Mat Schriner:

Good morning, good afternoon, or good evening, depending on where you are in the world. We will get started in roughly 90 seconds at 1:01 PM Eastern Time. Please be patient with us as we prepare for our broadcast and allow everyone into the Zoom platform. Thank you.

Once again, good morning, good afternoon, or good evening. Thank you for joining us today. We will get started in about 45 seconds at 1:01 PM Eastern Time. Thank you.

All right, I have 1:01 PM Eastern Time. Thank you for joining us today for our LPF webinar titled Combating Organized Retail Crime During the Holidays and Beyond. We would like to thank LiveView Technologies for being a valued LPF sponsor and partner and for sponsoring today's session. LiveView Technologies has spent years developing the first remote full security solution. LiveView Technologies camera units rapidly deploy whenever and wherever you need them. No need for wires, power or internet. So whether you need surveillance in a parking lot, on a lonely roadway, on a busy intersection, or at a concert or sporting event, LiveView Technologies has a solution for you.

My name is Mat Schriner and I'm the senior director of operations for the Loss Prevention Foundation. I will be your host today. Before we get into the presentation and introducing our speakers, we would like to talk about a few logistics items. First and foremost, this session is being recorded. Everyone is muted to minimize disruption to our audience, and we do ask that you enter any and all questions in the Q&A box, and we will hold those questions until the very end of the presentation to ensure we're able to get through the material that has been prepared for you today. So let's meet our distinguished speakers. First and foremost, we have Scott Glenn, Vice President of Asset Protection with The Home Depot. Good afternoon, Scott.

Scott Glenn:

Hey, Mat.

Mat Schriner:

Good to see you, sir. Next up we have Mike Lamb, retired asset protection executive. Good afternoon, Mike.

Mike Lamb:

Good afternoon, Mat.

Mat Schriner:

Always a pleasure, sir. And lastly, I have our moderator, David Studdert, chief Business Development Officer with Libby Technologies. Good afternoon, David.

David Studdert:

Hello, Mat. Pleasure to be here.

Mat Schriner:

Likewise. Good to have you.

David Studdert:

And thank you, Mat. As we just begin today, I wanted to start by reaching out to both Scott and Mike. Thank you, gentlemen for being here. It's an honor for us. If you could start us off with a brief introduction. It's always nice to really know the audience and you too, as being giants in the industry. We'd love to hear a little bit about you. So Scott, if you could start us off.

Scott Glenn:

Hey, David, I appreciate it. So good afternoon and thanks for everybody for joining here. But Scott Glenn, I'm the VP of Asset Protection at The Home Depot. Just a brief resume, brush over, spent a lot of time in a couple of different sectors of the industry. I spent about 10 years with Kohl's department stores, 10 years with Sears Holdings, a little bit of time with Target, and right out of college I spent about three and a half years with the US Treasury Department. So really appreciate the time this afternoon. Appreciate the time here with LiveView hosting us, as well as the LP Foundation. And I'll kick it over to Mike.

Mike Lamb:

Thank you, Scott. And likewise, good afternoon or morning, I guess depending on what part of the country you may be in. I'm the old retired guy now, but I started my retail career some 40 years ago, 1979 actually. And I've had the privilege of working for some really outstanding organizations, Home Depot among them, Scott knows, but I started my career with Federated department stores up in the East Tennessee area, migrated to Atlanta, and ultimately joined Home Depot as their VP of Asset Protection and Safety and, at the time, Regulatory Compliance. I had to work my way into that role, by the way. I didn't go in in that capacity.

I left Home Depot in 2012 and joined Walmart US where I had the privilege of overseeing the asset protection and safety efforts for that organization for about a five-year period. And then I finished out my career with the Kroger company just this past November. So I've been uniquely blessed to have had the opportunity to have worked in apparel and home improvement, mass merchandising, and then finally finishing out the career in full line groceries. So happy to be a part of the afternoon's discussion. I also want to thank Mat and the Foundation and David Studdert and the team at LVT for putting this together.

David Studdert:

Scott and Mike, thank you again, honored to be here. Just a brief background on myself, grew up in the Washington DC area, moved West for school. At BYU studied international law and diplomacy. Back to DC for a few years overseas with the federal government on some diplomatic assignments. And then back to the private sector where I found LVT about 10 years ago. I represent 1/4 of the partner group. We don't come from security, but it's been an incredible ride in understanding the needs of the space and how we innovate to meet those needs. And gentlemen like yourselves have helped us get there. So again, we appreciate the time today.

We're going to discuss, as indicated by the title of this, organized retail crimes. Specifically on the agenda you'll see we're going to target, really identify what's happening in the space as it relates to ORC, standard response plans, engagement, and how we coordinate both internally and externally with partners. And then we're going to open up to Q&A at the end and Mat will help us out with that. We'll also have a couple poll questions along the way, so please participate in those poll questions. With that said, ORC is top of mind for all of us, right? And the changing environment that we see daily on the news as indicated by this particular slide. Scott, let's start with you. What is Home Depot doing as it relates to this changing environment in the organized retail crime space, be it a holistic approach or partnerships or internal, external? Talk to us a little bit about how Home Depot's approaching this.

‍Scott Glenn:

Yeah, Dave, appreciate the question and maybe a little bit of background so people have some context. When my esteemed colleague, Mr. Lamb left The Home Depot in 2012, the 10 years, almost 11 years in between that period of time to me joining the company, we went through a kind of renaissance where we weren't putting asset protection loss prevention personnel into the VP spot. We were using it as kind of a officer training ground role. And so when I came to The Home Depot, we had kind of lost some muscle memory around the theft and fraud side of the business. And it's not always, we didn't want to over index there, but certainly we had kind of gone the other way. And so I had a little bit of an uphill battle in trying to convince our leadership that we needed to put a little bit more effort into this space.

But what I would tell you is our approach to this has been three and a half fold. I'll call it a three-pronged approach if you want to call it that. But for us, it was about education first and foremost. It was about giving our leadership data to make fact-based decisions. So it was about showing them information, showing them data, showing them product lines, showing them everything we could do. And so our leadership, as many of yours do, respond well to inarguable facts. And so you start with that piece of it and kind of say, "Okay, maybe we need to think about our approach here."

We actually implemented some RFID testing across the country on key product lines and things of that nature to really understand what was walking out of our buildings and at what scale. And so we did use that approach and we were able to come to it and it was pretty enlightening for our leadership team. And so it took a little bit of time, and once we were able to understand kind of the scale and the size of the problem, people started shaking their head yes a lot more and saying that we really needed to probably look at the things a little bit differently.

The second piece of the education was for our associates. So I mean our frontline associates, they kind of knew this. They're kind of coming to us saying, "What are you waiting for?" But the education for them was what they could do and what they couldn't do. And we've all heard the horror stories of the associates trying to do the right thing and losing their jobs. We had to kind of go out there and reinvent our education and de-escalation program while we were in the background trying to figure out how we were going to harden the environment and our physical security posture and all that piece. So it was really kind of a two-fold educational front when it comes to those pieces.

The second prong of this for us was we're 140,000 square foot store with seven or eight holes in the building on all four sides of the building and some really good product inside of it. And we were pretty wide open. We didn't have a lot of friction between the bad actors and our product. And so we had to kind of think about what was the short-term approach in slowing that piece of it down a little bit while we worked on the more elegant, longer-term solutions, technology solutions in the long term.

And so not to get into a whole lot of detail on that. But think about if you were in our store five years ago and you were in some of our stores today, you would see a different physical footprint in many of our stores and trying to make sure that we put a little bit of friction between the bad actors and the product and still be able to service our customer base properly. So we are continuing to work down that path where we're understanding what works, what doesn't work, what's a good investment, what's not a good investment. But you're seeing a slightly different posture from The Home Depot when it comes to hardening the physical environment in our stores.

And I would say the last kind of prong of this or arm of this approach has been our PR and GR efforts. And I would say this has been probably one of the places where we spent a lot of calories in really trying to adjust to the very fast changing conditions in the retail space. Think about the events of the last couple of months and all the attention that they're getting. Our message has been, "This isn't new." We've been dealing with this for a long time. The methodologies might be changing a little bit, the ways of work for the bad actors may be changing a little bit when you think about social media and using those types of tools. But I am very proud of our leadership team who's kind of pushed down this direction.

Our CEO is one of the first CEOs to come out publicly two and a half years ago and say, "ORC is a problem and we need to start addressing it." He's supported our government relations efforts, our entire leadership team has supported our government relations efforts, state attorneys general, governors, politicians, the INFORM Act, local law enforcement engagement, all the different pieces that come along with that have been part of our strategy to go after this. So to sum it all up, that's been our approach in general. Obviously these things are working in parallel. Some of these are short-term efforts. Some of these are much, much longer puts when it comes to our approach on this, but that's been our general strategy as it relates to addressing external theft and fraud, but more particularly organized crime component of that.

David Studdert:

Thank you, Scott. You've mentioned, and you've alluded to this ever-changing environment. It's pretty impressive how quickly the environment changes. I'm curious, and this is for both you gentlemen, really, as you focus on the security, there's traditionally a normal way of going about things. Tell us a little bit about in recent months, what are retailers doing or seeing that's different, that's something that's unique in your careers that you haven't seen before? How are they approaching those specific security focuses?

Scott Glenn:

Mike?

Mike Lamb:

Yeah, I'll take a crack at that one, Dave. One of the things that I've began to, I think, see now that I'm kind of on the other side of being the practitioner and more doing a little advising and talking to a lot of people in the industry is it really takes a balance between both people and technology to effectively, I think, mitigate ORC. And then you have to also balance that with this notion of safety and safeness not only for your associates, but also your customers. And one of the things that I have noticed, and I applaud The Kroger Company, this occurred after I had retired last year, was they pulled together a lot of their solution providers and each one respectively adding value to the organization. But the topic of that discussion was around how do you integrate each of those technologies in a way that really optimizes further optimizes the value?

So it's not just maybe one thing you're doing, but it's a series of things that you're doing that create this interconnected ecosystem, I think goes a long way. I know in the chat box there a second ago, I saw a note on, "Well, how do you balance this with safety?" And I'm sure Scott would agree when I would tell you that there is no product in the store that is worth the injury or worse to any associate or customer. And for the organizations that I've supported over the last several decades, that has been the mantra. But it doesn't mean you have to take a defeatist attitude. There are organizations, there's guarding companies that provide that expertise trained relative to those risks. And quite candidly, if you're going to put anyone in harm's way, it would be a group that's trained, well versed to understand what you can and can't do.

But I'm seeing more of a rallying point around a myriad of technologies, whether it's facial recognition, whether it's like camera towers, David, that you guys market, we had in the grocery environment at Kroger, the ability to lock a shopping cart at the door. Well, how do you bring all those things together? And if, oh, by the way, if you're going to have a guard company, how do you maximize the value relative to scheduling? How can you become a little bit more predictive in the approach you take?

Final comment is the mantra that we held at Kroger, and quite frankly at Walmart as well, was how do you harden the target? How do you create these impressions of control? Understanding and fully realizing you'll never completely eliminate ORC in your business, but how do you make it more manageable and more controllable? Scott, and I'll never forget, it's been what, four years ago, Scott, at Areva conference, we talked about education over prosecution, and at the root of it was the notion that some 39, 40 states had elevated the felony thresholds.

You add on top of that a growing opioid crisis, and it's no wonder that we're seeing an escalation of ORC. But to Scott's point, it's always been there. And I think the organizations and the AP leaders, like the ones that are on this podcast today, understand that you bring facts to the table, right? You show the value proposition of an investment that you need to make, whether that's in people or whether that's in technology. And that was exactly the course we took at Kroger, it was the course we took at Walmart, and it was a course we were on at Home Depot many years ago.

David Studdert:

Thank you, guys.

Scott Glenn:

Mike, I mean, you were very eloquent in your answer and pretty comprehensive in your answer, so I'm not going to add on. But probably the only thing that I would add to that is the question was how has your focus changed? Well, the reality is our focus shouldn't change. And if you're focused on the end result and don't get distracted by the shiny object, the shiny object is the tactics, the tactics have changed, they become a little more flashy, they become a little bit different. But when you think about what your pain point is in the stores, "How do I protect the product, how they protect the associates?" If you've got a solid plan in place for that, you may make a short-term deviation, you may make a slight adjustment here and there, but the actual plan is sound and you continue to believe in your actions and your strategy. So I don't have a ton to add on top of what Mike talked about there.

David Studdert:

It's interesting, not coming from the loss prevention space we've seen, down to the store level, these loss prevention professionals orchestrate so many different tools between human capital and technology. And A, I got to thank you guys and your teams and all of you folks on the call, our families shop at your stores and you keep us safe, but it's a heavy lift, right? What advice can you give retailers and the biggest splash, the biggest impact, both in fighting theft and in attacking this ORC problem? Scott, we'll start with you.

Scott Glenn:

Yeah, look, I mean, I think some of the things we mentioned earlier around don't waver in your commitment, right? Believe in what you believe in and what you believe in is that there is a problem that is able to be explained by information, you can articulate how much of your problem is delivered by certain problems. And so we think about our strategy, we try to break down our tactics into what are they addressing, and really go in and have the difficult conversations based on the facts with your leadership. What I would tell you is that you got to be a bulldog. You don't take no for an answer.

I mean, we've all been in those conversations where, "Oh, you're overflowing the theft contribution." I've heard the story for years about how you can't apprehend your way to shrink. You may not be able to apprehend your way to shrink, but you can sure lose it if you don't address the controls in your environment. So I think you have to be very, very adamant about what you believe in. I think you anchor all of your discussions in the safeness of your customers and associates, and the element that's bringing into it does not care about the safeness of your customers and associates. And if nothing else, you are kind of coming from that angle, it's going to be a very, very strong piece of it.

And then I think you've got to be very, very specific on how you train your associates to react to this. You open the doors in a public environment to the public, and you're going to deal with some of this stuff. No matter what you're dealing with, you can't talk your way out of it. The only way to not have this problem is to not open your doors. So if you're not prepared to protect your customers, to protect your associates, to invest the time in teaching them how to respond to these incidents, you're not going to stop anything. And in fact, if you're doing anything, you're going to probably invite yourself for more trouble. And so that's the best advice I would give when it comes to making the biggest impact specifically with ORC.

David Studdert:

Thank you, Scott. It's interesting-

Mike Lamb:

Dave, let me add onto that. Let me just-

David Studdert:

Yeah, please, Mike, go ahead.

Mike Lamb:

... pile on a little bit on Scott's comments, which I think we're spot on. I think one of the things that I've seen over the past, I'll say, several years, is better collaboration across retailing, whether it's Target working with CVS, or Walgreens partnering with Home Depot, or I mean you pick it, and the advent and growth of the ORCAs, these associations that are coming together representing a myriad of retailing and law enforcement to talk about just how bad this problem is. And then Scott's comment about government relations teams, the importance of CEOs to lobby for ORC to be more of an issue criminally than what it is today, I think is paramount. I think those things are evolving at a faster pace perhaps than they were in some recent time.

I don't know how many people on this podcast attended the grocery event in Nashville, the Apex event. Dave, I think you were there, your team was there. And there was an outstanding presentation by Ben Dugan that really brought to light the importance of legislative efforts, the importance of retailers coming together, share information because this is a common problem for everybody. Because Scott will tell you, if they're hitting Home Depot, they're hitting Kroger and they're hitting Target and they're hitting Nordstroms, and it's all about converting product or money. So to me, I think that's one of the key things.

Lastly, I would say there is no one thing that's going to solve your ORC problem. I think it's a myriad of things, and it's got to be this blend, as I said earlier, of people and technology. And you know this, David, from the time that I worked with you at Walmart when you were helping this sale with Towers to more recently at Kroger, it's like, you know what? I'm going to throw everything at the wall that is feasibly rational, and if it sticks, I'm going to hang in there to the bitter end with it. Because if you sit on your hands, you'll be the easiest mark in town. And if you're the easiest mark in town, you know where everybody's coming, coming your way.

David Studdert:

Hey, Mike, a question on top of that. As you're out and about meeting with LP and AP professionals in your new capacity in retirement, semi-retirement I might say, are there new trends that you haven't seen in the past? I mean, what's rising to the top? Are there things that are different now that might not have been there two, three years ago?

Mike Lamb:

Well, I think the advent of anything, anytime, anywhere puts more pressure and challenges on asset protection teams. It's no longer, as you know, just bricks and mortar. You're fighting this thing from several different angles in terms of where are the pain points and how do you go about mitigating against those losses? To me, I spent my last full year during the COVID crisis in retailing, and that was the most stretched and challenged that I had been in my entire career, and I'm sure that's probably true for a lot of others on this podcast, in a sense that you weren't just the individual and the department responsible for profitability, you were responsible for safety, you were responsible for regulatory compliance related to all things COVID.

And so asset protection teams today, I think they're really great leaders, look uniquely different than they did just five years ago. And you know what, Dave? I think they'll look different five years from now than they do today. It's an ever evolving industry in my opinion, and that's what I'm picking up on. AP teams, and I'm sure this audience would tell you, they're being asked to do more, right? They're being asked to do more. And the really good leaders make the value proposition on, "Hope's not a strategy." You've got to have good data, you got to analyze that data, and you got to make investments in the business of safety and security and shrinking.

David Studdert:

Yeah, it's interesting, the focus on data. I love your comments, Scott, about being articulate, right? There's a real focus strategy around the approach to be it ORC or theft or or all the myriad of things that you guys focus on every day. Scott, we dug into the archives, we found a video from 2019. Mat, if you're able to put that up, we've got a video from Scott Glenn back on CNBC back in 2019.

CNBC Anchor:

You're watching brazen retail theft. The suspects are so sure they won't get caught that some even get aggressive when stopped, as this surveillance video from Home Depot shows. Most likely, these people aren't shoplifters or people who steal items for their own use. Instead, it's a bigger problem known as organized retail crime, with criminals working together to steal for profit. Home Depot's Jamie Bourne investigates the theft. It all starts with boosters.

Jamie Bourne:

A booster is somebody that is basically a professional shoplifter. They're doing it for profit, not just for personal use.

CNBC Anchor:

Are they just guessing what items are in demand? Do they know it from history, "I know that I can sell a lot of drills"?

Jamie Bourne:

There are many locations out there that are giving lists to the boosters.

‍CNBC Anchor:

Well, if they're giving lists, they're part of the crime too, are they not?

Jamie Bourne:

Absolutely.

CNBC Anchor:

One of those locations was this pawn shop. The manager was charged with selling stolen property. The case is ongoing. Our next stop, this raid.

Police:

Police. Search warrant.

CNBC Anchor:

Bourne and his team helped when law enforcement served a search warrant on this Utah home.

Jamie Bourne:

When we do search warrants with law enforcement, we can provide them the value of the merchandise.

CNBC Anchor:

The suspect allegedly sold stolen power drills and other tools on Facebook. He was arrested. Law enforcement seized a pallet full of items from the home. They were brought to this warehouse. It may look like Home Depot, but this is actually an evidence room. Inside is over $1 million worth of stolen product seized from a raid of seven pawn shops.

Christopher Walden:

We'll actually see on the inside of a pawn shop, they'll say, "Lowe's and Home Depot's price, 129.99, our price, 79.99."

CNBC Anchor:

Chris Walden is a special agent with the Utah Attorney General's office.

Christopher Walden:

How is it that some of these secondhand merchants are selling it for less than what a big box retailer like Home Depot or Lowe's can even buy that product for?

CNBC Anchor:

They found the answer in these sting operations.

Pawn Shop Owner:

[inaudible 00:27:48] trying to do, sell them? Pawn them?

‍Customer:

Yeah, sell them.

CNBC Anchor:

This is undercover video of law enforcement selling items that seem stolen to those pawn shops. The case led to a new Utah law that makes it harder for pawn shops to buy unopened product.

Christopher Walden:

Since we passed the new law, it seems like it's getting a little bit better. What we've seen is a shift over to e-commerce.

CNBC Anchor:

Just like the power tools we saw confiscated during the raid, here they were for sale on Facebook. Organized retail crime is growing and costs the industry nearly $800,000 per every billion in sales home. Home Depot said its profit took a hit in the last three quarters because of higher shrink or loss of goods, which includes organized retail crime.

Scott Glenn:

While we don't comment on our particular numbers, we are seeing shrinkage rates rise across the country.

CNBC Anchor:

Scott Glenn is in charge of asset protection for Home Depot.

Scott Glenn:

Organized retail crime drives other crimes. It drives drugs, it drives guns, it drives human trafficking. I think the opioid and drug epidemic is a piece of it.

‍CNBC Anchor:

Why should consumers care that this is happening? Isn't Home Depot big enough to absorb this issue?

‍Scott Glenn:

We have been very good about not raising prices as a result of our shrink equation, but if it gets to a point where we cannot continue to do business this way, ultimately we will have to pass it along.

David Studdert:

Scott, first all, great job. Curious what your thoughts are on what's changed from 2019 to now, and how has the pandemic played a role in that?

Scott Glenn:

Hopefully I'm back on mute, but I had some dogs having a little problem here, so bad timing as always. But I see you can hear me. But listen, what's interesting is nothing and everything is probably my answer in terms of what's changed in the years. We were talking about this a little bit earlier, right? This problem has existed for a long, long time. We've talked about the same issues for a long time, particularly with drug tie, the boosters. It used to be pawn shops, now it's moving to the online platforms and the online resellers. So that conversation has been being had for quite some time.

I think, and Mike touched on this a little bit earlier, the whole drain on law enforcement and the courts, and that piece of it has been a discussion we were having in RILA conferences and NRF conferences five years ago. But everything has changed over the last 24 months, if you want to call it that, in terms of some of the scale. So think about the brick and mortar stores who only existed for periods of time during the pandemic as online sellers, curbside sellers. The other ones that had everything from, we were still open and doing curbside or standing up curbside, bringing on a whole online element to this business. I mean, it wasn't uncommon for the first couple of quarters after COVID struck for us to be talking about triple digit increases on the online sales revenues of most retailers out there. Some of them still doing it even as we've lapped the second year. But it's that piece of it.

The other piece of it that's changed is call it the social contract over the last couple of years. So on top of the pandemic, we had some high profile civil unrest. We had some high profile police interactions that resulted in unfortunate deaths and the resulting actions that took place from that, the social justice movement that kind of followed some of those particular pieces of it. And then the after effect of what that did. I mean, we're at a point right now where we have had in the last year, in the 2020 elections, we've had district attorneys, mayors, city councils, people elected to positions that enforce and make the laws where their platform was, "I will not enforce certain laws." Think about that. And what does that say to the criminal element and what that does that do to somebody who may be on the fence or maybe somebody that is doing this sporadically, but now sees that there's an opportunity for them to do it on a much broader basis?

So I think about what has happened, and then you layer in COVID and letting people out of jail, think about bail reform, think about all these different things coming together, these elements coming together that are essentially saying, "Retailers, we don't really care about you. You can afford it. We're not going to put any consequences that may have had some kind of mitigation effect to your organization that now does not exist." And so we're in the process of seeing the output of that. And so it's been pretty tough to watch some of these things happen.

And then again, on our end, yes, sales have gone up, but so do costs go up when you're trying to deal with a pandemic. You're trying to do all the right things for your associates, so it's not like, "Hey, we add $100 worth of sales, we get a free $100." We may have added $100 sales and added $70 worth of costs on top of that $100 worth of sales in addition to everything else just dedicated to COVID costs and time off and taking care of our associates. And so it's the devil in the details of this and how it's affecting all the different businesses, and I think it's created somewhat of a perfect storm as it relates to allowing people to kind of use us as their supply chain going forward.

David Studdert:

Scott, you referenced some of this, the change in civil unrest that we've seen and the increase in violent crime. Maybe a question for both of you, starting with you, Scott, what are the dos and don'ts of engaging suspects?

Scott Glenn:

Don't. I mean, it's the reality. And I was explaining this to someone just recently, in the past where we've had your typical, "Look, I don't want the associates to get involved. I don't want them to get hurt." With cell phones becoming quite ubiquitous, everybody's got one in their pocket, even when they're working on the floor in a store, customers have them everywhere, I've seen a new thing happening where associates try to do, they say, "Okay, I got it. I'm not allowed to engage with this bad actor, but I'm going to pull out my phone and I'm going to take video of it, and either I'm going to give it to the AP team or I'm going to give it to the media, or I'm going to put it on YouTube," whatever the case may be. We've actually seen some violence related to that recently.

And so I can tell you that we have actually put direction back out there that says, "Do not pull out your phone. Do not try to record these instances. I don't want to put you in harm's way." Because people are turning around as they're walking out the door, they got their merchandise, they turn around and they walk back to the person and bear spray them or punch them in the face and knock their phone down and break and stomp on it. We've had those types of escalations happening in our stores because now they know that, "Yeah, I might've gotten away with it for the moment, but that cell phone video is just going to go to the police department and somebody's going to try to track me down later." And so that's just something that's just been a unique twist on something that we've seen recently.

David Studdert:

Mike, anything to add on top of that?

Mike Lamb:

Well, again, not to be redundant, but I just underscore Scott's comments. I had the unfortunate tragedy of having to attend a funeral for a loss prevention agent during my tenure at Walmart. A guy attempted to steal four or five TVs in a shopping cart, and as he was pushing the cart out the door, this gentleman approached him from behind. The guy turned around, reached for a handgun in his waistline, and shot and killed our guy right on the spot, father of three. There is nothing more sobering than an incident like that that really underscores the importance of safety over product. And I don't think any AP leader that's on this podcast says, "Well, we're just going to roll over and do nothing."

But I think those that are really ahead of the game are saying, "We're going to lead you with prevention. We're going to do everything we can to harden the target." Even with your camera towers and the parking lot, right? That's step one. Read Hayes's zone theory. But in my opinion, a store or an organization can suffer a bad shrink. But when you start to see acts of violence, reach levels of fatalities, then you have to stop and you have to rethink your approach and your strategy. And we did that during my time at Walmart, and that carried over at Kroger. You chase someone into the parking lot, you just resigned from Kroger because your safety is far more important than a shopping cart full of liquor or meat or whatever the case may be.

And again, I'm a purist. I grew up in AP. I started my career catching bad guys. I despise a bad guy and a thief. But you got to weigh consequences. And to me, you always err on the side of caution relative to the safety aspect. Some organizations no longer make apprehensions. I don't know that I would ever, as an AP leader, advocate that for the company I work for. But I'll tell you, at any notion, slight or otherwise, implied or otherwise of a safety risk, you just let it go, has always been my belief.

David Studdert:

Thank you, gentlemen. Mat, if you could, we could pull up our first poll, our poll number one. We're going to have 30 seconds. If you could go ahead and you can pick multiple answers on this. We'll give you 30 seconds. The question is, "What security measures do you believe are most effective to combat organized retail crime? Additional patrolling, security guards, temporary in-store cameras, parking lot camera units, employee engagement, checking receipts of guests, et cetera, tagging valuable merchandise with RFID tags or similar technology, or other? We'll go ahead and give you 30 seconds to fill that out. Mike and Scott as they're filling this out, what do you guys think? I don't want to bias the pool, but where do you guys think we're going on this one?

Mike Lamb:

I don't know. I think we're going to see a lot of ticks of the box. That's a conservative approach to take. I'm sure there may be one or two elements that outweigh others, but I think we're going to see a lot of ticks here.

Scott Glenn:

Yeah, I would agree. That's not at all where I thought it would go. I really expected to kind of see the RFID technology piece of it maybe, and it's come in a very close second. I see that. But that's very interesting.

David Studdert:

Let's take one second. I'm curious, and we'll jump to another poll in a second. But coordinating with law enforcement, that seems like a heavy lift. Do you guys have a best method in coordinating and in building those relationships with law enforcement? And this can be prior to an event, post-event. How do you guys look at that coordination with your local law enforcement? Scott, let's start with you.

Scott Glenn:

Yeah, sure. No, I'd be glad to. I mean, first off, all relationships, just like politics ,are local. And so we really encourage our local AP to get to know their law enforcement partners and be engaged with them, not only from the standpoint of helping them understand what our pain points are, helping them understand what our patterns are, helping them understand what our opportunities are in a store. We do a lot of coordination where we bring chiefs and assistant chiefs into our stores and walk them through things that they don't even understand, like why copper wire is one of the most stolen items in a Home Depot store. I mean, a lot of people might not think about that, but when you think about the value of the commodity and what prices do with copper, that that's the case. But most police officers aren't going to walk into a Home Depot and think that that's one of the number one stolen products in our stores.

I think the second piece of it is that there has to be a reciprocity in terms of expectations, right? So we expect the service from the police departments and law enforcement in our communities, but they probably expect us to also back them and make sure that they're there. So we are very involved from a charitable perspective through our foundation with those local police departments. And then the last piece of it is they don't have time for your bull. So at the end of the day, make valuable use of their time. We have a mantra within our organization is you hand them a professional 100% completed case or as close to a completed case as possible. Don't expect them to fill in the blanks because they won't. And so we teach that to our AP teams. We develop those and foster those relationships with those teams. And I think you get the reciprocity back from them when they see our AP folks as professionals, not as somebody who's expecting the police officer to do their work for them.

David Studdert:

Thank you. Scott. Let's go ahead. Timing. Let's go ahead and jump onto the last poll we have. This is poll question number two. Again, 30 seconds on the clock. "What is the number one reason preventing you from upgrading your security plan with new resources and technology? Budget restraints, lack of support from higher management, problems with infrastructure, unable to determine which solutions are most effective, little trust in cloud-based technologies, or it isn't a priority to me?" We'll give you 30 seconds. And while we're doing that, I just quickly before we go into Q&A after this, I wanted both you Scott and Mike and everybody on the call again, to understand the gratitude that the general public has for what you do. We're a solutions provider. We're one tool and you're thousands of tools, and we're not selling anything, but we do want to give you a big thank you.

We're going into the holiday season and our loved ones are safe because you take your job seriously. And that's not lost on the people that are your neighbors and your friends. And so again, we wanted to just say thank you. Again, I could go all day. But thank you sincerely. We've got our results up. I don't know if that's where we thought we'd be, but I think that probably falls in line with where we thought we might be. Budget usually drives a lot of this. Any thoughts on this guys, on what you're seeing from a poll?

Scott Glenn:

Yeah, I'll jump in there real quick because I'm getting older, so sometimes I lose my train of thought. And this came to my mind a little bit earlier on a different answer. But I think that while many of us are looking at the publicity and the news reports of what's been happening recently in the last six or eight weeks, and we're all going, "Where've you been? This has been happening for a long, long time. I'm glad you're taking notice." But I think that it's also an opportunity. We all have a menu of options that we would like to deploy to address our problems in store in our individual companies.

And I can't think of a more kind of ready-made silver platter that's been served up for many of us to go back to our leadership teams and say, "Hey, listen, you don't want to be the one that's not addressing this problem right now, and you should have a very well-thought-out, well reasoned approach to this," like I'm sure we all do. But now may be the opportunity to strike while the iron's hot for some of these budgetary kind of wishes that we've had sitting out there for a while. Because again, we want this to be a collective solution between our retailers.

I always tell our leadership that the security and AP side is the one space where we're not competitors. We compete for everything else. We compete for every dollar of revenue, but we all have the same bad guys, and Mike mentioned this earlier, and girls coming into our stores every day, they don't care what the product is for the most part, as long as they can monetize it. And so now's the time to say, "This is where we need to be. This is where we need to be spending some money," and go after, take a swing at your highest priority on this from the budget side.

David Studdert:

Thank you, Scott.

Mike Lamb:

What occurs to me with this particular poll is the fact that, what, 78% deals with the budget constraints or lack of support from higher management. And I do think that there's always this challenge of articulating with good data and the analytics of that data, just how big is the problem? Because if you're spending a dime to save 8 cents, you're not going to get the financial support you need. So the importance of having, in my mind, the partner within your finance department, or if you have the benefit of having an analytics team to help create the ROIs and the NPVs and all those other financial things that as a practitioner I don't fully understand. But I can tell you that what we always tried to do as a starting point on investing in things like ORC was demonstrate the size of the price, and then understand, "If I make this investment, I'm going to get that much back," and test and trial and learn.

Again, I'll go back to the time with the OBT where we said, "You know what? I wonder if we could get a camera on a pole?" Well, we had to run electrical lines, dig up parking lots. We're like, "That's got to be a better way." And along comes the technology like LVT, and others of course, in this space and off we go. And once you begin to demonstrate that value, hold onto that and reevaluate that on a continual basis. I was kidding David the other day that whatever works really well today in our environment's probably going to be obsolete in three years. So we all have, as leaders in AP and as solution providers, a challenge to constantly reinvent yourself. So that'd be the only thing I would add to that.

David Studdert:

Absolutely. Well, gentlemen, thank you. I think Mat, we'll turn it over to you for the Q&A section and we'll go from there.

Mat Schriner:

Fantastic. And thank you guys so much. That was very informative. We do have a lot of questions coming in. If you do have additional questions, please enter those into the Q&A box. So this first question, "Sometimes it's hard getting buy-in from the frontline staff on engagement with the bad actors to try and deter theft, as well as letting the AP and LP team know the moment rather than after the incident occurs. How have you been able to get that buy-in with your frontline staff to inform while the incident is occurring?"

Scott Glenn:

I'll speak to what we have done. Philosophically, it's a matter of they better see something happen, right? I mean, psychologically, if you want them to provide information to you, there better be some kind of closed loop on it. And so that's what we've developed at The Home Depot. We actually have a way for any associate in the store to report a theft in real time on the registers and on our mobile devices. And we certainly bring that information back to our central investigations team. We do a ton of pattern analysis on it. We move our resources around. And based on those patterns, but most importantly, when something comes to closure, we actually talk to the store.

So if store 1, 2, 3, 4 gives us a tip that ultimately, even if it's a couple of weeks down the road, leads to some type of professional gang, prevention theft group, organized retail crime group being apprehended, we actually put personalized messages on their electronic boards in the break room and say, "Hey, thanks to the tip from..." If it's anonymous, we don't talk to the person, but if they're okay with us putting out there, "Thanks to a tip from this person, we were able to apprehend this group for $50,000, blah, blah, blah, blah, they're going to jail and blah." And so it has to be kind of a closed loop type of communication method in my mind. But I'll tell you, it's been incredibly valuable and we're sitting at somewhere around 420,000 tips that have been input into our system in the current fiscal year from zero three years ago. And so we'll probably hit close to 450, 460 by the end of this year. And it has been a huge win for us internally within the company.

Mat Schriner:

Wow. That is tremendous. And I know that one of the constant comments that I hear from professionals, and even the cashiers is, "I don't know when they get apprehended. I don't know that the ORC case is closed because they got picked up by law enforcement." So having that closed loop is instrumental in keeping them informed that we are doing something about these incidents. There is movement in the right direction, so keep the tips coming because it's resulting in apprehensions and post event apprehensions by our law enforcement partners. So thank you very much, Scott. Mike, anything to add to that?

Mike Lamb:

I was going to tell just a 45-second story, if I can get through it this quickly. But years ago when I was with Walmart, we commissioned Read Hayes and the LPRC to do a study on some known shoplifters. And we walked him through the store and we talked to them about, or he did, and his research scientists on, "Why do you steal from Walmart? And what deters you most effectively?" And this is no surprise to probably anyone on this call, but it was an attentive, alert and friendly associate who's engaging me. And we had video that we took back, and I actually played this video to Walmart CEO, and the officer meeting on Friday to say, "Look, great service, having an engaged associate that's friendly is arguably the most effective tool we have to shoplifting." I think frontline execution starts with top line management.

So when I was at Walmart, we talked about this. Look, every associate should care about the organization in which they work. Not all do, but you would hope they do. And when you can demonstrate the power of just an associate acknowledging a customer, particularly one that's about to commit a dishonest act, it's amazing at how that effectively deters. And we heard it from the horse's mouth. The shoplifters themselves shared that insight with us. Some said they'd steal out of spite because of a rude associate. And then at Walmart, they had this mantra, I don't know if they still do, but it's clean, fast, friendly. And underscoring this friendly piece was a great way for me to introduce that to the officer team and really begin to drive that messaging across the stores as they toured and walked stores. And so I think it's got to be top down.

Mat Schriner:

That's awesome. Thank you, Mike. Fantastic response as well as you, Scott. So the next question, "Michael, you mentioned that LP and AP is being asked to do more. Where do you see AP and LP programs evolving to combat shrink and other leakage in the organizations?"

Mike Lamb:

Well, I think it's becoming increasingly more important. The retail space, and particularly across certain verticals is highly competitive, razor-thin margins. The importance of delivering it to the profit line is paramount. And the importance of having an organization, an asset protection that is coming to the table with strategies, programs, and initiatives to drive that is as important as management's ability to support it. And generally, the successful companies have those two things going for them. They've got an AP team that understands where the big swings are because you can't solve for everything, and they're prepared to help invest in ensuring that those profit numbers are delivered. But not at all costs, as we talked about on this podcast, but to me, I think that's the secret sauce.

Mat Schriner:

Scott, anything to add there?

Scott Glenn:

Yeah, I think that in the total retail loss transition to AP, there's been more of this protect the bottom line, not just protecting the shrink line and the safety line. And so I think about using investigative methodology to look for other types of losses within the margin construct of your P&L. Certainly that investigative mindset can go a long way to uncovering other types of losses financially throughout the organization. I certainly think that piece of it continues to be a growth vehicle for within the AP team and side of the organization as well.

Mat Schriner:

Excellent. Thank you very much, both of you. Next question, "Can you speak to any efforts that you're aware of on any state or national level to create legislation specifically to combat ORC? And what's working and what's not?"

Scott Glenn:

I'd be glad to jump in there because I spend a lot of my time in that space right now. And I would tell you that first and foremost, there's a ton of efforts along, particularly with the INFORM Act and its variance at the state level, the INFORM Act has made it out of committee in the House. And so there is bipartisan sponsorship for that and certainly RILA and NRF and most major retailers are behind that. But importantly, there's been multiple versions of that act, or at least variants of the INFORM Act passed at state level. And probably even more aggressively, we've seen state attorneys general starting to create their own task forces within their agencies. So certainly in Illinois and in Florida and in California and Utah and New Mexico and Georgia, there have been new task forces just in the last year stood up that now are multi-jurisdictional, now take these crimes and aggregate these crimes across all the different counties and cities and towns within their states, and they're starting to be taking much more seriously.

I think there's a ton more to go. I think that there is a lot that we can continue to do. Personally, I think that the watering down of some of the decriminalization that's happened over the last couple of years will probably start to swing back the other way in the short term, whether it lasts or not, we'll see. But at the end of the day, I think that there's momentum to continue to put some politicians on the hot seat. You can just read the headlines recently, and you've got some politicians on their heels right now trying to defend what they've done over the last year in light of the crime statistics that are coming out of their cities and states. So I think that like anything, it's a pendulum swing and sometimes you go ditch to ditch. And I think that we're probably ready to go to the other side of the road right now.

Mat Schriner:

Yeah, I think that's a great point, Scott. One thing that comes to mind when you talk about law enforcement and the things that are going on out there that a lot of retailers don't seem to grasp is, who is it? When you talk about partnering with law enforcement, who has a seat at that table? Is it just your local police force? Does this include district attorneys, lawmakers, prosecutors, or is this strictly just the law enforcement officers that are making the arrests?

Mike Lamb:

I think to an extent it's all the above. I know during my tenure at Walmart, we had the opportunity to attend a National Chiefs of Police meeting in which we helped sponsor the event. We went to many cities like the City of Tampa, Florida, to meet with not only their police chief, but we also met with the Hillsborough County prosecutions office. Bear in mind, Walmart's a machine on shoplifters, right? So there was this notion of you are overtaxing and overburdening local law enforcement just based on the volume of shoplifters you apprehend. So it was under a little bit different pretense that we had those sessions. But what it really brought to bear was almost an opposing view where law enforcement's like, "Look, you steal, you go to jail." Hallelujah. We appreciate what you're doing. You go to the prosecutions office and say, "Man, we're just overtaxed, overburdened. And there's got to be a balancing point here."

But I don't think it's necessarily just one entity. I think it's all the above. And the thing I've noticed, I know Scott has a crack ORC team led by Mike Combs over at Home Depot, and the relationships that those men and women build with law enforcement, with prosecuting offices is an enormous play, I'm sure, for The Home Depot and other companies who have the benefit of having an ORC team in place. And Scott hit on it earlier, a well-packaged investigation complete with detail, you seldom find that law enforcement is not eager to assist. But there's a lot of pieces to that puzzle that include the district attorney's offices. And so it's a bit of a conundrum. And I think for the low level offender, it's got to be more about prevention and education. And the ORC operator, different beast all together. And I think that's where legislative efforts, contacting law enforcement, prosecuting offices is so critically important.

Mat Schriner:

Absolutely. Well said, Mike. Thank you for that. We have time for one more question before we get to our announcement. So, "From a training perspective, what additional trainings, courses or programs would you recommend to someone wanting to get more involved in the ORC side of the AP business or just to grow their knowledge in that sector of retail?"

Scott Glenn:

I thought you were going someplace else with that, Mat. But what I would say is I don't know that there's a one-size-fits-all approach as it relates to training for ORC. I think there are definitely some resources, I think that probably your local orcas are probably the first place where you can start to talk about tactics. And then I think you have to craft it internally to your own organizational needs. So we have our training department at The Home Depot who helps to put this together for us with the help of our ORC team. We certainly use some outside resources when it comes to surveillance tactics and training and technology. There are definitely some folks that are out there. But at the end of the day, I don't know that there's a package that you could just say, "Here's the off-the-shelf ORC investigative 1, 2, 3." I think it's a lot of different pieces from a lot of different places. But I think the most important is how do you tailor it to your resources, your support level, your investment level and your particular needs as an organization?

Mat Schriner:

Absolutely.

Mike Lamb:

I'd say three things. Network, network, network. And in fact, the LP Foundation has an ORC investigations course. Have an insatiable appetite to learn. It won't take you long to learn it's a major problem.

Mat Schriner:

Absolutely. Thank you both. And thank you, David for facilitating today's webinar. So we have a couple of announcements. First and foremost, LiveView Technologies has sponsored a 20% discount code off of our certifications as well as our LPF memberships. We'll include that code in the post webinar email blast we'll send tomorrow, along with the names of five random attendees who will receive a LP certification course scholarship free of charge courtesy of LiveView Technologies. As always, thank you for joining us today for this LPF webinar. We look forward to having you on future LPF webinars here real soon. Take care and have a happy holidays.