SheerID’s Q&A with Loss Prevention Expert Richard Mellor

Posted on Oct 4, 2013 · 5 min read

As ecommerce has grown in larger than life ways over the last decade, the effects on the retail industry have been astronomical. Ecommerce has both fueled spending, as well as new trends such as personalization and a bigger focus on customer experience.

With the balance shifting between the number of brick and mortar locations and ecommerce destinations, there has been one other major sector of retail that is seeing major change as a result: Loss Prevention.

What was once a much more straightforward, yet high-risk, job function, has now morphed into a profession responsible for complete oversight of both physical locations and the digital faces of today’s brands. Whether it be social media, websites, or behind-the-scenes analytics, loss prevention professionals have an ever-growing set of responsibilities to protect the brands they work for.

To get a better understanding of what these changes are and how they affect the world of loss prevention, we spoke with Rich Mellor, a retail loss prevention expert with over 30 years in the industry and former Vice President of Loss Prevention for the National Retail Federation. Here’s what he had to say:

SheerID:

How have you seen loss prevention change over the past decade in light of technological advances and changes in customers shopping habits?

Mellor:

Ecommerce revenue was up 9% in 2015, and there’s no doubt that we will continue to see it grow this year. However, as ecommerce grows, so does the amount of data being shared, which means that strategies to steal that data and use it fraudulently are on the rise. As a result, we’re seeing that many loss prevention professionals are now tasked with analyzing the data that is shared to identify trends and possible markers that indicate potential fraud.

This is further complicated with the demand for omnichannel experiences from customers. They want a shopping experience that is fast, simple, and consistent across channels, and retailers are seeing that it’s important to make the shopping process customer friendly, but also secure. For example, when offering exclusive discounts online, customers won’t convert it they’re forced to jump through hoops, which is why technology like eligibility and identity verification is a key element helping loss prevention executives ward off fraudsters.

Overall, just the speed of how fast we’re seeing advances happen make loss prevention in the digital age an awesome task. Loss prevention officers have to keep up with the evolving changes and new strategies always arising in the industry, and they have to be able to change quickly and be dynamic. These changes often happen overnight, something that wasn’t the case when brick-and-mortar locations were what retail was comprised of. It’s all about changing with the times and trying to stay in step with internet criminals who are always evolving.

SheerID:

You touched on it briefly, but can you expand on how can loss prevention officers benefit from the data that is available today?

Mellor:

As mentioned, today’s rich flow of data leaves a lot of vulnerabilities open on the retailers side, but it also is a necessary function to ensure personalization and a positive customer experience. This is why the loss prevention function is critical.

Not only can the data that retailers collect about consumers, whether it be purchase history, information given when joining a loyalty program, or email addresses, help them create a more personalized experience, but it can also give loss prevention officers a way to start building profiles to identify fraudulent trends. Many loss prevention professionals today are using that data to track transactions and identify “normal” vs “abnormal” behavior of a shopper.

By identifying patterns, and blocking risky purchases from being made, retailers are able to use the rich flow of information to protect the retailers.

SheerID:

What other tips do you have for retailers to combat online fraud?

Mellor:

Aside from using data to their advantage, retailers should be looking outside the box for other ways to take on fraudsters. They should be working with both internal teams in different departments to cross-reference information, as well as looking at third party companies to find useful solution to prevent loss of revenue and assets.

They should also look at the trends and evolve their strategies to combat issues that may arise from them. Being prepared is half the battle. They need to know how bad potential problems are so they can get ahead of the issues. By doing so, no one will be surprised or worried about the revenue lost due to fraud at the end of the year.

Another important component is to have metrics created so progress can be measured. Loss prevention pros should look on a monthly basis to see how they’re stacking up against those set KPIs. The KPIs are the intuition of the loss prevention person to say, “This is what we need to watch out for.” Remember, so much of being a retail loss prevention pro is about using intuition, so set KPI’s based on both history and what intuitively makes sense.

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