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America's #2 Retailer - Kroger's AP Efforts Paying Off

Appoints 1st VP AP, April 2017 & Centralizes AP With New AP Team

With nearly 2,760 grocery stores & 252 jewelry stores in 35 states, under two dozen banners & annual sales of more than $121.1 billion, Kroger today ranks as one of the world's largest retailers.

The Kroger Co. was named as one of the 2018 50 Best Companies for Diversity – Black Enterprise
The Kroger Co. was named #18 on the 2018 Harris Poll Reputation Quotient® Rankings - The Harris Poll
The Kroger Co. was named #16 in America’s Top 50 Organizations for Multicultural Business Opportunities – Omnikal

Kroger's New Investment On 1st VP of AP Role in April 2017
Followed by Centralizing the AP Effort With New Corp. Team
Paying Off - Here's the Proof
Kroger's New CFO, Gary Millerchip, Recognizes Continuous Shrink Improvement
Delivering Improved Results in 7 Straight Quarters
First Quarter financial results conference call transcript from yesterday's call with shareholders & media.

June 20, 2019 - First Quarter 2019 Results Prepared Remarks:
Our associates have done an amazing job managing shrink, which improved during the first quarter compared to the prior year. This represents the 7th consecutive quarter of shrink rate improvement.

Sept. 13, 2018 - Q2 2018 Earnings Release Prepared Remarks: "Looking at gross margin, we were pleased to see that our shrink rate continued to improve during the second quarter."

June 21,2018 - Q1 2018 Earnings Release Prepared Remarks: "A big focus continues to be on store productivity and waste. Our teams controlled shrink well in the first quarter. As we've said before, we won't leave a penny on the table as we seek to reinvest savings to grow our business."

March 8, 2018 - Fourth Quarter and Fiscal 2017 Results Prepared Remarks: "We are also pleased that shrink continued its steady improvement throughout the year with good results in the fourth quarter."

Shrink improvement and waste has been a major focus at Kroger. Which is why they staffed a Vice President level position, Mike Lamb in April 2017. Their first ever VP level AP executive in their long history.

Prior to that they had two Director level executives splitting responsibilities. With one, the Dir. of LP position, also being Kroger's first ever Dir. of LP role they staffed in Jan. 2008.

With one Dir. covering shrink in a shortage control and merchandise protection type function and the other covering Loss Prevention with an emphasis on security, front end shortages (rolled out first EBR program) , store audits, standardizing field job functions, and managing Kroger's in-house central station alarm operations.

The new Vice President role combined the two corporate functions in one position and started standardizing, refining, and broadening the AP processes throughout the company.

With the twenty two banners operating totally independently in a decentralized organization this made the standardization efforts even more difficult to accomplishment

However they've been very successful in redefining the AP functions, increasing the impact, and gaining company wide support.

With the comments being made over the last 18 months in quarterly and full year conference calls by the CFO's, they're seeing some significant and continuous shrink improvement, which is obviously a reflection of the new corporate leadership, new structure, and the entire AP team's efforts throughout all of the divisions. It's great to see a new officer level position in the AP community having such an impact. ir.korger.com

Coming Next Week: Turning a Battleship
Kroger's Centralization Effort Driving Results
The story - The Team - The Effort
How Kroger built the new model and how the new centralized effort is driving results.

USS Farragut (DDG-99)

Rarely Seen Recognition of LP/AP Efforts Mentioned in Financial Results Conference Calls
Share Yours with the LP/AP Community - Great For All of the LP/AP Teams & Retail Industry to See
We don't see it often but when we do - it deserves to be called out to the industry and to the LP/AP Teams across America. As it's a strong positive reflection for the entire industry and establishes a goal for every team throughout retail. And obviously it's great to acknowledge all the work and efforts the Kroger AP team and leadership team has made.

So if your department is complimented and recognized in your company's financial results/transcripts let us know and we'll share it with the community. As it reflects on the entire industry. Just a thought.
-Gus Downing

OpenEye Announces OWS Integration with
Keyscan Access Control

OpenEye, a leading provider of cloud managed video surveillance solutions, announces the integration of the OpenEye Web Services platform with Keyscan Access Control Systems.

Keyscan Access Control Systems, a member of the dormakaba group, provides best-in-class solutions for electronic and networked access control in facilities of any size. This integration enables Keyscan users to retrieve video from OpenEye video surveillance systems through OpenEye Web Services (OWS) to view both live and recorded video in reference to access control events. The viewer application establishes a connection to recorders using OpenEye Web Services’ Web Connect technology, improving connection reliability and eliminating the need to manually manage connection settings or forward ports.

For more information on OpenEye product integrations, please visit www.openeye.net/solutions/integrations

The EC3 Advisory Groups – Law Enforcement and Private Sector Meetings
Discussing Latest Cybercrime Threats and Challenges
Europol’s European Cybercrime Centre (EC3) continues to strengthen its work with the private sector in the joint fight against cybercrime. This week, EC3’s three industry Advisory Groups met at Europol in The Hague to discuss the latest cyber-related threats and trends, including 5G, new forms of online payments, and attacks against critical infrastructure.

The goal of the Advisory Groups is to provide a forum for law enforcement and the private sector to cooperate on cybercrime-related threats and challenges, fostering collaboration on both a strategic and operational level.

EC3 established the Advisory Groups on Financial Services, Internet Security and Communication Providers to foster trust and cooperation between key private sector industries and law enforcement in their joint fight against cybercrime. They meet separately three times a year at Europol’s headquarters in The Hague to share strategic information related to cybercrime threats and trends in their respective business areas, as well as to agree on joint initiatives alongside law enforcement. europa.eu

The Next "SaaS?"
Amazon patent reveals drone surveillance as a service
A new patent granted to Amazon suggests the retail giant is exploring ways in which drone surveillance could be packaged up as a new business solution.

As spotted by The Verge, the patent was originally filed in 2015 and was granted on June 4, 2019.

The USPTO "Unmanned Aerial Vehicle Based Surveillance as a Service" patent, number 10,313,638, describes how an unmanned aerial vehicle (UAV) -- otherwise known as a drone -- can "perform a surveillance action at a property of an authorized party."

The surveillance functions of the drone can be restricted through geo-fencing, a form of technology used in drones today to define areas which are acceptable to fly over and those that are restricted, such as military bases or airports.

Furthermore, the patent describes how the UAV could be used to generate images of a location both in -- and outside -- of a geo-fence. zdnet.com

The Next Big Concern - Hackers Using AI
Invisible Until It Hits Target!
Machine Learning Boosts Defenses, but Security Pros Worry Over Attack Potential
As defenders increasingly use machine learning to remove spam, catch fraud, and block malware, concerns persist that attackers will find ways to use AI technology to their advantage.

Machine learning, for example, has helped companies such as security firm Malwarebytes improve their ability to detect attacks on consumer systems. In the first five months of 2019, about 5% of the 94 million malicious programs detected by Malwarebytes' endpoint protection software came from its machine-learning powered anomaly-detection system, according to the company.

"The future of AI for defenses goes beyond just detecting malware, but also will be used for things like finding network intrusions or just noticing that something weird is going on in your network," he says. "The reality is that good AI will not only identify that it's weird, but [it] also will let you know how it fits into the bigger scheme."

Yet, while Malwarebytes joins other cybersecurity firms as a proponent of machine learning and the promise of AI as a defensive measure, the company also warns that automated and intelligent systems can tip the balance in favor of the attacker. Initially, attackers will likely incorporate machine learning into backend systems to create more custom and widespread attacks, but they will eventually focus on ways to attack other AI systems as well.

Malwarebytes is not alone in that assessment, and it's not the first to issue a warning, as it did in a report released on June 19. From adversarial attacks on machine-learning systems to deep fakes, a range of techniques that general fall under the AI moniker are worrying security experts.

In 2018, IBM created a proof-of-concept attack, DeepLocker, that conceals itself and its intentions until it reaches a specific target, raising the possibility of malware that infects millions of systems without taking any action until it triggers on a set of conditions.

"The shift to machine learning and AI is the next major progression in IT." darkreading.com

IoT explodes worldwide, researchers investigate security issues
Avast scanned 83 million IoT devices in 16 million homes worldwide to understand the distribution and security profile of IoT devices by type and manufacturer. The findings were then validated and analyzed by research teams at Avast and Stanford University.

This data helps us shed light on the global emergence of IoT and types of the security problems present in the devices real users own.”

The research reveals a complex picture of the IoT ecosystem and subsequent cybersecurity challenges in homes across the world. Key findings include:

• North America has the highest density of IoT devices of any region, with 66% of homes possessing at least one IoT device, compared to the global average of 40%.
• Even with over 14,000 IoT manufacturers worldwide, 94% of all IoT devices are manufactured by just 100 vendors.
• Obsolete protocols like FTP and Telnet are still used by millions of devices; over 7% of all IoT devices still use these protocols, making them especially vulnerable.

The paper further explored the distribution of global IoT vendors. While there is a very long tail of over 14,000 global IoT vendors, market dominance is limited to only a few.

Significant security risks not being addressed. helpnetsecurity.com

Customers of 3 MSPs Hit in Ransomware Attacks
Early information suggests threat actors gained access to remote monitoring and management tools from Webroot and Kaseya to distribute malware. Both vendors have said the attackers appear to have used stolen credentials to access their tools at the MSP locations. darkreading.com

39% of Small businesses Surprised the Access Granted Inside Large Partner's Systems

GOLD SPONSOR

Tyco Retail Solutions is known for the Sensormatic brand of loss prevention products, the ShopperTrak brand for people counting, also known as traffic insights, and the TrueVUE brand for inventory intelligence. Using sensors, Tyco Retail Solutions captures 40 billion retail transactions and interactions a year.

Joan Sparks tells us about some new solutions coming out of Tyco's development lab, including their Shrink Management as a Service (SMaaS), the InFuzion anti-theft tags, a self-checkout station and a Synergy EAS pedestal with interactive video displays.  
 

"It's not if you get breached, but when you get breached."

Joe and Amber discuss the new challenges facing retailers when it comes to cyber security, brand reputation, and the growing scope of what LP/AP departments are challenged to protect.

How False-Positives Complicate The B2B Payments Fraud Fight
Retailers focused on combating fraud have credit cards in the cross-hairs of their efforts. Between data breaches exposing customer details and card information and the rise of card-not-present fraud as operations move online, digital businesses are challenged to stay abreast of payment security trends — and fraud is a massive issue for firms large and small.

But ramping up the war on card fraud can introduce a new risk to companies: false positives. According to PYMNTS data, more than 60 percent of digital platforms say too many false positives are a significant point of friction in the conversion process — and more than 30 percent say it’s their number-one challenge.

According to the latest Payments 2022 Playbook: Building A High-Performing Payments Team For Fraud Detection, a PYMNTS study in collaboration with Stripe, digital platforms continue to express discontent with their current fraud strategies, and false positives are compromising their brands, customer relationships, and bottom lines.

This isn’t merely an issue for the B2C world, however. Indeed, as B2B organizations begin to pay closer attention to the rising threat of fraud in the procure-to-pay process, the issue of false positives can result in similarly negative consequences, from declined card payments to broken vendor relationships. Read more: pymnts.com

Not Amazon, Instagram is likely to dominate the future of online retail

Farfetch looks towards blockchain for “frictionless ecommerce”

Riverside, CA: Target Employee and Accomplice Arrested; $100K Worth of Stolen Target Merchandise Found at Perris Home
Two people have been arrested in connection with an embezzlement scheme that netted about $100,000 in stolen goods from a Target store in Riverside, police said Thursday. Elias Hernandez, 23, of Moreno Valley, is accused of helping Mandeep Chamdal, 34, steal the merchandise from the Target store where he worked on Canyon Springs Parkway over the past five months. Asset protection at Target notified police about the scheme earlier in the month.

Hernandez was arrested June 5 at the store, while 34-year-old Mandeep Chamdal was taken into custody on June 13 at her home in the 2200 block of Jornada Drive in Perris. After serving a search warrant, detectives located and recovered the $100,000 worth of stolen Target merchandise at the home. Police said Hernandez would allow Chamdal to “price check” items well below their actual value, and would give her gift cards to use toward her fraudulent purchases.” “One example included where a $15 package of diapers was rung up for only $2 to $3 dollars,” police said in the news release. Detectives believe Chamdal would sell the stolen merchandise at local swap meets, including one in Wildomar.  ktla.com

Jacksonville, FL: Theft ring stole at least $83K in merchandise from home improvement stores; 52 thefts between 2017 and 2019
At least four people have been arrested in connection with a string of thefts of power tools from several Home Depot and Lowe's stores in Jacksonville. Nicole Arnette, 34, Samantha Cowles, 31, Brian Hudson, 41, and Keith Wright, 28, face charges of grand theft and organized fraud in connections with thefts at stores on the Southside, Westside, Northside, Jacksonville Beach, Mandarin, East Arlington and Regency. According to reports obtained by News4Jax, at least $83,000 worth of merchandise was stolen from 10 Home Depot and Lowe's stores between September 2017 and January 2019. The reports list 52 separate thefts during that time frame. One of the stores, located in Regency, was hit at least 11 times over a 16-month period, a report shows.  news4jax.com

Wake County, SC: Thieves steal nearly $20K in electronics from Wake Forest Walmart, lead officers on high speed chase
Officials are investigating after two people reportedly stole thousands in merchandise from the Wake Forest Walmart and led officers and deputies on a high-speed chase. It started just before 1:30 a.m. at the Walmart at 2114 S. Main St. Authorities said two people entered the store, stole $19,899 worth of electronics and fled the scene in a dark gray Dodge Journey. Multiple law enforcement units including highway patrol were involved in the chase, which ended at the Fairfield Inn in Morrisville.  abc11.com

Washington, DC: High-priced eyewear attracted a laser focus from thieves
The thieves came armed with a hammer, with eyes on unique and expensive targets: Cartier eyeglass frames. Inside the Apex Optical Co. store in downtown Washington, one man swung the hammer on a glass case, then snatched six pairs of frames before turning to leave. An employee tried to block the escape before a second man hit the employee with a hammer, according to a D.C. police report. The thieves fled with frames that cost $5,700, and damaged two other sets of Cartier frames valued at $950 each. D.C. police investigators are searching for the pair they say are responsible for the smash-and-grab burglary at the shop in the 2000 block of L Street NW, just before 2:30 p.m. Wednesday.  washingtonpost.com

Titusville, FL: Thousands in Radio-Controlled Cars stolen from Motorcycle/ RC Shop
At least two masked thieves stole thousands of dollars worth of radio-controlled cars overnight Thursday from Dr. Dan's Motorcycle and RC Shop on Garden Street. Owner Danny Attal's surveillance captured the smash and grab burglars shattering his front window and pushing over display stands to force their entry. At 2:35 a.m., the burglars are then seen stealing expensive RC cars, valued at nearly $1,000 each.  clickorlando.com

Stoughton, MA: Police tie Vehicle Smash &Grab thefts of Credit Cards to electronic purchases shipped to South America
 

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In Case You Missed Our LP Challenge
Take the Pledge
Diversity - Inclusion - Equality
Hire 1 Diversity Team Member in Next 3 or 4 Hires
Two Executives Attend NRF Protect 2020 Free
As we challenged the attendees at the NRF's Ring of Excellence Award keynote session last Thursday we'd like to extend the challenge industry-wide by including it here in our Tip of the Day column.

For over twenty years the Daily has quietly sponsored Keith White's, EVP The Gap, International Organization of Black Security Executives (IOBSE) conference and website. With building and hosting the site for over twenty years now, while Keith White has helped literally hundreds of young college students enter the work force. His efforts have truly made a difference and impacted so many. Therefore we feel it's only appropriate to challenge every retailer out there to make concerted effort and make the pledge that they'll hire a diversity candidate within the next four hires and be more inclusive in their overall hiring practices.

With Joan Manson's NRF group, Women in LP, having made such an industry impact, let's keep it going and broaden it to include all the nation's retailers.

Take the pledge and let us know how it progresses over the next year and the two retailers making the biggest impact, percentage wise, will select one of these executives to attend NRF Protect 2020 free of charge and with absolutely no obligation. The two retailers will also be featured in a Spotlight on Leadership column sharing their story, all of which will be monitored and any ties decided by the NRF VP of LP Bob Moraca.

Watch Gus' acceptance speech for the Ring of Excellence Award

Just a Thought,
Gus

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