Loss Prevention Career.”

Tyco’s Sensormatic Brand Celebrates 50 Years of Innovation

Tyco Retail Solutions is celebrating the 50th anniversary of its Sensormatic brand, a name synonymous with innovation, quality and service. The company’s first anti-theft pedestals and tags were disruptive technologies to an industry that relied on physical security for merchandise protection. Today, Tyco builds on the strength of its trusted brand with information-based solutions designed to better manage inventories, shopper activity, employees and facilities to improve operations and profitability. Over five decades, Tyco remains on the cutting edge of innovation with its patented technology represented by more than 1,600 patents issued and 700 applications pending worldwide.

“Over the last 50 years, we have built deep customer relationships to better understand how we can partner to solve retail’s biggest challenges,” said Nancy Chisholm, President, Tyco Retail Solutions. “We will continue to expand on our pioneering Sensormatic technologies to help retailers protect and grow their businesses, while delivering exceptional customer experiences. We extend a big thank you to our customers who helped drive retail innovation over the last 50 years and for their continued commitment in the years ahead.”

The Sensormatic Advantage – Then and Now

Back when retailers needed a better approach to protect products Sensormatic’s pioneering Acousto-Magnetic (AM) technology offered superior shoplifting protection for wider or multiple exits, maximizing customer flow and effectively safeguarding merchandise. Tyco continues to meet and solve critical store performance challenges with its next-generation Sensormatic Synergy Detection Series. Harnessing the power of RFID, Synergy connects multiple technologies, including AM, infrared and IP video, in one modular, network-ready system to capture valuable shopper, shrink and inventory intelligence, helping retailers deliver a seamless customer experience.

During an era when retailers wanted a more efficient, easier way to protect a diverse product assortment and keep customers satisfied, Sensormatic led the way with the world’s first EAS Source Tagging program. Retailers around the world adopted this groundbreaking approach to quickly deliver tagged items to the sales floor, and reallocate staff to better serve customers.Today, Tyco has the largest source tagging program in the industry with nearly 60 billion consumer and apparel items protected worldwide. Tyco’s forward-thinking approach to source tagging offers retailers a pathway for better inventory visibility through RFID technology, with more than two billion RFID-based Sensormatic hard tags deployed since program inception.

The Sensormatic Response to Omni-channel

With the advent of online and mobile, consumers can now shop anywhere, anytime and anyhow they choose. As retailing morphed from a single-channel to versatile omni-channel, retailers needed enterprise-wide visibility into inventory to satisfy shoppers’ increased demand. Tyco responded with innovative in-store technologies connected through a store intelligence platform, which connects the broad portfolio of Sensormatic devices and tags, providing retailers enterprise-wide visibility and data analytics into key operational areas to help make better business operations and customer experience decisions.

Explore the Past and Prepare for the Future

From the popularity of bell bottoms in the ‘70s, to the big box chain boom of the ‘90s, to today’s connected omni-channel world, Sensormatic has adapted to trends in the retail industry over the last five decades. To explore an interactive timeline of retail trends and technology innovation, visit Tyco’s 50th anniversary microsite.

Loss Prevention Consulting: A Conversation with an Industry Expert

Robert L. “Bob” DiLonardo is the principal of Retail Consulting Partners LLC and a well-known authority on the electronic article surveillance business, cost justification of retail security products and services, and retail accounting. DiLonardo started his loss prevention consulting practice after several years in sales and marketing for Sensormatic, Security Tag Systems, and Decision Point Data. Prior to that he held various accounting, shortage control, internal audit, and loss prevention positions with Macy’s and Carter Hawley Hale Stores. DiLonardo is a frequent seminar speaker for industry conferences and has written extensively for numerous business and security publications, including LP Magazine, where he was the contributing writer of the Industry News column until his recent retirement. He holds a master’s degree in finance from George Washington University and a bachelor’s degree in economics from Georgetown University where he also played football and baseball.

EDITOR: You have a lengthy resume, but let’s start by telling our readers who Bob DiLonardo is in just a sentence or two.

DILONARDO: I would describe myself as a professional student and practitioner of retail loss prevention and shortage control methods. I would also say that those who know me value my hard work, honest opinion, and forthrightness, which are at the heart of my loss prevention consulting practice.

EDITOR: What was your first exposure to loss prevention?

DILONARDO: I had my first preview of loss prevention in 1974. I had just started at Davison’s, which was the Macy’s division headquartered in Atlanta. I was meeting with my peers to get acquainted, and I had an interview with a guy named Joe Vaux, the security manager. His office was in the bowels of the headquarters store next to the boiler room. All he had in there was a table, his chair, and a seat for a visitor. He offered me a seat, but before he sat down, he pulled out his .38 and put it on the desk. Then he piled a stack of checks on the desk. After sitting down he said, “I’m not gonna keep you long, but I want to tell you what I do. You see these checks? These are bad checks. My job is to go collect them.” And that was my first exposure to loss prevention. It surprised me that the guy had to be macho enough to make a show like that.

EDITOR: What role did you have at Davison’s?

DILONARDO: I was the budget and statistics manager in the controller’s division at the time reporting to the controller. About a year later, the CFO called me while I was on vacation and said, “When you get back, you’re going to be the head of internal audit because we’ve got some problems, and I think you can do a good job solving them.” That’s basically how I backed into loss prevention. I spent several years working in the controller’s division where I became expert in retail accounting, merchandise statistics, and inventory control. Later I switched into merchandising as a buyer in women’s and men’s wear, which I thoroughly enjoyed. I think that those skill sets made me the prototypical shortage control guy.

EDITOR: Where did you go from there?

DILONARDO: In 1978, Carter Hawley Hale Stores recruited me to go to San Francisco to Emporium as their first director of shortage control. Thats where I met my friend, mentor, and idol Earl Welliver, who was the director of security. Earl showed me about a much more professional side of loss prevention. We worked on a number of cases, had a great time together, and always had each other’s back. Our corporate boss was the late Bascomb Shanks. Chuck Sennewald was Broadway’s director of security, and Carl Donnelly was on the corporate staff at the time.

I had six solid years of experience in retail and loss prevention, mostly shortage control, before Earl and I were recruited to San Diego by a German outfit called FedMart. To be kind, they didn’t know how to operate in the U.S. retail environment and eventually closed the company. Based on that bad retail experience, I went to work for Sensormatic in 1980.

EDITOR: What was it like going from retail shortage and inventory control to the vendor side?

DiLeonardo Georgetown Image
DiLeonardo (22) with the other starting defensive backfield at Georgetown University in 1966

DILONARDO: At the time Sensormatic was small, only selling about $25 million a year, but they were in a growth mode. The late Al Tate, western region vice president, was looking for sales guys with either military or sports backgrounds, and I had both. So they hired me as a bag-carrying salesman, one of only three in Southern California. That’s how small it was. My territory ranged from Tijuana west to Phoenix and north to Long Beach. The only product Sensormatic had at the time was a microwave-based system, the granddaddy of all EAS. Emporium had employed them in a couple of stores. As of 2015, you could still find some of them working famously in legacy Macy’s West or May Company stores.

EDITOR: Did those use the old gator tag?

DILONARDO: That’s right. Sensormatic did not have a disposable label at the time, so we were renting gator tags and microwave systems to apparel stores.

EDITOR: Back when you started with Sensormatic, what was the sales argument that you made with retail buyers?

DILONARDO: I had never been a salesperson before, and frankly, I was nervous. I performed poorly when it came to selling product features and functions, but I certainly knew my way around inventory shortage math, so I decided to try selling the economic benefits and the return on investment. I needed a compelling sales pitch, so I devised the financial logic to convince prospective customers that EAS should lower shortage and would be worth the investment. I took classes in Lotus 1-2-3 spreadsheet software and constructed my first ROI model. Nobody was taking the same approach at the time.

In 1982 I had the opportunity to call on the CFOs of two large Los Angeles department store chain Robinsons and May Company. I ended up selling a major deal to Robinsons in LA, which got the attention of the Sensormatic hierarchy. They promoted me to national account manager with responsibility for large accounts like Sears Pacific Territory and all department stores in Southern California. I used the same approach but customized it for each client, and I was very successful.

EDITOR: Over the years, you’ve gained quite a reputation for someone who really understands the ROI proposition and how to make that argument. You’ve done many writings on that subject, including for us. Did all of that come out of formulating the financial argument to support sales?

DILONARDO: Yes, but it was a long process. I credit my financial education for giving me the tools to construct the ROI logic. But it was my stint as

Sensormatic Reunion Image
DiLonardo with former Sensormatic associates (left to right): Tim Gates, John Zambiasi, and Lance Weeden in 2007.

a buyer that showed me that preserving inventory from theft would result in incremental sales.

By 1983, the other Sensormatic salesmen got wind of what I was doing. They were having trouble expanding EAS tests because the LP guys wanted proof that it “worked” before they would buy any more. None of them knew how to demonstrate that, aside from saying that “if your shortage went down, it must have worked.”

Two salesmen who dealt with Montgomery Ward asked me to help them. They flew me from San Diego to Chicago to analyze Ward’s latest inventory results and help cost-justify EAS to management. I rented one of IBM’s new portable PCs for $400 and took it to Chicago. Wards gave me the inventory data on stacks of dot-matrix computer printouts, and I spent all night manually entering the data into the PC. I loaded my model, fed in the data, and out popped the results, which I presented to Ward’s management. They ended up expanding their test on that basis. That exercise convinced me that this was what I ought to be doing.

From there, I did 30 to 40 studies for various retailers proving the ROI in the very same manner. I kept refining my logic and modifying the model. One of the satisfied customers was George Luciano, then vice president of loss prevention for a women’s specialty apparel chain called Hartfield-Zody’s. George was like a big brother and always encouraged me to work hard and use my expertise to cost-justify other products and services besides EAS. He remains one of my best friends in the industry.

EDITOR: When did you leave Sensormatic and what did you do then?

DILONARDO: I spent eight years at Sensormatic the first time, and for the last half, I was at their headquarters in Florida, where I essentially had a desk job. I quickly learned that I had a hard time dealing with corporate politics. I also learned that I would be better off in smaller companies, because I could have an impact and get things accomplished. When I finally got fed up with the politics at Sensormatic, I quit in 1988 and went to work for Security Tag Systems, where I spent the next five years.

EDITOR: Why Security Tag Systems?

DILONARDO: I followed a couple of my old Sensormatic buddies, John Zambiasi and Perry Garvis, who told me that Security Tag was doing groundbreaking stuff. They built the first EAS transceiver, which is a single EAS pedestal instead of a pair. They also had an RFID test in place with the New York Daily News, where they put tags on the delivery trucks and readers at the distribution centers to track how long a truck was inside and where it was parked. And in 1989 we were the first to commercialize ink tags and benefit-denial devices in the United States. Much to my dismay, Sensormatic bought Security Tag in 1993. After spending an unsatisfying year commuting to Sensormatic, I decided to start the loss prevention consulting business.

Retailers who were investigating EAS hired me to help them decide what systems were the best for their environments, how much they should pay for them, and whether or not the project would be cost-justified. I’ve even negotiated contracts on their behalf. As time passed, I decided to apply the same principles for other security technology, like video, access control, and self-checkout.

EDITOR: When a manufacturer or a vendor brings you in for loss prevention consulting, what are they asking you to provide?

DILONARDO: I’ve taught their sales executives the principles of selling financial benefits and have constructed proprietary ROI models that they use with their prospects and customers. Since my experience includes marketing management, I have done competitive analyses and have assisted in product development. I hold one patent and have helped on numerous other patented products. I also have worked as an expert witness in patent-infringement cases and have helped venture capitalists research potential acquisitions.

EDITOR: How do you handle a loss prevention consulting situation where a company asks you to come in and do something for them when you’ve done something similar for one of their competitors?

DiLonardo Typing Thesis Image
Typing his master’s thesis in 1973

DILONARDO: I never accept a loss prevention consulting project without insisting upon a mutual non-disclosure agreement between me and the client. I will never divulge confidential information entrusted to me. I’ve been fanatical about that my entire career. People have tested me on this and have found out that I’m a man of my word. My clients also know that I will provide them with the unvarnished truth about an issue, a trait that has, at times, been sorely lacking in various parts of the industry.

EDITOR: As you look at the long history of EAS, what changes do you think were the most dramatic, in terms of product development, that have had the greatest impact on retail loss prevention?

DILONARDO: It’s over 40 years since the big three EAS vendors commercialized their first products. In my view, the most dramatic change has been the proliferation of source tagging, which was made possible by the development of inexpensive disposable labels capable of being affixed at high speeds in the manufacturing process. Disposable labels opened up the EAS market to packaged merchandise. They also provide the method by which apparel can be source tagged either by affixing the label to a price ticket or embedding it in a fabric label.

The second biggest impact was the advent of the ink tag, benefit-denial devices, and other item-level products like keepers, box wraps, and alarming tags. At the time of their inception, ink tags were successful because the EAS deterrent was flagging rapidly. In my judgment, the EAS market would have dried up quickly without these two phenomena.

EDITOR: Apart from EAS, what other technologies have you observed that have been significantly impactful to the industry?

DILONARDO: Video and data mining come immediately to mind. When I started, CCTV cameras were bulky, were set in a fixed position, and the output could only be watched with a monitor and couldn’t be saved. These technologies have improved more drastically than EAS.

In my opinion, the most important enhancements have been solid-state electronics, microprocessor controls, recording devices, and John Coutta’s tremendous invention of camera rotation along its longitudinal axis. Solid-state electronics allowed for smaller cameras. Microprocessors added “brains” and controlled switching, PTZ, and data collection. Recorders assisted in investigations and evidence keeping. And longitudinal rotation coupled with mirrors made domes the standard housing in the industry.

Superimposing a POS transaction onto video really jump-started the data mining industry because we needed some type of software to help us identify transaction anomalies, instead of staring at videotape. Now the data mining industry is very sophisticated and has provided information that is essential to properly running all aspects of the business, including loss prevention.

EDITOR: What changes have you seen in the retail LP executive over the years?

DILONARDO: That goes back to that story about Joe Vaux putting his pistol on the table. There were a lot of ex-military and ex-law enforcement in

DiLonardo and Welliver Image
DiLonardo with Earl Welliver (right) in 2011.

retail security when I first started, and many of them didn’t even have college degrees. So what we have nowand the magazine gets some credit for this, in my opinionis a situation where the LP industry has decided as a group to train and nurture the professionals that they hire. With greater emphasis on college degrees and certification programs, retail security executives today are far better trained than the Joe Vauxes of yesteryear. And that’s not going to stop as long as we continue to pay forward our knowledge and experience. It’s just going to continue to be essential to the betterment of the industry.

EDITOR: What advice would you give an LP executive or somebody on their staff regarding how to be smart about evaluating the market and sourcing the right product?

DILONARDO: I would give them the same advice that I gave to myself when I started in loss prevention consulting. Take the cue from your boss as to the direction he wants to take, and then immerse yourself in the product literature that’s out there. Go to trade shows, read the trade magazines, and ask your peers, “What are you doing? How does this work for you?”

The other thing I would say is that hiring a consultant is a good investment. I hear people say, “I don’t want to spend money on loss prevention consulting.” I think that’s a mistake because it’s my job to know twice as much as you would need to know and to help you add value to your organization. There are other guys like me out there who have the knowledge and can really provide an important service. The right consultant is worth his weight in gold when you’re looking at making multi-million dollar procurements.

EDITOR: Selfishly, I want to turn the discussion to the magazine’s relationship with you over the last 14 years. You have been one, if not the number one, contributing writer since our premier issue in 2001. We have been so pleased and proud to have had you as a part of the team. Thank you very much for all your articles and insights. Given you’ve done all this for not a penny, why did you?

DILONARDO: Let me start by saying I most certainly appreciate what you and Jack allowed me to do and what we all did together. I still remember Lee Pernice from Sensormatic asking me if I would be willing to write an article because “these two guys are trying to put out a magazine, and they are short one.” I said, “Hell, yeah!” That first article was about Federated’s source-tagging initiative and Tom Cole’s theory on “the total cost of shortage.” That became the first of over 80 Industry News columns.

Setting aside the fact that you allowed me to keep my name in front of the industry, which I appreciate, this has always been a way for me to pay forward my experience. I wanted to give back to the industry in some way. Writing for the magazine always gave me the impetus to do the research to keep myself up-to-date.

I also want to say, and I’m saying this from the heart, what you two did back when you started was uncharted territory. There were other trade magazines, but there was nothing like LP Magazine. As far as I’m concerned, it is going to go down in history as the best periodical that we have ever had in our business. I’m just glad I played a part in its success.

EDITOR: Thank you for that, Bob. Looking back over your career, would you change anything?

DILONARDO: I know the standard answer is no, but yes, I would. I ended up backing into a lot of jobs, like shortage control, which turned out fine. But I wish I would have taken a little bit more control of my career at the beginning. The thing I regret the most is what I mentioned earlier about my problem with politics. Anybody who works in an organization, even if it’s five people, has to be able to manage interpersonal relationships as well as possible. I struggled with that for a long time, and I know it cost me. In hindsight, my frustration with politics induced me to start my loss prevention consulting business, which aside from my family has been the biggest joy I’ve experienced. It allowed me to make a good living working on very interesting projects whenever I wanted and however frequently I wanted. So it’s been fantastic. I’m going to miss it.

EDITOR: Best of luck, Bob, and enjoy your well-earned retirement.

DILONARDO: Thanks, and I still have some thoughts on articles, so I might just submit something new down the road.

Day 1 of the 2016 RILA Asset Protection Conference

The Retail Industry Asset Protection Conference is now in full swing in Dallas. This year’s conference kicked off with introductory statements from Lisa LaBruno, senior vice president of retail operations. LaBruno shared that this year’s attendance is the highest in the history of the conference, and set the tone for a busy agenda. She further emphasized that consumers are more connected than they’ve ever been before, and the loss prevention community needs to build our approach to support that line of thinking as well, finding new and creative ways to learn and grow with our retail companies.

A moment of silence was then shared in memory of Jaseramie Dion “JD” Ferguson, who was fatally shot outside a metro Atlanta Wal-Mart last week. “JD’s death provides a sober reminder to us all of the risks associated with shoplifter apprehensions,” said LaBruno. “The thoughts and prayers of the entire loss prevention community are with his family during this difficult time.”

The day’s events then kicked off with a General Session led by David Lund, vice president of loss prevention with Dick’s Sporting Goods, on “Making LP Matter.” Lund reminded us that if loss prevention continues to remain relevant, we have to change our perceptions. He discussed the importance of evolving as partners within the retail enterprise; and finding new and improved ways to contribute to the success of the organization as a whole as a means of keeping the department productive and valued by the entire organization.

This was followed by an enlightening discussion with political analyst Amy Walter who shared her insights on the electoral process, congressional culture, and the current political scene as we march forward towards this year’s election. With voters more polarized than ever, Walter underscored her message by stating that perhaps the most prominent political bumper sticker we should see to represent this year’s elections should be, “2016: WTF?” With the strange and unique events that have categories the recent trends in American politics, she feels that we are at a tipping point that is in fact reflective of the current changes in our country and within the political arena.

Morning and afternoon Breakout Sessions for each of the session tracks were next on the day’s agenda, sandwiched around lunch in the main ballroom. The Breakout Sessions featured many open forums that allowed the audience to actively participate in the conversations, leading to active and productive discussions that were informative and engaging. The day’s speakers were knowledgeable and well-prepared; getting the most out of the information and the audiences while sharing their presentation messages.

Following the afternoon Breakout Sessions a General Session was hosted by former FBI profiler Joe Navarro, who discussed “Dangerous Personalities.”  Navarro how to identify the four most common “dangerous personalities” and analyzed how much of a threat each one can be: the Narcissist, the Predator, the Paranoid, and the Unstable Personality. He reviewed the characteristics common to each of these personalities, and offered advice on how to deal with these personalities when revealed in the workforce.

The day’s events ended with a networking session in the Exposition Hall. The traffic in the Exposition Hall was strong and steady on the first day of the show, and conversations appeared productive. Many seemed intent on speaking with specific solution providers, and will likely use Tuesday’s opportunities to investigate new products and solutions.

EyeOnLP: RILA AP 2016 Conference Video Update Day 1

The EyeOnLP video team attended the opening day Monday April 18thof the 2016 Retail Industry Leaders Association (RILA) Asset Protection Conference at the Gaylord Texan Convention Center just outside Dallas, Texas.

The day after severe storms in the Dallas area disrupted many of the attendees’ arrival plans, the conference started with a rousing opening keynote delivered by David Lund, LPC, vice president of loss prevention for DICK’S Sporting Goods, who drove 15 hours from Charlotte, North Carolina, after his flight was cancelled.

Hear comments from attendees about Lund’s presentation, other educational sessions, and observations about the exhibit hall, as well as few highlights from Joe Navarro, who delivered the day one closing general session on “Dangerous Personalities.” Navarro served as an FBI special agent on counterintelligence and behavioral assessment for 25 years.

Watch Emerging Trends to Plan for the Future

Nobody can predict the future. We can look backward and at the present. We can hear about and see certain things that are already unfolding. But it is important to think and plan for the future.

Previously I wrote about how you need to understand your company’s total retail enterprise and how that plays into security and loss prevention. Your company also needs you and your team to be watching and thinking about the future. Tactically, we should be looking at data and talking to people about current and evolving violence, fraud, and theft incidents and trends. We should know where new stores are planned to open, new high-value merchandise we plan to carry, new operational processes, and so forth. We need this information to assess necessary protective action.

You should also be thinking a little about strategic issues—about how your organization and similar businesses are evolving what and how they sell and operate. What macro challenges lie ahead? Demographics, crime trends, buying habits, illegal selling sites, and methods should all be examined periodically.

Skimming over LinkedIn articles and retail magazines can help us all stay a little more up to speed. There are a lot of people paying close attention to shoppers and their wants, needs, and behavior. Loss prevention and asset protection professionals should strive to include a little retail 101 and future trending updates in their monthly routines. How retail will be structured and delivered will absolutely drive what needs to be protected and from what threats. We already see some meaningful emerging patterns.

Read more about the trends effecting loss prevention in the Evidence-Based LP column in the March-April 2016 issue. The contents of the entire print magazine are available online as well as in a PDF version via the Print Archive.

Best Buy Loss Prevention: Changing the Rules

Winning in business, as in sports, requires both offensive and defensive skills and strategies. Certainly nothing is more discouraging to a team than to gain hard-earned points through offense, only to lose the game by giving away points that should have been protected by a solid defense. In most companies, the defensive team is called “loss prevention” and the offensive team, “merchandising and sales.”

At Best Buy loss prevention, we changed the rules of the game. Not only did we teach our defense how to play offense and vice versa, but we also combined the two historically opposing groups and created a new team with a broader role and a larger goal—serve the customer and add value to the organization. The results have been excellent.

Did we change the rules of the game because we thought it would be fun to play a different way? No, we changed the way we were playing because we wanted to stay in the game. Retail shrink, or loss of inventory due to shoplifting, employee theft and vendor theft, and administrative errors, is a significant problem of retailers across the country. In 1995, it was clear that it was a problem for Best Buy, as well.

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Employee Theft Increasing Nationwide

The 2002 National Retail Security Survey, published by the Center for Studies in Criminology and Law at the University of Florida, reported an average retail shrink rate of 1.70 percent of total annual sales, or an approximately $31.3 billion annual loss to retailers. The largest percentage of loss, 48 percent, comes not from shoplifting or individuals external to the organization, but from theft from the organizations’ own employees. This study showed employee theft continuing to increase significantly from the previous year.

Another study, the 15th annual Retail Theft Survey conducted by Jack L. Hayes International consulting firm, found that on a per-person basis, dishonest employees steal approximately 5.7 times the amount stolen by shoplifters.

Biting the Hand That Ignores Them

Employees who feel devalued or not trusted by their organizations often feel justified in stealing from them, reports University of Florida associate professor of sociology Dr. Richard Hollinger. Disenfranchised employees may not only reduce profits through theft, they also may reduce overall productivity by aiding in the deterioration of employee morale through secrecy, lack of helpfulness, and abuse of sick leave or increased absenteeism. A secretive culture breeds distrust and results in a lack of communication both internally and externally. Workers whose voices are not heard or who feel they have nowhere to go in their careers become inattentive to their job responsibilities, feel less of a personal connection with the company, and care less about customers.

Ironically, physical devices and countermeasures installed to reduce theft can aid in creating an overall feeling of distrust, even among honest employees. Experts studying employee behavior do not tell us that employees steal because there are not enough cameras or not enough security tags. Instead, they tell us that workers are significantly more involved in theft when they feel their employers are dishonest, unfair, and uncaring.

Creating a “Low-Shrink” Culture

As the title of five-time Tour de France winner and cancer survivor Lance Armstrong’s book says, “It’s not about the bike.” Technology is only a tool for people to use. No matter which tools employees have at their disposal, those tools won’t be effective in the hands of employees who don’t care. Creative solutions, positive attitudes, and employee loyalty come from people, not technology.

Loss prevention is not about technology and about catching people doing the wrong thing. It’s about preventing loss, or eliminating an environment where people feel it’s right to do wrong. TRAX Software and Consulting founder Larry Miller puts it this way, “The first job of prevention is to create a culture in which people do not want to steal, where they do not believe they can get away with shrink-causing activity, and in which they know that shrink will not be tolerated.”

At Best Buy, we knew in order to have lower shrinkage, we needed to change not only the way we approached Best Buy loss prevention, but also our corporate culture around shrink prevention.

Traditional Methods Were Not Enough

Best Buy Co., Inc., is a multinational consumer electronics corporation based in the Minneapolis area.

Prior to 1995, we began our fight against shrinkage with a traditional loss prevention structure. The responsibilities of the Best Buy loss prevention department were to limit and reduce inventory shrinkage caused by shoplifting, employee theft, vendor theft, and administrative errors. To detect errors we ran operational audits of our stores. To apprehend and recover inventory from theft, we engaged in the customary in-store procedures and theft investigations. The organization had very good results until 1995.

In 1995, our shrink spiked to over 1 percent, and we were forced to take a good look at ourselves in the mirror. We saw that Best Buy loss prevention had become a silo, and it wasn’t working. We hadn’t even been aware that we had a problem. And, we hadn’t been allowing anyone else into our business, so no one could help us see or fix our problem. The numbers didn’t lie, however, and it was clear that the traditional model of loss prevention wasn’t satisfactory any longer. We had to find a way to do something different.

In today’s competitive arena, we needed to find new ways to add value to the organization as a whole. We wanted to be smarter about how we employed our most valuable resource—our employees—not only for better shrink results and greater operating cost efficiencies, but also to ensure that we met employee needs and made them our allies.

The revelations of 1995 started us on a long road of significant changes that have brought positive results not only to Best Buy loss prevention and our shrinkage, but also to other disciplines within the company. We began adopting a more disciplined, employee-driven approach to developing a culture that would encourage and reward employee honesty, ideas, and teamwork—thus reducing shrink and developing highly satisfied, loyal employees.

Multidisciplinary Teams Eliminate the Silo Mentality

First, we felt it was critical that we have a simple retail shrink plan that was developed from the bottom up, not the top down, involving store managers and line-level employees. By trusting employees to develop sound plans, we respect their intelligence and innovative capabilities. In turn, they become more engaged and develop ownership in the success of the plan and the company.

This approach helped us get rid of the silo concept of Best Buy loss prevention. We needed other disciplines within the company, such as retail, to share responsibility and ownership of retail shrink. We did not want to be the lone “hero” because we had already tried that and had failed.

We also felt it was important to try to control areas that were controllable, while retaining an open style of merchandising, the “grab-and-go” ease, for customers. With that in mind, our shrink plan focuses on primarily reducing employee theft and administrative and paperwork errors. Rewards are important, and our shrink plan contains a generous shrink incentive available to all employees, which gives a portion of each store’s shrink savings back to that store’s employees.

At the same time, we started to gain traction around the company retail shrink plan, Best Buy recognized the need to add structure to our other disciplines as well. So, in 1997, the company introduced a standard operating platform (SOP) for each of our store disciplines: operations, inventory/loss prevention, merchandising, and sales. The SOPs enabled us to consistently come to market in all areas of the company and across the entire country.

Embracing Change, Allowing Innovation

Through the implementation of the SOPs, teams were required to take on additional responsibility. Best Buy loss prevention took ownership of the inventory discipline and merchandising took ownership of the media area. The merchandising discipline, which includes the media areas of the store (music, movies, and computer software) has responsibility for setting planograms in stock and down-stocking, store appearance, pricing, ad set, and media revenue and tasking.

By widening their areas of responsibility, the teams were able to view the company from a broader perspective. This not only helped them identify potential efficiencies, but also helped them understand the company from a bigger picture perspective, freeing them to see new ways to improve performance.

Leadership Fosters Better Solutions

You cannot simply drop good employees into new disciplines with a “sink-or-swim” message and expect to get great results quickly. Our teams decided that the way we could be the best partners to our district and regional teams and their stores was to understand their business. The Best Buy loss prevention team developed a program called Integrated Business Leaders (IBL), so we could become added resources for our partners, and they could reciprocate.

We challenged individuals from loss prevention to learn other disciplines’ businesses. IBL is not classroom learning. Rather, it is hands-on, onsite learning that requires seeing another discipline at work, asking questions, listening, and getting involved. The team educated themselves, became resources for each other, and had fun in the process. They learned that if they couldn’t get somewhere or achieve something, they could ask for help from their partners. This emphasis on building partnerships we refer to internally as “ship building.”

Integrated business leaders learn not to ask “How does the organization fit into my goals?” But instead ask, “How do I fit into the organization’s goals?” Not only does this process build cohesive partnerships and mold different disciplines into a single organization, but it also engages employees and provides them with continuing and growing interest and ownership in the company. The more brainpower you add to a situation, the more fresh perspectives, the better the solution.

 

This kind of partnership building without egos can happen only when you have trust, respect, and openness. You have to not be afraid to let people into your business and be willing to use their ideas. You have to have honest follow-up. The employees who thrive in this environment are the team heroes, and they need to be put out in front of other employees to show them what “good” looks like.

Excellent Results, Not the End Game

Since we began these changes in 1995, our shrinkage results have been excellent. Retail stores in general experience an average shrinkage of 1.7 to 1.8 percent of sales, with the best operators reporting 1.0 to 1.2 percent shrink. For the past three years, Best Buy has enjoyed world-class results well below other industry leaders. We achieved these results not with world-class technology, but with world-class people.

Product Process Team

Over the past three to five years, the Best Buy loss prevention and merchandising teams consistently demonstrated flexibility and high levels of success, so we challenged them once again to think outside their boundaries, and in January 2003, asked the teams to combine, forming a product process team.

In taking this unconventional and dramatic step, we anticipated benefits across a number of arenas. Both teams had discovered synergies in their goals. Merchandising had ideas about reducing inventory shrinkage, and loss prevention had ideas that could benefit merchandising and sales. Combining the two teams enabled us to create a new team comprised of the “best of the best” from each discipline, rather than follow the traditional path where a stronger department is forced to take on a weaker department. As part of an “Efficient Enterprise” initiative, merging also reduced costs in Best Buy’s infrastructure.

One of the most exciting benefits, however, was the opportunity for us to “unleash the power of our people,” one of Best Buy’s core values, by giving each member of the new team the opportunity to learn new disciplines, make a difference and contribute in new ways to our organization’s success, learn about their own ability to innovate and grow through tremendous change, and enjoy broader career path opportunities that had not been available to them previously.

The Scorecard: A Means to Learn

As with any major change, you have to expect a transition period where results may slip, being prepared for better results longer term. For us at Best Buy, the first ninety days was a period of definition and learning for the new teams and the product process discipline. In merchandising we did see a decline in productivity in the first three months, while the inventory/loss prevention shrink results continued to be excellent. Longer term, this has been the best year ever for both disciplines.

Looking for ways to take work out of both disciplines, we evaluated both disciplines during that initial ninety-day period as two separate entities with two sets of job responsibilities. We found that we had to maintain most of the responsibilities as they were, but needed, instead, to find a way to execute them as one new discipline.

We also learned that we need one clear set of expectations. The shrink control expectations were clear to all from the beginning, but my leadership team and I did not recognize the need to clarify the merchandising expectations. We put our team in a self-discovery mode during the initial period and failed to recognize that clear expectations could have helped as guideposts. We now have a clear set of expectations for the merchandising discipline.

We continue to handle all of the loss prevention duties within our product process discipline. In some ways, the transfer of ownership from the traditional model to the new model has enabled us to become a better partner to retail, as well, with better results to date. We have always challenged our loss prevention teams to truly add value to the company in nontraditional ways.

We have spent very little time using vehicles such as civil recovery, data mining outsourcing, and loss prevention outsourcing. Rather, we have concentrated on learning inventory, change management, leadership training, and partnership building, both internally and externally with vendors. We think of this as a Deming emphasis—building quality into the system, or in our case, into our people, rather than looking retroactively for “bad apples.”

Because of the unique environment we have created, we realize that we now have to grow our talent internally. Through this integrated approach, we have increased the size of our talent pool, as well as our leadership bench. In addition, we have employees who have more options. They can take very different and exciting career paths within Best Buy if they wish, or they can choose to return to a single discipline for other retail organizations.

In the long run, our increasing knowledge and understanding of these activities has added value to the organization. With our results in mind, I would challenge the loss prevention leadership in other organizations to think beyond loss prevention and look for new ways to add value to their companies.

Unleashing the Power of Our People

We have learned without a doubt that people will find a way to manage through enormous change if we let them. While not a new thought, it came to the fore front during this process that there is not just one right way to manage through change. Sometimes as leaders we try to protect our people by trying to manage their capacity, or their work/life balance for them. What we found is that if we have a clear set of expectations and goals, we need to allow and trust our people to go after those goals, and they will find a way to achieve those goals, while managing their own capacity and balance.

We’ve learned that we don’t just have one set of people doing one job and another set doing another job—it’s all “our job.” Creating an integrated company where we understand each others jobs, roles and responsibilities, and interact like a Venn diagram of three overlapping circles, helps employees understand that we all share the same goal—to take better care of our customers—and have fun and profit along the way. As a company, Best Buy doesn’t need to protect ourselves from our employees—rather, we’ve won because of our employees. We value them. They value themselves and their company.

This article was first published in 2004 and updated in April 2016.

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