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Loss Prevention: What Do the Mob, eBay and Winona Ryder Have in Common?

Loss prevention experts like Tiffany CSO David McGowan say closer integration among security disciplines will go a long way toward managing the retail industry's myriad risks.

McGowan: We like to think that we've done a good job making sure we have the right employees and the right controls in place so that we can limit internal theft. However, when it does happen, it's pretty bad, primarily because of our product. You could take a handful of loose diamond stones and retire if you knew what to do with them.

Rogers: Of course there is a significant price point difference between a Tiffany operation and a major discount chain operation. Tiffany is a different kind of company and can be more selective in the choice of the job candidate than some of the lower-end retailers. Management is more in tune with the employee selection and training.But even with the difference between selling a 99 cent Coke and a $20,000 necklace, there must be some loss prevention fundamentals that remain the same.McGowan: Absolutely. For example, most retailers have a degree of physical security that needs to be maintained, inventory control, the screening of employees, ensuring the integrity of the operation itself through auditing or surveillance....

Rogers: And if you take those common fundamentals and apply five basic tactics to any of them, they're the same throughout the industry. First is prevention: Take appropriate steps to prevent any types of loss. The second tactic is detection. When an incident occurs, the sooner you detect it, the greater chance you have of making a recovery. The third tactic is investigation. After you detect that something has been stolen or that a fraud has been prevented, you have to investigate swiftly and legally. Often [swiftness and legality] are in conflict with each other. The fourth tactic is resolution. In the case of an internal theft at a Target store, the resolution occurs when we have the offending employee in the loss prevention office and we are interviewing him. We want to find out just how much of a loss that employee has caused. At the end of the interview, one thing happens for surethat employee is no longer an employee. In all likelihood we are also going to prosecute that individual, so we have to enter that individual into the law enforcement machine.

The fifth and final tactic is recovery. During the course of that interview, let's say that employee admits to $300 of theft in a Target store. I want to ask that individual to sign a promissory note to pay us back. I'll go one step further: If they have a credit card, a non-Target issued credit card, I will ask them if they would like to put that promissory note on their card, and I'll process the transaction right there. Because I've got a responsibility to make Target whole again. If prevention is the first fundamental, then the employees, buyers and truck drivers who work with the merchandise on a daily basis are the first line of defense. What kinds of training programs are effective in educating those populations?Rogers: The training programs that we delivered to our asset protection people and our store operations and distribution center people were all created internally, based on need and desired results. There are a lot of good training products out there, but we always tended to customize ours.