LP Magazine

MAR-APR 2019

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 mong television business announcers doing stock market play-by-play, tit-for-tat tariffs and the "slowing Chinese economy" are frequent causes of shrill alerts and fretful dissection. Fundamentally, however, there is a bigger China story developing. This is the year that China will push past the US to become the leader in retail sales. According to calculations by market research firm eMarketer, growth of 7.5 percent will put China's retail economy at $5.6 trillion, exceeding the US by $100 billion based on its 3.3 percent growth projections. American businesses have taken notice. In a quarterly conference call in January, Starbucks' CEO Kevin Johnson said the company is "comfortable and confident" with its strategy in China, which remains, despite current softening, the coffee chain's fastest-growing market. "We continue to play the long game in China," he said. It's not just China, of course. When retailers squint into the future to see where sales growth will come from, eyes often focus on opportunities and operations abroad. Capitalizing on that vision is complicated, however. It's the uniform view among global risk analysts that the world is becoming more uncertain, more dangerous. Twenty-two percent of countries, for example, were rated as "high" or "severe" risk in a 2018 guide to political risk, terrorism, and political violence by Aon, an insurance and risk services firm. Bruce McIndoe, president of WorldAware, a global risk management firm, sees two emerging risk categories that pose a particular risk to the global aspirations of retailers: societal risks and the escalation of friction between nation states. "While we always have had to deal with societal risks, such as citizen unrest in response to labor, human rights, and corruption issues, there are a number of countries where divisive issues are currently fracturing the society," McIndoe told LP Magazine, specifically citing risks from the rise of nationalism and populism across Europe and Asia as examples. "Similarly, while friction has always existed between nation states, rising globalization has coincided with more frequent instances of friction between countries over geopolitical issues ranging from trade, to domestic security, and beyond." Matthew Bradley, regional security director at International SOS + Control Risks, similarly warned of risks to people and operations sparked by civil unrest and political instability. He additionally noted the growing risk from natural disasters and street crime to retail personnel engaged in sourcing and visiting manufacturing hubs, such as in Southeast Asia and Central America. "In many cases, preparing travelers for a high-risk location will mean measures to help keep workers safe from local violent crime," he said. Those threats are reflected in the priorities of global loss prevention departments today. "I am concerned about international conflict—and how that impacts our travelers, expats, and basic employee safety," said Debbie Maples, vice president of global LP and corporate security at Gap. She and others cited a wide range of global threats that are keeping them busy, from the yellow vest protests in France to potential fallout from the Huawei hullabaloo. It is a dynamic risk picture that puts LP squarely at the center of a retailer's ability to exploit a growing global marketplace. Case in point: American Eagle's expansion into Mexico. Benefiting from a forward corporate vision, which provided an abnormally long lead time to plan and the resources necessary to execute, the company's LP team was central to successful expansion. "Three years before going into Mexico we wrote a white paper on what we were going to need to do in order to do it right and establish a strong LP presence in each of the retail locations," explained Scott McBride, the retailer's vice president of global loss prevention, safety, and security. He said LP was "unapologetic about how strong we wanted security to be" and that management saw value in giving them everything they needed. The "full court press" paid off. A few years in, American Eagle's twenty stores in Mexico had the best shrink rate in the company, with a loss rate of close to 1 percent of sales. That impressive shrink rate was particularly critical in an environment with a supply chain that Bruce McIndoe Matthew Bradley Scott McBride Debbie Maples For LP executives with global supply chain security responsibilities, typical problems are often amplified. The risk of criminal attacks against goods in transport is often the same—or higher—while traditional loss mitigation may be absent. 16 MARCH–APRIL 2019 | LOSSPREVENTIONMEDIA.COM MAKING A WORLD OF DIFFERENCE

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