EDITOR’S NOTE: Dan Faketty is vice president of asset protection for Southeastern Grocers based in Jacksonville, Florida. Prior to moving into a leadership role with Winn-Dixie in 2005, he was vice president of loss prevention at Harris Teeter, director of loss control for Super Kmart Centers, and regional LP manager at Shopko. Faketty is the current chair of the National Retail Federation loss prevention council where he has played an active role for the past fifteen years.
EDITOR: Thank you, Dan, for speaking with us again. We last interviewed you in 2003 when you were head of LP at Harris Teeter. Fifteen years later you are with Southeastern Grocers. Tell our readers about your current company and its various brands.
FAKETTY: Thanks, Jim. Southeastern Grocers currently operates under four different banners. There’s Winn-Dixie, which is the largest. We also have the BI-LO, Harveys, and a new banner that we launched in June of 2016 called Fresco y Más, which means “fresh and more.” Combined, we have 580 locations operating in seven Southeastern states.
EDITOR: And as the vice president of asset protection, what are your current responsibilities?
FAKETTY: In some respects, I have the traditional loss prevention responsibilities that center on shrink reduction, but the organization has also entrusted us with additional responsibilities that I like to call nontraditional roles. For example, we oversee all corporate safety programs, including accident prevention and investigations. The audit program also reports into asset protection, and we have a field team auditing stores and reporting out daily on results. Additionally, we’re responsible for pharmacy oversight, which involves working closely with our pharmacy business partners to develop and implement targeted controls to ensure we’re in regulatory compliance in order to prevent theft and diversion. This includes using powerful analytic tools that enable my team to monitor the shipping and dispensing activity for “problematic” drugs, such as opioids, and respond accordingly if we see overdispensing opportunities in stores or doctors who may be overprescribing.
Asset protection also has recovery services, which predominately deals with the collection of bad checks and employee restitution. My peers often chuckle when I mention that and ask, “Who writes checks these days?” I can assure you they are alive and well in the supermarket industry. Rounding out the AP areas of responsibility are food safety and business continuity.
When you look at things holistically, I think you’d agree that many are nontraditional roles from a loss prevention perspective. Ultimately, my primary responsibility is building the team, developing talent, working cross functionally with our business partners, and then developing and implementing strategies to help make us successful.
EDITOR: All those areas have financial metric components that would help you measure where you’re successful and what you need to improve upon. Is that correct?
FAKETTY: I would agree. In fact, it’s interesting because most of these responsibilities were not those we went after. Over time, it was key leaders in the executive suite that came to us and asked if we could help drive measurable results by assisting in the development of proactive programs designed to either enhance profitability in the business, minimize loss, minimize brand damage, or all three.
EDITOR: While you’ve picked up responsibilities that many of your peers in food retailing, and many in traditional retailing, do not have. What are some of the challenges that are specific to your company or food retailing in general?
FAKETTY: The competitive nature of the grocery industry presses our organization to continuously look for ways to work more efficiently. As this happens, we’ve been asked to take on additional roles yet remain resource neutral. From a department standpoint, this has been one of the biggest challenges. With that said, we’re continuously looking to do more here if we can add value to the organization.
Ultimately, our department is measured on each of the additional responsibilities we have inherited, which suits us just fine as we pride ourselves on being results driven. If we take on an additional role, it’s not uncommon for us to ask for resources. Sometimes it’s granted, sometimes it’s not, but we find ways to shift or reallocate resources, within the department, to get the job done-continually measuring the business impact financially.
EDITOR: If you think back ten or twenty years ago, LP was basically concentrated on shoplifting and dishonest employee investigations. How would you describe the changes that have evolved to today?
FAKETTY: In my opinion there’s still a strong emphasis on internal, external, and vendor theft. We’re active in those traditional roles here but you can’t ignore other problems that may be negatively impacting the business. What we’ve found is that as a department we can actually do more. I think it’s one of the reasons the organization has entrusted our team to take on the nontraditional roles we’ve been given.
I remember when our organization was purchased by BI-LO. When I first met the chief financial officer from BI-LO, who is now the CFO here, I spent two hours walking him through the asset protection program. When I began speaking about safety and the role we played in developing new programs, the work in defending accident claims, and others, he asked, “Why do you have safety; it’s in operations where I come from.” I said, “Because we have a field staff that can do more than just the traditional roles of theft detection.” At the time we were active in safety for about a year and a half and were making significant progress in accident reduction and cost savings, all of which were measurable. Safe to say he was impressed with not just safety but the other nontraditional roles we had in the department, as I was eventually identified to lead the asset protection team in the new company now called Southeastern Grocers.
In the past, safety was managed by operations in Winn-Dixie, but since we had district asset protection managers in the field, I felt strongly we could help improve results. Considering these asset protection district managers were in stores every day, it only made sense that it should fall under my department. I also ran the corporate safety program in a previous life, and when you see the litigious exposure in supermarkets, especially slip-and-fall accidents and costs associated with workers’ compensation injuries, it made sense to be in my purview. Our CFO agreed wholeheartedly.
Please recognize I don’t want to downplay the traditional roles and approaches to asset protection, but I think if you look at what has occurred in retail over the last fifteen years, you’ve seen better technology, systems, and effort go into measuring shrink. Even here we have the ability to measure what’s missing by category, subcategory, even on the item level in our stores, and we’ve had that ability for seven years now. Based off the data, we can better understand that theft is not the only thing driving shrink. In fact, we have identified process failures as the leading driver.
Put another way, with the data we have available today we can be laser focused on identifying what is driving shrink much more accurately than ever before. By using this same data we can also make smarter merchandising decisions on not just what products are driving shrink but more importantly what isn’t selling in stores. As you know, nothing good can happen to product that sits on store shelves or in the backroom. This also alleviates the need in having so many bodies in the field performing the traditional role of thief catcher, and instead we choose to reallocate those same resources to support other parts of the business. The traditional investigative role is important and will always need to be addressed, but you can now be more focused than ever before in identifying the root cause of shrink and allocating resources accordingly, whatever that is.
EDITOR: What about the impact of organized retail crime? In your opinion, has it changed over time?
FAKETTY: It’s still a serious problem. But as stated, using data, you can identify and truly recognize ORC much more quickly than you could ten or fifteen years ago. Our data-driven approach gives us the ability to immediately see where incidents are occurring, allowing us to address them in real time.
Ironically if you look at external theft in general, you still have amateurs or opportunist. You train your people on how to deter that type of theft. There’s also the local booster-the individual coming into a store and taking all your deodorant, for example, and selling them on a street corner. You then have the more hardcore organized retail crime groups. How you deal with each one of those three classifications is completely different. I am disappointed that our industry tends to focus on the ORC problem only, when the other two, based off frequency, may be driving as much or more of the problem.
Don’t get me wrong; resources must be allocated to deal with the ORC thief. In fact, we’re addressing a problem now as we do this interview. Our field teams investigate and resolve ORC problems as they come up, but from a resource allocation standpoint, we also have our field teams involved in safety, business continuity, audit, food safety, and all the other responsibilities we spoke about.
One thing I will say is we throw every available resource at ORC problems involving violent crime. Grocery stores, in general, still have a lot of cash on hand and as such are prone to armed robberies. When dealing with a criminal enterprise that targets stores, and especially those involving takeover situations, these problems must be addressed immediately.
The good news is our armed robbery incidents have dropped dramatically here over the past ten years, and while we don’t have many, our asset protection field team resolved 90 percent of the ones we did have last year, primarily through the use of technology and our AP field teams. Those are the situations that we’re aggressively paying attention to because they’re putting our associates and customers at risk. This is also an ORC crime, at least when you identify multiple suspects, targeting multiple retailers where the target is cash as opposed to merchandise.
EDITOR: There are a lot of people who believe that crime has turned more violent in recent years. Are you one of those who believes that?
FAKETTY: I don’t have a statistical measurement on it, although we have seen some increases here, mainly customer-on-customer violence, but in some cases customer-on-associate violence as well. It just feels as if there’s more of it, and it is top of mind with the NRF loss prevention council.
Six years ago, Larry Barton, a well-known expert on workplace violence, gave a presentation at the NRF PROTECT conference. A big part of his message dealt with the media and how the statistics on workplace violence at the time were low, yet he was suggesting the media was overexaggerating the true picture. It would be interesting to see what he would have to say today because violence in retail stores is real. I can assure you we have programs designed to proactively prevent and react to these situations if and when they arise. Much of our strategy has been designed through what we learned from Barton. We take protecting people very seriously here and put a lot of effort in keeping our customers and associates safe.
EDITOR: Since you’ve been in your current role, you’ve made significant strides with the use of technology and, I assume, continue to contemplate new technologies that could help your program. Talk about some of those initiatives and solutions that you’ve put in place.
FAKETTY: We’ve worked in this space quite a bit, actually. Five years ago, we launched our AP analytics center, which has been a tremendous success. So much so were adding resources in this area. We’ve also received tremendous support from our executive leadership team for supporting our technological solutions. We take the time and effort when designing our systems to ensure they interface with each other. We’ve made choices to purchase single-source equipment, use the same integrators to install it, and utilize the same software, where possible, to run it. All to be consistent across the enterprise and make things easy for stores and our AP team.
For example, in our AP analytics center, you can immediately link any single transaction in a store to video. But in order to make that happen, you have to ensure that every single camera in every single store is centered on every single register. Since we’re regularly remodeling stores, that can be challenging and takes a lot of effort in preplanning, but we have strong relationships with our construction, maintenance, and merchandising groups, which helps us manage this program.
We’re also involved in remote auditing from within this area. For example, recently our logistics team came to us about a concern with some of our third-party warehouse drivers. They asked if we could identify what time they’re showing up at stores, whether or not they’re actually helping store associates unload freight, and how long, on average, it takes them from the time they park in the loading bay until they leave. While GPS can tell you some of this, it can’t tell you if the driver parks his trailer and leaves the store for an hour or more. We did the comprehensive audit in over 100 stores, and within a few days we were able to report out and resolve a number of issues.
We also use it for monitoring serious incidents live, such as workplace violence situations, and of course use the center for high-profile internal, external, and vendor theft detection and resolution. We’re also using it to conduct remote video accident investigations and evidence preservation by downloading video remotely to a server-based solution, which enables our risk management department to better defend accident claims. Those are just a few examples of how we use AP analytics.
We’ve also partnered with our Store Help Desk. Now, every single incident that occurs in a store is phoned into this team and our operators, who man it 24/7, take the information and disseminate it accordingly. We call this our critical incident desk (CID). We’ve identified seventy-four different incident types. Obviously, if it’s an emergency situation, stores call 911. But if one of these seventy-four incidents occurs, they are phoned into the CID immediately. The information is then keyed into our software program and distributed to the asset protection field team in real time.
On extremely critical incidents, such as armed robberies, burglaries, or aggravated assaults, they are turned around in minutes and forwarded to our AP field team through text messaging with escalations of notification going to district operations managers, regional vice presidents, and others. The AP field team then follows up on each one to close them out.
Once a week I report out to our executive leadership team on how many critical incidents were phoned in from stores, how many were responded to, and how many were closed. We then use the data to ensure we allocate resources into our highest-risk stores through enhanced security tools, updated equipment, even identifying which locations may need a contracted service. Those are just a couple of examples of how we use data to drive technology solutions and allocate manpower as needed.
EDITOR: On another subject, how do you go about providing information, education, training, or awareness to store managers and associates in stores?
FAKETTY: We’re pretty fortunate because our human resources group purchased a learning management system (LMS) from Axonify about two-and-a-half years ago. Ironically, I tried to introduce that company to Southeastern Grocers, unsuccessfully, years earlier. Up until then our asset protection team built all of the AP awareness modules, 180 in total, with the help of another service provider.
When the new HR leadership team came on board and introduced us to the Axonify platform, all we had to do was take the content from our previous work and migrate it into the new software package. We now have incredible insight on every single associate in every single store. What modules they’ve gone through, which ones they haven’t, and how they scored to include pass or fail. Our HR team tracks all of this, so those that don’t score at a satisfactory level have to go back through them.
EDITOR: What accomplishment are you most proud of for yourself or your team?
FAKETTY: I’d reference the success I’ve had at hiring some really good people and putting them in positions where they can be successful, either here or elsewhere.
I’ve been extremely fortunate to have incredible teams throughout my career. Here are a few examples. Will England, who was my director of loss prevention, was recently promoted to vice president of LP for Weis Markets. A few weeks ago I learned that David Homolka, whom I hired and trained years ago at Shopko, moved from vice president of asset protection and human resource for Cabela’s and accepted a position with Duluth Trading Company where he’s now the VP of HR. Mike Limauro, who I had hired and trained at Super Kmart Centers, recently joined Whole Foods as senior director of asset protection. Candidly, there are people I work with here that have the potential to become vice presidents of asset protection at some point in their future.
We have a really good team here, and I believe in promotion from within when we can. If you hire the right people and give them the resources to be successful, they will be. As much as I hate to see people leave, as long as they’re bettering themselves, it’s all good.
EDITOR: Speaking of people, let’s talk a little bit about the structure of your AP organization. If you would, summarize what your organization looks like.
FAKETTY: I have a director of asset protection operations, who manages the field from a traditional asset protection and safety standpoint. Within that structure, he has four regional directors that report to him. Under the regional directors we have asset protection district managers, and they support a territory or group of stores.
We align ourselves as best we can with our district operations managers. Our AP field team is responsible for executing all the strategies that are developed, and ultimately cascading it into stores. This group performs all the traditional AP roles including investigative work in the field. They also handle those seventy-four incident types that are identified and reported by our stores. Depending on the severity of the incident, they are our first responders.
I also have a senior director of food safety and audit who is responsible for our food safety program. The field audit team reports in through this area.
There is a senior manager of corporate safety, whose office is here in Jacksonville, and he has regional safety managers in the field.
I have a senior manager of pharmacy oversight and AP analytics. She runs our AP analytics center and is responsible for pharmacy oversight, which, as mentioned, is an important part of our added responsibility here. There’s also a business continuity manager and a senior manager of physical security, both of whom report directly to me.
EDITOR: You’ve been an active leader in the LP industry apart from your contributions to your company. Looking at the industry as a whole, what are your observations about the evolution of LP executives?
FAKETTY: First, while retail is changing at a dramatic pace, I wish there were more loss prevention executives changing with it. For whatever reason, we seem to hold on to our old-school thinking that the detection, apprehension, and prosecution of shoplifting suspects and associates involved in internal theft will hopefully keep us employed. Unfortunately, those that continue to follow that mindset and make it the staple of their entire programs I fear are missing out on opportunities to make their companies more profitable.
Additionally, absent strong metrics that support an ROI model for an asset protection department, it’s not if but when someone knocks on your door and asks, “What do you do for us?” This is especially true now due to mergers, acquisitions, replacement of CEOs, or when the dreaded consulting group is standing outside your office door. While not a popular position amongst my peers, I feel strongly that this is a contributor as to why some leaders in our industry have been replaced, asked to step down from their positions or, in some cases, causing entire asset protection departments to be eliminated.
EDITOR: As you’ve discussed earlier, you obviously believe that LP executives should take on added roles in their companies. Why do you believe that?
FAKETTY: I believe there are five reasons. First, I believe strongly that asset protection professionals can do it better. Second, done right, you will be able to produce a strong ROI, often with the same or perhaps even fewer resources. Third, you will add immediate credibility to your program and be looked upon as a problem solver. Fourth, you won’t need to self-promote within your organization because your executive leadership team will do that for you. Lastly, it protects you and your team from possible staff reductions or job loss.
EDITOR: That’s tremendous advice, Dan. Let’s turn our attention to the upcoming National Retail Federation’s PROTECT conference in June. You serve as the council chair. What does that role encompass?
FAKETTY: I don’t think most people understand just how large the conference has become over the past fifteen years. It’s the largest annual LP conference in North America with a solid track record for educational content. While at Harris Teeter and now here at Southeastern Grocers, I’ve been fortunate enough to receive the support of our CFO, whom I report to, who has allowed Southeastern Grocers to become an NRF member company. He has also been incredibly supportive as evident by him personally approving that I be able to take on the additional responsibility of NRF LP council chair.
My role is to provide leadership, make recommendations on issues that may be impacting our industry, and, more than anything, support the seven different committees within the loss prevention council. The seven committees include awards and recognition, legislative, education and research, diversity, women in LP, the investigative network, and content planning. The last committee works closely with NRF and makes recommends on education content for the conference, location, and even making recommendations for keynote speakers.
Throughout the year I am in touch with the vice chairs through meetings and conference calls where we discuss hot topics that are impacting our industry. I also support the committees to achieve their goals and objectives. All in all, it’s a great group of executives doing great work for the industry-all of whom volunteer their time. I’m proud I can be part of it and flattered that our president and CFO support me in the role.
EDITOR: Where is the conference this year, and do you have any presentations you are especially looking forward to?
FAKETTY: The 2018 conference is at the Gaylord Texan Resort in Dallas on June 11 to 13. I’m very interested in hearing our keynote speaker, Marv Ellison, who started his career in loss prevention and is now chairman and CEO of JCPenney. He’s speaking on “managing through change and adversity,” which he’s certainly been living in the department store world.
With the recent impact of Hurricanes Irma and Harvey, we felt strongly that we needed sessions on disaster recovery and crisis management. We have several speakers talking about how to build a disaster recovery program and others who will talk about how they specifically handled those recent natural disasters.
We have presentations on cyber crime, which continues to be top of mind, not only with chief information officers but also in LP as it’s typically a big responsibility in our world.
There is also an interesting session called “Power Posse” with Melissa Mitchell on decoding nonverbal cues, which I’m really looking forward to.
EDITOR: Dan, we’ve talked about a lot of different things today. Is there anything that you would like to say to conclude our interview?
FAKETTY: There has been a lot of conversation over the past few years about loss prevention programs being downgraded or even eliminated, based on changes in retail. I don’t believe that will be the case at all. If I could recommend anything to anyone in our business, it would be to look for nontraditional ways you or your department can enhance your company’s profitability, even if that means taking on what you may feel is not in your job description. By taking on additional roles and measuring the impact consistently, you will put yourself and your department in good standing with your organization. There are some in our industry that shy away from this mindset, and I think that’s unfortunate.
While we will always be asked to show our impact on shrink, there is much more that we can do, and I feel we should embrace new roles and responsibilities, especially in this ever-changing retail environment. I think if more industry leaders thought this way, they could make an even larger impact in their companies’ success. This is not a dying profession as some have told me; it’s one that’s continually evolving, and it’s a very exciting time for loss prevention professionals, especially now.
EDITOR: Well said, Dan. We look forward to seeing you in Dallas in June.