LP Magazine

JUL-AUG 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.

Issue link: http://digital.lpportal.com/i/1146652

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Page 20 of 76

than ever to breaking up theft rings and reducing shrink. "The partnership with the analysts is huge. It's the most important part of our having been able to conduct large successful internal cases, breaking up a prolific external refund fraud operation, and even in smaller cases," said Bandaries. "Often, analysts put together everything for us so that literally all we need to do is conduct the interview." Data analysts typically generate cases—identifying data to monitor, focusing on unusual findings, developing information, adding corroborating evidence such as photos or video if available in a case file, and then putting that in an email to AP investigators. "Very rarely do we do some digging and find out that there is not something there or that there is not a case. Most of the time it is dead on," said Bandaries, while also suggesting that a successful long-term partnership can't be a one-way street. "One thing we're always sure to do is to include data analysts in the conclusion of the case, and to say, 'this was the yield of that case' and 'here is what that person admitted to.' Completing the circle helps give them some ownership. Letting them know how cases turned out is extremely important to us moving forward with future cases." Designer Brands shared their success story at NRF Protect. To combat a trend in rising shrink at stores, its AP team began to focus on improved data analysis to make effective decisions, according to Adam Gilvin, the footwear retailer's director of asset protection. "Seven or eight years ago you started to hear about big data. Well, we have a lot of data—we're satisfied with our data—but what do you do with it? Where do you push it?" For answers, AP is centralizing its analytics function and hiring more analysts to build out an elite team that is highly skilled in "data-driven decision making," said Gilvin. "We were too often making decisions on anecdotal evidence or based solely on experience." Pethuyne is one of those recent experts hired to kickstart a more analytical AP approach. Already he is finding success in identifying fraud patterns in online sales, such as whether customer service representatives are sending packages to friends and family. "That has been successful for us, a good case generator," he said. "We also did the same thing with store associates that might be doing it, and we were getting hits right away. It was a good case generator from minimal work." Pethuyne noted the importance of working off a robust data platform (in their case, Profitect) that permits easily transitioning between data in different parts of the business. "You want to be able to easily jump from the sales module to data on the back of the house," he said. "That ability to pivot easily [between data] provides additional value." A data-driven approach is cutting costs as well as reducing fraud at Designer Brands. For example, data noted a significant overspend by stores on expensive EAS tags, and by using analysis to rank shoe brands by theft risk and targeting price points they wanted to protect, they redesigned their EAS strategy, reduced shrink, and secured significant savings for the company by reducing its spending on tags. "That is where having data really shines," said Pethuyne. Still, the industry could improve its use of analytics, said industry leaders. For example, several leading LP executives suggested that the industry can do a better job conducting post-case analysis to show the return on investment of ORC investigations. By putting analytics to work on sales data and inventory turns, the financials of ORC rings, shipping data from fence operations, and other sources, LP teams can put a reliable price tag on investigative cases and cite specific harm in victim impact statements. Taking the time to apply analytics in this way can dispel the commonly held idea that there is no good way For loss prevention, these advances lay the groundwork for increasingly smart pattern detection in retail transactions. Models become more capable over time at identifying previously undetected fraud patterns and better at distinguishing between problematic and legitimate transactions. ANALYTICS IS NOT JUST A NUMBER'S GAME Adam Gilvin 20 JULY–AUGUST 2019 | LOSSPREVENTIONMEDIA.COM

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