For Security Integrators, Not All Retail Store Clients Should Be Treated the Same

More retail outlets are looking for security solutions for loss prevention, but integrators need to do their due diligence on a prospect’s unique security needs.

VENTURING INTO new vertical markets can be tricky business for dealers and integrators. Expanding beyond the comfort zone of niche markets and customer bases to explore new business opportunities should be a well thought-out decision. When considering any new vertical market, dealers and integrators should educate themselves not only on the potential opportunities, but the lurking challenges that are inherent to that particular segment.

This is especially true of the retail market, which holds plenty of promise for integrators who wish to target it while those entrenched emphasize that proper due diligence must be done first. Additionally, shopping around for clients means understanding different needs ranging from mom-and-pop stores to mega chains. A common pain point pervasive to all retailers, however, and a big reason why they look to the security industry is the continuously increasing amount of product (and potential revenue) businesses lose to shrink each year due to internal and external factors.

Scott Roberts, sales manager at Setronics, advises that, when approaching new customers, it’s critical to listen to them and understand their unique business model, and any security concerns they’re facing. This is true across all markets, and Roberts should know, as Billerica, Mass.-based Setronics provides custom integrated security solutions to its extensive customer base of retailers, health-care facilities, financial institutions, corporate campuses, Fortune 500 companies and more. “If they don’t have a true grasp of what the retail pains are, then it is highly unlikely a dealer/integrator can offer a viable solution.”

Pointing out that regional retailers generate millions of dollars in new business and service revenue and can have anywhere from 20 to 200 cameras per location, Roberts adds that, “If you can service them quickly and properly, you’ll be in good shape revenue-wise.”

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To help dealers and integrators scale the retail learning curve, SSI spoke with several integration companies that have worked successfully in the sector for many years. Read on to learn more about the impact of shrink, plus the latest trends, unique challenges, specialized customer needs and opportunities specific to securing the retail client.

Is Shopping for Retail Clients Right for You?

Scott Bohm, president and owner of Bio Touch Solutions in New Jersey, gleaned a lot of experience in retail verticals over three decades but points to other factors to generate success in the vertical market. He says that a security provider’s success in retail still comes down to the usual protocol of analysis, forward thinking and sound planning that any business must embrace; the prospective customers are there for the taking.

“That [retail] experience made it easier for me. But it’s really all about having a strong network and business plan,” he says. “You have to look to the future. The retail vertical does have sustainable demand and growth.

Understanding the Many Sides to Shrink

The percentage of loss of products between manufacture and point of sale is often referred to as shrink in the retail space. This fact of life in retail – which encompasses shoplifting, employee or supplier fraud and administrative errors — rose from 1.28% of U.S. sales in 2013-14 to 1.97% during 2014-15, based upon responses from common retail participants in Global Retail Theft Barometer surveys both years. This may not sound like a huge number, but it translates into billions of lost dollars each year for the retail market. It’s a security concern that commands attention. (And security integrators that serve an international client base should note that global shrink climbed from .94% to 1.42% during the same period.)

Scott Bohm, president and owner of New Jersey-based Bio Touch Solutions, worked in retail loss prevention for three decades before launching his physical security integration company five years ago. “Retailers will be battling these factors of shrink to the end of time,” he says. “The trick is to break down the components of shrink and address them accordingly.”

Bohm believes the economy has catalyzed the increase in shrink, and cites studies conducted by retail experts (and University of Florida professors) Read Hayes and Richard Hollinger that indicate trying economic times contribute to high levels of shrink. But, Bohm points out, shrink has always been there. “The key for loss prevention [LP] managers is to narrow down all avenues of shrink,” he advises. “It comes in many forms. It’s unaccountable loss, and you don’t always know where it’s coming from.” Bohm points to distribution transportation, financial errors and processes, and internal theft as likely suspects, and stresses that loss prevention managers need to examine all of those components before the ideal security solution is designed and implemented.

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Security integrators must also keep in mind that how shrink is addressed may mean very different solutions depending on the type of retail client. Steven White, corporate vice president, business development at Vector Security in Warrandale, Pa., cautions, “There are so many subsets of retail that these trends and issues only tell part of the story. The shrink challenges faced by a specialty electronics store are quite different from a dollar store or apparel retailer, though they may share common terminology and install similar technologies. It is important that retailers understand what tools – exception reporting or video analytics, for example – might be more valuable in their operating environment, and tailor their investments accordingly.”

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