LP Magazine

NOV-DEC 2018

LP magazine publishes articles for loss prevention, asset protection, and retail professionals covering shrinkage, investigations, shoplifting, internal theft, fraud, technology, best practices, and career development.

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A fter a long career in loss prevention, including twenty-six years at Best Buy, Paul Stone, CFE, LPC, is now experiencing unparalleled results. Tempted out of semiretirement six months ago, Stone joined Goodwill Industries of Southeastern Wisconsin as its vice president of security. "We have zero shrink," he said, a smile in his voice. "It is, by far, the lowest I've ever had in my career." He's joking. When you're accepting and selling donated items, it's impossible to know, really, how much diversion is going on. Traditional inventory tracking doesn't exist. Valid shrink figures can't be calculated. But while a standard performance metric may not apply, the importance of successful loss prevention is the same for a nonprofit as it is for any retailer—and perhaps more so. When LP leaders work for a cause-driven organization, revenue protection truly is "mission critical." "Whether you're at a big box store or a place like Goodwill, all of us in LP are trying to do the right things for our companies," explained Larry Hartman, director of risk management, loss prevention, and safety at Goodwill Industries of Central Florida. "Usually that protection of assets is helping our companies' sales. In our case, it's providing the revenue we need to carry out our missions." Goodwill is a big operation. It has 161 member organizations, comprises 3,250 North American stores, and has approximately 130,000 employees. It's the second-largest nonprofit in the US, serves 36 million people annually, and has helped put people to work since 1902. It is both ubiquitous and well regarded; yet, it can be oddly misunderstood. People typically know that there is charity going on behind the scenes—that good works are the driving force lurking behind its model—but the face of Goodwill is its retail locations. Its thrift store business is at the heart of its public image. So, for many people, there may not be much consideration of Goodwill beyond it being a good place to shop and a convenient way to get rid of clothes that no longer fit for a tax write-off. Until he got involved with Goodwill, Mike Keenan, CPP, CFI, LPC, said he had a very rudimentary picture of it. "But when you learn about all that they do and how they help people in need, it really blows you away," said Keenan, who has led LP at Macy's, Ross, and Gap and is now president of Mike Keenan and Associates, a retail loss prevention consulting company. Goodwill organizations routinely provide job training opportunities and job placement free to disadvantaged individuals. "I found it really fascinating, and I have been moved by the people whose lives I've seen changed," he said. He was so moved, in fact, that his volunteer commitment to his local chapter has expanded significantly, and since April 2018 he has served as the chairman of the board of Goodwill Industries of the Greater East Bay, which serves Alameda, Contra Costa, and Solano counties in Northern California. Before his involvement, however, "I mostly thought of it as a donation drop-off place," said Keenan. "I didn't know much about the mission or what it did." Regardless of geography or size of Goodwill territory, LP leaders we interviewed cited awareness and perception as a primary determinant of LP's success. Theft depends significantly on the extent to which employees and members of the public equate Goodwill's mission with its thrift-store items. If that connection doesn't exist, then the items on store shelves or at donation drop-offs are someone's unwanted items or junk—and, to many, freebies for the taking. "Philosophically, when you've got donated product coming in, people see it as free. And because of that 'free' notion, they are certainly tempted to take it," explained Keenan. "The 'free' attitude permeates everything about inventory loss. When people think it's free, they don't treat it as carefully. You can get in nice glassware, and someone will just throw it in a box." The "free" attitude toward donated items underlies risk for a nonprofit retailer. And it is partly why some struggle financially even though inventory truly is, well, free. "Every Goodwill on the planet should be profitable, but some struggle because they lack efficiency and execution—and because of theft," said Keenan, who is taking aim at exactly those items in an effort to solidify the unsure financial footing of Goodwill of the Greater East Bay. Trying to alter the "free" mindset is at the core of Goodwill LP programs, but implementing culture change is in addition to—it does not replace—typical retail risks. Resellers pose a problem. Stores get hit by organized retail crime (ORC) gangs. Price switching—yes, price switching—is a common scheme. Goodwill stores also face other unique risks, such as the fact that store associates are often individuals who would never pass a background check at a major retail chain. In short, Goodwill offers LP leaders a rewarding place to apply their talents, but it's not easy work. "Thrift stores are a billion dollar business," said Carlos Garcia, director of loss prevention for Goodwill Industries of South Texas. "But it's also a million-dollar LP nightmare." Paul Stone Mike Keenan Carlos Garcia 16 NOVEMBER-DECEMBER 2018 | LOSSPREVENTIONMEDIA.COM MISSION DRIVEN

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