Sponsored by BSI
Video surveillance is often at the heart of loss prevention strategies designed to address causes of shrinkage. Whether a retailer is taking aim at shoplifting, employee theft, returns fraud, tag switching, or sweethearting, a video solution can usually help. So it’s no wonder retailers have been investing heavily in recent years on cameras and video systems, and will continue to do so through 2019—at an annual increase of more than 8 percent, according to the latest market studies. But even as retailers embrace the power of video and endeavor to leverage its value, there is a need to ask a somber, fundamental question—Are you really making a wise investment, or are you just wasting money?
Video is a useful tool for loss prevention, and improvements in quality, cost, and ease of use have made video solutions a better option, in more environments, for more retailers. Yet not every video solution will hold its value or provide a positive return on investment. Potential pitfalls can cause video solutions—ones that seemed like the smart choice during planning—to be the source of headaches as time goes by. Mike Dunn, vice president of business development at BSI, a leading provider of video security solutions that was named for the second year in a row as retail partner of the year by Axis Communications, identified three common sources of regret.
“It seemed just as good.” Cameras are an aspect of a video solution where retailers may be tempted to opt for the lower-cost option, especially when the difference in picture quality seems negligible. But initial looks can be deceiving, according to Dunn. Cheap cameras may still be able to deliver a good image, but are rarely built to last. “There are some manufacturers that don’t value quality and use inferior parts,” said Dunn. “They may look nice, but those parts substantially shorten the life span of the equipment.”
One common problem is that electronic components inside bargain cameras can overheat and malfunction. When that happens, an inexpensive camera choice quickly becomes the source of mounting bills. A camera warranty may appear to be an effective hedge against problems, and some may seem generous at up to three years, but warranties rarely include the cost of replacement. Even if a manufacturer sends a replacement for a faulty camera, the retailer pays to rip and replace.
Moreover, during the time that the camera is failing and going through replacement, a retailer’s video solution is compromised—and failing to provide the value that the retailer thought it was buying. Some camera manufacturers can have failure rates up to 25 percent, while it’s less than 1 percent at industry leaders, noted Dunn. Lastly, even if cheap parts don’t result in outright camera failure, they can cause degradation in image quality, he added.
Loss prevention practitioners need to look skeptically at promotions of cameras offering rock-bottom prices. “The quality of product is something that can’t be overlooked,” said Dunn. “There are a lot of promotions that insist, ‘We’re just as good as this or that brand.’ But when you take a closer look, you’ll see that they simply aren’t.”
“It seemed like a waste at the time.” Service maintenance agreements can seem like money for nothing, but that attitude may be shortsighted and doesn’t reflect the value of service agreements as they pertain to today’s video solutions. Now, health monitoring can replace the need to repair malfunctioning equipment.
“Active monitoring will generate service tickets for problems the retailer didn’t even know they had,” said Dunn. The service agreement will then cover a technician traveling to even remote locations to freshen up a camera, something that a retailer would find hard to justify if paying out of pocket. “Just rolling up a truck can cost hundreds of dollars when you don’t have a service contract,” said Dunn. Routine performance maintenance has the additional benefit of enhancing system performance as well as extending the life of systems, thus reducing total cost of ownership.
Nor does a “money-for-nothing” attitude factor in the positive value that maintenance agreements can provide during price negotiations. “It’s something that needs to be discussed before the job starts, in my opinion. You can get a better deal on systems if you get a service agreement; it’s something that should be part of the negotiations,” said Dunn. A maintenance agreement also enhances budget clarity and reduces surprises by making maintenance a fixed cost, he added.
Dunn believes that LP pros shouldn’t blindly sign service maintenance agreements, but they shouldn’t reflexively run away from them, either. Instead, investigate and negotiate, and see if you can’t strike a deal in which the agreement provides a clear financial benefit. “Sometimes people run from the idea, but in my experience, it is an insurance policy that—nine times out of ten—saves people money,” said Dunn.
“It seemed like a good deal at the time.” The best thing about today’s video surveillance platforms is that they can evolve and provide additional value as technology improves. But retailers that opt for a proprietary system can be left behind and may find the latest and greatest technologies out of reach. A system that seems like a good value up front can quickly feel like a trap, suggested Dunn. “You want to be sure that when that ‘great new thing’ comes out, you can take advantage of it.” He said he’s seen retailers cough up hundreds of thousands of dollars to rid themselves of providers who had stopped updates on key system components, taking advantage of having “locked in” their customers. “You need to make them continue to win your business year after year,” said Dunn, suggesting that selecting open systems is the best way to maintain your options—and your leverage.