Nebraska Furniture Mart reduces fraud and increases customer safety

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It takes a lot of planning to create a security system that performs the way it is supposed to. Nebraska Furniture Mart is reaping the benefits of a camera surveillance system that was three years in the making.

“In an industry where a shrink rate of under 1 percent is the gold standard, ours is 0.168 percent,” says Jim Cahill, corporate security manager of NFM, referring to the retailer’s location in The Colony, Texas, a northern suburb of the Dallas-Fort Worth metroplex.

The 560,000-square-foot store, which is 40 percent larger than the company’s two other major locations, had a soft opening two years ago, and numbers measuring the effectiveness of its 1,000-plus camera system are beginning to roll in.

“We’ve lost only about $7,000 from the floor,” Cahill says of merchandise theft.

Shoplifting in particular is not even his biggest concern when it comes to loss prevention and asset protection. “We’ve got shoplifting, but that is nowhere near our biggest loss,” he says. “Our biggest loss is fraud — identity fraud.”

NFM manages to catch more than 90 percent of attempted frauds. “That’s not perfect,” Cahill says, “but it’s pretty good. We don’t want to be too overbearing and screen out good customers.”

NFM reached this point by involving suppliers from the beginning.

“When he started this job, even before it was publicly announced that NFM was going to build this store, Jim [Cahill] called me in and said ‘Here, I have a set of plans for you.’ They were over 10 feet long,” says Rob Walker of SEI, a security integrator based in NFM’s headquarters city of Omaha, Neb.

“We’ve been with SEI as an integrator for many years,” says Cahill. “We worked on the design of the Texas stores and after that, it was just dropping dots on a map where the cameras would go.”

Both Cahill and Walker credit Michelle Evers, corporate project manager at NFM, for facilitating the construction process, keeping lines of communications open and scheduling timely coordination among information technology and other in-house departments, the contractor and subcontractors.

“She’s awesome putting these things together on a large scale,” says Cahill. “She facilitates what I need with SEI and the general contractor.”

Connected views

A year prior to the store’s opening, Milestone Systems was brought in to install video management software, which manages all the cameras from the head-end, says Mike Tice, Plains Region manager for Milestone. With more than 1,000 cameras, “configuring the smart wall was a complex job,” Tice says. “They wanted an open platform. We support best-of-breed hardware technology and scalability.”

The video management system is both the glue that holds the hardware and technology together and the heart that keeps all the parts functioning.

Milestone’s system was already in place in two other NFM locations, so when the Texas store opened, the retailer could bring in people who had experience with the Milestone system, Walker says. “It’s a phenomenal product and a huge asset.”

The operations control center has 45 monitors, each of which can pull up video from every camera inside and outside the store, Walker says, “so you can follow someone through the store and out into the parking area.”

Cameras are well-deployed at checkout and loading areas. “We have a lot of cameras at the point-of-purchase areas and at the customer pick-up area where we can get the license plates,” Cahill says.

One feature of the system was that Milestone was able to connect all these views with the electronic article surveillance gates at retail doors; there are also gates in the restroom areas and other non-retail sections of the store, such as administrative offices.

“If someone were to take merchandise into a restroom with the intention of stealing it, they would have no idea that they had set off an alarm,” Cahill says, “but that signal would go to the control room where they could pull up video and get it to security guards” before the individual exited the building. There are four entrances to the store, including one on the second level that leads to the five-level parking structure.

In one instance, a young man picked up a smartphone case and walked with the item into an area where refrigerators were displayed. He removed the phone case from its packaging, stowed the box and packaging inside a refrigerator and walked away. A store associate happened to open the refrigerator, noticed the empty box and put two and two together. The associate alerted security.

It took about two and a half minutes to pull the video from the refrigerator department showing what had transpired and send the images to the security post at the entrance, Walker says. “It takes 10 minutes to walk from the refrigerator department to the exit and within less than three minutes, security had the images and were waiting for him.”

“If someone were to take merchandise into a rest room with the intention of stealing it, they would have no idea that they had set off an alarm. That signal would go to the control room where they could pull up video and get it to security guards.”
— Jim Cahill, Nebraska Furniture Mart

Building goodwill

A recent report from Javelin Strategy & Research says there were 15.4 million consumers victimized by identity fraud last year, a 16 percent increase from 2015 and the highest level in a decade. Collectively, losses from identity fraud totaled $16 billion, according to the Javelin research.

Pointing to statistics showing that the greater Dallas area has been consistently in the top 10 areas for organized retail crime, Cahill says the Kansas City store has “maybe 215 fraud cases annually. We’ve tripled that in Texas, and we are well over 90 percent” in catching fraudsters and working with the local police.

Cahill gives an example of an identity thief that gets a credit card with someone else’s identity and about $10,000 credit on the card. “He comes into our store to use it up as fast as he can. Not only is the individual whose identity has been stolen a victim, but NFM is a victim, too, unless we get the merchandise back,” he says. “And through greed and maybe a little stupidity, many of these people will be back in the store.”

Cahill maintains that helping solve identity theft crimes helps build goodwill for NFM not only with the person whose information was stolen, but also with consumers who might think well of the store for being so vigilant.
In an effort to build that goodwill — and possibly deter potential identity thieves from working the store — NFM publicizes instances when such a thief is arrested at the store, sending video from the surveillance system to local news media.

Theft detection and fraud-fighting are not the only uses for the surveillance system. “Managers can look at things going into the warehouse, we can zero in on that. It’s a great operational tool. Property management people have access to the parking area and can check the lighting without ever leaving their office,” he says.

Another key function is that video can be accessed by the local police department, thanks to the Milestone technology. Using an active shooter scenario as an example, Cahill says, “If we have to call them, they can look at the video and see what they’re getting into. Fortunately, that hasn’t happened, but it’s there if we need it.”

The technology helps in several situations, he says. “We’ve had medical emergencies at our Texas facility, where we have more than 50 uniformed security personnel. They can be directed from the control room to attend to a medical emergency, an upset customer or to take down a thief.”

Development considerations

Though now owned by investor Warren Buffet’s Berkshire Hathaway conglomerate, Nebraska Furniture Mart was started in 1937 by Rose Blumkin, whose family has stayed active in management of the company. It was a single store until the early years of the 21st century when a small branch was opened in Clive, Iowa, outside Des Moines.

A location in Kansas City opened in 2003, and while there have been expansions and replacements at the various stores since then, there wasn’t a new store built in a new market until The Colony store opened in 2015.
In addition to the sales floor and administrative offices, the Texas facility includes a warehouse and parking garages.

The 1.3 million-square-foot warehouse area includes more than 100 bays where shoppers can park while picking up heavy and bulky purchases.

Major merchandise departments include large kitchen appliances, furniture for both home and office, rugs and flooring, electronics and housewares ranging from tabletop items to small electric appliances.

The store anchors a development called Grandscape, which covers more than 430 acres and has plans for nearly 4 million square feet of retail, entertainment, dining, hospitality, residential and office use.

“We’ve typically been somebody else’s tenant,” Cahill says. “Here, we’re developing the common areas. It’s more like a mall, and it’s different security.”

David P. Schulz has been writing for STORES since 1982 and is the author of several non-fiction books.

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