One of the issues that came up time and time again in our research, was the question of how quickly ORC has grown in the past ten years or so. Clearly, anyone who has read industry and mainstream media articles, attended trade association conferences, or visited industry message boards has seen a seemingly dramatic increase in ORC during that timeframe. The recent NRF survey on ORC that was released in May had 73% of respondents saying that ORC incidents had increased for them over the previous 12 months. Dr. Hollinger also added a new category to his annual NRSS to report a few years ago to start tracking this issue.
We have also heard some counterpoints to the growth of ORC in the past years. For instance, Charlie points out in a comment on our previous post, that professional shoplifting has always existed in our industry and questions whether we have just given it a new name and expanded the definitions. In fact, if you read our post on the varying definitions of ORC that are being floated about, it is clear that definitional issues come into play anytime you try to estimate the total impact of ORC or its growth. In the 2007 NRSS report, responding retailers still only estimated that about 25% of their shoplifting losses were attributable to ORC. It will be interesting to see how that trends when the final 2008 report is released.
Another consideration is whether part of the “growth” in ORC is attributable to the increased capabilities and attention of retail loss prevention groups. Incident tracking databases – both internal and industry-wide, improved communications via email, and digital CCTV which can be easily viewed and shared may all contribute to increased visibility of the problem. Couple the improved tools with an increased focus on the issue and it is easy to see why it would feel like a growing problem.
Where do we come down on the issue? The simple answer is “We don’t know.” One must resolve the definitional issues before you can make any pronouncements about scope or trend. And, we don’t have any baseline data from previous years. But, regardless of whether it is growing as explosively as it seems or not, ORC is a real issue for many retailers and causes significant losses and we know that is a growing concern for the industry that warrants further research and assessment.
When one reads many of the articles and press releases about ORC, it is easy to feel as if we are talking about one precise type of crime or offense. However, as we put our research together, one of the difficulties we quickly ran into was the fundamental question of “What is ORC?” It seems as if it means many different things to different people. A colleague of mine was at a conference in Boston last year on ORC and three retailers in a row presented on the topic and each one had a different definition. Here are some of the criteria we heard cited during our interviews and research:
- Any shoplifting incident over $500
- Shoplifting for resell
- Any shoplifting that is not for personal use
- theft or fraud with the intent to convert to financial gain
- more than 2 people involved in the theft
Recent articles and discussion have also focused on how cases involving employees get classified. If an employee gets caught “sweethearting” goods to a friend is that a simple internal theft case or is it ORC? Articles in trade magazines over the past five years have also suggested that burglaries, robberies, and cargo theft should be included in the ORC bucket. Should credit card fraud rings be included, as well? What about individuals who create false bar codes to obtain lower prices? What about a single individual who goes to the local A&F store, steals four pairs of jeans, keeps two pairs for himself, and sells the other two pairs to a buddy of his for $10 each? Is that ORC?
Is having a precise definition of ORC necessary? Maybe not, but there is a need for some consistency especially when legislation is being considered at both state and federal levels. In our report, we highlight the common elements that seem to be coalescing from the trade associations and legislative efforts. We would be interested to hear from you about what you think the definition should be and how it is distinguished from other categories of theft.
One would certainly be hard-pressed to find a “hotter” topic in the retail loss prevention space over the last five years than organized retail crime (ORC). Industry articles, conference presentations, legislative lobbying efforts, and increased efforts on law enforcement liason have largely been focused on this issue. As we began doing our research and meeting with practitioners, it quickly became apparent there were differing views of ORC and its impact.
Based on what we saw first-hand in visiting with certain retailers, ORC is clearly a significant issue for some operations. As you can probably discern from industry articles, there seems to be more concern on the part of retailers who sell the following types of goods:
- fashion apparel
- high end accessories / designer goods / fragrances
- OTC / HBA
- baby formula
This does not mean that every retailer who carries these product lines has the same view on the impact of the issue. Nor does it suggest that there are no retailers who carry other product assortments who see ORC as a significant threat to their business. Those retailers do exist.
However, it is clear that there are also many retailers who do not see ORC as a significant issue for their operation or, at least, don’t view it as a top priority relative to other shrinkage and theft related elements. In fact, one leading Vice-President of Loss Prevention who services two distinct retail operations related that ORC was a significant issue for one of his retail divisions, but not at all significant in the other operation because of the distinctly different product mix and market position.
But, while conducting our research, we sensed a bit of contention between the two ends of the spectrum with ORC advocates advancing the thought that retailers who don’t think they have an ORC problem “have their heads in the sand” while those on the other side of the proverbial fence feel as if ORC has received too much attention and is “a game of cops and robbers.”
We hope the white paper and the commentary posts we will be making in the upcoming days on this topic will help everyone look at the issue with some balance and perspective.
The ASIS Foundation has released our white paper – Organized Retail Crime: Assessing the Risk and Developing Effective Strategies – and it is now available in print and on-line at this link. This report is part of the Foundation’s CRISP series which stands for Connecting Research in Security to Practice. In the course of putting this research together, we had the chance to not only review all the available literature on the issue, but also interview and visit with many of the leading retailers who consider this issue to be a key priority. We also had the opportunity to speak with those retailers who do not consider ORC to be a major threat to their operation.
Over the course of the upcoming days, we will highlight some of the findings from the report, some of the unanswered questions from the research, and some ideas about what needs to be addressed on this issue going forward.
From time to time, we post article links or commentary about general management skills and this short article from Talent Management is worth a read. Honest, candid feedback on performance is such an important baseline for effective management and yet most managers in the workplace struggle with it. Read the article here.
The Security Industry Authority (SIA) in the United Kingdom has decided that licensing requirements currently in place for contracted security guards do not need to be extended to in-house security guards. The British Retail Consortium (BRC) lobbied against the proposed extension as the retail marketplace is the largest employer of in-house security guards in the country.
In its report the SIA accepts BRC evidence that retailers have very good recruitment processes for security staff, including criminality checks and thorough training. The report has acknowledged that, “Quite often the training is to a much higher standard than the SIA approved training.” British Retail Consortium Director General Stephen Robertson said: “The Government is right to reject licensing for in-house security guards. It would have piled new costs and bureaucracy on to hard-pressed retailers while adding nothing to public protection. We told the SIA that licensing could not raise retailers’ standards for recruitment and training because they are already higher than the SIA requires. Its report rightly accepts this.“
In the July issue of Security Director News, four retail loss prevention practitioners were recognized as in the “Top 20” under 40 years of age. While SDN covers the entire scope and range of the security profession, they have certainly done a nice job in reporting news in our industry and it was gratifying to see retail LP well-represented on this list. The honorees are:
- Joe Marsico, Global Director of Loss Prevention, Nike Retail
- Matt Daily, Senior Manager of Corporate Security, The Home Depot
- James Hooper, Market Investigations Manager – West, JC Penney
- Bryan Strawser, Assets Protection Innovation, Target Stores
If you haven’t seen the print edition, you can read the electronic edition HERE.
In previous posts over the past couple of months, we started a dialogue on how to be more effective in getting the support of senior management for your programs, budgets, and proposals. We addressed:
- Demonstrating a “Cause and Effect” Relationship
- Speaking the Language of Senior Management
- Knowing Their “Hot Buttons”
- Establishing Expertise Credibility
- Playing Nice in the Sandbox: Relationship Credibility
If you missed any of these columns, you can still them here or at www.PCGsolutions.com/articles.htm.
In this post, we are going to look at the issue of alignment. Fred Smith, Chairman of FEDEX, has said, “Alignment is the essence of management.” Alignment occurs in two dimensions. In horizontal alignment, we talk about how processes are aligned with customer needs. In vertical alignment, we talk about how people are aligned to an organization’s strategy. This is where we will focus in this column.
In their landmark book, The Power of Alignment, George Labovitz and Victor Rosansky have this to say about vertical alignment, “Vertical alignment is about the rapid deployment of business strategy that is manifested in the actions of the people at work. When vertical alignment is reached, employees understand organization-wide goals and their role in achieving them.” If we apply this to the Loss Prevention function, it means that we understand how our work supports the overall strategic goals of our organization. But, as importantly, it also means that others in the organization, including senior management, understand how we support the overall strategic goals.
In his article, “Not A Moment to Lose: Influencing Global Security One Community at a Time,” in the January/February 2009 issue of LossPrevention Magazine, Francis D’Addario identifies the need for alignment between loss prevention and the organization. “We must be conversant with the mission, values, and business objectives of our companies and interdependent service providers to affect ‘all hazards’ awareness and mitigation.”
Last year, Protiviti (www.protiviti.com), a global consulting and internal audit firm, conducted a survey aimed at assessing the differing priorities of executives and Loss Prevention management. Some of their findings were quite concerning. In their opening introduction, they summed it up as follows:
“Retailers appear to have a problem: Their loss prevention management is not always working towards the same goals as those of corporate executives. While the C-suite is developing an overall strategy that all departments in the retail organization – including loss prevention (LP) – are expected to follow, what they identify as being areas of concern may not necessarily align with the priorities of LP management.”
This conclusion leads to the question, “How can you possibly hope to get support for your programs if your senior management doesn’t believe your efforts align to the overall mission of the organization?” Since misery loves company, I will note that we are not the only staff function that faces this challenge.
For instance, the human resources profession, another staff function, faces the same challenge with several studies over the past few years showing the same disconnect between senior management and HR leadership.
This gap or disconnect could be caused by several factors. Some possibilities include:
- We have not articulated our strategy and mission and how it connects to the overall strategic plan for our organization.
- We have not communicated effectively with senior management to let them know our strategy and our progress towards goals.
- We have not defined our mission in ways that are meaningful to senior management. For instance, perhaps we talk about case statistics without connecting them to shrinkage, lost productivity, out of stocks, etc.
There could be many more reasons for the gap. What are your thoughts? Do you think you and your senior management team are aligned in priorities and strategies? If so, how do you accomplish that in your company? Please share your successes or challenges.
Originally published in RILA Report – Asset Protection – February 2009
This short article about a proposed city ordinance in Mesa, AZ that would require “better” security prompted this post on the subject. We have been seeing a trend over the past couple of years in this direction with local cities and municipalities considering and adopting ordinances requiring various security measures, often in the wake of a tragic and/or high profile incident. These ordinances are usually directed at convenience stores, bars, and other “high risk” retail operations. But, increasingly, we are seeing general retail mentioned as possible targets as was the case in Tinley Park, IL after the Lane Bryant shootings or in a couple of different Florida venues.
It seems as if public attitudes about CCTV usage have shifted from wary to welcome, at least when something bad happens. Give us a call if you need other examples of local requirements for CCTV or other security measures.
In Monday’s post, we discussed the first of two prerequisites for persuasion and influence as identified by Jay Conger in his 1998 article The Necessary Art of Persuasion which was published in the Harvard Business Review. The first prerequisite that we covered was expertise credibility – the necessity that others view you as having the knowledge, skills, and experience to know what you are talking about.
However, Conger argues that expertise credibility is wasted if it is not coupled relationship credibility. But, why are relationships important? Don’t we sometimes think that as long as we “do the job we are paid to do” that nothing else matters? Have you ever said, “They don’t pay me to be popular”? It seems that we often equate “building relationships” with smoozing, kissing up, or being manipulative. This couldn’t be further from the truth.
Having relationship credibility does not necessarily mean that you are popular or have lots of friends at work. The first aspect of relationship credibility is that others in the organization trust you to listen and to work in the best interest of others. Instead of simply foisting your plans or priorities on others, you meet with them one one-on-one, get their views on initiatives you are pursuing, listen to their concerns and priorities, and find a way to help them with their top issues and projects.
The second aspect of relationship credibility is that others view you as having “consistently shown strong emotional character and integrity.” This means that you are consistent and not prone to emotional outbursts and mood swings. In the past, when I’ve asked groups whether they would prefer to work for someone who is a jerk everyday without fail versus a boss where you can never tell “which side of the bed they woke up on,” the group chooses the consistent jerk every time. Inconsistency in a relationship is a sure predictor of failure.
When you can establish yourself as trustworthy, consistent, and working in the best interest of the group, you have an edge in any negotiation, meeting, or persuasion situation. Others in the group, will want to help you them achieve your goals and will give you the benefit of the doubt. However, if people don’t trust you on a relationship level, your expertise is wasted and you will lose the ability to bring influence to your organization.
Remember, relationship credibility must go hand-in-hand with expertise credibility. Have you ever worked with someone where the common comment about him was, “He’s a nice guy, but he doesn’t have a clue what he’s doing”? That is not a recipe for success. Like so many things in life and work, you cannot depend on one “magic bullet” to make you successful.
Do you and your department have “relationship credibility” in your organization? Do you have it with certain functions or people but not others? For instance, do you have a strong relationship with the CFO, but not your head merchant or HR executive? Do you have some examples of successes you have had in establishing solid relationships credibility within your organization? If so, please share them and we can generate further dialogue.
In a future post, we will start to look at the issue of alignment and how misalignment derails the ability to build the case for the value loss prevention brings to the retail enterprise. As always, I welcome your views, thoughts, and insights into these issues.
Originally published in RILA Report – Asset Protection – December 2008
In a previous post, we discussed the need to understand the “hot buttons” that really capture the attention of your senior executives. As examples, we talked about financial ROI, risk avoidance, sales risks, and high value theft cases as possible hot buttons. One reader weighed in this month with another example. He wrote, “I n my company, my CEO is all about protecting the integrity of the brand, as it relates to merchandise and customer experience.” Knowing that hot button allows this executive to advance his proposals in light of how they would support this important organizational aspiration.
In this post, we will look at another key factor in gaining board and CEO support for your programs – expertise credibility. In 1998, Jay Conger wrote an article for the Harvard Business Review titled, The Necessary Art of Persuasion which gives a great, easy to understand summary of the two prerequisites for persuading anyone to do anything – expertise credibility and relationship credibility.
Since getting anyone to adopt a new opinion or change an existing one is difficult, Conger argues that to be successful in persuading someone, they must view you as having expertise. Think about it in another context – medicine. If you were concerned that you had a serious health issue, who would you turn to for diagnosis? Someone whose only claim to expertise is that they “stayed at a Holiday Inn Express last night”? In fact, if you had a disease that was really serious, you would most likely seek out the doctor with the best reputation and experience in the area of medicine you require. You would not likely go to an optometrist or even your general practitioner if you had a rare blood disorder.
But, have you ever noticed that it seems like everyone in your organization thinks they know how to do loss prevention? While we should always want the ideas and contributions of others in the enterprise, we also need to do a better job at establishing our own expertise and the existence of loss prevention as a professional expertise akin to accounting or marketing or human resources.
One of the ways we can do a better job with establishing credibility is by increasing transparency. In other words, let’s educate others about what we do and how we make our decisions. Let’s listen to their perspectives and not be defensive. If you learn what they think, you will have a better handle on how to work with them and what you need to do to persuade them to a different mindset. Educate them on our industry. How many people know that there are professional conferences, research councils, text books, certifications, and degree programs for loss prevention?
At the end of the day, we must have more substance in our profession both at the industry level and within our own organizations if we hope to have lasting impact. I highly recommend Conger’s article as he also discusses how you can improve your expertise credibility on a tactical level. Even more importantly, I would like to encourage you to write in with your thoughts, examples, disagreements with this column and any future ones. This space will be a whole lot more useful to everyone if you participate and add your thoughts. Otherwise, you are simply stuck with my opinions…
Do you and your department have “expertise credibility” in your organization? Do you have it with certain functions or people but not others? For instance, do you have strong credibility with the CFO, but not your head merchant or HR executive? Do you have some examples of successes you have had in establishing expertise credibility within your organization? If so, please share them and we can generate further ideas and dialogue.
In a future post, we will start to look at the next element in building the case for the value the loss prevention function brings to the retail enterprise – relationship credibility.
Originally published in RILA Report – Asset Protection – November 2008
Here is a link to a good article in The Guardian, a British paper, about the use of data-mining in the fight against theft and fraud. Data-mining is a hot topic in the U.K. and Europe as it really started to blossom there about five years ago and I would say they are a few years behind the U.S. in the adoption curve but I’m still surprised how many companies here in the states haven’t implemented a robust data-mining program. Read the article here.
At the recent National Retail Federation Loss Prevention Conference in Los Angeles, Dr. Richard Hollinger from the University of Florida presented the preliminary 2008 results. Many of us look to this survey as the benchmark for shrink performance and the figures here will be cited over and over again in the press.
Overall, inventory shrinkage as a percentage of sales (retail) came in at 1.52% with 95 retailers reporting. While this is up from 2007’s all-time low of 1.44%, it is still the second lowest number in the history of this survey that has been compiled since 1991.
Extrapolating this percentage out against total industry sales in 2008, gives a dollar figure of $36.53 billion. From a purist’s perspective, I think this is a bit dicey as the overall percentage is calculated as an average of all respondents shrink percent number and not weighted based on sales volume of responding company. But, we do not have any better source as an industry.
As to estimates from retailers on the sources of shrinkage, the gap between employee theft (43.7%) and shoplifting (35%) continues to inch closer to each other. Final results will be released soon and results may change slightly in the final report based on late survey responses.