Following a year that laid waste to retailers’ plans, trying to assess the path forward can seem foolhardy, but taking stock of where LP is—and is going—may be more important now than ever.
Before COVID, the industry was certainly in flux, but its transformation seemed somewhat predictable. Asset protection challenges are never uniform, but there did seem to be something of a consensus on where we stood, how opportunities were unfolding, and how the LP mission was evolving. Then 2020.
To what degree, if at all, has the industry’s trajectory been substantively altered—even as the end to the pandemic is finally in sight? What about a year dominated by managing the crisis at hand will have a lasting impact on LP’s strategic mission? How have priorities changed—or have they? Or more simply put, what now?
Back to Basics
For Tina Sellers, vice president of asset protection at Rite Aid, 2021 may mark a return to LP’s founding principles. “For a very long time we’ve tried to move away from a cops-and-robbers approach and have more of a business outlook on shrink,” she said. “But I’ve had to get back in touch with my roots.”
She says she finds herself examining core questions about theft prevention: “Do I want to use security guards, and how do I want to use them? Does it make sense to have hourly employees touching shoplifters? And what do we do when police announce they’re not going to respond? How do we handle crime in stores when people just load up the cart and head for the door and associates just get shoved out of the way because they’re spoiling for a fight?”
From Sellers’s vantage point, it’s a “different world” today. Between specific conflicts over mask wearing and the anger, anxiety, and economic fallout from COVID-19 more generally, she says disrespect for staff, the risk of violence, and losses from theft are all at elevated levels entering 2021. Drug store sales have been strong, which has helped offset increases in shrink, but it’s a problem Sellers sees dominating a greater share of her attention in the year ahead. “My focus is on how to get shrink under control,” she said, suggesting that she sees many of her peers in the same position. “To some degree I am going back to basics and the early days of LP when we were much more security-based.”
Many retailers feel that today’s criminals approach store theft with a sense of entitlement, and they lack the same fear of being caught that they’ve had in years’ past, according to Dan Reynolds, vice president of retail sales at 3SI Security Systems. “They walk out with an attitude of ‘just try to stop me.’ It’s amazing how blatant violent criminals have become.”
Consequently, protection strategies and employee safety seem certain to be at the forefront this year for a growing number of retailers—and not just for late-night convenience stores but also for all retailers at any time of day. “I think we will see the implementation of real-time technologies that not only provide 24/7/365 protection but also have direct ties to law enforcement,” said Reynolds.
“We’re all concerned a bit by how much bolder the bad guy is,” according to Mark Stinde, MBA, LPC, vice president of asset protection at Kroger. “And now we’re seeing an increase in ‘theft for need’ or the rationalizing of theft because of the times. That’s something that we’re encountering as we speak, so we’re trying to figure out how to respond to that.”
Although 2020 hit some retailers hard, others thrived financially. Like Rite Aid, Kroger was able to “outsell shrink in 2020,” according to Mike Lamb, LPC, the company’s vice president of asset protection until he retired late in the year. Indeed, they managed to maintain their thirteen-year streak in year-over-year shrink improvement despite the challenging conditions and multiple distractions—but the coming year could prove tougher. Although he won’t be around to directly contend with it, Lamb expects more pressure on shrink in the coming months as the events of 2020 drive economic consequences into 2021. “For retail, shrink has a long tail,” Lamb noted. In addition to demand, staff focus can also present a challenge. “You can lose some of your operational discipline in the store when you’re working hard just trying to stay in stock and meet customer needs and managing crowds.”
The situation could get very bad indeed. Depending on the amount of relief that state and federal lawmakers provide, economists predict the number of people falling into poverty in 2021 will land somewhere between concerning and catastrophic. “Risks will be exacerbated by pressure on consumers caused by increasing job losses, home evictions, and increased overall debt as people try to survive,” said Jason Cheung, fraud product manager at Digital River. “A rise in desperation may drive a rise in on-premises theft and broaden the customer type who’s willing to attempt theft.”
The trend could force LP to focus more on shrink caused by theft and fraud, according to some practitioners. One LP executive said he’s seen a tilt toward intentional loss compared to operational shrink, and he expects to put extra effort into hardening targets in the months ahead as a result.
Technology will certainly play an outsized role in retailer efforts to reverse the crime trajectory, and LP executives like Stinde think better solutions are starting to come into focus. “I think there is an increase in use cases for [artificial intelligence]. It’s becoming a real thing,” he said. He pointed to new self-checkout technology that stands to save his company tens of millions this year. “I think applications like that are only going to expand and leveraging that will be a big deal.”
ORC Remains a Priority
Allied Universal (AU) supports retailers with a range of services, from supplemental officers in a crisis to providing fully outsourced LP departments, and it expects to see organized retail crime (ORC) worsen in 2021, according to Craig Matsumoto, vice president for AU Risk Advisory and Consulting Services. “We definitely see the increase in activity in ORC, and I think most retailers will say they’re anticipating an increase.”
Renee Micek, business development manager at Avery Dennison, holds a similar view. “ORC will continue to be a concern in 2021, and changes in law enforcement response and a focus on budgets and expenditure is forcing retailers to adapt quickly,” she said. “Retailers must be able to combat these criminals with different methods and provide a focus on safe and nonconfrontational solutions for the sake of their employees and their customers. There is no one perfect method, but it will be a primary focus that all retailers must deal with.”
Lack of support will continue to complicate the challenge facing retailers, according to Fred Burton, executive director for Ontic’s Center for Protective Intelligence. “As cities begin to reduce their police budgets, there will be fewer officers on the streets, and the burden of care will fall to retailers to provide a safe and secure environment for their shoppers as well as their property,” he told LPM. “In essence, fewer cops mean fewer investigative efforts devoted to property crimes.”
To disrupt ORC gangs and protect against them, both staff training and an effort to affect more arrests are likely to be a greater strategic priority for LP teams and the industry in 2021. “The impact of ORC is one of the key items LP practitioners are building into their strategies, especially because of the trend toward greater violence and brazen theft activity,” Matsumoto said. “We’ve found a lot of retail companies have placed greater emphasis on training, awareness, de-escalations techniques, and programs that empower employees, because they might not be able to stop a theft from happening, but they can do things to minimize the number of stolen items.”
Turning Challenges into Opportunities
At the store level, disruption in the broader retail industry could be an opportunity for LP, suggested Jeremy Prout, director of security at International SOS. As stores change formats or focus, there is a chance to revisit designs to identify problems they might be able to mitigate. “It’s a good time to take advantage of the reorganization of stores,” he said. “There has been inertia, certainly; people do things a certain way because we’ve done them before, and this is an opportunity to revisit those assumptions and see if they make sense. To see if we can’t make better decisions around LP about how we put out our stock, how we organize our stores, how we protect our stores, and to be deliberate in making those reassessments.”
At the industry level, Matsumoto thinks retailers are doing a better job collaborating than ever, and they will need to continue to strengthen information-sharing channels to keep pace with ORC activity, as well as to enhance mobile surveillance to build effective cases against ORC groups.
Collaboration is frequently cited as an important industry theme for 2021 by LP professionals. Many praised coordinated efforts to combat ORC, but there is also a desire to see similar efforts on other fronts, especially in representing the industry’s concerns to legislatures and government officials. One LP executive cited recent ordinances that put staff associates in the untenable position of enforcing mask mandates as an example of the need for the industry to earn greater sway with lawmakers.
In terms of security, many pros are asking basic questions as conflict persists between “hands off” store policies for door-security personnel, more aggressive criminals, and a fraying social fabric. How does the industry regain its traditional crime deterrence? How do we most effectively protect and prepare store personnel for the situations they might face?
Sellers suggested that store security would benefit from the same kind of focused collaboration and consensus building that has helped in other areas, such as joint efforts to battle online selling of counterfeit merchandise. That type of effort needs to happen around the serious crime that is happening in stores, she said. “I think it’s really necessary for retailers to pull together and have one voice as we approach law enforcement and legislators,” she continued.
The safety of store personnel may depend on it. “Security is a big thing, and we’re all challenged in this regard—physical security, and the safety of employees, and what that looks like—so we can get to a place where it’s not unsafe for people to show up to work in a retail store,” she said. “There is a lot of networking and sharing of ideas that needs to happen in our industry. If we all move in a direction together, and operate less as individuals, everyone benefits.”
That same “we’re in it together” mindset could also put a new frame around retail shoplifting—cooperation that may prevent first-time offenders from becoming lifelong thieves and put retailers in a better position to argue against legislative efforts to further reduce penalties for retail theft. “There has been an attitude [in LP] of ‘kill ’em all and let God sort them,’ but there is a line of separation to draw between the habitual crook and the first-time offender,” said Mike Lamb.
Kroger signed on to a coalition of retailers spearheaded by the National Association for Shoplifting Prevention (NASP) to invest in educating rather than prosecuting first-time offenders. Lamb notes that the industry has consistently invested capital dollars in public-view monitors, camera software, and similar shrink control measures, but that little money has been put toward education. That has hurt the LP mission—not only because such spending would lower recidivism, says Lamb, but also because its current approach has often put retailers on one side of the problem and an overburdened judicial system, law enforcement, and legislators on the other. In the wake of George Floyd’s killing, for example, some in the press took a shot at retailers for perceived hypocrisy. On one hand, advocating for inclusion, diversity, and social justice in press releases and tweets but then “contributing to mass incarceration” with constant calls to police for minor crimes on the other.
A demonstrated commitment to education for first offenders would put retailers in a stronger position to advocate for tough penalties against chronic offenders, according to Barbara Staib, NASP’s director of communications. “Then we can go to legislators and show that our goal is to keep people off the path to incarceration and show them the positive force we are,” she said. “It’s an idea being embraced far more now than a year ago. People are seeing the importance of being strong enough to bend.”
The idea was met with open arms by Kroger’s corporate affairs department, which assisted with funding and wondered if it wasn’t an idea they should expand—educating store associates who make a first minor misstep rather than terminating them.
In 2021, it will be hard for retailers to gain legislative support for any measure that is going to increase incarceration, according to Staib. “We need to put focus on felony offenders and unsafe situations in stores but do that while we stop feeding the criminal justice system. [We do that] by giving free second-chance education for low-level offenders,” she said. “We’re saying you can have it both ways, both reduce incarceration and hold those who repeatedly steal—and make our stores unsafe—more to account.”
There is a lot of inconsistency around how law enforcement and retailers handle shoplifting, and that has made it tougher for the industry to fight against it, said one industry executive. Retailers would be better served if it spoke “more with one voice and planned cooperatively” in the same way it has come together on other issues. Cooperation in affecting arrests should be mirrored by cooperation in forging a strategic approach to shoplifting, he said.
With many subjects ripe for collaboration, Tina Sellers looks forward to the end of the pandemic so that forums for in-person networking and cooperation can resume. She thinks the industry has “tried its best” to maintain connections and that virtual meetings of smaller groups have been helpful, but something has been lost without large events bringing together many LP practitioners to exchange ideas. There is only so much solution-sharing and networking that can happen over email, she noted.
Retail changed because of the pandemic, and it will surely morph in concert with the pandemic’s fade in 2021, but Sellers doesn’t expect anything to be different with respect to the heightened social tensions that sparked sustained looting and destruction of retail properties in 2020. “We’re starting to feel good about vaccines, but the civil unrest that happens every time a person of color is killed by police is still very much with us,” she said. “Nothing has changed since last time, and it will happen again. And people who want to loot my stores for drugs are lying in wait.”
Adaptable Crisis Planning
Sellers and several other LP pros said they blew up their security budgets in 2020 and are looking to improve their ability to learn about, assess, and react appropriately to potentially explosive events in 2021.
AU’s Craig Matsumoto agrees that crisis response and management will continue to be a major theme for the LP industry in the year ahead. Because of the amount of civil unrest last year, he’s seeing substantial interest among retailers in evaluating and enhancing physical security, especially as more face restrictions on internal human resources and the uneven assistance from public authorities. Physical security assessments are big business these days, he suggested. “They’re looking to make sure they have the perimeter protection in place they need to minimize after-hour risks, with laminates, roll downs, alarm enhancements, camera surveillance, and other hardening.”
Topher Cramm, senior national account manager at STANLEY Security, sees retailers focusing on protecting their people in the face of an unpredictable future and evolving threats. “According to our 2021 Industry Trends Report, twenty-four-hour alarm and video monitoring, video surveillance systems, and intrusion detection systems are among the most-used security systems across the globe.”
Focus on business continuity and disaster planning will also have legs in 2021, according to Matsumoto. “They’re shoring up their current plans and testing to make sure everyone in the organization can be prepared in a crisis event.”
Given the pandemic’s scale, Kroger’s Mark Stinde thinks it will probably make retailers better at managing crisis events in 2021 and beyond. “This was a crisis on steroids, so more than anything it showed the value of having a good plan in place and put us in a position to have crisis plans that are better thought-out. All of us got caught short on some things, which can make us better as we move forward.”
Importantly, Stinde thinks the pandemic experience will make the industry take greater interest in conducting tabletop exercises to imagine how it would operate and recover in a range of events. “Right now, it’s pandemic, but it could be a major failure in the electric grid or a massive cyber attack.”
As industry themes, Paul Jaeckle, LPC, vice president of asset protection at Meijer, thinks crisis management and safety are likely to be universal. Like Stinde at Kroger, Jaeckle says Meijer is seeing an increase in theft driven by need, but he also notes some positive trends, such as fewer issues related to the opioid crisis, and suspects concern over shrink in 2021 will track closely to a retailer’s maturity and store format. Managing crisis and business continuity, however, are issues all his peers are talking about, he says.
The importance of flexibility in crisis response was highlighted by the pandemic, says Jaeckle. AP owns a lot of the crisis management program at Meijer, and Jaeckle said he’s now working to revise his company’s health and safety standards as it relates to employee travel in advance of the return to conferences, buyer trips, and in-person vendor business. “We’re rewriting the first part in pencil right now, but even when we get to the point of writing it in pen, it will probably be erasable ink in recognition of the ever-changing nature of the environment that we’re in,” he said. “It’s been proven out that you can have a plan but that it’s not going to hold constant.”
As a grocery retailer, Meijer has always prioritized health. But Jaeckle sees greater attention on employee health as another legacy of 2020. “Traditionally, physical safety issues have been at the forefront, like customer trip-and-fall type stuff, but now we’ve incorporated health, and that is something that will outlast the pandemic, a continued emphasis on health issues as part of the store safety paradigm.” Driving overall mask compliance within stores is part of the effort, and so is ensuring compliance with health department orders and state and federal guidelines. “We want to make sure we position ourselves correctly from a cleanliness standpoint and for execution to our program’s standards.”
Regarding loss issues, Jaeckle sees a need to review processes in 2021 to ensure that no inefficiencies or gaps were created by emergency actions it needed to take in 2020. During the pandemic, the company sourced from vendors it hadn’t normally done business with, which can make it important for a store to review its processes for purchase order payments, shipment verification, validating the accuracy of credits, and to ensure that stores aren’t erroneously setting up POs that have not been fully vetted. “We are finding ourselves playing in that space of protecting the business from the business as a function of speed,” said Jaeckle.
From a store security perspective, Jaeckle says Meijer will continue its effort to strike the right balance between maintaining positive relationships with the communities they serve and store protection. They will work hard, he says, to continue engaging with community leaders to understand planned events and associated risks. “Last year taught us a lot about the expectations of our communities and for a safe shopping environment, and if I had gone in and boarded up all of our stores, we would have lost a lot of trust,” he said. Similarly, Jaeckle wants to continue to be thoughtful in responding to unplanned but potentially disruptive events. “We’ll spend a lot of time trying to understand the what, who, and why instead of just the what.”
It was a point echoed by several industry leaders: reputational issues around crisis response protocols need to be a significant part of the planning. “If you have a peaceful protest planned, and all of a sudden you’ve put up plywood, there are people who will look at you negatively for that,” said Prout.
In addition to its traditional three pillars of safety, shrink, and security, the team at Meijer is adding a fourth in 2021: commitment to diversity, equality, and inclusion. The company has made moves in that area, but the AP department is really leaning into, said Jaeckle. “Specifically, what does that mean for AP personnel, or in stores, and what does that mean for interactions with customers—that’s a new one for us this year.”
He sees the issue as particularly important for LP teams because the public often perceives little distinction between law enforcement and AP. “We saw a lot of what transpired in 2020 centered around diversity, inclusion, and appropriate use of force, and that was all played out in the law enforcement world, and in the eyes of the public we are the law enforcement of the business,” he explained. “We’re trying to better understand the communities we operate in and what are the pressure points for them and for our teams as well.”
Part of the catalyst for the AP team’s effort, which took shape seven months ago, was to be better able to explain to law enforcement the company’s expectation in this regard in those instances when it needs their assistance, as not every past event has aligned with their desire to always demonstrate respect. Its effort has also had an educational piece, trying to give AP team members a better understanding of and appreciation for differences in society, including having them read the book What If? by diversity and inclusion expert Steve L. Robbins. “We’ve chosen to leverage the focus on diversity and inclusion in terms of advancing a mission, instead of avoiding litigation,” said Jaeckle. “They are not necessarily the same thing.”
When asking executives about what 2021 will mean for LP pros, greater resource allocation does not come up. However, while executive leadership may not be inclined to give LP departments more money, there is a sense that—for departments that performed well in a year marked by crises—greater appreciation and respect awaits LP in the year ahead. “I think 2020 illuminated the value of the AP function, and probably the majority of AP teams will benefit from the value we showed and the fact that we stepped up,” said Kroger’s Mark Stinde.
And if nothing else, the looting from this summer is likely to keep LP top of mind for senior management for some time to come. “I think they get it. When you’re having conference calls twice a day, sharing photos and discussing how to repair looted stores, and trying to decide if this is the day we send people back in, they are right there with us. They get what we’re up against.”
Highlighted by the pandemic and significant social unrest, Mike Lamb said his final year as an LP executive was also one of his most demanding. He thinks he leaves, though, with AP’s visibility and esteem on the upswing. The year stretched AP into new arenas, and it has perhaps permanently broadened its playing field. “I think the year has both cemented our place in the business as a critical function and reshaped the expectations of AP teams,” said Lamb. “Having been able to contribute in more and significant ways is ultimately going to be good for LP.”
