This is truly a transformative time in retail. With mounting expectations on product availability and escalating demands on service and convenience, the way people shop is changing—and with it the strategies necessary to attract and retain customers. Innovation has become a requisite to retail survival, with new technology offering both our greatest opportunities and our greatest challenges. But the changes that we face are more than just a few new and different widgets that will push the envelope. This is all part of an evolving retail culture that is changing the way that we do business.
What does this mean for loss prevention? What are the primary challenges the industry may face this coming year, and how might we rise to meet them? For perspective and input into where 2019 may take loss prevention, we turned to executive leadership from three leading retail solution providers to help identify some common themes.
What key trend or development that took place over the past year do you think will drive the loss prevention agenda in 2019? What do you think will have the greatest influence on the way LP will evolve in the year ahead?
BARTOL: Perhaps the most prominent trend was the permeation of IoT into the LP space and the realization that integrated systems and solutions may allow the LP professional to finally start achieving the directive to “do more with less.” As e-commerce continues to affect brick-and-mortar, retailers will be looking for ways to evolve and adapt to the changing landscape. By leveraging IoT and integrated systems, the LP visionary that has always been as concerned about sales as they have been about shrink will be able to leverage solutions to drive sales, operations, and the customer experience. After all, who owns more devices in a store than LP?
BATTERBURY: The growth in technology solutions that retailers have seen this past year will continue to drive the 2019 LP agenda. New enhancements in video analytics, artificial intelligence, machine learning, biometrics, RFID, and the growth of IoT-connected devices are leading us to a truly connected store. Retailers will have more smart-connected devices in their stores, and these devices will be learning more about our customers while providing new data points unlike anything seen before in the brick-and-mortar environment.
The key for LP professionals in 2019 will be learning how to harness this data in a way that it will generate actionable intelligence to initiate new theft identification and resolution. The next steps beyond 2019 will be how retailers are leveraging artificial intelligence and machine learning to analyze all of this data, so retailers can start to get predictive in terms of addressing shortage.
REYNOLDS: One way to understand these trends is to look at the buzzwords we’re hearing—and one that heard constantly is “omni-channel.” I think omni-channel is affecting LP in two ways. First, the delivery method of retail continues to evolve. While the “death” of brick-and-mortar stores is likely an exaggeration, it’s certain that online sales are growing; and for traditional stores to survive, they need to adapt to consumer trends. That means that LP professionals must adjust their solutions as well. In addition to protecting stores against shoplifting, burglary, and robbery, LP now faces the additional challenge of protecting the supply chain at multiple stages. Whether inventory is shipping to a warehouse where items will be sent directly to customers or organized and sent to physical stores, there are many vulnerabilities along that path that criminals seek to exploit. To combat losses, it’s incumbent on protecting inventory at each and every stage.
Further, like retail sales, retail LP should take a multilevel approach. There’s no one-size-fits-all security solution. The solution that protects against robbery in the store probably won’t work to protect inventory being shipped cross-country or stop the growing menace of porch pirates stealing packages. Becoming familiar with as many security solutions as possible is the best way to protect the most inventory.
As you look over the risk landscape in 2019 and consider the many challenges currently facing LP, which of these do you think the industry is least prepared for or perhaps not giving enough attention? In other words, are there any areas where you think LP might need to step up its game?
BATTERBURY: “Frictionless” is the new retail buzz word, and retailers are striving to create a frictionless shopping experience for every customer. We’re seeing the expansion of self-checkout, or the removal of checkouts altogether in some circumstances. Every day we see new methods for allowing customers to shop without any interaction with retail employees. For the loss prevention side of the business a certain amount of friction provides more opportunity to reduce risk. One of our greatest risks moving forward is failing to adapt our people, processes, and technology to this frictionless environment. LP leaders will need to challenge their teams to think differently, being strategic and creative when it comes to addressing the shortage risks in a frictionless environment.
REYNOLDS: Criminals are always evolving their methods and LP must continually evolve its approach as well. That’s not to say that traditional methods aren’t worthwhile, but by themselves they’re no longer enough. While it can be challenging to stay on top of the latest technology, it’s incumbent on all of us to do just that. I like the concept of using a “layered” approach to security, where multiple technologies work together to increase the likelihood of predicting and deterring criminal activity and apprehending violent criminals.
The increase in retail crime also impacts law enforcement, and retailers who are perceived as doing their best to stem this growth will strengthen their relationships with police. Interrupting the crime cycle helps both police and the community as a whole. Less crime and fewer criminals on the street will help create a safer world for everyone. This definitely sends a positive message for retailers and a way to connect with potential customers and employees.
BARTOL: I believe the biggest threat is in the realm of cyber security. It’s fair to say that most retailers are well aware of the issue and taking the necessary steps to mitigate risk. However, when one considers the number of tools that all business units in retail have that are on the network, it can be a daunting task. By engaging more with IT on strategy and approach, as well as self-education on the basics of technology and cyber security, an LP professional will be better equipped to work in conjunction with their IT counterparts.
I overheard a discussion between an LP professional and an IT professional where the LP pro asked why the IT pro didn’t hire more resources. The IT pro responded, “Why don’t you hire an IT guy?” Might be a good strategy.
The retail culture is changing at a fast and furious pace, and in many different ways. As you look at the year ahead, how do you see these changes reshaping retail or loss prevention?
REYNOLDS: It really will be all about the technology. Smart retailers are using intelligence-enabled platforms to deliver more-personalized customer experiences every day. Those that don’t embrace customization will find themselves on the losing side of the sales equation. Just as with the retail sales function, there are benefits to leveraging technology in the physical security space as well. Facial recognition and AI have become hot topics in loss prevention.
Traditional security methods have become smarter: cameras and alarm systems now have the intelligence to decipher what they sense and see. Covert GPS solutions have become more proactive and provide real-time results. Alarm systems have evolved in sophistication to improve their performance as well. But I don’t believe there is a “cure all” approach for anything, and even with this tech-injection, we will continue to see the best payback coming from a layered approach to safety, albeit with more tech-driven layers.
BARTOL: First of all, thank you for saying that retail is changing. I grow weary of the folks saying that retail is “dying.” It is changing, and retailers must begin to adapt to the way folks shop today. I think that because of the rapid pace of evolving technology, retailers will be forced to adopt new technologies quicker than ever before.
Where there used to be great risk associated with adopting something that didn’t work well, there is now greater risk of not being up-to-date with the latest and most effective solutions on the market, which will change again very soon. By keeping your thumb on the pulse of technology and always having the mindset of asking, “How can I use MY tools to enhance sales and operations?” we can better serve the LP industry.
BATTERBURY: Organized retail crime is getting more and more organized, which is playing a major role in how the loss prevention industry is changing. Retailers need to work faster to identify behaviors that lead to shortage and even faster when sharing this intelligence with other retailers and law enforcement. Technology is helping brick-and-mortar retailers bridge this gap and move faster.
Retailers have more behavioral data on their customers than ever before due to all the new connected devices. This new data will change how we identify theft behaviors and how much intelligence we have regarding those causing the issues. Loss prevention leaders will need to reshape their data platforms to handle the influx of new data, analyze that data faster, and generate easy-to-follow action items for those in the field. The next step will be for retailers and law enforcement to reshape how they share and act collaboratively on this intelligence. This intelligence is beneficial to each individual retailer, but it becomes even more powerful when used in a collaborative way with other retailers and law enforcement.
Looking at the industry as a whole, what do you feel is the most important lesson that loss prevention professionals should take away from the past year and apply to their career development as they move forward?
BARTOL: We live in a very fast-paced world. The luxury of time and ability to do gradual proof of concepts is going away. We need to talk to each other even more than we have in the past. Lean on your solution partners and hold them to a very high standard. Engage at trade shows and events with an open mind. We are all in this together and working toward the same goals.
BATTERBURY: The US economy is doing well right now. For the most part a majority of retailers had a profitable 2018. Loss prevention leaders have spent a lot of capital on new technology capabilities and technology life-cycle maintenance. It’s easier to make these capital investments during a strong sales period, but it is critically important to be planning now for technology maintenance, so you are prepared during a time when sales slow. Without planning for life-cycle replacement now, retailers run the risk of not having those critical tools to combat theft five years down the road if the sales environment changes.
REYNOLDS: LP professionals who want to succeed must embrace change and the need to keep learning. It’s always easier to make low-risk decisions and stick with the “tried and true,” but the big rewards will be had by those who are open to new possibilities. True success is built on good relationships and long-term trust-in the industry, with law enforcement, and with your internal company contacts. I am a firm believer in that. Tap into your industry organizations, such as the Loss Prevention Foundation and the Loss Prevention Research Council. We’re heavily involved with both groups and they support research, ongoing education, and networking that will help keep you plugged in to what’s going on in the industry.