Pedro’s Blog

My esteemed colleague, Pedro Ramos, a 23-year veteran of the LP space is now blogging and tweeting.  Check him out:

rethinkLP – Pedro Ramos Blog

Pedro’s Twitter Feed

Microsoft Recognizes Agilence

Agilence was the subject of a recent blog post by Rodney Bowen-Wright at Microsoft.  Rodney is a director of business development and a part of the emerging business team.  Rodney does a great job of summarizing Agilence and our core technology.

Agilence is currently built using all Microsoft technologies including:  Microsoft SQL Server, Microsoft .NET Framework, MSMQ and Microsoft web services.  Agilence is a Microsoft Gold Certified Partner.

The blog post is worth a read! 

The Role of the LP Executive is Changing

That is the title of an article in Security Director News on Wednesday.  The article was based on a speech by Paul Jones, VP of Asset Protection for the Retail Industry Leaders Association (RILA), at a Milestone Symposium in Las Vegas.

The article is quite short, but I thought this paragraph was important: 

Why? Budgets and staffing levels are being reduced yet shoplifting, employee theft and organized retail crime are problems that continue to proliferate retailers worldwide. These days, LP executives are being asked to not only control shrink but develop executive protection, brand protection and crisis management plans in addition to shrink reduction and control programs.

That is a pretty good summary of the role of Loss Prevention in any retail environment.  Its no different than any other role in any other company.  As organizations reduce staff, those that remain have to pick up the slack.  The problem for LP is that their job of controlling shrink is getting harder every day.  Just because people are buying less doesn’t mean they are stealing less too.

In fact, its the inverse that is true.  As sales go down, shrink goes up in a recession.

Social Media in Loss Prevention

One of the outcomes of the FMI LP show was that the folks there need to be able to search across multiple social networking sites to find not only people, but instances where their companies show up.

So, I have done a little searching and it looks like Yahoo is looking into this as well.  In fact, I am pretty sure the next big internet start-up will be searching social networks.  (If I had the money, I would start this right now!!!)

Anyway, here are a couple of sites that might help the folks in Loss Prevention do their jobs more effectively.

• Wink.com – Wink lets you search across multiple social networking sites and also includes background checks.  I quick search of my full name revealed 5 results including Twitter, Facebook, and LinkedIn.
• Delver.com – Another interesting site that is more for social networking users.  You put in your name and it finds you across multiple social networking sites and creates a sort of family tree of your friends.  This could be beneficial for finding accomplices.
• imvivo.com – This one looks to be very promising.  Entering my name returned over 57 records.  These included:  press releases were I was quoted or mentioned, my blog, eSnips, Amazon.com profile, Plaxo, LinkedIn, Facebook, other blogs where I was quoted, even a comment I posted on an article at Forbes Magazine.  Even more impressive, it seemed to figure out that I go by RODSTAR (see my twitter) and found only those profile names that were mine.  So, it found me on www.delvalreefclub.org as an example.  It found a printed article that I was interviewed in that appeared in Government Computer News and it found the wedding registry from my wife and I (5 years ago).

I’m Vivo wins for now.  But, they get a few errors here and there on the site and a search for “Big Y” (as in the grocer) came up with everything from Big Brother to the Big 3 automakers.  It will pull results from inside PDF files which is cool.

But, the one that may win out is the one used by PR firms.  It is Radian6.  I just signed up for a demo myself.  So, I will report back at another time.  But essentially, Radian6 will find out who is talking about your brand!  And, though it is a paid service, it might be a good one for not only LP folks, but your marketers and advertisers as well.

Store Visits while at FMI Loss Prevention Conference

I also took the opportunity to do a couple of store visits with Pedro Ramos, our VP of Operations and a 23-year veteran of Pathmark.  Pedro was the VP of Loss Prevention at Pathmark prior to joining Agilence and he is well known in the space.

SIDE NOTE:  Agilence’s new website will launch on March 15 and Pedro will have his own blog! 

We visited Ralph’s, owned by Kroger, first.  I learned about Benefit Denial devices and stocking shelves and placement of high risk items.  It is a fascinating world that I have entered. 

We then moved on and visited a Fresh & Easy store owned by Tesco, a powerhouse in the UK.  For those of you unfamiliar with Fresh & Easy (like I was), it is what people in the business call a “community” or “limited assortment” store.  I had heard about them before, but had never been to one.  So, here is the deal.

First, they are small.  They are not supermarkets.  Therefore, they can pop up right in the middle of a community, which this one did.

Second, the are low cost, no frills stores.  So, they have their own private label and about 50% of the store is private label.  The store is very sterile.  Someone who shall remain nameless, said it looked like a prison.  And, that is not untrue.  The shelves are stocked with cut cases.  (They stock the items in their shipping boxes and cut off the front and top.) 

And, everything in the store is pre-packaged.  This includes the meat, the fruit, etc.  Why?  Well, they have very little labor in the store.  They do not have a butcher in the back or a deli department.  There is no pharmacy.  In fact, there are NO cashiers.  Everything is self check out. 

SIDE NOTE:  In the industry, they call self check out lanes “robots”.  I don’t know why.  But, its a poor name and they certainly aren’t robots.  Hmmmm….. maybe we are the robots.  The customers who do the job that the store used to do.  

Finally, they are low cost.  How low?

As an experiment, Pedro I bought the following:

• 1 16oz. Lipton tea
• 1 private label bag of macadamia nuts
• 1 private label bag of banana chips
• 1 private label bag of jalapeno cheddar potato chips
• 1 bottle of private label shiraz wine

total cost:  $9.91 and everything, even the wine, was delicious.

We bought the wine to check out their alcohol compliance policies.    Sure enough, the item beeped.  We were not able to complete the sale until a woman appeared (who was stocking shelves) and checked our ID.  She swiped her card, pressed a few buttons and we were off.

Fresh & Easy may not be the fanciest store.  Its actually very utilitarian.  But, it might just be the future with the current economic recession.  I just can’t see it flying at home.  Too many people drive miles out of their way to go to Wegman’s because it is a grocery destination if there ever was one! 

Wrap-Up from FMI Loss Prevention Conference

Well, my first Loss Prevention Conference is under my belt.  I was initiated at the Food Marketing Institute’s LP show.  It was the perfect show for me.  Small and intimate, the loss prevention folks are very friendly and inviting. 

In fact, I was very impressed by how these folks openly share information.  They are family.  Together, they are fighting shrink.  With any other group, they would be friendly but guarded because the others in the room are competitors.  Not in this room.  The more they can share and learn from each other, the more they can benefit their own organization.

And, I was not treated like the bad guy either.  Typically, the vendors are shunned and avoided like the plague, especially us marketing folks.  But, that was not the case.  John Geunther, VP of Loss Prevention at Heinen’s is one of the committee members for FMI LP.  I met him on the first day of the event.  Even though we only chatted a few times, we shook hands and departed like old friends.  Ok, so I exaggerate a bit, but not by much.

So, thank you to everyone I met at the show.

It probably didn’t hurt that, during the opening keynote, Michael Sansolo started talking about social media and I was the only one Twittering during the event.

Thanks to Michael for opening up their eyes to social media.  It will make my job easier in the long run if these folks start to pay attention.

But, later in the day I attended a presentation by Mark Gaudette, Director of Loss Prevention from Big Y on social media and I realized a few things.  First, these folks are afraid of the technology.  I was approached by a few of them after the event to discuss how thieves use social media to commit fraud and what they can possibly do to mitigate it.  And rightly so.  There are videos everywhere on how to steal from retailers. 

YouTube, take note.  You ought to think about some sort of moderation.  You do it today.  No nudity allowed. Why not extend that to include no criminal acts?

Second thing I learned from these folks is that they have a pessimistic view of social media.  And, that is not their fault.  That is how it was pitched to them.  Use it to investigate and catch the bad guy. 

But, social media can be positive.  Look at how I am using it.  Look at the YouTube videos from Heinen’s that are all about making the perfect dinner.  Use social media to market your brand or your department.

The Big Y commercial spoof shown in the session was pure genius.  Hopefully, Big Y takes advantage of it.  Some kids made a parody of the Big Y commercials.  It was tasteful, funny, and portrayed Big Y in a positive light.  If I were Big Y, I would take advantage of this. 

Sponsor a contest for customers to create a 30 second spot and the best one wins $500 in free groceries.  But, remember, its about the internet, so cell phone created commercials are fine.  The smaller the video the easier it is for it to be spread all around the world!

See you all at RILA’s Loss Prevention Conference May 3-6, 2009 in Orlando, Florida.  In the meantime, I will be blogging religiously.  Welcome aboard.  I hope you enjoy the ride!

Derek

Social Media in Loss Prevention

One of the final topics that Michael covered in the keynote was social media.  This is a topic that is near and dear to my heart.  (In fact, there is an entire session dedicated to it at 1:30 today.

He asked folks about their use of SMS, Facebook, even Twitter.  Though 30% raised their hands for Facebook, only a couple had heard of twitter and I was the only one posting tweets during the keynote.  He called me out several times as an example. 

Loss Prevention needs to be using these methods to communicate to the staff.  that is their preferred method.  Make the training videos short and post them on YouTube.  Send SMS texts to workers about meetings, etc.

but, you need to monitor these as well.  They could be using it against you.  Even your customers might be talking about you. 

I will go one step further.  Customers are talking about you.  The dialogue is happening somewhere.  Is it Facebook, Twitter, Forums?  Go find it and get engaged. 

Opening Keynote at FMI LP – State of the Supermarket Industry

Instead of random tweets, I thought I would simply summarize the session.  The speakers and content were so engaging that I decided to pay full attention and summarize at the end.

So, the presenters were:  Anne-Marie Roernik, Director of Research for FMI and Michael Sansolo, President of Sansolo Solutions. 

Anne-Marie presented the content and Michael gave the commentary and it worked very well.

Bottom Line:  These are tough times but this is also an opportunity.  An opportunity to shatter the status quo and fix the things that need to be fixed.

Some tidbits:

• Issues that affect the economy and consumers, affect Loss Prevention (LP) immediately
• Shrink has grown in the supermarket space from 1.54% to 2.3% (as a percentage of sales) through 3Q2008 and it is most likely over 3.00% now
• Considering that average gross profit in supermarkets is 1.84%, the shrink numbers are staggering.

What does the economic downturn mean?  It means tat consumer spending is down in grocery and the number of trips to the store are down so retailers need to figure out how to increase the basket size.

Anne-Marie talked about the Triple Trade Down and its an important concept to remember.  Here are the 3 stages with an explanation.

1. Stage 1 – From restaurants to fast food and grocery stores.  This is what the upper middle class is doing today.  They stop all the dining out and have dinner at home.  If its a night out, its back to the fast food, which is why McDonalds is doing well.
2. Stage 2 – Shifting the Mix.  This is happening today in the middle income families.  They are transitioning from premium brands to private labels.  They are buying frozen instead of fresh.  They are doing planned shopping now, making lists and using coupons. 
3. Stage 3 – Shift to Super Centers and Limited Assortment Stores.  This is just starting to happen today and is not yet pervasive.  This is about leveraging the pantry.  Buying bulk and buying fewer items.

Following along this thread, Michael used Anne-Marie’s charts on economic data over the last 40 years to highlight the changing dynamics of the supermarket space.  In the 60s and 70s, the main retailers were Sears and A&P.  But, the recession in the early 70s led to the demise of A&P.  Now, there are hundreds of grocers. 

The 80s recession brought Walmart into the picture.  That changed grocery forever.  Now, almost 40% of the population does not go to a grocery store.

The 90s recession brought about the birth of clubs.

The recession in 2000/2001 saw the birth of the limited assortment super centers.  Again, this changed the face of grocery.

Now, as we are in the middle of another recession, what will grocery look like in 5 years?  No one knows.  But, Fresh & Easy may be the prototype.

Fresh & Easy is going back to the basics.  The stores are much smaller.  They have a smaller selection.  The prices are low and the entire store is self-service, including all check outs.  Walmart is catching on with their “Market Side” stores which are similar to Fresh & Easy.

By the way, Fresh & Easy is owned by Tesco.  Tesco is the largest grocer in the UK. 

Night One at the FMI LP

Well, the first night is complete.  I took some pictures and will upload them tomorrow.  A few things struck me on the opening night of the conference and I though I would pass them along.

• The days will be long…too long.  The booth opens at 7am tomorrow morning and will be open every other hour until 7pm.  In between are sessions.  That is too long of a day.
• Loss Prevention is a small space.  Everyone knows everyone else.  And everyone knows Pedro Ramos, former VP of Loss Prevention at Pathmark and our very own VP of Operations. 
• The show is much smaller than last year.  Last year there were 240 people in attendance.  This year, the number is 200. And, I bet 75 of those people are vendors.  So, that leaves 125 retailers.  Assume two from each company and you are left with around 50-75 retailers total. 
• The retail space is in a wait and see mode.  One of the gentlemen I met at the show is a 30 year veteran of the space form the vendor side.  He sees the same thing we are seeing.  There are a ton of opportunities in the funnel.  But, no one is willing to pull the trigger on ANYTHING.  Everyone thought it was going to happen in June.  But, now June looks to be too early.  It better happen before the end of the year.  If not, many companies will not be around for 2010.

More coming tomorrow.  Time for bed.  The fun really starts in 6 hours.

Food Marketing Institute's Loss Prevention Conference

The conference is about to start!

Just like San Diego, the opening reception and the entire exhibition hall is actually a large tent!  The show is at the Hyatt Mission Bay.  Its a beautiful location.  The Agilence booth is all set-up and ready to go!  We will have a demo of our new release, 3.2, which adds a bunch of new features.

If you haven’t heard of Agilence before, let me tell you about it quickly and then I will forever hold my peace.  Well, not forever, but this blog is not about advertising for Agilence.  But, a quick overview will help set the context for future posts.

Agilence delivers a software solution for retailers that dramatically reduces shrink caused by cashier fraud, operational inefficiencies, and policy violations.

How do we do it?  Well, we have a patented technology that marries the raw data from a POS register (or other devices) with the video from cameras.  This item-level synchronization allows our analysts (or yours) to identify, investigate, and eliminate the causes of shrink in a retailers organization.  And, as you are all well aware, shrink is expected to reach $115 billion worldwide this year.  And, almost half of that will be at the point-of-sale.

I will be Twittering during the event and posting updates here as well.  Welcome!!!

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