In the second in a series of industry-focused benchmarking surveys, the authors present a few key findings from a new study of how some of the biggest retailers in the US are using a range of emerging technologies to manage the problem of loss prevention.
Loss prevention practitioners have a long track record of investing in a wide range of technologies to help control the various losses retailers experience. The extent to which they do this has regularly been measured by various annual surveys, such as the National Retail Security Survey. This current benchmarking study, however, focuses particularly on understanding LP executives’ views of the potential value of emerging technologies, the extent to which those technologies are currently being used, and the main business challenges the executives see the technologies addressing.
For the purpose of this benchmark survey, “emerging technologies” are defined as those evidence suggests some retailers have begun to use, but not as widespread as more established technologies prevalent across the retail sector (such as alarms, EAS, and CCTV). They also differ from what might be regarded as future technologies that sound promising but have yet to move beyond the conceptual, laboratory, or testing phase of development, for example drones or robotics. After extensive discussion with representatives of the retail loss prevention industry, nine emerging technologies were chosen for consideration:
- Feature recognition—the ability to recognize and assign a unique ID to individuals within a store environment.
- Smart shelves—the ability to detect the removal of product from specific shelves or displays based on defined criteria.
- Biometrics—the use of unique physical characteristics, such as fingerprints or retinal scans, to identify employees and grant access against defined roles or rules.
- Point-of-sale (POS) product activation—the ability to require an activation protocol at POS in order for the product to function properly.
- Body-mounted cameras—cameras worn by store and security staff, with or without audio.
- Non-scan POS detection—the ability to identify transactions where merchandise passes through the checkout process without being properly scanned or identified.
- GPS product tracking—the ability to track the movement and location of specific products.
- Exception-based video alerts—automatic video-based alerts generated by agreed rules or events, such as the opening of a door or the removal of a product.
- RFID—the ability to provide a unique identifier to a specific product.
While some of these technologies have been available for a considerable period of time, such as RFID, they have not had a high level of adoption across the retail industry to this point and can still be considered emerging, especially when compared with highly established technologies such as EAS.
Of course, the value of any benchmark survey is highly dependent on the quality and representativeness of responses. For this study, the authors chose to target as many of the largest US retailers (based on sales) as possible, exploiting existing contacts within the loss prevention industry. A request for information was sent out to ninety-five retailers, which elicited a response rate of 63 percent, giving a sample representative of 48 percent of the US market, totaling $1.576 trillion in retail sales. Overall, respondents had a total of 123,333 stores.
While this represents a significant percentage of the retail industry and, more specifically, a very significant percentage of chain-store retail, it is important to note that this sample cannot be used as a representative sample of the entire US retail industry. Therefore, no effort will be made to extrapolate estimates from this data to try and represent US retailing as a whole. If individual companies intend to draw comparisons with this data, it is important that they understand the overall profile of the companies that responded. This article provides only a snapshot of the main results from the study, which are available only to participating respondents or by special request to one of the authors.
Detailed here are some of the key findings from the survey, looking specifically at how respondents view the potential of each of the nine selected emerging technologies to impact loss prevention efforts, the extent to which they are currently using them, and the perceived potential of them to help deal with particular loss prevention issues. The survey also asked respondents to comment on the loss prevention technology industry’s track record on developing new innovations to reduce loss or improve safety and security.
Understanding the Potential of Emerging Technologies
Respondents were asked to rank the potential of each technology on a scale from 1 (very low potential) to 5 (very high potential) as to the possible impact they might have to improve safety, security, or asset protection in their businesses.
Exception-based video alerting technology was regarded as the technology with the highest potential with an overall score of 4.1 out 5. GPS product tracking (3.65) and RFID (3.54) followed. Respondents were much less convinced about the potential of body-mounted cameras, which only achieved a score of 1.73, and biometric technologies at 2.93. Respondents were largely unsure about the potential of the remaining four technologies: smart shelves, POS product-activation technologies, feature-recognition systems, and technologies designed to manage non-scanning at the point of sale.
Using Emerging Technologies
Respondents were then asked about the extent to which they were using or planning to use these technologies in their businesses.
For most of the selected emerging technologies, very few respondents were currently using them or had plans to use them in the near future. The technologies most in use or being piloted were GPS product tracking (46%), exception-based video alerting systems (41%), and RFID (32%). At the other end of the spectrum, no retailers responding to this survey said they were currently using body-mounted cameras, although two were planning to use them in the near future. With regard to the other technologies, relatively small numbers were currently using smart shelves and non-scan POS detection systems, the two that were most likely to be used in the near future. In many respects these results are not surprising—the technologies chosen were considered to be currently on the fringe of mainstream retail use, so it will be interesting to see the extent to which they become more established in future years.
Primary Use Case for Emerging Technologies
Respondents were then asked to consider what, for each of the selected emerging technologies, would be the main loss prevention issue they would see it addressing. They were given the following issues to consider: organized retail crime (ORC), opportunistic crime, safety and security, inventory control, fraud, and internal theft, and could only select one for each of the technologies.
The majority of respondents saw both feature recognition and smart-shelf technology impacting ORC as the primary use case. However, a sizable minority of respondents (31%) also regarded the smart shelves as being useful for inventory control. A similar picture emerged with both GPS product tracking and POS product-activation technologies, where respondents were split between ORC and inventory control as the primary business case. Perhaps not surprisingly, RFID was primarily seen as a technology for helping with inventory control (81%). Most current case studies point to the role it can play in reducing problems with on-shelf availability and product visibility in the supply chain rather than malicious losses. Both exception-based video alerts and non-scan POS detection were primarily seen as tools to help tackle internal theft—the former perhaps helping with the identification of illicit activities at the back of the store and the latter helping to monitor checkouts for potential sweethearting. Body-mounted cameras were viewed as a tool almost exclusively to help with issues of safety and security, with a small minority also suggesting they could play a role in gathering evidence for cases of ORC. Finally, biometrics was largely seen as a technology that would be used to target internal theft and safety and security issues.
Loss Prevention Technology Industry’s Ability to Innovate
The final benchmark question asked respondents to consider how well the loss prevention technology industry had been in developing innovation to help them manage the problems that they face.
With the responses to this question clustered in the middle, one’s reaction to this chart will depend on how “adequate” is interpreted. If it represents “acceptable,” “up to par,” or “meets expectation,” then the overall mood of the industry skews positive. If instead, one reads it as “just getting by” or “reaching only minimal level,” it indicates there is work to do. Clearly, both vendors and practitioners would like to see these numbers move more heavily to the “very successful” end of the spectrum.
Perhaps this report can serve as a catalyst for loss prevention practitioners and solutions providers to sit down and discuss technology and innovation. Practitioners should shoulder the burden to do a better job of identifying their business needs while vendors need to listen and respond lest they be viewed as offering “solutions in search of a problem.”
Putting These Findings to Work
When looking at innovation, it is often hard to separate the publicity and hype of new technologies from the actual state of adoption and deployment. The authors hope the data presented in this second benchmark study will help retailers and the loss prevention technology industry to better understand current levels of adoption, interest, and perceived potential of the technologies in this report, as well as the broad business needs that are being addressed.
Like the rest of retailing, technological change is happening at an extraordinary pace, and loss prevention teams need to be prepared to innovate and experiment to understand how they can remain active and engaged business partners. Using emerging technologies will undoubtedly be an important part of this, but it will require considerable clarity in understanding what they might achieve and under what circumstances. As with all interventions, it is often as much about how they are managed as what they can deliver.
Based on this snapshot of where our industry currently stands on innovation and emerging technologies, loss prevention practitioners might want to consider taking the following action steps:
- Assess, evaluate, and prioritize which, if any, of the identified technologies could potentially address your business needs. And determine your state of readiness to adopt and implement.
- Share your findings internally with your team and peers in the organization to get feedback from others as to the viability, appetite, and perception of value.
- Share with the vendors who work alongside your organization to facilitate brainstorming, and challenge your “solutions providers” to help meet the needs of the business.
- Consider how these technologies might converge in the future and how they will affect or interact with other systems and legacy technologies currently deployed, such as CCTV, EAS, locks, and so forth.
The authors are extremely grateful to all those companies that agreed to take part in this second benchmark. If you would like to participate in future surveys, please get in touch with one of the authors. The next benchmark will focus on the role and use of data analytics.