The Top Challenges Retailers Face

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Today’s retailers must cope with a broader range of threats than ever before, and these challenges go well beyond preventing loss and increasing sales. More than ever, retailers face threats such as identity theft, organized crime, workplace violence, changing buyer behaviors, as well as the ongoing challenge of reducing shrink.

However, addressing these issues isn’t always easy, which is why retailers are turning toward new technology advances to help address threats and build solutions that can not only protect employees and assets, but also enhance business intelligence and augment business continuity.

Loss: An Uphill Battle

According to the latest Global Retail Theft Barometer (GRTB), an annual industry survey that looks at shrink trends in countries throughout the world, missing goods from shoplifting and other causes cost US retailers approximately $42 billion per year. And it’s consumers who pay the price for the theft—roughly $403 annually per US household, according to the GRTB.

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The study also showed that employee theft accounts for 43 percent of lost revenue in the United States. Some of the key reasons for these numbers include ineffective pre-employment screening, less employee supervision, and the easy sale of stolen merchandise.

Technology, however, is making strides against loss and theft. According to the National Retail Security Survey (NRSS) conducted by Dr. Richard Hollinger of the University of Florida in partnership with the National Retail Federation, shrinkage percentage is down in the US for the first time in twenty-four years. This can be largely attributed to the leveraging of video surveillance and other loss prevention technologies. But other challenges exist for retailers, and deploying comprehensive security solutions can often help address or mitigate threats, which can be a win for both loss prevention executives and the C-suite.

Data and Data Management

Target, Adobe, AOL, eBay—all of these companies have been victims of significant security breaches over the last year. At big box retailer Target, more than 70 million credit card numbers were compromised that took months to address, resulting in profit loss and public distrust. The company’s stock took a dive, and its bottom line was affected as well as its brand integrity.

The threat of data breaches is a real risk for retailers and the mitigation of such threats begins with a comprehensive plan that incorporates facility security, IT security, and risk management. Starting from the ground-up, a comprehensive and in-depth security strategy is key, and this effort begins with the engagement of all levels of the company—from employees working the register to top executives in the C-suite.

Using the latest technology offerings, retailers must secure network points that include point-of-sale (POS) terminals, e-commerce websites, third-party vendor web links, employee access points, and Internet of Things (IoT) devices, such as security cameras and printers.

Today’s security integrators and solution manufacturers must take into account all of the points at which breaches may occur, and think about ways in which the data security of their own organizations can be protected. In some cases, significant investments must be made that strengthen the network from hackers and other threats.

Any network-based device is at risk. Last year, hackers broadcasted hundreds of thousands of video streams from security cameras on a public website, inciting widespread public panic about the security of camera networks. As it stands today, not many IP cameras and camera networks are very secure—both in terms of penetrability and data integrity—but more camera manufacturers are incorporating greater amounts of network security into products. This includes virus protection and denial of service, as well as encryption of video and data in transit and storage.

Comprehensive Video Surveillance Solutions

Thwarting theft, vandalism, and organized crime is paramount to protecting the integrity of today’s retailers and ensuring long-term profitability. One way retail organizations are mitigating these risks is by deploying comprehensive video surveillance solutions; that is, not only installing cameras within retail spaces, but integrating these cameras with video management systems (VMS) that are tied to access control solutions, emergency management systems, POS transaction data, and much more.

The video surveillance networks include IP cameras, network infrastructure, storage solutions, and software for managing the incoming feeds. Traditional VMS systems connect the cameras through a network, and then the video is stored either on a centralized server or on the cameras themselves. A web browser can be used to view live video from the camera, but the VMS records and saves the video data.

The Top Challenges Retailers Face 0116 Image 2Today, IP cameras with the capability to internally manage video management functions have the ability to deliver the same powerful features found in traditional VMS systems. These advanced cameras have robust intelligence and built-in performance that allows users to view live and recorded video in real time, making it easier to streamline security efforts and allow security officials to achieve maximum mobility during the course of a security event. Additionally, mobile applications allow loss prevention personnel to utilize dewarping abilities for 360-degree surveillance cameras on a mobile device, allowing them instant access to video from any part of the store.

Surveillance video delivers new levels of data that, when combined with other network or business systems, allow users to experience the correlation of multiple data points into one interface. Networked-enabled video surveillance can be integrated with access control, alarms, and intelligent video applications such as video analytics, emergency response software, and other systems. Bringing these technologies together serves the retailer by bringing safety and security to the forefront and streamlining business operations by mitigating risk.

Traffic Patterns and the Role of Analytics

As the focus shifts to optimizing sales, operations, marketing, loss prevention, and security in today’s retail organizations, retailers seek new ways to maximize security investments to deliver new levels of return on investment (ROI).

Today’s retailers are changing, and more organizations face a dramatic shift in profit from brick-and-mortar stores to online shopping. To combat this issue, retailers seek to secure investments in solutions that will not only protect a store’s assets, but also build profit by identifying new ways to collect data.

Advanced surveillance devices incorporate video analytics, or video intelligence, capabilities directly on the camera, which collects images from the camera feed and analyzes those images to be turned from data into actionable information. This combined solution delivers surveillance coverage while simultaneously delivering business intelligence that includes high-accuracy people counting, queue management, heat mapping of shopper’s movements, dwell information per fixture, and customer demographics.

Using analytics, retailers can track the traffic patterns of customers to determine how they shop, what displays attract most attention, and other customer-centric information. Using such analytics, video captured for security purposes becomes valuable data that can be used by other departments, such as merchandising, marketing, and customer service, to better market new products, control the flow of traffic through a store, gear more people toward a specific spot in the store, and other tactics to enhance the customer experience.

With so much of the physical store’s retail capabilities based on hunches and assumptions, video analytics finally delivers answers to questions that retailers have always asked—how effective are marketing campaigns? Can the store’s layout help drive sales?

Analytics and 
Customer-Driven Service

It’s no secret that the most important part of a retailer’s focus is on customer service, but short of hovering over employees’ shoulders and listening to every interaction, it can be difficult to “see” what is driving customer interactions and interests. Built-in video analytics can help address some customer service issues on the sales floor through an intelligent algorithm, termed “people counting.”

People counting is a fundamental metric, as it enables retailers to calculate their customer conversion rate (number of people in the store vs. the number of purchases). Additionally, with this analytic, managers are better able to staff the store based on the average number of people in a specific time period or area of the store. For example, if a manager in the shoe department has ten customers and only one employee, and the children’s LPM 0116-BShopping Mall - 1department has two employees and no customers, the manager can redirect under-utilized employees to ensure customer engagement is maximized.

Similarly, video analytics can be used in checkout lines, alerting managers when there is a backup at the front queue. Without having some way to notify managers about an area that is understaffed, customers can become impatient and walk away, which can lead to a loss in sales as well as a poor customer experience.

Heat mapping is another interesting way to analyze in-store customer traffic patterns. This tool tracks how long people gather or stop at an end cap or sales display, helping marketing departments determine how and where certain types of merchandise should be placed throughout the store to garner the most customer interest.

Loss Prevention 
and the C-Suite

Today, the roles of LP and retail security teams are being viewed in a new light. Retailers face unique challenges—the shift from high-traffic at brick-and-mortar stores to rapid online shopping, staff shortages, and high customer expectations. To combat these issues, LP professionals are engaging the C-suite to secure investment in solutions that will both protect a store’s assets and build profits through utilizing data gathered in new and innovative ways.

Historically, security investments have been viewed as a necessary purchase by the C-suite, but now more and more departments are able to utilize video data to advance sales goals and streamline business operations, spreading the investment out over several departments.

Additionally, advanced video surveillance tools can help LP partner with other departments to help drive sales. This internal “convergence” allows multiple departments to combine efforts and investments to collaboratively invest in the future of the overall business.

Intelligence is growing on all fronts. This includes the increased integration of different technologies and systems to address security concerns, including upgrading POS terminals to deal with the migration to contactless technology such as Apple Pay, installing advanced asset tracking devices to mitigate organized retail crime rings, and implementing data security technology to fend off threats from cyberspace.

Implementing 360-degree Surveillance Technology

To achieve the kind of video data that can support analytics and deliver superior views for investigations, many retailers are turning toward omni-directional cameras, such as those with 360-degree views. As the technology of these cameras improves, these devices are becoming more affordable. In fact, 360-degree cameras are becoming more cost-effective because the solutions can provide a much larger coverage than narrow field-of-view (traditional) surveillance cameras.

Single-lens fisheye cameras get a full 360-degree image that needs to be “dewarped.” Multi-lens 360-degree cameras contain multiple lenses in one unit, and images are stitched together to create a full, inclusive image. With higher resolutions and more efficient dewarping or stitching technologies, these omni-directional cameras will soon replace pan-tilt-zoom (PTZ) cameras, which are widely used in the retail space today.

Higher-resolution sensors allow these multi-directional cameras to deliver superior images and deliver more value to customers. With current PTZ technology, the video being stored is only what the camera sees. But with 360-degree cameras, multiple areas are monitored at the same time for full situational awareness. Even if the operator only is interested in a particular area, the stored video includes the full 360-degree view, which can be accessed later for investigations.

Loss Prevention Revisited

Today, the role of LP teams is being viewed in a new light. With solution providers breaking down the siloed departments that exist within retail, LP teams and other key business units are working together and leveraging the same technology across multiple functions to meet various needs. Not only does this result in greater ROI across multiple business segments, it drives new levels of data capture that allows for new levels of customer engagement.

Retailers are only beginning to realize the potential of video technology and multi-department collaboration. The future is full of greater opportunity, resulting from new levels of data and insight previously unavailable to retailers. All of these will eventually lead to more ideas on how technology can make organizations more dynamic, efficient, and successful.

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