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Making the most of Technology

Loss Prevention as Agents of Change?

More than ever, it seems that those in loss prevention are being faced with a plethora of new loss prevention technology solutions. In fact, at a recent USA loss prevention conference organised by the Retail Industry Leaders Association (RILA), over thirty-seven different technologies were being promoted, including global positioning systems (GPS), electronic article surveillance (EAS), and facial recognition.

To help bring some order and sense to this vast array of loss prevention technology choices, I used a research method called narrative content analysis. This technique is popular in social science and is often used to judge the mood of a certain audience by looking at the number of times particular words, phrases, or emotions are used in written or even spoken form. In the early years of its application, the analysis was displayed in the form of a data table with word counts. More recently, free online software developed by Jonathan Feinberg of wordle.net has helped researchers display their results in the form of a word picture, with the frequency of use dictating the overall size of the individual words.

For my analysis, and with thanks to Lisa LaBruno and Tripp Taylor of RILA, I was able to analyse the words provided by the 127 vendors in a mobile app RILA developed for its conference. Vendors described their organisations and the technologies they were promoting. Each vendor was limited to 500 words, and a total of 13,944 words were analysed.

In total, I found in the full text 124 references to a specific technology. As expected, many were mentioned more than once. So from the total of 124, I identified just thirty-seven as unique and distinct. The most frequent of those thirty-seven unique technologies was video, with twenty-eight mentions out of 124. However, if you were to add the other technologies dependent on or enabled by video, namely remote monitoring, video analytics, pattern analysis, facial recognition, and scan avoidance, the total number of mentions of this broader “video” category came to fifty-five, accounting for 44 per cent of the total. The next most popular technologies were access control with nine mentions, radio-frequency identification (RFID) with seven mentions, and then EAS with seven mentions.

I next used the free online software to create a word cloud, which illustrates by the size of the words, the relative frequency of mentions of the thirty-seven technologies.

In the word cloud, video was displayed in the largest type because of its frequency of twenty-eight, while RFID with just a frequency of seven was displayed in a smaller type. Those with the smallest types were those like Internet monitoring, which only had one mention.

I think there are three conclusions that can be drawn from this analysis, and I will explore each in further detail in the rest of the article. But to summarise:

There is a clear expectation from the vendors, based on input from market intelligence, that there is a large demand for video technology. Their reasons to be optimistic are no surprise given the advancements in the technology itself and the reduced cost of ownership; however, it is not clear whether the skills, expertise, and capacity within the loss prevention team has kept pace and that the industry is ready to unlock the full potential of the technology.  

The industry can and should help shape the technologies of tomorrow, ensuring that the best thinking of technology experts is being directed through a process of collaboration to finding new ideas to address problems that matter most to retailers. While the technologies being promoted by these vendors are in demand today, it is clear that in the emerging omni-channel retail context, with self-scanning, click and collect, and so forth, there will be a demand for new technologies to help manage malicious and non-malicious losses.

With so many technology choices and even more emerging, those skills, tools, and techniques the loss prevention function develops and improves, as professional managers of technologies, will become increasingly valued by their organisations in the future.

Video: Core Competency for the Loss Prevention Team of Tomorrow?

The concept of core competencies in business was made famous in the 1960s by the management guru Peter Drucker. He stated that organisations should seek to identify and recognise their unique points of difference. Once these skills and capabilities have been identified, he argued that organisations should disproportionately invest in them and focus on these competencies to grow their businesses. Fifty years later, organisations continue to use this thinking to drive major changes in strategy. A recent example would be Pearson, which has chosen to divest its media-related investments in the Financial Times and the Economist, to focus the organisation on growth of its education business.

For loss prevention teams, if core competencies in the past have included investigations, audits, and incident management, I believe that video management now needs to be established as a new core competency.
Today, it is not clear this is the case since video has traditionally been seen as just a piece of equipment for the stores, heavily reliant on available resources to either monitor live footage in dark rooms in the backs of stores or to manually review huge quantities of footage to build a case or identify incidents. This has limited its value and relevance to the broader organisation beyond loss prevention.

However, even just in the last five years, video technology and the other technologies it enables have been transformed. For example:

Digital technology enables material for case management to be collected and collated much more quickly. Further, by setting up alerts that look for exceptions, incidents can be acted on in near real time and reviews can be speeded up, which has been seen as a significant change transforming the perceived value of this technology.

Smaller, higher resolution video cameras provide sharper images and fewer blind spots at increasingly lower costs.
Networking, video compression, cloud technologies, and improved broadband speeds have enabled greater remote monitoring by field managers, allowing real-time interventions while central hubs with two-way communications can provide local reassurance through “virtual” visibility and the opportunity to see, send alerts to, and talk to those in many stores, all from one location. 

The integration of cameras into store infrastructures, including doors, alarm systems, refrigeration, point-of-sale registers, EAS gates, lighting, and more, generate new opportunities for value creation. For example, one big box retailer in the US is exploring the potential energy savings of being able to remotely turn off the lights the store managers forget to switch off when they lock up and leave the store after closing.  

Complex data analysis and algorithms made possible by technology advances enable pattern and image recognition, creating new capabilities such as scan avoidance and facial recognition.

While these big changes—moving video from being seen as just a uni-functional piece of store equipment to a technology with enormous potential—are increasingly evident, it is not wholly clear that these new capabilities are being fully appreciated by either store staff or retail executives. As one loss prevention director recently shared with me, the video technology now available to stores is, in car terms, like a Ferrari, yet we are asking it to be driven by novice drivers. 

As I visit retail locations, I see this myself as I witness security guards and store associates using just 5 per cent of the potential capability of the video systems installed. In one example, I was visiting a distribution centre of a major UK retailer, where despite investing in over 500 Internet protocol (IP) cameras for the location and a full video management software suite, the security team was still using video as though it were their own DVR system at home.

Further, in those retailers exploring new ways to leverage video, my concern is that as they build their “Ferrari,” it becomes very reliant on others who may not have the time, skills, or inclination to drive it!

By way of an example, video can be set up to deliver alerts via text message to security guards or other staff in the stores as and when high-theft items are selected from shelves. This is a terrific capability, one that can deliver the great customer service that thieves hate, but it is very reliant on the response of the increasingly scarce and often under-trained security guard or store associate. 

In another example, a retailer piloting scan-avoidance technologies that provided the store manager with video evidence of their cashiers not scanning certain items, reported that while this technology gave them many more possible cases to investigate than just the traditional point-of-sale exception tool, they simply did not have the time to handle so many cases, nor in some cases the confidence or inclination for this type of work that takes even more time away from delivering great customer service. 

To address potential gaps in current and future video capability and capacity, loss prevention leaders could start by defining and aligning their organisations to a five-year strategy and business case for video. This exercise can help identify the many different drivers of value to the organisation and the financial benefits they deliver. Some will be hard to quantify, such as staff feeling safer or the marketing department knowing the number of shoppers turning left or right on entering the store. However, others will be easier to quantify, such as productivity savings from moving to remote monitoring or reducing energy bills by turning off the lights store managers forget to switch off.
With the use cases identified, the capabilities required to execute and the head count needed to deliver can then be calculated. Without doubt, a broad range of skills will be needed to manage video.

For example, there will be a need for highly skilled individuals who know how to fully leverage video for monitoring purposes. There will be those that know how to organise and deliver an efficient and effective remote monitoring centre, and there will be those who can sell and promote video as a capability to other functions in the organisation.

Some organisations may consider some of these competencies, shopper insights being one example, as ones they believe their organisations can uniquely develop and deliver themselves for competitive advantage, while other competencies such as the remote video monitoring of stores by security guards may be viewed as a task that could be outsourced.

While the overly simplified approaches to developing and delivering a video strategy laid out in the points above will be different for each organisation, what I think is inescapable is the conclusion that video is now an advanced technology and not simply a piece of store equipment, and as such it needs managing, and most importantly, a strategy needs developing to build capability and capacity so that its potential is fully exploited.   

Working Together Better to Generate Real Value

The loss prevention industry is fortunate to have attracted the attention and the investment of technology vendors, both from well-established names as well as new start-up companies, all of whom believe they have big new ideas to help resolve the industries’ problems.

While many of the technologies they have already brought to the industry have led to improvements and a positive return on investment (ROI) for their clients, I believe the industry can do a better job together to help inform the experts in technology of their emerging problems and the specific requirements and aspirations for new technologies. 

The recent report by Professor Adrian Beck and Dr. Matt Hopkins on mobile self-scanning provides a perfect example of research that provides technology experts with exactly these requirements.

In their report, they document a case study that demonstrates the problem and how losses on the transactions that used a mobile self-scanning device were found to be four times higher than the traditional process where a cashier will scan the goods and then take payment from the shopper before they leave the store.

To mitigate this problem and the risk of non-scanning, they identified the opportunity to increase awareness to would-be thieves of the potential risk of being caught not scanning at all points of shopper journey from starting the app to leaving the store. Across this journey, they identified that some controls already exist—for example, at the beginning only loyalty card holders can use the app, and at the end random audits are performed. However, the big unmet need is in the middle of the journey—in the store itself when the scanning (or not) of products occurs. 

To address this gap, they identified three broad categories of solutions and thirteen different technology ideas. For any technology expert reading this report (it is available as a free download from the ECR website (ecr-shrink-group.com), there could not be a clearer articulation of the unmet need and the requirements for new technology.

But mobile self-scanning is just one problem where the industry has unmet needs and aspirations for better technologies. I believe that the role of groups like the ECR Europe Shrink and OSA group, the UK forums established by ORIS, and RILA in the USA should be to bring together the industry to more deeply research the current problems all retailers face and to articulate, just as the mobile self-scanning report did, the unmet needs and the aspirations for new technology solutions. 

Loss Prevention as Professional Managers of Technology

Technologies do not manage themselves; they need to be managed with equal passion and energy at all the key stages of their life cycles, from the initial selection for trial through to their eventual decommissioning. Here are the three skills and approaches that I have observed over the years to be the most important to managing technology in retail.

Stakeholder Analysis. Whether you are getting started on trials of a new technology or managing the transition from an old technology to a new one, fully understanding who your stakeholders are and how they are likely to view the technology changes is critical and a key enabler for change.

Stakeholders are all those inside and outside the organisation who will, or who think will be, impacted by the technology and associated change. For each stakeholder, the following four questions need to be assessed. 

What will be the benefit of this technology and associated change to this stakeholder? Using point of sale video analytics (a technology that can reduce the size of the scan avoidance problem) as an example of an emerging technology enabled by video and the human resources (HR) function as the example of a stakeholder, the question would be to ask how the HR function could benefit from this technology implementation. How could it make their jobs simpler, save time, or make their targets easier to achieve? 

What could be some negatives of this technology and change for this stakeholder? Using the same technology and function example, how would HR view the potential for more incidents of non-scanning to manage? Would it help them achieve their function’s targets and goals?

What are the possible implications and changes imagined for this stakeholder? Again, using the same examples, if a possible implication and change from the introduction of point-of-sale video analytics were to be the need for HR to develop and execute some new cashier training to reduce non-scanning, how would they respond? Is it one of the HR function’s current priorities? Does the motivation and capacity exist today for this work? 

Where on the axis of change does the stakeholder sit today, and for the technology to be a success, where do they need to be? At the start of the project, would the HR function be at the positive end of the scale and be enthusiastic supporters of the technology, or would it be at the other end and be hostile to its introduction, or perhaps somewhere in the middle? If HR personnel are deemed hostile to the technology, is it acceptable that they remain hostile, or does their position need to be changed to enthusiastic supporters or just compliant? If this is the case, then the project team needs to identify ways to change their position from negative to positive or at least neutral.

With an assessment completed, it will become clearer who to engage as core team members, who to involve when needed, and who to keep informed of the project.

A consistently surprising benefit of the stakeholder assessment approach is that it can help to identify new value drivers and use cases for the technology not previously imagined. For example, who would have thought that the commercial team could see technologies such as EAS pedestals as a source of new advertising revenue or that video could help verify slip-and-fall claims by shoppers and employees?

Use Case Development and Return on Investment (ROI) Analysis. Technology vendors are critical to the loss prevention industry—it relies on their creativity, deep technical knowledge, and expertise for new solutions. However, in my experience, their strengths are not always in the areas of use case development or building persuasive and coherent business cases. This should not be a surprise, not least because these vendors do not know each organisation’s business model and priorities, culture and people, work processes, and cost bases as well as each respective organisation does.

It follows that the loss prevention team needs to develop those skills, tools, and techniques that allow them to quickly identify new work processes to support the use cases and the different hypotheses as to how the technology can generate value for their organisations.

In my experience, leveraging the strengths of other experts within the organisation can help with the workload and the credibility of technology projects. A good example would be the finance function; their expert input can help build the business case, while at the same time and because the function is typically trusted and respected by top management, they add credibility to the financial analysis. 

Technology Performance Dashboard. As is often said by management, if you want to manage a problem or opportunity, it needs to be measured. You get what you measure. The same could be said of technology, and yet it is not obvious to me that that the technologies commonly used by the loss prevention teams are being proactively managed.

For example, with EAS systems, it is rare that I see evidence that key measures related to this technology are being regularly monitored. Examples of the measures would be number of alarms per store, number of alarms per store relative to number of visitors, number of alarm responses, and the number of customer complaints related to EAS received by the customer service department.

With point-of-sale video analytics as another example, if it were to be adopted, a one-page view or dashboard of the key performance metrics could be created to include, for example, the number of incidents per store, the percentage of non-scanning reasons that are malicious versus non-malicious, and the key reason codes for non-scanning.   

The real value in tracking performance on technology lies in the ability to identify how and where it is working well and where it is not. With these insights, improvements and action plans can be identified that can ensure the technology evolves and remains relevant in the ever-changing retail context.

Draw Your Own Conclusions

These are just my observations based on the output of the narrative content analysis of technologies promoted at just one recent industry event. There are of course limitations to this research, not least being that not all the possible technology vendors attended.

I am sure you and your team will make your own interpretations on what this analysis tells you, and perhaps (and I hope) this article could be a topic on your agenda for your next team meeting.

As ever, I welcome your comments on all the ideas mentioned here and the research itself.

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