1. Loss Prevention, Auditing & Safety Conference 2009 Title Sponsor:

2. Building Your LP Program Stephen Scott Director, Loss Prevention Tractor Supply Company

3.  Specialty niche retailer catering to hobby farmers, ranchers, land and pet owners and anyone who lives the rural lifestyle  885 stores in 44 states  5 distribution centers  $3B in sales  18-20K sqft. selling space  Brentwood, TN (Nashville)

4. State of Business in 2003  Day one on the job  400 stores in 30 states  1.2B in sales revenue  No loss prevention department  No proactive thoughts or actions  No budget for security resources  Shrink levels unacceptable  A preconception about a “security” department

5. Your Role and Your Culture  How will the department be defined?  Security department  Bad guy for Ops and HR  A necessary evil or  A strategic business partner  A professional resource

6. Partnerships  Identify the people or groups critical to success and build relationships  Human Resources  Educate them on LP and how you can affect them  Store Operations  Make them see you as a resource and not an oversight department  Finance (Budgeting)  Effectively communicate objectives and ROI information

7. Assess Your Current Situation  What can be fixed with little or no money?  Policies (benchmark from peers or mentor)  Cash handling procedures  Key control program  Open and close procedures  Trash removal, package checks, etc.

8. Low Hanging Fruit / Early Wins  Contracts  Evaluate all LP related contracts  Alarms, employment screening, security hardware  Vendor line reviews/bids  Savings with or without changing vendors  Major internal cases  No one has been looking  Communicate success stories!

9. Get to the Data  Use existing software to get simple reports  Get data on negative POS transactions  3 rd party exception reporting  Wait until you can support it  Financial Data  What merchandise categories are causing the shrink  Attack accordingly  Where else can you make the biggest splash  Cash, checks, credit

10. Investigations  Do the proper diligence on each case, but don’t spend all your time on investigations  Use telephone interviews  Don’t handle every discount and soda case  Use the early low hanging fruit and large cases to your advantage  Shows ROI for resources and the department

11. Prioritize your Budget  Limited funds…spend effectively  Field loss prevention  CCTV  EAS  Benefit denial products  Corporate LP support  Logistics loss prevention  Case/Incident management  3 rd party exception reporting  Awareness program

12. Vendor Partnerships  CCTV and EAS  Test products at no cost  Choose your test stores carefully  These resources will not fix operational weakness  Effectively communicate the ROI  Emphasize crossover benefit with CCTV (Risk/HR)  Don’t advocate a huge spend without a certain timely ROI

13. Field Resources  Regional LP Managers  Sold the first RLPM position as a test*  Huge success – took work away from operators and HR  Hired hard – Find people that fit your culture  The Key  Operators saw success and wanted more LP  LP was not forcing the issue *I forgot to mention this was a test to the first RLPM we hired

14. RLPM Focus – High Impact  Target Stores  Focus on the worst first (10-15 stores each)  High Shrink Reviews  Analyze PI data, general shortage interviews, audits, physical security assessments  Training and Awareness  Store, district and regional meetings  Store audits  New stores  Investigations

15. Current Staffing  8 Regional LP Managers  100+ stores each / $400M sales volume  LP Operations Manager  Alarms, CCTV, EAS, key control, POS  Logistics LP Manager  National Investigator  POS Exception Team (3)

16. Summary (Do’s and Don’ts)  Do…  build key relationships  Find the people important to your success  win early without spending money  Contracts, policies, low hanging cases  prioritize and test  Hardware, software, people  communicate your success and sell it for the future  Learn how to effectively present your ROI

17. Summary (Do’s and Don’ts)  Don’t…  put all of your brilliant ideas on the table at one time  Prioritize and chip away at the critical few  be concerned with internal case stats  Be seen as a business unit not a security team  compromise when hiring  Hire hard and surround yourself with talent

18. Building Your LP Program Q & A