How loss prevention transforms an organization

It felt like a big-budget Hollywood awards show. Bright, colorful lights and thumping music greeted Rich Mellor, the National Retail Federation's VP of loss prevention, as he walked on stage this morning to kick off the NRF's 2012 LP Conference and Expo in New Orleans.

Mellor, who joined the NRF in November 2011, welcomed the crowd to the show and thanked the sponsors. He also called attention to the companies that sent teams of their loss prevention employees. A special mention was reserved for The TJX Companies, owner of T.J. Maxx and Marshalls, which has 52 loss prevention employees at this year's show. Vicki Cantrell, the NRF's senior vice president for communities and executive director of Shop.org, also spoke, telling the audience that the NRF is working hard to battle the misplaced belief that retail is full of dead-end jobs.

But the real focus of the morning was Stephen Sadove, chairman and CEO of Saks Inc., who offered the keynote address. His topic was loss prevention's roll in transforming oranizations. It wouldn't have been a very effective speech if Sadove didn't have some first-hand experience to call on. But he did, beginning with Saks storied history and following it up to some of the more recent bumbs along the way, including an SEC investigation in 2005 into illicit tactics used by the company to inflate its earnings. Sadove, who took over as CEO in 2006, called it a "transformational" period for the company.

Today, Saks has reduced its shrink rate by 70 percent since 2005, Sadove said. He attributed the reduction in shrink to "clarity of strategies, over communication" and "constant planning."

He gave his loss prevention team credit. Tearing down organizational silos and horizontally integrating loss prevention across the organization was a key factor in the company's transformation, Sadove said. It takes a leadership roll in all activities when it comes to compliance or other business areas involving ethics.

Asset protection is more than just stopping shoplifters, he said, it "sets the stage for an ethical corporate culture."