LP Magazine

MAY-JUN 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.

Issue link: http://digital.lpportal.com/i/978254

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SECURITY AT THE SOURCE 41 LP MAGAZINE | MAY–JUNE 2018 RFID, NFC, and QR codes together for tags that capitalize on the benefits of each. And a few manufacturers are using anti-theft solutions to gain competitive advantage in high-shrink product categories, according to Hayes. By building in security measures, these companies can "go to a retailer and say, 'Hey, I understand that this product category is a challenge for you, but what if I take these steps that will reduce the amount of loss?'" That can result in favorable treatment because they are helping the retailer solve a problem, said Hayes. One prominent example is RCA, a maker of tablet computers. By tweaking firmware during manufacture, the company's devices require a code for activation available only at point-of-sale. Without a legitimate purchase, they're bricks. By denying thieves the ability to use the device if they steal it, and thus the motive to steal, the company was able to sell the prospect of fewer losses to forge a more favorable deal with a big-box retailer. Adam Alford, senior director for loss prevention at GameStop, said his team has met with a few vendors in the last few months on the benefit-denial concept, with the goal of being able to put higher-value live products on the floor without increasing loss. Many merchants think such availability is vital to driving brick-and-mortar sales today as customers rely on stores as a place to touch and test products, rather than simply make purchases. Alford particularly likes the strategy's potential in the mobile phone and tablet space. According to some LP practitioners, it's somewhat rare for manufacturers to take individual initiative on theft prevention. The booming connected-home market is an example—smart thermostats, smart plugs, and the like. While these vendors understand their products are in high demand and can be high theft—and will discuss the issue, ask for recommendations, and gladly take measures to prevent their product from being secured in a physical lock-up—it typically stops there. Vendors are not necessarily at the point where they go to retailers to say, "We know theft is an issue, so we've partnered with this solution or built in this technology to prevent theft, and how will this work for you?" That conversation remains rare. The core obstacle is the same as it has always been, said several industry leaders. In some cases, manufacturers may not perceive that they have skin in the game and fail to see an impact on them if a retailer experiences high losses. Small brands may more easily recognize high losses as detrimental, recognizing the possibility that a store may choose to buy fewer of their products, move their products to online sales only, or discontinue altogether a product with high shrink. But large vendors, ones that hold some leverage on retailers, can remain hesitant to implement solutions that are going to raise their costs. "It's not adversarial; they're willing to hear you out," but they often fail to see enough value to drive them to take action, said one LP director. A requirement that high-shrink items must be source-tagged is fairly routine and well accepted by manufacturers, but working on new, innovative solutions can be more challenging, noted the LP executive. While their particular bottom-line interests naturally divide manufacturers and retailers on the issue of retail theft, Hayes sees goodwill—and recognition of the legitimacy of each other's viewpoint—as a viable building block to successful LP-manufacturer collaboration. Rather than a unique challenge, Hayes characterizes the divergence between the two camps as similar to many business relationships. "It's just complicated," said Hayes. "Everyone has positive intentions, but everyone also wants to make their numbers." Cultivating those good intentions are thus an important part of creating effective LP partnerships with product manufacturers. It may sound trite, but it's nonetheless true, that it all comes down to relationships, agreed Richard E. Widup, Jr., CPP, CFE, global corporate security director at RB, which acquired Mead Johnson last year, the maker of Enfamil and other infant formulas. "We all have a part to play, and manufacturers especially," he said. "We need to understand shrink at the policy level and at the store level. And we need to use that to help shape and enhance our partnerships and forge open and Manufacturers in the drug, food, and household goods sectors have tended to be more aggressive in pursuing product protection, according to industry experts. Several LP leaders specifically identified Procter & Gamble (P&G) as a model manufacturer partner, for example. Adam Alford Richard E. Widup, Jr., CPP, CFE

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