E Bay May 2011

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E Bay May 2011

  1. 1. PARTNERING WITH RETAILERS by David E. George, CFI, LPC Note from Paul Jones, LPC: At the FMI conference in March, I successful. Similarly, no retailer or wholesaler can sell merchandiseheard an interesting presentation made by David George from Harris they don’t have. Said differently, the supply of a product and theTeeter who frames a piece of the organized retail crime equation demand for that same product must have a synchronized relationshipthat has been missing from our national dialogue. David shares his in order for an enterprise to profitably function.perspective in this month’s column. So how does supply and demand play a role in our fight against If you’re like me, you are exhausted from hearing all ORC? If we as loss prevention professionals were asked where stolenthe bad news regarding organized retail crime (ORC). Sure, we hear merchandise was being sold, the majority of us might tend to sayabout large arrests made on ORC rings, but we all know that as soon Internet sites, flea markets, and a whole host of other locations. Andas one ring is dismantled, the power vacuum sucks in the next in line why not? Every ORC ring that has ever been conquered has beento open up shop in its place. I can’t help but think we aren’t making identified as using one or more of thesethe level of progress that we have all hoped. venues. However what if we, as retailers, Recently, an article in the April 4th Star Tribune stated, “While are unknowingly purchasing the veryretailers spend $12 billion a year to battle organized retail crime, merchandise that was stolen from ourthieves pilfer $15 billion to $30 billion annually, a huge blow to shelves just a few weeks earlier? Whatbusinesses and, ultimately, their customers.” According to this if we are actually causing the “demand”source, it’s official—we are losing the war against ORC. needed for the supply-and-demand This is perplexing given that our profession has never had more principle to work?resources available to it than it does today. We have vendor partners Consider for a moment what iswho have diligently sought to acquire, develop, and improve upon occurring right under our noses. Boosters David George is vicetechnologies to help us do our jobs more efficiently. We continue president of asset steal our merchandise and sell it to a protection for Harris Teeterto invest in state-of-the-art equipment and technology, specialized fence. The fence cleans and organizes Supermarkets, Inc.personnel for undercover operations, training seminars, books, the cache into two categories—pristinemeetings, and committees. We are even seeing legislation enacted all and damaged. The damaged, or marked, merchandise goes toacross the country that addresses ORC, thanks to the lobbying efforts the all-too-familiar flea markets and Internet sites, but the pristineof LP professionals. items are sent up the chain where they eventually land in a repack Armed with these resources, we have collectively taken up arms, operation. Once there, our stolen merchandise is packed in boxesmounted our horses, and staged an all-out assault on criminals who labeled with the same quality names of the manufacturers with whomuse Internet sites, flea markets, cleaning houses, warehouses, and we do business.even illegitimate brick-and-mortar storefronts to move the stolen Consumer-createdgoods. All of this with one objective in mind—stopping professional demandthieves from removing mass quantities of merchandise from our Retailer supplies Boosters steal from the demand retailer and sell to fencestores. With all of these deployed resources, how can we still be ORClosing this war on ORC? Are we to I submit to you that while we are all focused on preventing our Wholesaler (“legitimate” blame? Fence sells tomerchandise from leaving through the front doors of our respective broker) sells to retailer illegitimate brokerscastles of commerce, we never once considered what was coming Illegitimate brokerin through our back doors. Could it be that we have been hitting the sells to wholesalerbullseye of the wrong target? The stolen merchandise, now packed neatly into brandedEconomics of ORC boxes, is sent to wholesalers. Some wholesalers may be aware the Before we answer this question, let’s first consider the merchandise is suspect and others may not, but either way they have“economics of ORC.” We all understand that boosters are part of a plausible deniability. These wholesalers accept this merchandisecomplex business enterprise. But even though these are illegitimate into their inventory waiting for a buyer to place an order. If thatbusinesses, they still operate under the same indiscriminate economic buyer happens to be a broker representing your company, then yourprinciple of supply and demand. No retailer or wholesaler can stock company just created the demand for more merchandise to be stolen.their shelves with merchandise no one wants and expect to be The chart above will help demonstrate this point. continued on page 51
  2. 2. efforts a step further by having LPC and LPQ approved under ParTnering WiTh reTaiLerS continued from page 40tuition reimbursement assistance for his department. I guess hethought it was worthwhile. What do you think? This same vice president then expressed his strong belief Anti-ORC Buying Program The only way to stop ORC is to stop the demand. As loss preventionthat there shouldn’t be a question as to if LP leaders shouldget certified, but rather when they should get certified. He professionals, we have a duty to build an anti-ORC buying program forreferenced the endless challenge that we have all faced with our organizations. Here are suggestions for approaching this challenge:trying to improve the professional perception of our industry. Step 1—Meet with your executives and explain how buying stolenHis challenge to all of those listening: product creates demand for more stolen product. “If you are a true leader and truly committed to this Step 2—Get a commitment that your company will not purchaseindustry, then it should not be a question as to whether or not stolen product, which may entail revamping incentive structureyou should get certified. Rather, you should recognize that it for buyers.is your obligation to get certified. Are you going to lead by Step 3—Communicate expectations to suppliers by establishingexample and be a true leader? Or are you going to jump on the procedures for violations and sending vendors detailed letters.wagon only when you have to, and simply follow the crowd?” Step 4—Create a “right to audit” clause in all supplier contractsNew Foundation Board Members that allows unannounced visits to supply warehouses. The following individuals have accepted nominations and Step 5—Audit for compliance by inspecting lot numbers after youhave been approved to serve on the Foundation’s board of receive product.directors: If retailers only purchased merchandise from legitimate suppliers,■ Lee Bland, Director of Loss Prevention, Stage Stores then wholesalers will be forced to stop buying stolen product. If the■ David George, CFI, LPC, Vice President of Asset Protection, illegitimate sources lose the customers to whom they’ve been selling Harris Teeter stolen product, then the stolen merchandise will no longer have value.■ Jeffrey S. Levitt, Senior Manager Asset Protection, Panera We will always be fighting the sale of stolen merchandise at flea Bread■ William Napier, LPC, Senior Manager Corporate Asset markets and the like, but if we all ban together and build an effective Protection, Cabela’s anti-ORC buying program for our respective organizations, the losses■ Kevin R. Wolfe, Vice President of Loss Prevention, will drastically decrease to such a level that we can finally use our Big Lots Stores progress and resources on more profitable challenges. 51 LP Magazine | May – June 2011

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