How to Ring Up More Retail Security Sales
Systems integrators can help end users of all sizes in the retail vertical who are collectively absorbing losses worth billions of dollars from vulnerabilities both outside and inside their establishments.
The global retail market lost more than $123 billion between 2014 and 2015 due to shrink.
Brick-and-mortar retail spaces offer myriad opportunities for systems integrators, particularly in the areas of shrink control and asset protection.
Statistics show us that having a wide array of up-to-date, high-tech security services available is essential for retail clients, and security professionals can be profitable in this market by staying ahead of the curve providing solutions for this growing market.
According to the 2016 National Retail Security Survey, conducted by the National Retail Federation (NRF) and the University of Florida, U.S. “retailers’ inventory shrink averaged 1.38% of retail sales, or $45.2 billion in 2015, up by $1.2 billion from 2014. 47% percent of retailers surveyed reported increases in overall inventory shrink in 2015, with shoplifting accounting for the greatest cause with an average loss of $377 per incident (39%), up nearly $60 from 2014.”
The NRF report also found that robberies cost an average of $8,180, up from $2,465, with the rise in 2015 “driven by an increase in jewelry stores reporting extremely high average losses.”
The global retail market lost more than $123 billion between 2014 and 2015, according to the latest Global Retail Theft Barometer study. That represents 1.23% of total retail sales over the same period and, the study notes, 39% of the lost revenue involved dishonest employees, 38% shoplifters, and 16% administrative, non-criminal sources.
“The retail market is in a state of flux with the expansion and contraction of brick-and-mortar facilities. A major news story in the retail trade magazine Clark listed 14 major retailers closing 100 or more stores,” says Keith Jentoft, Integration Team, Honeywell Security & Fire. “At the same time, Amazon launched the prototype of a new convenience store concept without cashiers, but packed with technology, including cameras. This volatility creates opportunities for the security industry, if for nothing else, to protect the dark stores that closed and participate in the technology revolution of the new stores.”
The Global Retail Theft Barometer adds that the most common merchandise stolen were items that are easy to conceal: footwear, batteries, accessories for mobile devices, alcoholic beverages and razor blades.
In addition to common shrinkage, the 2015 survey indicates robbery continues to be a growing concern, as well as workplace violence and hold-up/duress. Surprisingly enough, however, it’s not always largest chain operations that experience the greatest losses.
According to ADT, small businesses often experience higher levels of shrinkage than larger, better equipped retailers simply because larger firms can spend more money to protect themselves. So be it mom-and-pop shops or big brick-and-mortars, prospective retail customers abound to give security professionals the chance to cash in.
Read on to review what’s in store for those who shop this market.
Big Data a Big Asset
Stanley Security representatives say today’s retail space requires a more data-driven approach, especially in large enterprise facilities where upper management needs to view their operation in a more compressed, 360° manner.
This, of course, has resulted in more network-connected security solutions where connectivity, data processing, data analytics, and data retention involve more open standards, something that yesterday’s closed, proprietary approach couldn’t accommodate.
Size Makes a Difference
Without a doubt, the steps that a retail store takes to curb shrink depends on its size. The larger the retail store, the more extensive the precautions. However, the smaller the store, perhaps the more personalized relationship a security provider will have with the owner and a greater understanding of specific goals. “The larger the organization, the more disciplined they will need to be as it relates to security. Local retailers typically have ownership onsite or nearby to keep a watchful eye on shrinkage. Locals will tend to have a more personal relationship with their employees, whereas a larger organization must have an intentional, disciplined approach,” says Greg Peninger, president of ProTex Technologies of Cedar Park, Texas. “Processes must be established and executed. Deliveries must only be received ‘here’ in full view of cameras. Access to certain rooms or storage must be electronically logged via access control system.” In small retail establishments, business is often built on the relationship that a store owner has with many of their customers. Large retailers might necessitate and be able to afford bigger security systems, but integrators may be able to better customize the small local store owner’s solution. “Rather than a ‘catch-all’ or ‘one-size-fits-all’ approach, being able to provide the customer with features and benefits that are tailored to the installation, requirements or requests of an individual is more of a benefit to the end user rather than just doing installs with the sole purpose of gaining accounts,” says Mike Steffancin, inside security sales consultant with wholesale distributor Security Source of Parma, Ohio. “Also, most established local companies are more inclined to know the local municipalities and their requirements than a national retailer.”
“When we think about Big Data and how it’s evolved from the more traditional business intelligence domain, we describe it in a framework as the four V’s: variety [or unstructured data], volume, velocity and veracity. Data from physical security systems exhibit these characteristics. For example, access control, video and alarm notifications have a general lack of structure,” says Dave Bhattacharjee, vice president for data analytics, Stanley Security. “Velocity is a second consideration, where you get streaming data at a faster pace. Instead of receiving data once a day, you might get it every hour or in real-time. And the third is the volume of data – it is not uncommon, for example, to receive up to a million alarms per month.
“And then when you receive all this data,” he adds, “the question is how do you store and process it? The insights that you retrieve from the data have to be relevant and accurate – this is referred to as veracity. Organizations could benefit from leveraging Big Data management and analytics techniques such as cloud based processing, data lakes and machine learning.”
Within the four walls of a retail store are many risks. Today, full system integration with Big Data analysis figures heavily into their successful mitigation. This is especially true with the recent development of networked enterprise-wide software designed to aggregate data from almost every system in operation within a facility.
The result is a steady flow of real-time and recallable actionable data that enables end users to more quickly and intelligently make critical decisions.
“In today’s data explosion, companies are bringing together point-of-sale [POS] data, website traffic, marketing numbers, and transactional data to find actionable insights from the big picture. But analyzing all of this information is just one small element in the evolving world of shopping,” says Jeff Huckaby, market segment director, retail and consumer goods, for data solutions provider Tableau. “As mobility and analytics collide, both the consumer and the retailer are moving toward a real-time, mobilized experience.”
At the “big-picture” level, this approach includes accessibility to all silos when working with disparate systems, which continues to be a common issue within many retail spaces. This includes single locations along with tens or even hundreds of facilities across a city, state, nation, or even worldwide.
This recent approach has led manufacturers and the integrators that engineer and install these elaborate da
ta-driven engines to make a significant move toward the adoption of the IoT (Internet of Things) approach where there is never too much information.
Examples of IoT use in retail-based monitoring include freezer and cooler temperature monitoring along with outside and indoor temperature control. Water level indication is also critical in many instances where flooding is common during heavy rains and during warmer winter months due to the melting of snow and ice.
Approaches to Address Needs & Vulnerabilities
It is imperative that security pros understand retailers’ pain points.Traditionally these establishments suffer huge losses at the hands of burglars and robbers and even more substantial are the losses wrought by shoppers and store employees themselves, as mentioned earlier.
If all that isn’t enough, retail stores also are subject to administrative losses related to accounting errors and product mishandling. To address these problem areas, security integrators commonly turn to burglar, video and fire alarm systems to address asset protection.
Traditional protection using video hinges on “distances, areas of egress, location of key equipment, field of view, etc. Basically, what does the customer expect to see and how do they want to view it? The increased use of apps for smartphones and other smart devices has also allowed manufacturers to market ease of use as well as immediate notification to key individuals,” says Mike Steffancin, inside security sales consultant with Security Source, a security and fire/life-safety equipment distribution firm in Parma, Ohio.
In addition, these and other modern systems now have the capacity for network connectivity, allowing them to be monitored if not controlled by Big Data management software, either contained onsite or offered as SaaS (software as a service) in a Cloud-based data processing center.
Next in importance is a quality, well-equipped and engineered video surveillance system, although it could be argued that video occupies top importance in retail space protection.
Electronic article surveillance (EAS) is another common method of crime fighting whose focus is on a retail store’s public entrances and exits. The focal point of the EAS approach is to detect the presence of sellable items as a shoplifter attempts to remove them from the store without payment.
EAS transponders are attached to or embedded in these items, either onsite or where they are manufactured. Many of these EAS transponders are actually installed inside the price tags or packaging where they cannot be seen.
In most cases, a signal emitted by the EAS portals, which surround all exit points, powers and activates these small devices enabling the EAS system to detect them using radio waves at specific frequencies (another name for this technology is radio frequency identification, or RFID).
Creating RMR: SaaS in the Cloud
One of the advantages of today’s enterprise-level software is that it offers integrators an opportunity to partner with a Cloud-based service where they can earn additional RMR.
Add to this the ability to review critical data related to real-time events using a mobile device makes the analytical SaaS approach highly attractive not only to large enterprise chains but to smaller facilities.
“The retail vertical offers tremendous RMR opportunities to integrators. The ability to unify multiple sites with one login via Internet browser or smart-phone app allows the owners and management team to virtually manage each location,” says Greg Peninger, president of ProTex Technologies of Cedar Park, Texas. “From relatively simple tasks such as store openings and closings to having the ability track customer foot traffic hotspots and dwell time to manage marketing efforts.”
The issue of RMR, as Peninger points out, includes specialized analytical services related to shopper behavior to specific in-store advertising efforts created and executed by vendors. Small cameras can be embedded into a display so store management as well as vendors can review shopper behavior as well as a store’s overt surveillance cameras.
Surveillance cameras also can be put to good use in analyzing shopper behavior in general. A detailed, documented report can be produced that provides critical actionable information on shopper behavior for each day of the week allows management to better place personnel throughout the store.
Video analysis also can render the number of shoppers visiting a store on an hour-by-hour, day-by-day basis. The sophisticated Big Data analysis software that the security dealer provides as a service can be employed to deliver these and more benefits, each one resulting in additional monthly earnings – more profit to the end user and RMR to the dealer.
Thwarting the ‘Inside Job’
A significant amount of product goes out the back door of retail spaces, courtesy of a store’s own employees. Losses also occur due to a store’s product vendors that often deliver goods in back rooms while store employees and managers are on the sales floor attending to the shoppers.
“Unfortunately most shrinkage is an inside job. Either an employee or vendor will allow theft or damage of product, whether intentionally or unintentionally,” says Peninger. “Unless the retailer has already caught someone red-handed, the biggest obstacle is overcoming denial – ‘it will never happen to me.’ We must help ownership see the cost/benefit of installing high-resolution cameras, with adequate light management and proper viewing angles.”
Including access control in retail store monitoring enables management to know when rarely used doors are open or when they are open for an extended period of time. By implementing access control, management can also know which vendors were there, when they arrived and when they left the premises.
Employee theft also includes consumption of store product in coolers and other locations outside the view of others. Many store employees actually come to believe that this type of behavior is part of the perks that the store offers them (see sidebar) when it is not. A comprehensive security plan for the retail end user can reinforce the rules while providing greater peace of mind overall.
RELATED: How Big Data Can Change the Security Industry
If you enjoyed this article and want to receive more valuable industry content like this, click here to sign up for our FREE digital newsletters!
About the Author
Al Colombo
Al Colombo is a long-time trade journalist and professional in the security and life-safety markets. His work includes more than 40 years in security and life-safety as an installer, salesman, service tech, trade journalist, project manager,and an operations manager. You can contact Colombo through TpromoCom, a consultancy agency based in Canton, Ohio, by emailing [email protected], call 330-956-9003, visit www.Tpromo.Com.
Related Content
Security Is Our Business, Too
For professionals who recommend, buy and install all types of electronic security equipment, a free subscription to Commercial Integrator + Security Sales & Integration is like having a consultant on call. You’ll find an ideal balance of technology and business coverage, with installation tips and techniques for products and updates on how to add to your bottom line.
A FREE subscription to the top resource for security and integration industry will prove to be invaluable.
