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The Quest for Excellence at Saks Fifth Avenue

EDITORS NOTE:Rosamaria Sostilio is vice president of asset protection for Saks Fifth Avenue. She manages the corporate and field organizations and is responsible for investigations, physical security, inventory reconciliation, shortage control, training and ethics, pre-employment screening, distribution centers, and budgeting.

Sostilio began her career on the sales floor at Bloomingdales in Boston before moving into loss prevention as a detective. She joined Saks Fifth Avenue as loss prevention manager in their Boston store before moving to the New York City corporate office fourteen years ago.

Sostilio is a frequent speaker at the National Retail Federation loss prevention conference. She is currently completing a masters degree in forensic psychology.

EDITOR: Saks Fifth Avenue, of course, is one of the premier retailers in the world. Tell us a little bit about Saks as a company.

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SOSTILIO: We are part of Saks Incorporated, which operates a number of department stores under various names. However, we operate as our own entity, Saks Fifth Avenue Enterprises. We oversee 110 stores, 61 of which are full-line Saks Fifth Avenue locations. We are considered a luxury retailer in the type of products that we sell, however were actually structured in more of a traditional department store format. Our stores are large and carry a full assortment of merchandise. Also under our umbrella are our Off 5th stores, which carry designer merchandise at a value price.

The Saks Fifth Avenue mission is to be the most inviting luxury-shopping experience in the world. As an asset protection department, we have to keep that in mind as were building our programs to fit the culture of the organization.

EDITOR: How is your asset protection department organized?

SOSTILIO: I report to Tom Matthews, who is senior vice president of asset protection. The Off 5th stores report directly to Tom, as does risk management. The other corporate AP functions report to me along with the field organization.

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In the corporate office we have four senior directors. One who oversees reconciliation, another over shortage control, one who manages all the physical security and investigations, and one who is in stores.

EDITOR: What about your field organization?

SOSTILIO: We have three regional directors who oversee stores. One of my regional directors is a senior director. Below them, we have directors, and then senior managers and managers.

EDITOR: How are you organized in your stores?

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SOSTILIO: At the store level, we have an asset protection manager and they have detective staff underneath them, depending on their volume. We just recently have gone to a district concept where a larger store will oversee some smaller ones within driving distance.
The way were structure enables us to give our people a great deal of growth potential, which is really important to me. We have a major focus on retaining top talent on how to keep the best people.

EDITOR: What are you doing to keep your turnover low?

SOSTILIO: I believe that we have an incredible associate engagement philosophy within our organization. We empower people to do their jobs. I believe people feel very excited when they have ownership in the program. Everyone here is free to bring ideas to the table, and we discuss them openly. They believe their opinions do count. We have very strong communication here. We go around to staff meetings where we make sure that everyones aware of whats happening in the department, which is very, very important.

Our division is not hierarchical. Our people dont have to go to the next level to get permission. We allow people creativity to customize our programs. I think everyone feels that they have equal ownership in what were doing and thats important to our engagement scores.

EDITOR: Do you do anything as far as recognition is concerned?

SOSTILIO:Absolutely. Recognition is very important to us. We focus on recognition on many different levels. Tom does a great job making sure that our department is recognized inside the company. Our chairman recently took my department out to dinner, which is really unheard of. Everybody was included, from the directors to the clericals.

I personally try to provide a lot of recognition, often in very simple ways. I write a lot of personalized notes. I really prefer a handwritten note to email. I might send a goofy little smiley sticker on something that someone sent in or just a quick line that says Thanks. You did a great job. People love to get that sort of recognition. And I want everyone to feel that they’re important. I think everyone really feels that they have a best friend at worksome with me, some with their peers. And that feeling of camaraderie is very important when you’re coming to a place and working as many hours as we work.

EDITOR: What about more formal awards?

SOSTILIO: We also have annual summits when we bring all the AP people together. We will bring in motivational speakers. We do leadership development with them, and then end with an awards dinner. I pass out eighteen or twenty awards, so that everybody walks away with a beautiful crystal award.

EDITOR: Over the past several years you have enjoyed some significant success in shrinkage reduction programs. What are some of those key initiatives that you have put in place to make that happen?

SOSTILIO: Thats actually a very exciting question because one of the major things that we did, and I have to give Tom credit because it was his vision when he came in, was to realign the inventory controller positions throughout our company. Previously every location had one. Their responsibility was to balance the net receipt journals and all of the books. A lot of retailers have a position like that in their stores. Well, we had a real discrepancy in talent in that area, so Tom asked me to figure out a way of centralizing that function. Once I got over the initial shock of what he was asking, I came up with a way that could work.

We consolidated 145 people to ten people who are managed by a senior director of central journal. They reconcile the books for the entire company. We now have the cleanest paperwork thats out there. We are able to tackle our paperwork problems from a real top-end, global perspective, working with the merchants and with the stores.

It used to be the stores had their own best interest at heart. Their agenda wasnt a total company agenda, so we really werent balancing the shortages and overages appropriately. Now theres a real company overview. The central journal managers have both store responsibility and merchandise responsibility, so what they want to do is really get to the bottom of the problems. Thats been a huge, huge success for us.

EDITOR: Lots of people are going to be excited to hear that because what you are describing is something that usually is not under the umbrella of loss prevention.

SOSTILIO: We also do a lot of cross training within the division. Everyone is reviewed on the shortage number no matter what their responsibility. The accountability goes down to every levelin the organization. Even someone who is in the background check area is reviewed on shortage. That way any decision thats made in this organization is made for the best of the team. Its not, Well, Ive got the cases if they could clean up the paper. Or They need to get more shoplifters.

EDITOR: The number one priority is shortage reduction.

SOSTILIO: Yes. Everyone has their own personal objectives based on their area of responsibility. However, the number one goal for everyone is the company shortage.

EDITOR: You also have a strong internal training program, correct?

SOSTILIO: We have developed something called the Step Beyond program, which is where we take our top talent in the field and form committees focused on some aspect of our business. We have a Step Beyond awareness team, a Step Beyond investigations team, a shortage team, and a store compliance team. What these teams do is bridge the corporate team with the stores, so that were not sitting in the ivory tower making up policies that the stores feel that they cant really implement. So, our top talent comes into New York and works with us quarterly. Then they take the ideas back to the field and help us implement them. We really have a lot of interaction between stores and corporate. I think thats very, very important.

EDITOR: How many people are involved with these teams?

SOSTILIO: There are sixteen people. Its been a big deal. They get awards and theres a lot of recognition that goes with it. In fact, out of the sixteen people, ten have been promoted.

EDITOR: One of the teams you mentioned is the Step Beyond awareness team. I know you have a very successful awareness program. Tell us something about it.

SOSTILIO: The awareness committee has really been working very diligently in coming up with yearly campaigns. We dont reinvent the wheel every single year, but evolve the program over time. We started eight or nine years ago with a program called the Quest for Excellence. Over the years, it has become our own brand so to speak, within the company. Everyone throughout Saks Fifth Avenue knows the Quest program and associates it with AP.
Each year the awareness committee comes up with new twists on the Quest program. This year we used the tagline, Quest: Together We Can. The team develops the tagline and comes up with new ways of implementing the program. For example, we now have our own website on our company intranet.

EDITOR: How are you using the intranet?

SOSTILIO: The intranet allows us to distribute some of our awareness materials electronically. We still send posters to our stores, but a lot of our materials go on the web where they can be downloaded and printed when theyre needed.

EDITOR: Are you using the intranet for other things?

SOSTILIO: We’ve just launched a case management system called APISthats Asset Protection Information Systems. It enables us to take the paper piece out of it and really streamline the process for the stores. Now, I can come in every morning and see whats going on within the organization. It helps me crunch numbers in all different ways and provide a lot of different analyses that tie back into shortage. For example, I can see how many cases Ive had in specific shortage areas. I want to understand that our top cases are coming from our top shortage departments. I want to have intelligent cases based on what our true problem areas are. Were not looking to just generate numbers. Were looking to really penetrate our issues.

EDITOR: Apart from associate awareness, what about specific loss prevention training?

The Quest for Excellence at Saks Fifth Avenue

SOSTILIO: We are big into interactive training. We have several modules right now, including basic and advanced asset protection modules, Wicklander-Zulawski interviewing, sensitivity training, and safety and risk management. None of this is off the shelf. All of the programs are customized specifically for us. It is scripted by us and filmed in our stores, so that its our environment. Thats very important to us.

EDITOR: In looking to hire new people within your asset protection team, what qualities do you look for?

SOSTILIO: I look at some nontangibles about the person. For example, I look at the persons enthusiasm. As a matter of fact, I have just hired an assistant store manager to become a regional director for us. She came out of our flagship store and applied for the position. I dont feel as though you have to have years of experience in AP to be good in this division. I think you need to be a good business person. You need to have enthusiasm, energy, a passion for life, and a passion for what youre doing. I think skills can be taught. But theres a certain quality that cant be taught. Thats what I look for. I want someone whos got a fire in their belly.

EDITOR: Youve created an organization that allows for a lot of mobility. In order to move up in your organization, what are the important traits that you look for?

SOSTILIO: Personal integrity, strong ethical background, strong management skills, positive attitude, excellent communication skills. You have to be a very good communicator in this company.

EDITOR: Having said all that, what caused you to make a choice to go into the loss prevention field?

SOSTILIO: Ive been here now fourteen years and I owe my career to my former boss, Ed Barclay, who took a chance on me when a lot of people wouldnt. I was approached by a headhunter to come here from another retailer. I interviewed with Ed and, looking back, probably didnt have the experience level that I needed to run a store at that time. But he saw something in me, and Im grateful that he took a chance on me.

At the time when I came to the company, I was one of very few women in loss prevention. I have worked very hard to prove that I could do a good job. When Ed left the company and Tom came in, Tom really taught me a lot from a visionary standpoint and pushed me to the next level. Both Ed and Tom gave me the opportunity to prove myself, and, for that, Ill be forever grateful.

EDITOR: Tell us how things have changed within your company since you came there as it relates to women and minorities in loss prevention.

SOSTILIO: When I first came to Saks, I was the only woman in management and there was very little diversity here. It was a very white, male-dominated, navy suit division. Now, in the corporate office, there are more women than men actually. We have every ethnic background here, from Italian to Caribbean to Hispanic. So its really, really changed. We didnt intentionally set out to change it. It just evolved because of the people here because of who Tom is and who I am. Its Toms belief that we find the best people available. We didnt look for men or women or certain ethnic backgrounds. We just looked for the best qualified person.

EDITOR: There are a lot more women in the field today, but there arent enough at the executive level yet. What has to happen to change that?

SOSTILIO: I think women have to take ownership for their own careers and their own progress. You have to believe in yourself and be confident in your own abilities. You cant let people put ceilings up for you. You have to shatter those ceilings and not sit around waiting for someone to give it to you.

Ive heard the word no a lot in my career. But the more someone tells me I cant do something, by God, the more Im going to do it. I dig my heels in deeper and I figure out a way of getting around it. And thats what Ive done for myself. No one has done it for me. Yes, I got the initial opportunity to get into the organization, but then I made the rest happen myself with hard work and believing in myself and making myself better.

EDITOR: As an executive in loss prevention, do you ever get called by other female colleagues to discuss career issues?

SOSTILIO: No, I really dont, surprisingly. I get men who call me, but I dont get many women who call me, and I think thats very interesting.

EDITOR: I thought at one point there was a group of women in LP that was trying to organize itself in order to begin a dialogue.

SOSTILIO: I approached the NRF (National Retail Federation) with that idea, but nothing ever came of it. ASIS (American Society for Industrial Security) has something like that, and I thought we could really use it in our industry. I was willing to head it up, but it never happened.

EDITOR: As you know from our magazine, we devote a column every issue to women and diversity issues.

SOSTILIO: I think thats terrific. would still be very interested in a formalized group within asset protection, because there are so many things women can still learn from each other and work together on.

EDITOR: To share ideas

SOSTILIO: To share ideas, give advice, and network and find out what jobs are open and also to coach and mentor. Im a big believer in mentoring. Ive coached a lot of people who work for me to where they are now, and I believe it works.

EDITOR: Theres been a lot written this year, even in our magazine, about organized retail theft. Has organized theft affected Saks Fifth Avenue?

SOSTILIO: As a matter of fact, we are working with the federal authorities right now on a couple of organized crime rings.

EDITOR: Can you talk at all about the kinds of things that you are seeing?

SOSTILIO: Were seeing organized groups trying to infiltrate our system by having associates hired. Were seeing different ethnic groups in different areas. For example, the Eastern Europeans are really big here in New York. Weve actually sent people to Russia where weve found our merchandise in locations in Moscow. A different group works California. Another works Texas. The different rings are trying to penetrate our systems. Some have been successful, and weve apprehended some of them. But we can never apprehend as much as is out there, so were trying to get the word out that were on to it and hopefully deterring it.

EDITOR: Is this an area where there is a lot of collaboration between you and other retailers?

SOSTILIO: Not enough.

EDITOR: Why is that?

SOSTILIO: I think we just get wrapped up in our day-to-day lives. Its not that people dont want to, because we do talk about such things at NRF or whenever we do come together. But it just doesnt happen enough where we pick up the phone and share information. Its something that we need to do better as an organization and as an industry.

EDITOR: Are you seeing any other types of problems?

SOSTILIO: Were seeing a big increase in information theft hacking and that sort of thing. Weve worked with the Secret Service recently on a couple of cases. I believe information system theft is becoming very important. I have a specialist on my investigations team who focuses on information theft and what the exposures are.

EDITOR: What types of information theft are you seeing?

SOSTILIO: Breaking into emails and getting confidential information. Trying to get into our information systems. Theres fraud and identity theft. Now that were into this whole new e-world, there are so many different avenues that people can attack your company. You really need to be aware of it.

We work very closely with our IT people, giving them suggestions on how to protect our company and what kind of flags are out there that can let us know theres something going awry. You just cant build enough firewalls into a system. Or I guess its human nature, the more you build, the more theyre going to want to try to break them down. So thats an area that all retailers should focus on and work on with their IT people.

EDITOR: Youve talked about a lot of terrific accomplishments that have taken place in Saks Fifth Avenue. What is the most important thing that you did as an asset protection organization to pull it all together?

SOSTILIO: Our involvement with the associates in the company. Our associates are the number one tool that we have. Technology is an enhancement, but it certainly does not replace people. Our associates are the most important asset that we protect far more important than our merchandise or anything else in the building. Its the associates that we educate. Its the associates that we turn to for assistance and guidance. Its the associates interaction with our customers that makes us the best retailer out there. We truly believe in what we do here, and I think it shows in our results.

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