Security video now plays a greater role in retail and public spaces security. Cameras outside a facility and in parking lots and garages not only provide security but also can count cars and determine busy times.

It’s all about sales for retail operations.
And when it comes to the use of business intelligence as part of security systems, the winners use and the underperforming don’t.
A study “Loss Prevention and Beyond: Survival of the Fittest,” sponsored by ADT’s Sensormatic Retail Solutions, has uncovered some big differences between top retail performers – those whose sales growth outpace the three percent industry average – and retailers below that average. One is that top performers use business intelligence tools like returns and void management technologies 46 percent more than underperformers. Another is that nearly three times the number of top performing retailers use electronic article surveillance (EAS) technology as compared to underperformers.

Better Return on Investment

“Greater use of business intelligence tools has improved the efficiency of our other loss prevention technologies and delivered a strong return on investment,” said David George, vice president of asset protection for Harris Teeter. “Business intelligence solutions tied to our security video systems have enabled our operators and loss prevention teams to quickly identify and address both operational and loss prevention issues in each of our stores and across the entire chain. The end result is two-fold: improved shrink reduction and better performing store operations.”
The online survey was conducted by Retail Systems Research (RSR) during September and October 2008, including respondents from retailers with stores around the world. Among its findings:
  • Employee theft of goods and cash are top retailer concerns, with respondents ranking internal theft as their number one source of shrinkage, shoplifting as second, and internal theft of cash as third.
  • While almost half of the top performers use EAS to control shrink, only 17 percent of underperformers use EAS – despite all respondents ranking shoplifting as their second largest source of shrink.
  • Seventy-one percent of all respondents said they frequently use exception analysis reporting, a key business intelligence tool, as a critical technology in their loss prevention arsenal.
  • Fifty-three percent of all respondents cite better business intelligence as needed to make effective use of the vast amounts of loss prevention data that exists, especially from video surveillance systems.
According to the report, this discovery was consistent with many other findings that top performers don’t merely do the same things better compared to underperformers, but they also tend to do different things: “(They) think differently, plan differently and respond differently.”

Follow Through

In another example, the study found that while 39 percent of top performers audit employees’ adjustments to the quantity of goods on hand, only nine percent of underperformers do the same. The report concluded: “Even as these retailers are convinced their employees are stealing from them, they allow those employees to make adjustments to quantities on hand without even verifying what happened to the merchandise.”
“In tough economic times, shrink continues to rise,” said Paula Rosenblum, RSR’s managing director and widely recognized as one of the top analysts in the retail industry. “With the slowing economy many retailers have cut back on staff and now will be relying on technology to help control theft. Smart, winning retailers know the best way to maximize profitability and improve shrink is to leverage existing assets and improve store intelligence.”

A number of different studies have identified four ways that retail operations lose money. There is lost from sales associates and other employees. There is loss from shoplifting. And there are losses from vendors and just from bad bookkeeping.

Loss prevention executives and experts both agree that the recent economy may spur more losses from employees and shoplifters, While retail security has depended on a combination of technology and security officers, there is a shift to more intelligent security video systems and their integration with point-of-sales and other business systems. 

One of the outcomes is the ability of loss prevention to partner with the business to provide the operation with people counting and traffic analysis within the store.
For Security Magazine and SDM Magazine readers, a free copy of the 22-page report can be obtained by visiting the link below.