The Year Ahead in LP

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 2018 may take LP, we turned to executive leadership from three leading retail solution providers to help identify some common themes.

- Sponsors -

 

Was there a key trend or development in 2017 that you think will drive the loss prevention agenda in 2018? Or might something new steal LP’s focus in the year ahead?

CARTER: With a reduction in overall brick-and-mortar growth and an increasing aim at omni-channel expansion, loss prevention will need to realign their resources more toward product visibility and inventory controls. Individual consumer buying habits continue to evolve, and there is a growing need for more visibility of the available inventory. As consumers, we’ve already done our research and know what we want. We want to experience the purchase in-store but know it’s there before we go.

With this increased transparency comes inherent risk. Credit card and cyber security threats are on the rise and can severely affect profits but more dramatically alter brand loyalty and future purchases. Loss prevention must continue evolving preventative measures for protecting these critical areas of the business.

Terrorism, active shooters, and the opioid epidemic are all growing and raising substantial concern for employee and consumer safety. Planning and preventing these types of safety threats is a monumental challenge for loss prevention and if done inaccurately can shake the stability of the brand, personnel, and future offerings. Security measures, training, and working in conjunction with law enforcement can help, but it will be loss prevention’s preparedness and responsiveness that will best reflect community responsibility.

SANTANA LI: We are once again moving forward in a new age of technology, and this will continue to demand our focus and attention. In 2017 we began scaling operations of autonomous security robots nationwide after numerous successful deployments in California and believe this will be an escalating trend in 2018. We’ve been able to assist law enforcement in issuing an arrest warrant for a sexual predator, helped loss prevention apprehend retail thieves, helped stop a vandal at a corporate campus, and put a stop to a fraudulent insurance claim. We’re just getting started in providing our nation’s more than 2 million law enforcement, loss prevention, and private security professionals new, unprecedented capabilities in situational awareness—new tools to help them to do their difficult jobs much more effectively.

TONKON: Inventory accuracy and visibility will continue to drive the loss prevention agenda as retailers address the complexities of omni-channel commerce. This is vital to developing a winning retail strategy today and directly benefits loss prevention efforts by helping organizations understand what items are missing. Inventory accuracy is critical for supporting an omni-channel solution that provides real-time visibility to a single view of products across all channels. It begins with data integrity throughout the merchandise supply chain and the ability to track at the item level what happens from when it arrives at the store.

As you look over the risk landscape in 2018 and consider the many challenges currently facing LP, are there any areas where you think LP might need to step up its game?

SANTANA LI: Implementation of technology, which is a two-fold problem. First, having the courage to take on new technologies proactively and aggressively—the pace is way too slow, and there needs to be a much greater sense of urgency. The second is much more complicated—the lack of innovative technologies to actually implement. This is an industry starving for real game-changing innovation but also an industry starving for those willing and able to drive that same innovation. This needs to change.

It’s also infuriating that we live in a society where going to work, going to the mall, going to a movie theatre, or even going to school comes literally with a risk of being shot or killed. A fundamental change is required. I can assure you that no amount of “thoughts and prayers” from our political leaders is going to fix this growing problem. LP folks need to think broadly about risks—not just losses.

TONKON: Technology is being embraced more rapidly than ever before, and the race to support the many facets of an omni-channel solution is driving most retail investments. But as history has shown, this race can lead to the need for greater loss prevention efforts because some retailers’ risk assessments were not fully considered at the time of implementation. As a result, initiatives such as “buy online/pick up in-store” and touchless in-store purchasing have exposed greater risks than initially understood.

Another key trend is in the world of big data, moving beyond data analytics to prescriptive analytics and the need for qualified professionals. Over the last four years, we have worked with the Retail Industry Leaders Association (RILA) to mentor students at the University of Texas at Austin McCombs School of Business Master of Science in Business Analytics program. This leading global program develops data scientists that RILA matches with major retailers to analyze major loss prevention challenges. With efforts like these, all industries will enable the faster transition of data into actionable information.

CARTER: We as an industry are unprepared for the opioid epidemic, which doesn’t discriminate and can affect any individual and community. It’s unsafe and creates uncomfortable and challenging situations for us all. As loss prevention professionals, we will need to identify with it, accept it’s here, learn more about it, and figure out how we can adapt to provide a safer and more secure shopping environment for our communities.

Technology advancements are coming fast and furiously. As you look at the year ahead, do you see technology reshaping retail or loss prevention? If so, how?

TONKON: Retail is already being reshaped by changing consumer expectations. Organizations need real-time visibility and location solutions, which transform the physical to digital, so they can sense what’s happening in their operations, analyze that data to deliver insights, and act on those insights to make smarter decisions. Retailers specifically require real-time visibility across all purchasing channels to ensure they have what the shopper wants when and how they want it, or shoppers will buy somewhere else.

In loss prevention, this transition is well underway as companies move to utilizing technology and analytics that will sense, analyze, and notify store associates to act immediately on a real-time situation. These actions are geared to prevent a loss or situation from occurring in the first place because of the ability to capture data and recognize that an occurrence outside of a certain threshold is taking place so that a message can be sent to a store associate equipped with the mobile device to take action in real time.

The proper training of store associates will be the last step to make this ubiquitous. We’re seeing the emergence of new technologies such as robotics, advanced video analytics applications, behavior recognition, and the application of blockchain for food safety benefit loss prevention as well as other functional areas of retail.

SANTANA LI: We here in Silicon Valley are working on game-changing technology that will drastically impact the entire LP landscape in the future—but would challenge the premise of the question as it’s not as fast as it needs to be. Our long-term ambition is to make loss prevention the hero in the organization. What happens when the technology is mature enough to effectively eliminate the majority of shrink—and that massive amount of money goes straight to the bottom line of an organization? What if most losses were eliminated, and we could reduce prices of goods for everyone nationwide? When that happens the shopping experience, financial performance, job satisfaction—all of it changes dramatically.

CARTER: Artificial intelligence (AI) applications and augmented-reality shopping experiences are going to continue to reshape our buying habits and purchase landscapes. As more transparency is shown during a customer’s journey, such as inventory availability, store accessibility, and un-attended kiosks, the more opportunity can arise for risk and shrink. We all want to have the latest and greatest smart devices, apps, and experience, but at what point is the experience leading us versus us leading it? These are interesting questions to be posed and prepared for, and solutions designed to help support our evolving technology.

There is a lot of industry talk about changes in retail strategies to drive revenues. Do you see any emerging retail strategies impacting loss prevention?

CARTER: Loss prevention will need to realign resources more toward protecting product visibility and inventory management. Having a transparent inventory knowledge bank that is accessible to any consumer could result in future threats, shrink, and inventory shortages in brick-and-mortar, further driving consumers toward omni-channel solutions. As loss prevention puts more emphasis on protecting the entire supply chain, better controls for omni-channel accessibility, diversified sales platforms, and transparency will continue to meet the ever-growing demand. I also believe that ongoing cultural changes, collaborative communities, and experiential visitations will also help to regain brick-and-mortar presence, delivering quality of experience or quantity of availability.

SANTANA LI: We are currently working on (not yet released) an AI concierge feature to add to our autonomous security robots allowing for a two-way dialogue between the machine and a human. What if the loss prevention team could provide a unique and engaging shopping experience while simultaneously securing the facility? There’s nothing like the ROI on a safe and happy customer.

TONKON: Let’s start with the touchless checkout that’s been implemented by many retailers, which eliminates the need to go through an associate-staffed point-of-sale. Depending on company policies, there are different methods for assessing and minimizing risk, but a standard method has not yet been established. Former methods for lowering risk associated with certain high-priced items are being challenged so that retailers can provide a more engaging experience, requiring that different prevention factors be implemented that utilize new technology. The good news is that these emerging technologies can be applied to a wider and more effective set of retail situations and ultimately lower the total loss factor at retail. This will be exciting for the loss prevention leaders of tomorrow.

Stay Updated

Get critical information for loss prevention professionals, security and retail management delivered right to your inbox.