LVT Head of Go-To-Market Matt Kelley recently appeared on Retail Retold. Read the transcript below.
Below is a transcript of the Retail Retold Podcast episode 203 "How to Reduce Organized Crime by 69%." To listen to the podcast, click here.
Chris Ressa:
This is Retail Retold, the story of how that store ended up in your neighborhood. I'm your host, Chris Ressa, and I invite you to join my conversation with some of the retail industry's biggest influencers. This podcast is brought to you by DLC Management.
Welcome to Retail Retold, everyone. Today I am joined by Shane Healey, the Chief of Police for the City of Opelika, Pete Kepler, the Director of Security and Investigations at Advance Auto Parts, and Matt Kelley, head of retail at LiveView Technologies. Welcome to the show, guys.
Shane Healey:
Good afternoon. Glad to be here.
Pete Kepler:
Glad to be here.
Chris Ressa:
So this is a unique show for us. We have yet to have anyone on the show talking about security, organized retail crime, and I'm excited for this episode, given how much headline news this is all making today, so thank you for being with us. I want you guys to go around and tell a little bit more about what you all do, who you are, and so we'll start with Pete.
Pete Kepler:
Yeah. Thanks, Chris. So my name is Pete Kepler. I'm the director of Security and Investigations at Advance Auto Parts and I've been with Advance for about eight years and was originally hired in to create and build out an organized retail crime investigations team. And over the course of two or three years, I evolved into my current role within the security services department and it just made sense, right? There were so many overlaps in what the security services team was doing and what the investigations, the ORC investigators were getting into, so it just made sense and it just evolved in to one all-encompassing group now.
Chris Ressa:
You mentioned eight years ago you were brought in with organized retail crime and I'll put this in your brain to talk about it in the state of the market. We're just really hearing about organized retail crime as much as we are in the last year. So to me, when I hear that, it sounds like this isn't the newest phenomenon happening. Maybe it is, but when you say that, it sounds like it might be gaining headline news traction today, but if you were hired eight years ago for this, it's not new.
Pete Kepler:
Yeah. It's been going on as long as people have beenstealing product and selling it. It's just a different name now, so yeah, I'lltalk to more of that, though. That's absolutely a good segue.
Chris Ressa:
Okay, and Shane, you are the first chief of police to beon the Retail Retold podcast. Thank you for joining us.
Shane Healey:
Not a problem. I guess I'm honored, to say the least.
Chris Ressa:
So tell us a little more about who you are, what you dodown at Opelika.
Shane Healey:
Yeah, so my name is Shane Healey and like you said, I'm the police chief here in Opelika, Alabama, been working for this police department for about 32 years, done a little bit of everything. I've been thechief for the last two years and a big part of the things that we've been doing over these last couple of years is really trying to be more involved in thecommunity and being more transparent in our community about what we do, some of how we do that. And we created a program called Together Opelika and a lot ofthe things that we do fall up under that. How can we be the best police department we can be for our community? And when we were asked about participatingin this project, it was a perfect fit for what we're trying to do here. We've been looking for a great way to connect with our business partners throughout the city and this was a perfect opportunity to be able to do that, to try to help provide a better service for our community.
Chris Ressa:
Got it. Matt Kelley.
Matt Kelley:
My name is Matt Kelley. I am head of retail for LiveView Technologies and what that really entails is making sure that LiveView Technologies is getting feedback from their customers, positioning themselves to meet the needs of our customers and develop that partnership. But before I was with LiveView [Technologies], I was with Home Depot for about 10 years, where I was responsible for, and my team was responsible for physical security of all their retail locations. And also within that was sourcing technology to make sure that the needs of the business were met so that we had the right tools and resources for our investigative teams and also for our frontline associates to make sure that they were safe and secure when they were operating, but our investigative teams had the right tools and resources to do their jobs on a day-to-day basis.
Chris Ressa:
Matt. Can you tell us a little bit more about LiveView Technologies?
Matt Kelley:
So LiveView Technologies is a blend of a hardware and software security company that's really untethered to the power grid and is cloud-based, in terms of how they access the video. So it is a unique platform and that is readily deployed to meet the needs of our customers and really, the end of the day, is trying to make our customers more safe, more secure, so that they can go home to their families and just help the communities around those retail stores and our customer base.
Chris Ressa:
Well, guys, thank you for that. And for the listeners, Shane mentioned a project. Pete, Matt, Shane have all worked together in Opelika on this task force. They're going to tell you about what they've done and how they've produced organized retail crime, which I think is really compelling, given all the headline news we have been reading about retail crime. It has made national news more than it's ever has before and one of the things that has astounded me is, as many of you know, I pay attention to what the analysts on the street are saying about retailers, who are our clients at DLC. And this is, I would call it the first quarter or two, you have found seen investors, analysts starting to pay attention and want to know more about security and know more about what's going on in organized retail crime.
I made a joke to Pete and Matt, who had worked on the retail side and when we did our prep call for this, and I said, "When you guys were retailers, could you ever imagine the CEO," and Pete still is, "Coming up to you, wanting to be briefed before an earnings call?" It just seems so unlikely and now it's front and center. And I guess the question I have for the group, and we could take this in any order, is why now? What is going on? Why is this so prevalent right now, this organized retail crime? What's going on in the state of the market here that this is happening? Pete, I'll go to you.
Pete Kepler:
And I'm anxious to see what the chief says on this one, too. I'll tell you, you go back 20 years and you happen to acquire a stack of blue jeans from a retailer. You had about three different ways you could move that product. You could do it through word of mouth, you could sell it out of your trunk, or you could go to the local flea market and hope that a local police officer didn't walk through and ask you where you got them. Today, it's just easier to move stolen product. There's online avenues and there seems to be a new one every day and they're almost invisible to anybody trying to detect them. So once the bad guy has the product in their hand, their ability to move it is so much quicker and I really think that they're getting more intelligent. They know what we're doing, almost as good as we know what we're doing. We have EAS towers, they bring bags into help defeat the EAS technology. And I think, and finally, the penalties for the organized retail crime, compared to how lucrative it is, are nowhere near as severe as, say, the penalties for somebody doing a more violent activity, so I think the risk reward is just very enticing for the bad [inaudible 00:09:04].
Chris Ressa:
It's really interesting. If I just unpack what you said, it's being a thief is a more profitable business today than it was in years past. Easier way to get it out, they have better technology, and the penalties are probably not what people think they are for doing these crimes.
Pete Kepler:
I tell you, what is amazing, though, is the progress, just in the eight years of my exposure to it. There are municipalities who are really taking a hard line stance and putting a lot of muscle into their organized retail crime statutes. So it's getting better and definitely chief can talk to that, but in my opinion, it is getting better.
Matt Kelley:
Yeah. To piggyback on what Pete said, you'll see a lot of state level attorney generals now funding task force to combat ORC. Not only that, but the Inform Act that has gotten passed from an online secondary market platform really is trying to put a face to the people who are selling stolen goods online. So that's really encouraging to see at the federal and at the state level, they're starting to take this seriously and you can tell when the needle's starting to get moved, politicians are starting to use this as a platform to get elected.
Shane Healey:
To compound the points that Matt and Pete brought up, I think on the law enforcement side, as communication develops between retail and law enforcement and our legislative side that's getting involved, as all those avenues of communication open up and get better, we're identifying a lot more of these organized retail crime folks that are coming in to different smaller cities. We've had some of these crimes for a long time, but we maybe weren't able to quite identify them as being organized and coming in and stealing stuff in our city, but then taking it and selling it wherever. So I think now that we're able to identify this crime for what it really is, now it looks bigger when you start looking at statistics, it looks big.
Chris Ressa:
So when I hear ORC or organized retail crime, I think one of the things that I struggle with and now with the internet is to put a face to it and what this organization looks or who they could be, looks, and feels like because when you hear a certain a mafia or a gang, there's been documentaries and videos and people have a visual of what a group like this, how they operate, who they are, why they operated. Are organized retail crimes or organized retail crime syndicates, are they ... I think people think of when they hear this, it's someone just walking in a store and taking a pair of jeans and it's somebody and a buddy doing this and it's more sophisticated than that. Can you walk us through a little bit about who they might be, how organized and sophisticated?
Shane Healey:
I guess I can start a little bit on that. They're pretty organized and very sophisticated. The thing about it is they have their finger sin a lot of different schemes, I guess, in how they do this. So a lot of it, yes, you have groups that will come in and actual physically steal product to take and resell, but we also face a lot of groups that come in with cloned credit cards. And even going back to when people would write checks, counterfeit checks that they would come in and write and they would come in to our city, we're right off of an interstate, our big shopping retail area is right off an interstate, so we'd get folks that would come in from Atlanta, Montgomery, Birmingham and come into this shopping center and go to all these stores with cloned credit cards and just make purchases using clone credit cards or counterfeit checks.
Matt Kelley:
So to pick up on what Shane was saying, they're super sophisticated, they are much different things are that they do in terms of funding their organization from human trafficking to gun running to smuggling stolen goods, people, drugs. It's not just this one source of ... It could be super sophisticated, like you're alluding to the mafia, or it could be a pawnshop that has multiple people working for them and sends people out with a shopping list to go to retailers and say, on any given week, "This is what I need to sell because this is what somebody has stopped by my shop to ask for."
Chris Ressa:
Got it.
Pete Kepler:
If you really want to look into it, after this call and you got some spare time, Google ORC. I mean, there's some case studies out there where health and beauty aids are a big core target because they're expensive, they're small, and everybody likes and needs them, but there's case studies done where something is boosted from a Walgreens, let's just say 9:00in the morning and by noon it's in another state and it's for sale online or in a flea market or something. It's amazing the networks that, I steal it, you've got it within 10 minutes of me stealing it, and then within an hour, Matt has it and he's running it across state lines or something. It's crazy, man. It's really ...
Chris Ressa:
So Pete, you said a word, boosted. Can you define that for everyone, because I don't know if everyone listening knows what boosted means.
Pete Kepler:
To boost something is to take it without permission. I boosted it. Yeah.
Chris Ressa:
It's a slang word there, boosted. One of the things that recently hit headline news that really took the retail world and really the retail investment world for spin is when Target announced they had about $400million that was lost to what they deemed to theft, which that's when the retail world and the retail investment world's eyes lit up because this is a staggering number for one retailer. So I don't know if retailers had broken this out like this, they've always had shrink and they've always talked about shrink, but this was staggering to people. And are you seeing this in all ...You followed. I know you're at Advanced Auto and Matt, you're whatever. Are you seeing this, is this pervasive across categories? You mentioned health and beauty aids or is it really specific to certain products and goods?
Matt Kelley:
The NRF just posted some stats on ORC went from I want to say 90 billion to 95 billion year over year. So if you think about what profits, that's far greater acceleration than profits or top line sales, so 5 billion jump in one year is pretty significant for an industry in general.
Chris Ressa:
Got it. Yeah, that makes a lot of sense and wow, that's why it's getting such, so much traction. So now that it's so hot and heavy from headline news perspective, and you've alluded to some of the challenges. The groups doing this are super organized, they're fast, the fact that you can steal it and in 10 minutes someone else has it and then in an hour it's gone to its destination to be sold off again, is quite uncanny. So they're organized, they're sophisticated, they're fast, technologically super savvy. How is the retail community now trying to tackle this challenge? What's going on at large? And then more specifically, what are the three of you doing as it relates to working together and how do you see people working together to lower the rate of organized retail crime and then go forward?
Shane Healey:
I think the key is what you just said, working together, the fact that you have retailers, you have businesses like LVT that have a specialty in technologies that can be used as what we call a force multiplier and law enforcement. By combining with these different entities, businesses, groups, police coming together and working together to combat this, we're stronger as a group than we are as individuals. Where before, I think, on the police side, we're trying to tackle everything and we may find this little thing over here that might help, but we're not really working with the retailer to get to the root of the problem and look, maybe, nationwide. We're only focused on what was happening just in our city. And now by these partnerships, we can look bigger picture and the answer that we're looking for may have already been answered in some other location and it helps us solve our crime just like we may have answers that they're looking for. And by working with folks like Pete, there's Advance Autos all over the place, so they may have that piece of information that we need to solve a crime here in Opelika but it came from some other part of the country.
Pete Kepler:
No, you nailed it, Chief. And I think it's important to call out, too, that knowledge is power and the ability to share that and what LVT is doing with this taskforce being a small example of the overall bigger picture. Loss Prevention Research Council out of Gainesville, University of Florida is doing tremendous amounts of quality work, pulling retailers together to problem solve and work through different issues and they do offender surveys. A wealth of information can be gained from a convicted or a charged organized retail criminal, say, what motivated you to do this? How did you choose your target? Why didn't you go here and you went here instead of there? It was just so much information. And Matt, you may be able to speak better to this because you may be a little closer to it now, but last check, probably 15 or 20 regionally aligned, organized retail crime associations throughout different states and jurisdictions. So Matt, are you aware of that and is that still continuing to be the trend?
Matt Kelley:
Yeah, ORCs, I mean, that's a great point, is there's organized retail crime associations within states. Our powerful tools where law enforcement and retailers come together to do exactly what you both alluded to is share knowledge and that's becoming more and more prevalent and is a way to combat these unwanted activities and theft because you put it so very succinctly, Pete, is knowledge is power. We are forced multipliers when you break down the silos because everybody's there fighting the same battle, whereas historically everybody's operated in silos and not wanted to share information for fear of the perception of them either being a soft target or just admitting, "Hey, we're not as solid as we want to appear on the outside." But breaking down those silos, collaborating together to stop this activity really is going to be the silver bullet, whereas there hasn't been a silver bullet in the past, because they're all fighting the same battles. It's not like you're a merchant within an organization competing for share wallet. You're trying to stop the root cause of what's happening rather than just treat the symptoms.
Pete Kepler:
Yep.
Chris Ressa:
Got it. So Pete, when you got to Advance Auto eight years ago, what types of things were you evaluating and what was the approach then versus what we're about to get into as it relates to this task force?
Pete Kepler:
Yeah. It's a great question. I think I would sum up as Advance Auto as not being the traditional organized retail crime target, compared to a big box retailer or a small box or a specialty, but Chief talked to it earlier. We were getting exposure to refund fraud and gift card fraud, credit card fraud right off the bat. We experienced the traditional external loss, but the way our stores are set up, fortunately, it's not as conducive to say.
Chris Ressa:
The goods in the back. Most of the goods are in the back of the house.
Pete Kepler:
Right. So the typical or the traditional grab and run that some of our retail partners see doesn't really befall us as much because of one, the way we're set up and two, because of what we sell. We, like I said, are more victimized in the sophisticated credit card, gift card shenanigans that you see taking place.
Chris Ressa:
Got it. All right. We're going to get into the task force and what you guys are doing specifically in Opelika. Guys, well, interesting stuff that went on and thank you for sharing some of the things about Advance Auto versus some other retailers. I'd like for Matt, why don't you start and tell us what you guys have done in Opelika, how this partnership formed, and what have some of the results been?
Matt Kelley:
Yeah. I think we touched on the goal of the access taskforce and some of the answers we've given already, in that there is a force multiplier in collaboration when silos are broken down. And that's really where we started with the idea for access task force is, what would happen if we went to a untapped market in terms of no collaboration, major thoroughfares for ORC, and partnered with local law enforcement, local governments, our retail partners to say, "How can we make these communities safer, drive down theft, when we have a collaborative partnership that stood up?" And we went to Opelika and Paducah and brought together a handful of retailers and did just that. Went out into the community, made a large investment from a monetary standpoint to put units together, partnered with these retailers and local law enforcement to share information, create an impression of control, to let the bad actors know that their activities won't be tolerated and that everybody is working together to harden the target and make the community safer.
Chris Ressa:
Interesting to make sure you get ... We have a technology company in LiveView [Technologies] that has the cameras and it's cloud-based and that's interesting to have eyes. You have the retail security in people like Pete for retailers. You got the chief of police and law enforcement involved. What does that mean, working together? What are you guys doing and what have been the results?
Matt Kelley:
We've actually had a couple instances already where our law enforcement partners have reached out to us for site-specific investigative information that we've been able to quickly pull video, provide that to local law enforcement to investigate incidences and ultimately, at the end of the day, try to get to a quicker prosecution when activity happens from a criminal standpoint.
Shane Healey:
And I want to add something else that we've had here is we've seen, from talking with our retailers, a change in the behavior of these bad actors as they're coming in to potentially try to victimize one of our retailers. They're already have recognized the fact that we have new technology at play, we're doing something different, and they're already having to try to adapt, and how can they defeat it? And one of our retailers came to us and said, "Hey, we've noticed that they're actually either taking the license plates off their cars or they've started using rental cars," which opened up a whole new investigative lead for us to now contact our local rental car companies to be able to see what kind of information is available to us as law enforcement and how can we, on the front end, proactively ... You got somebody coming to Opelika from Atlanta to rent a car for a day. Why is that?
So it's opened up some new leads for us, some new information that we can give to our patrol officers that patrol these areas. Hey, if you see a car riding without a tag on private property, that's not usually something that we're allowed to make a traffic stop for unless they're actually on the roadway, but now that we know that they're doing this behavior, taking their tags off their cars and traveling around in these large retail locations, if we see them on that private property, now we have the reasonable suspicion we need to make a contact with them to find out, "Hey, who are you? What are you doing?" And we walk up to the car and the car's chock full of two or three people and you can't see the roof because all the boxes and bags of stuff that they have bought, that's a clue for us and we're able to do some different things on the enforcement side.
Pete Kepler:
Got it. I tell you, just real quick, being a part of this task force, it's amazing because at Advance, we love our police departments. We love our communities that we work in and I love it if I get a call from a local PD saying, "Hey, we need some help on this. Do you think you may have video of that?" Absolutely. I mean, without our local law enforcement, people like the Chief, our jobs are just that much harder, so it's the ability to pull all these different agencies together. We're chasing the same actors, so working together will help us win.
Chris Ressa:
So you guys are all communicating, working together on the back end after things happen. What's being done on the front end from a prevention standpoint?
Matt Kelley:
So that's really where the overtness, perception of control in the parking lot comes into play, right? You've got these mobile security units in LiveView [Technologies'] towers on display in the parking lot at the front of the stores with speakers that are talking down to you with flashing lights and cameras to harden the target to psychologically make the bad actors think twice or, even as Chief Healey put it, recognize what it is as a prevention effort and to either subvert it, go somewhere else that doesn't have it, or keep the honest customers honest.
Shane Healey:
I call it the old get the devil to go next door trick. You do these things and you have this wonderful piece of equipment like Matt said, sitting in the parking lot out front with the flashing blue lights and the cameras, and it screams police, we're doing something different here. And they're like, "Ooh, I don't want to be on camera, let me go down here someplace else that doesn't have this." And I think that's a big factor when it comes to preventing on the front end, preventing these crimes from occurring in the first place.
Chris Ressa:
Got it.
Pete Kepler:
Yeah. I love that, send the devil next door. And another byproduct of this is it's increased team member and customer safety as well. I mean, that lends itself to the customer who needs to run in and grab a battery at 8:00 at night and it's dark outside, but they see this camera in the parking lot and they know, "Okay, that store is taking additional measures not only to keep the bad guys out, but to keep people safe," so it's just another byproduct of the technology.
Chris Ressa:
Got it. And so when did this task force in Opelika get put together, Matt?
Matt Kelley:
We started this back in September when we brought a handful of our more strategic partners, their leadership into a meeting and approached this topic with them and we deployed these units the first week of November and we have a second wave going out within the next week or so for some additional partnership to make an impact. And to the previous question, though, we've seen, in certain case studies, upwards of a 69% reduction in grab and go theft in some retailers, 60 plus percent reduction in parking lot activity. And I'm really excited to see once we get a large data set from our partners with this in partnership with LPRC, how we move the needle in terms of parking lot activity during this very busy holiday season.
Chris Ressa:
Well, that's some amazing numbers and it's the collaboration and the use of technology and the technology we're talking about here is the LiveView Technologies cameras that are these large units that are in the parking lots of shopping centers and in front of retail stores that capture everything on video, store it in the cloud, and hopefully deter people from wanting to boost stores, I'll use a Pete word, because they know it's the possibility of getting caught is much greater. That's led to, in this timeperiod, in a shorter time period, but so far about a 69% reduction in ORC. That's fantastic. Good for you guys.
Shane Healey:
I think one aspect, too, that we haven't quite touched on yet, and maybe this is a question that you had coming, but the positive impact that the community itself sees from these different retailers. In our community, we put together, working with Matt and his team, a pretty large media push and social media push about what's going on, what the technology is, how it works, and which retail partners are using this. And we have had a large outpouring of support from our community that this type of partnership is going on and they speak highly of the retailers that they see as partnering together with LiveView Technologies and us to make their shopping experiences, like Pete said, safer. They feel more comfortable being able to go out and hopefully, I guess maybe Pete can speak more to this, but hopefully that does increase their sales, especially this time of year.
Matt Kelley:
Hey, Chief, I want to ask you a question real quick. In terms of your force and this driving down unwanted activity on some of the biggest retail locations in your city, how does it free up your force's time to go do other more impactful activities within the community and what is the perception with your force?
Shane Healey:
It's phenomenal. When I say that it's a force multiplier for us, I don't just mean that we have another tool to use to be able to solve these crimes. The fact that these cameras and these trailers are in the parking lots and they have stickers on them that have Opelika Police and they have the flash and blue lights and stuff, our community thinks that we are in all these places all at one time. So instead of in the past, especially this time of year, I've had to look at, do I take some of my patrol officers that need to be on the streets doing some of the things and put them in these parking lots focused solely on these areas to have that presence? I now have a presence where I don't have to have a person and that perception from the public, from the bad guys that see those is, in essence, they think that's a police officer standing right there, so that really has freed up my officers to be able to respond to things quicker and cuts down response times. They're able to be more proactive in other areas, so it's a game changer for us. That's all I can say.
Chris Ressa:
Well, guys, this has been fantastic. I know we're running short on time here and I am looking forward, Matt, to hearing more results as this task force continues and you potentially roll this out in other communities. This has been a learning lesson for me. Thank you so much. This is not a topic I'm all that familiar with and you guys taught me a lot and I'm excited for everyone to hear this. This is really interesting and hopefully you guys continue to help make shopping in America safer. So with that, thank you so much for your time and everyone have a happy holiday.
Shane Healey:
Thank you, Chris.
Matt Kelley:
You, too.
Chris Ressa:
Thanks, gentlemen.
Shane Healey:
See you, Matt.
Chris Ressa:
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