As I reflect on the initiatives driven by the RILA LP team in 2011, two things stand out to me about the loss prevention profession. First, retail LP continues to evolve at a rapid pace. Second, LP executives are stepping out of their corporate silos to collaborate with industry peers and external stakeholders.

Gone are the days of LP professionals living their professional lives as crime stoppers. Retail crime remains a significant risk that will require our ongoing attention. But, today there is much more to retail LP than fighting crime. Thanks in part to corporate reorgs and budget constraints, LP professionals have been forced to diversify. Individuals hired years ago to catch shoplifters have taken on additional roles, like safety manager, hazmat specialist, human resource investigator, and auditor. With diversification comes the reality that LP professionals may not always have the answer, and they may need to look outside their organizations for help. All one needs to do is look at RILA's key LP initiatives in 2011 to see how diversified the LP function has become, and how the spirit of collaboration is alive and well in the industry.

Workplace Safety

Our Workplace Safety (WS) Committee grew exponentially with nearly 100 safety professionals representing forty retailers. The numbers in and of themselves show a desire on the part of retailers' to collaborate. In 2011 the committee convened regularly to discuss emerging trends (the good, the bad and the ugly), top challenges, and leading practices for minimizing workplace injuries.

In the fall committee members met in Washington, D.C. and welcomed the unprecedented participation of executives from the U.S. Chamber of Commerce, National Institute for Occupational Safety and Health (NIOSH), and Occupational Safety and Health Administration (OSHA), delivering on our commitment to look outside our organizations for sustainable solutions.

Throughout the year, the WS committee commissioned several benchmarking surveys covering a broad range of topics including fall protection, corporate safety programs, and trends in general liability and workers' compensation claims. RILA closed out the year by hosting more than 150 safety professionals on a webinar addressing the impact of OSHA's enforcement actions on the retail industry.

Disaster Preparedness

2011 saw its share of natural disasters, both domestically and overseas. With each event came a reminder to LP executives of the critical role of preparedness in a retailer's response and recovery efforts. This past year, RILA's Disaster Response and Preparedness (DRAP) Committee was keenly focused on corporate and industry preparedness, working together and with external stakeholders to develop strategies for mitigating the impact of disasters.

DRAP members met regularly to discuss preparedness and response protocols, leading practices, and strategies for streamlining industry efforts. They "downloaded" in the days following significant weather events to share challenges, successes, and lessons learned. They developed a communication mechanism to facilitate information sharing during a crisis.

In addition to peer collaboration, we...once again...looked outside our industry for answers. We forged strong partnerships with key external stakeholders, including the Federal Emergency Management Agency (FEMA) and the Department of Homeland Security (DHS). In the spring FEMA hosted DRAP at the National Response Coordination Center (NRCC) in Washington, D.C., where Administrator Fugate and other FEMA executives spent a full day brainstorming with committee members about methods for driving public-private partnerships and opportunities for enhancing the agency's initiatives to better align with retailers' needs and capabilities. Several months later, RILA and DRAP members played an important role at FEMA's first national conference on building resilience through public-private partnerships. And, RILA takes pride in the fact that two of the four companies to sit in the private-sector seat at the NRCC this inaugural year were DRAP members.

One of the most humbling experiences of my professional career occurred this past year when I had the opportunity to travel to Joplin, Missouri, to lead DRAP members and 250 other volunteers from RILA retail member companies in "Retailers Rebuilding Joplin," a large-scale cleanup and rebuilding effort following the F5 tornado that ripped through the small Midwestern town.

Operational Audit

This year, the Operational Audit Committee (OAC) released the second edition of the RILA Store Operational Audit and Loss Prevention Guide, written in partnership with KPMG. The guide is a resource tool to help retailers develop, enhance, and update store audit department structure and reporting hierarchy, store audit processes, selection criteria, and reporting. Following its release, committee members helped lead a webinar to review the guide's contents with the more than 250 audit professionals in attendance.

Throughout the year, the committee commissioned several benchmarking studies, including surveys on regulatory compliance, store and distribution center inventory practices, and store-level receiving processes and controls.

Technology

Helping to drive the development of cutting-edge, theft-deterrent technology is a key objective of RILA's Horizons Committee. Committee members kicked off 2011 in Chicago to continue their work on creating an industry business requirements document designed to provide suppliers with retailers' common requirements for solutions that address retailers' top loss prevention concerns.

Retail Theft

RILA's Crimes Against Business (CAB) Committee was more active this past year than in years past. We expanded our focus to include all crimes against business, recognizing that organized retail crime (ORC) is one of many criminal risks retailers face. Consistent with this expanded vision, we broadened the scope of RILA's annual crime trend survey to solicit information regarding emerging crime trends and new solutions for mitigating criminal risks.

In the fall CAB members met in Minneapolis to hear presentations discussing such topics as intelligence infrastructure, use of force during apprehensions, workplace violence, in-store portable POS units and proof of purchase, cargo theft via rail cars, use of the RICO statute in prosecuting ORC cases, internet fulfillment and LP strategies for online fraud, video solutions, serial robbery investigations, alternate-source suppliers, and using tactical, strategic, and administrative analysis to combat ORC. And, RILA announced a partnership with Verisk Analytics to help drive participation in CargoNet and LERPnet2.0 as part of our ongoing effort to help stem the tide of ORC.

Industry Leadership

I am particularly excited about RILA's Asset Protection Leaders Council (APLC), and I believe it will be a game-changer for the industry. Setting aside the fact that the APLC is comprised of the top LP executives from the leading retailers in the world, the APLC's process-driven shrink initiative has gained significant momentum since its launch just a few months ago. This initiative is part of a collaborative industry effort to better understand shrinkage, identify the most significant operational risks causing shrink, and develop sustainable solutions for mitigating loss.

In the fall APLC members, product manufacturers, and renowned academic researchers convened in Minneapolis to discuss shrink and to develop a forward-looking research agenda to zoom in on the shrink implications of the emerging operational retail environment. In the coming year, the group will be focusing on the true cost of shrink, the next generation of self-scanning, and engaging the business in LP.

LP Conference

Finally, a recap of the year's accomplishments would be incomplete without reference to RILA's 2011 Loss Prevention, Audit, and Safety (LPAS) Conference. Record-breaking attendance, a sold-out exhibit floor, unprecedented networking opportunities, and thought-provoking session content led by topical experts helped make LPAS 2011 a huge success.

Looking Ahead

2011 was a banner year for RILA and the LP executives who helped drive our initiatives. Looking ahead to 2012, we will continue to drive initiatives that reflect the key priorities of LP executives, keep pace with the evolving LP function, and facilitate collaboration among our membership for the good of the entire industry.

It's not every day that competitors come together to talk about how to get better at what they do, but last week senior loss prevention executives from the leading retailers in the world did just that.

The Retail Industry Leaders Association (RILA) welcomed to Minneapolis members of their Asset Protection Leaders Council (APLC) and Crimes Against Business Committee who met separately to discuss shrink and crime, respectively. Over the course of three days, executives sat side-by-side listening, sharing, brainstorming and learning from each other for the benefit of their respective organizations and the industry-at-large.

The week got off to a great start at Best Buy, who hosted the APLC meeting, where we kicked-off the APLC's process driven shrink initiative. This important industry initiative focuses on the key role operational breakdowns play in explaining the root causes of shrink and the development of sustainable methods for retailers and product manufacturers to collaborate in creating effective shrinkage control practices.

It's no secret that a company's shrink rate is a major driver of profitability in the retail business. As such, retail shrink and its root causes are deemed proprietary information inside most organizations. That's why it was so impressive to witness at the meeting senior LP executives sharing their strategies for driving down shrink. The APLC recognizes, however, that they can't win the war on operational shrink alone. Key to the success of the process driven shrink initiative is a "whole community" approach that encourages participation from product manufacturers and researchers. And so, in addition to the many retailers in attendance, meeting participants included an impressive list of renowned researchers from the U.S. and Europe who will help drive the initiative forward as well as product manufacturers who certainly have a significant stake in the shrink game.

The meeting kicked off with Paul Stone leading the group in a walk of a Best Buy store during which his team highlighted real examples of the company's shrink strategy in action. Paul shared the mistakes he made along the way to delivering better than industry average shrink results. Paul explained that the foundation of Best Buy's shrink strategy is a company-wide culture of honesty, associate engagement and robust item level shrink data. Notably, Paul shared his perspective on finding "the good" in conflict, learning from mistakes and the value that comes from soliciting and thoughtfully considering feedback from store associates.

Following the store walk, the group headed across the street to Best Buy's corporate headquarters. where Target, gave an overview of their holistic approach to process loss that focuses on operational excellence and engages all business partners from manufacturer to cashier.

Attendees also heard from Dr. Mark Barratt, a professor at Arizona State University's W.P. Carey School of Business who shared the results of his studies that suggest cycle counting may create a false impression of the status of product availability in distribution centers.

A key deliverable of the process driven shrink initiative is a forward-looking research agenda that zeros in on the shrink implications of the emerging operational retail environment. To meet this deliverable, the group spent considerable time debating the inherent value in various research topics. From a list of 12 research proposals, the group agreed on three that they want to commission for their initial work plan. Those topics include: the next generation of self-scanning, the true cost of shrinkage and engaging the business in loss prevention.

The APLC will be busy behind the scenes putting the plan into action in advance of the next group meeting in January. Suffice it to say that a lot of progress was made last week thanks, in large part, to the spirit of collaboration alive in the room.

A special thanks to Ernst & Young for sponsoring the networking dinner and meeting!

Following the APLC meeting, RILA's LP team headed up the road to Target's Investigations Center, the venue for RILA's Crimes Against Business (CAB) Committee meeting. Not surprisingly, the spirit of collaboration carried over from the APLC meeting!

In advance of the meeting, CAB Committee members identified those topics they wanted to address either by way of formal presentation or open dialogue and those retailers from whom they most wanted to hear. One can quickly glean from a review of the final agenda that retail investigators face a multitude of challenges and risks. Indeed, some of the topics included: social networking tools, intelligence infrastructure, use of force during apprehensions, workplace violence, in-store portable POS units and proof of purchase, LERPnet 2.0, LP organizational structures, cargo theft via rail cars, use of the RICO statute in prosecuting ORC cases, internet fulfillment and LP strategies for online fraud, video solutions, serial robbery investigations, alternate source suppliers and using tactical, strategic and administrative analysis to combat ORC.

Of particular interest was a presentation by John Hawthorne, Manager of LP at Publix and Cathy McKyton, Assistant Florida Statewide Prosecutor who shared how they used the RICO statute to successfully prosecute a large ORC group. Historically, prosecutors have filed charges only against the lowest-level shoplifters within an ORC enterprise, charged them with multiple counts of simple theft or alleged violations of the state ORC statute. In many jurisdictions, these approaches carry minimum penalties and in many cases result in little to no jail time. On the other hand, the RICO statute can be used to prosecute each member of the criminal enterprise and typically carries stiff penalties and prison time. Most notably, in a RICO prosecution the state has to prove only two predicate offenses (e.g. two simple thefts) and does not need to prove the value of the stolen merchandise (which, as many retail investigators know, can be a challenge). The prosecutor shared that once the case was publicized, she fielded numerous inquiries from her peers in other offices and law enforcement wanting to know more about her use of the RICO statute in ORC cases. This presentation was about educating committee members on the use of the RICO statute so they can return to their respective markets and educate their teams, law enforcement partners and prosecutors. It's all about spreading the word on what's working to help combat the growing problem of ORC.

The robust dialogue and candor with which CAB committee members shared information throughout the course of the day demonstrated that retailers do not see crime rate as a competitive advantage or, if they do, they are willing to set it aside all in the name of catching criminals!

Gone are the days when retail LP executives saw collaboration as the exception rather than rule.

Lisa LaBruno leads the asset protection offerings in the areas of loss prevention, retail crime, workplace safety, disaster recovery, operational audit, research, and benchmarking for the Retail Industry Leaders Association. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs, and more than 100,000 stores, manufacturing facilities, and distribution centers domestically and abroad. LaBruno can be reached at 703-600-2024 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Last week RILA joined forces with Operation Blessing to organize a large-scale clean-up and rebuilding effort by the retail industry in Joplin Missouri, which was struck by a devastating tornado this past May.

Over 250 volunteers from America's leading retailers visited Joplin, July 13-15, to help with the ongoing rebuilding efforts underway in the small Midwestern city. RILA, members of the RILA Workplace Safety Committee and Disaster Recovery and Preparedness Committee, and local field-level associates from among RILA's retail members including Dollar General, Lowes, The Home Depot, Sears, Target, Walgreens and Walmart, participated in the industry-wide volunteer initiative.

To say that the experience was amazing is an understatement. The level of destruction we witnessed in Joplin and the emotion from victims was truly life changing. As far as the eye could see was merely rubble and we were witness to the sheer courage and will to survive by the citizens of this once bustling city.

In 100 degree weather, teams worked for three full days to remove debris and repair roofs, gut homes, and help erect new homes as they made every effort to help get survivors back on their feet. Working alongside folks who had lost everything they owned, sifting through the ruins of their personal belongings, family pictures, and former lives and helping them put it back together one piece at a time.

One particular project the group worked on was rebuilding the home of the Powell family, a single dad with four young children who lived through the storm huddled under the stairwell of their apartment building, and lost everything. The father described the limbs of his young children being pulled into the wind as he grasped frantically to save them. And when the storm was over, the family emerged from hiding to see only the wreckage of their entire apartment complex. With no renters insurance and only five thousand dollars in savings, Mr. Powell spent his last dime on a house that had been damaged by the storm, hoping to rebuild a home for him and his children.

Selected by Operation Blessing, the Powell family was slated to receive an extreme home makeover and our retail volunteers were part of a group to rebuild this home. On the last day of the trip volunteers witnessed the big reveal as the awestruck family walked through the door of their newly remodeled and refurnished home for the very first time.

I am so proud to have been a part of this effort and want to thank all of the volunteers for donating their time and thank Operation Blessing for everything they have done and continue to do.

Through this clean-up effort, we set out to lend our assistance and send a clear message to the people of Joplin that the retail industry stands united in its' commitment to help them rebuild their homes, their businesses and their lives and I believe that is exactly what we did.

Through RILA's Workplace Safety Committee and Disaster Recovery and Preparedness Committee we will continue to provide a forum where retail members can carry on their good work and exchange information around incident preparedness, response and business continuity to help protect customers, employees, facilities and assets and minimize business interruption.

Our heart goes out to the citizens of Joplin and RILA and our members will continue to be there to offer our assistance to Joplin and others in the country struck by disaster.

While the new Congress brings many changes to Washington, one thing remains unchanged—the need for federal legislation to help combat organized retail crime (ORC).

Loss prevention executives continue to be challenged by the increasingly sophisticated schemes used by organized theft groups to defraud retailers, evade detection, and maximize profits. Retailers continue to pour millions of dollars into deterrence, investigation, and prosecution strategies. These challenges linger as do the ongoing retailer investments despite the best efforts of online marketplaces, most notably eBay.

Let me be clear. We acknowledge the progress eBay has made over the past year through its PROACT program. Those among RILA's retail membership participating in PROACT are appreciative of their renewed partnership with eBay and are happy to be receiving more information and cooperation from eBay than in years past. However, to suggest that PROACT is the solution to the problem related to the online sale of stolen merchandise is shortsighted.

Holistic Approach

The reality is there is no one-stop solution to this problem. Rather, the solution requires a holistic approach that involves several key stakeholders and includes both prevention and enforcement components.

• Retailers must remain vigilant in their efforts to deter theft from their facilities and supply chain.
• Online marketplaces must develop methods for preventing offenders from selling stolen merchandise on their sites.
• Law enforcement agencies must dedicate resources to investigating ORC.
• Prosecutors must aggressively prosecute offenders and seek appropriate punishment.
• Judges must impose harsh sentences that reflect the impact of ORC and deter others from engaging in similar criminal conduct.

If one key stakeholder fails to do their part, the solution fails. Robust state and federal legislation is an important component of a holistic approach to ORC. The Coalition Against Organized Retail Crime (CAORC), which RILA chairs, has worked tirelessly to pursue federal legislation that focuses on prevention, because we simply cannot arrest our way out of ORC. And so, while the goals of the Organized Retail Theft Investigation and Prosecution Act, which passed the House of Representatives last Congress to supplement the tapped resources of law enforcement and prosecuting agencies, were commendable, it didn't do enough to prevent ORC.

Why Federal Legislation

Some have asked why federal legislation focusing on prevention is necessary given the progress that has been made with eBay's PROACT program. As robust as eBay's PROACT program may be, it remains a voluntary program. Nothing legally compels eBay to operate PROACT, to put tools in place to prevent the sale of stolen product, to proactively identify suspicious auctions, or to cooperate with retailers in investigating the sale of stolen goods on their site. The fact is eBay could opt to shut down PROACT at any time and face no legal consequences.

Additionally, while eBay has implemented some preventative tools to identify suspicious auctions onthe front end, PROACT continues to be, in large part, a reactionary program. Indeed, much of its success is measured by the quality of closed cases. It seems every day we are reading about another ORC ring apprehended with the involvement of eBay. I recently read about a $1.2 million case that resulted in thirty-six arrests. Some would call that a success. I call that more prevention is needed.

Federal legislation being pursued by the CAORC would seek to respond to these issues. Legislation would formalize partnerships between online marketplaces and retailers, legally compel online marketplaces to implement tools to prevent the sale of stolen goods on their site, require long-term and sustained cooperation from online marketplaces, and impose real, measurable consequences for noncompliance.

To eBay's credit, through PROACT, they have demonstrated a good faith effort to join retailers in the fight against ORC. What about other online marketplaces that haven't done near enough or nothing at all to help stem the tide of ORC? Loss prevention executives have reported seeing an increase in the frequency with which stolen goods are being sold on online marketplaces other than eBay, none of which have a PROACT program. And, what about online marketplaces that aren't operating today, but are the favored site of tomorrow's ORC rings? Will these online marketplaces be good corporate citizens and invest money and resources into a voluntary prevention and response program? We can all scramble to figure out a solution when that time comes, or we can fight for federal legislation that provides a solution now.

Federal ORC legislation is an essential component of a holistic approach to ORC. RILA and the CAORC remain committed to working with retailers, online marketplaces willing to dialogue, and elected officials to pass meaningful, comprehensive legislation that brings a long-term solution.