|
Professional Transformation: The History of the Loss Prevention Industry
Gus Downing, CEO Downing & Downing, Inc.
Thursday, May 13, 2004
|
When we look at the history of Retail Loss Prevention, we see a slow evolution of the private law enforcement industry, otherwise known as the Security Industry, into today’s somewhat sophisticated Asset Protection industry. This evolution, which is in its fifth decade, was started by individuals who came straight out of the public law enforcement communities. It delivered the service of policing Retail America - methodologies which satisfied the retailers for a time. However, in the mid to late 60’s, senior management began wanting more for their money than the mere detection and apprehension of thieves. They began asking the industry, “How do we get in front of the problem and start PREVENTING the losses?” From this demand came the new title of “Loss Prevention”.
This new expectation, which the industry craved and applauded, resulted in a complete redefinition of priorities and methodologies. It forced the industry to the next level. Law enforcement was no longer the driving force but instead served a supporting role in a much larger function. Shrinkage reduction became the end result. This larger function created the need for Loss Prevention executives to have a working knowledge of every department within a retailer and to integrate prevention and detection techniques within each one. Consequently, what we began seeing in the 70’s and 80’s was a Loss Prevention pyramid head’s profile. Senior management no longer defined this as a “law enforcement executive”, but rather as a “retail business executive who is in the Loss Prevention industry.”
Interestingly enough, this change in profile also corresponded with the fact that the first-generation Loss Prevention executives, who primarily came from public law enforcement, were slowly being replaced with second-generation Loss Prevention executives who were born and raised in retail. Fundamentally, this increased retail expertise and Retail America’s ongoing need for profit is fueling this industry’s next step into what some are calling “Asset Protection”.
This Asset Protection philosophy adds a fourth component to the equation and changes the end result from the old Prevention + Detection + Apprehension = Shrinkage Reduction to the new Protection + Prevention + Detection + Apprehension = Increased Profits. While this Protection component is not entirely new as it relates to its obvious overlapping with the Prevention component, it does broaden the scope of the equation and forces the industry to be involved in the whole pie (profit) and not just a piece of it (shrinkage). Examples of this can be found everywhere from the protection of proprietary information to the protection of employees and customers, the protection of pricing and SKU integrity, and essentially to the protection of all of the company’s assets.
Asset Protection takes Loss Prevention to the next level. Loss Prevention is primarily concerned with the prevention of loss and deals with the “during the fact” or “after the fact” thought process while Asset Protection positions itself in front of that philosophy and minimizes the need for prevention because it deals with the “before the fact” thought process.
The Loss Prevention industry, which is now being lead by predominately second-generation retailers, is now populated with third-generation retailers. To satisfy tomorrow’s senior management, this group must evolve by looking at the development of this industry from Security to Loss Prevention to Asset Protection and applying this growth process to their own personal careers- in essence by going through their own personal transformations. They will then be in a position to lead tomorrow. It is the “thrill of the chase” that brings so many to these ranks, and ultimately, that same thrill holds them back.
|
