Special Innovation Edition 2023

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Asset Protection | Profit Enhancement | Retail Performance

INNOVATION SPECIAL EDITION

INVASION OF THE RETAIL ROBOTS As staffing and security woes become increasingly difficult for retailers, the promise of autonomous solutions becomes more compelling.

Innovation Special Edition 2023 | V22.5 LossPreventionMedia.com


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Innovation Special Edition 2023

Contents

Features

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12

I nvasion of the Retail Robots

Digital and Physical By Tom Meehan, CFI

30

18

By John W. Jones, PhD

34 38

RFID Technologies Are Changing the Retail Landscape By Sam Boykin

ORCA Data-Sharing

The Intersection

of Interviewing and Innovation

By Cory Lowe, PhD

How Revolving

Employee

Cybercrime and Deviance

This special edition of LP Magazine is sponsored by the following partners.

echnology Alone T Will Not Solve the Problem

By Courtney Wolfe

Bridging the

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22

By Jacques Brittain, LPC

Data-Driven Defense By Allie Falk

Lerbank / Rabbit_Photo / Shutterstock.com

By Dave Thompson, CFI

Innovation Special Edition 2023

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EDITOR'S LETTER

President Caroline Kochman

Caroline.Kochman@losspreventionfoundation.org Vice President, Editor-in-Chief Stefanie Hoover, CFI StefanieH@LPportal.com Editorial Director Jacque Brittain, LPC JacB@LPportal.com

Stefanie Hoover, CFI Editor-in-Chief

eff Bezos once said, “I believe you have to be willing to be misunderstood if you’re going to innovate.” As a solution provider or a practitioner, standing on the edge of that innovation precipice can be scary. What if this innovation does the quintessential belly flop and all that research and development money goes down the drain? What if it works but no one buys it? What if I put my credibility on the line and support this innovation inside my company and the trial doesn’t work? Belly flop again! Or, what if, just maybe, you hit upon an innovation that’s a real game changer? Bezos was right, if you’re going to take chances, you have to be willing to deal with what comes afterward. Innovators can often be misunderstood. Putting your name behind an unproven technology or process is the ultimate act of business bravado. It takes guts. It takes grit. It takes patience. In this special edition, we explore new technologies and innovations that are changing our industry. Some of these may seem far out there or the stuff of science fiction, like robots or artificial intelligence. We dive into these, and other innovations, headfirst to take the unknown out of the equation and leave you feeling better informed. Robots and AI are no longer the stuff of Isaac Asimov novels or Terminator movies; they have arrived. We also look at other ways to approach employee cybercrime, employee interviews and technology, what’s new with RFID, and the ORCA databases. We hear from Tom Meehan, CFI, about a new buzzword in his article “Digital Twins in Retail”—another exciting tool for retailers. A special edition about innovation and technology would be remiss without a contribution from the LPRC. Cory Lowe, Phd, provides an overview of the newest tech they are looking into down in the Everglades, with some brutally honest observations about what we need to do on the human side to get these things to work. You may not be ready to step off the cliff of your reputation for some of these new technologies, but with the speed at which technology is changing and the growing scope of retail crime’s impact on our society, you must stay informed. Then ask yourself, “Am I ready to jump and can I afford not to”?

Managing Editor Digital Courtney Wolfe CourtneyW@LPportal.com Assistant Editor Allie Falk AllieF@LPportal.com Retail Technology Editor Tom Meehan, CFI TomM@LPportal.com Contributing Writers Read Hayes, PhD John W. Jones, PhD. Cory Lowe, PhD Walter Palmer, CFI, CFE Michael Reddington, CFI David Thompson, CFI Special Projects Justin Kemp, LPQ Kevin McMenimen, LPC Design & Production SPARK Publications info@SPARKpublications.com Creative Director Larry Preslar Advertising Strategist Ben Skidmore 972-587-9064 office, 214-597-8168 mobile BenS@LPportal.com Subscription Services New Or Change Of Address LPMsubscription.com or circulation@LPportal.com Illizium / Nikelser Kate / Shutterstock.com

Innovation and Cliff Diving J

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Postmaster Send change of address forms to Loss Prevention Magazine 128 Fast Lane, Suite 202 Mooresville, NC 28117 Cover art:: sdecoret / Shutterstock.com Loss Prevention aka LP Magazine aka LPM (USPS 000-710) is published bimonthly by Loss Prevention Magazine, 128 Fast Lane, Suite 202, Mooresville, NC 28117. Print subscriptions are available free to qualified loss prevention and retail professionals in the U.S. and Canada at LPMsubscription.com. The publisher reserves the right to determine qualification standards. For questions about subscriptions, contact circulation@LPportal.com or call 214-662-9548.. Periodicals postage paid at Mooresville, NC, and additional mailing offices.

© 2023 Loss Prevention Foundation Loss Prevention, LP Magazine, LP Magazine Europe, LPM, and LossPreventionMedia.com are service marks owned by the publishers and their use is restricted. All editorial content is copyrighted. No article may be reproduced by any means without expressed, written permission from the publisher. Reprints or PDF versions of articles are available by contacting the publisher. Statements of fact or opinion are the responsibility of the authors and do not necessarily represent the opinion of the publishers. Advertising in the publication does not imply endorsement by the publishers. The editor reserves the right to accept or reject any article or advertisement.

Innovation Special Edition 2023

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Elevate Your EAS Protection with CONTROLTEK’s State-of-the-Art High Security EAS Tag and Detacher Solution I

n retailers’ relentless battle to secure merchandise in their stores, traditional EAS tags have become vulnerable to removal by readily accessible magnetic detachers, making large-scale theft a significant concern. Introducing CONTROLTEK’s new line of High Security EAS Tags and Detachers. Combining cutting-edge technology with ingenious design, CONTROLTEK’s line of High Security EAS Tags features a unique locking mechanism and specialized detachment process that prevents the tags from being removed with traditional detachers. These state-of-the-art detachers are not only effective in protecting against theft but also exceptionally affordable, and exclusively available only to our trusted customers. “We continuously heard from our retail partners that they were having challenges with theft due to unauthorized magnet detachers purchased from online platforms to defeat tagged merchandise in store,” said Tom Meehan, President at CONTROLTEK. “It was important for us to find a way that we could combat this challenge without the need for expensive and complicated electronic detachers, align with retailers’ current loss prevention efforts, and reduce the cause of confusion amid store associates.” Not only are CONTROLTEK’s line of High Security tags sleek and secure, but they also provide unparalleled protection for your merchandise. Unlike other options on the market that are expensive, complicated to use, and require electronic components, our High Security tags and detachers are designed to seamlessly integrate into your current retail processes. Some important features of the new High Security EAS tag line by CONTROLTEK: UNIQUE DETACHMENT METHOD Through a unique detachment method, CONTROLTEK’s High Security line of tags can only be opened with our patented High Security Detacher, which means they cannot be removed by standard detachers that are easily accessible by thieves and bad actors.

HIGH PERFORMANCE EAS TAGS With a modern, sleek design, CONTROLTEK’s High Security tags provide excellent visual deterrence while still looking great on your merchandise. Made with premium plastic, they boast a high detection rate and are built to withstand the heavy demands of the retail environment. A VARIETY OF FORM FACTORS CONTROLTEK offers a variety of form factors to ensure the right protection for the product including tags for apparel, sporting goods, footwear, eyewear, beverages, and many other product types. “We understand the importance of offering a diverse range of tag options to our retailer partners, so they have the best security for their array of merchandise,” said Brian Diplock, vice president of Strategic Sourcing and Product Development at CONTROLTEK. “We took the most popular tags from our CONTROLTEK line that our customers have come to love and created High Security versions to provide top‑notch security for retailers’ merchandise.” The High Security line boasts a diverse range of options, catering to various needs. These include a robust padlock-style solution for unparalleled strength, a tag equipped with a retractable pin to safeguard against potential injuries during handling, a specially designed optical tag that accommodates glasses of different sizes while still allowing customers to try them on, and a dedicated bottle tag to deter unauthorized opening and consumption of bottled products within the store. In this era of heightened retail security challenges, CONTROLTEK’s High Security EAS Tags help retailers in deterring, detecting, and ultimately combating theft. Enhance your loss prevention strategy and confidently protect high-value items with CONTROLTEK’s High Security EAS Tag line. Contact us today to learn how CONTROLTEK’s High Security EAS tags and detachers can help you improve your loss prevention strategy, deter theft, and boost your store’s profitability.

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INNOVATION

PROFILE


INNOVATION

INVASION OF THE RETAIL ROBOTS

As staffing and security woes become increasingly difficult for retailers, the promise of autonomous solutions becomes more compelling. By Courtney Wolfe

C

ameras, access control, RFID, etc. are all crucial parts of any loss prevention program. These technologies are tried and true, and will likely always be essential. However, as retail crime continues to evolve, so should the available security solutions. Today’s retailer must worry about organized retail crime, staffing shortages, curbside pickup, violence against both customers and employees, flash mob robberies, supply chain issues, and more. Thankfully, solution providers have been hard at work developing

products tailored specifically for these issues. With artificial intelligence and machine learning finally living up to the potential promised for decades, there is a new kind of LP technology growing in popularity that can help with everything from guarding to inventory control and curbside delivery: robots. If you’ve been to an LP conference in the past few years, you’ve likely seen a robot or two wandering around the show floor. You may have pulled out your phone and taken a picture but quickly excused it as something the C-suite would never


“HUMAN GUARDS COULD NEVER TELL YOU [AFTER AN INCIDENT] WHO ALL WAS IN THE PARKING LOT, THE LICENSE PLATE INFORMATION OF ALL VEHICLES IN THE AREA, AND THE SUSPECT’S CELL PHONE INFORMATION —BUT A ROBOT CAN.”

go for. But take a good look at the technology, and you may be surprised by how much potential it has. In this article, we will look at three different ways robots have the potential to transform your LP program.

Guarding One way robots can make a massive impact in the retail space is in place of human guards. According to a 2022 report on security robots, the market was estimated to be worth $31.7 billion in 2022 and was projected to reach $71.8 billion by 2027. ADT Commercial established its dedicated Emerging Technologies team and Innovation Lab space in Dallas, Texas about three years ago, and the first project developed was a security robot. Director of Emerging Technologies Strategic Development William Plante said the company aimed to confront the ongoing challenge of high turnover in the security guard market. The result? Earlier this year, the company announced the launch of William Plante the EvoGuard brand of intelligent autonomous guarding solutions. Developed in partnership with Norway-based robotics manufacturer 1x Technologies, EvoGuard is a startlingly human-like robot specifically built for commercial security environments. It has arms, a mouth, eyes, and even eyebrows. “The goal is for the robot to eventually perform a variety of security services and tasks that are often associated with human security guards,” Plante said. “This may eventually include the ability to remotely verify the accuracy of alarms, where the robot is equipped with 360-degree cameras to allow for efficient evidence data and video capture in a security incident.” Leveraging what Plante refers to as a “humanoid robot” in lieu of a human guard also allows retailers to document unbiased evidence of crimes and help deter further activity by an intruder. Ultimately, ADT is working toward the potential for future automated robot patrols that can be completed “without distraction.” Another company making a splash in the guarding robot market is Knightscope. Stacy Stephens, executive vice president and chief client officer at Knightscope, said the genesis of the company came after the Sandy Hook shooting in 2012. “There had been mass shootings before, but this really captured the nation’s attention,” Stacy Stephens Stephens said. “As we were watching this unfold, our Chairman and CEO [William Santana Li] was watching with me and he didn’t understand why everyone was staged outside the school and not going inside. I have a background in law enforcement, and as I explained that they had to gather information first, he wanted to know how we could solve that problem. That was the beginning of Knightscope and what we wanted to tackle—how we gain actionable intelligence that allows professionals to act smarter, quicker, and safer.”

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—Stacy Stephens This quest started with cameras, but after attending a security conference and seeing how many companies were already working that angle, they switched directions. “Bill graduated from Carnegie Melon, arguably the number one university for robotics, and I said, ‘People like you have been promising me robots since I was a kid and I don’t have one yet,’” Stephens recalled. “Eight months later we had our first robot.” Stephens insists Knightscope is not a robotics company, but that robotics is one of the four pillars (alongside AI, self-driving technology, and the electrification of vehicles) on which the company was built. The robots allow them to build a platform at ground- or eye-level for cameras and other detection capabilities. Knightscope currently has four robots available as a subscription-based service, and while they focused on schools initially, many of their clients are retailers. Some have robots inside stores, but over 65 percent of Knightscope robots are outside—deterring criminals before they even enter the premises. “So much of LP is focused inside the store, but a really robust security program is layered, and you want to start from the outside, in the parking lot,” Stephens said. “It provides an early warning to those seeking to do harm that there are advanced technologies protecting the facility. Nobody wants to spend time in jail, so it’s likely they will go somewhere else, where that technology doesn’t exist, to commit their crimes.” Similar to ADT, Knightscope’s robots can also be used in place of security guards, making them more popular than ever post-COVID. “People started looking to us and asking how we could help them [once the pandemic hit],” Stephens said. “Prior to the pandemic we did a lot of demos with curious people who had little intention of deploying. After COVID-19 they had to find new and innovative solutions.” Stephens predicts that retail’s interest in security robots will continue to grow exponentially in the near future. “Especially with the ways laws are changing and the burden of proof being more stringent, having that real-time, on-the-ground, eye-level evidence is going to become even more critical,” he said. “We as human beings are very unreliable as witnesses and this technology is incredibly reliable, with near-perfect recall of any incident. Human guards could never tell you [after an incident] who all was in the parking lot, the license plate information of all vehicles in the area, and the suspect’s cell phone information—but a robot can.”

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Innovation Special Edition 2023


INNOVATION

INVASION OF THE RETAIL ROBOTS

ADT’s Plante agrees, saying the full capabilities of security robots are still unrealized. “It’s become increasingly clear that retailers see the value in leveraging robotics and drone technologies in their security programs and are evaluating them for a variety of safety, security, and loss prevention applications,” Plante said. “By nature, the emerging technologies area is always evolving—and particularly in this area. “There’s a real opportunity for robots and drones to provide a solution for the retail industry—and countless others—to fill a gap. That gap exists in the need to cost-effectively and consistently protect the company’s brand, its assets, customers, and employees. But in the current landscape, that can put a strain on resources and budgets. There’s immense value in pursuing AI-powered solutions that could eventually enable and advance retailers’ loss prevention mission with ever-evolving, future forward technologies and applications such as robots that are not nearly as people-dependent and can achieve a higher degree of consistency in detection, protection, and incident response.” And if you’re thinking the cost of this sort of technology is too much, Stephens urges you to consider the cost of shrink. “Many retailers have accepted shrink, and they’ve accepted these numbers as a part of doing business,” Stephens said. “I don’t understand that logic and mentality. If you have a big store, it’s not unreasonable to say you have millions or billions of dollars of loss each year. If you stop writing that off as a part of doing business and you invest money in reducing that, your brand will look better, your bottom line will look better—it’s such an optical improvement it becomes a no-brainer to me.”

Inventory Control Keeping track of inventory is one of the more tedious aspects of the retail business, evoking groans from most employees tasked with it. Thankfully its tedious nature makes it perfect for automation—which is why so many inventory control robots are flooding the market right now. One company navigating that large market is Simbe, and its inventory control robot Tally. “Our core focus is empowering retailers with greater visibility of what’s happening on their store shelves,” said Simbe CEO Brad Bogolea. “Tally is a fully autonomous mobile scanning platform that leverages computer vision, RFID, AI, and edge computing, so you’re able to understand what’s happening to merchandise in stores.” Simbe’s primary markets are grocery stores with high-volume low-value items that aren’t great Brad Bogolea

Innovation Special Edition 2023

candidates for RFID. However, the company also has clothing store clients where Tally can be integrated with RFID technology. Like ADT and Knightscope, Simbe’s robots experienced substantial growth post-pandemic. “We’ve grown 22x since the pandemic,” Bogolea said. “The pandemic shined a light on retailers’ processes around inventory, product control, and dependency on labor, and really highlighted the need for greater automation and data.” Tally moves up and down store aisles, scanning every product and checking for missing, misplaced, or mispriced items. “It forces replenishment to happen so that product is back where it needs to be,” Bogolea explained. “And this may not be due to theft. Sometimes product goes into the wrong store, or you pick the wrong unit quantity, etc. By scanning store shelves, we close the data gap and drive greater accountability. When integrated with RFID, we can read every RFID tag.” In one situation, Tally was deployed in a store where a mass looting incident had occurred; the robot traversed the entire store and understood exactly what products remained, and what was now missing. “Stores have never been measured at this sort of frequency and fidelity before,” Bogolea said. “We’re scanning stores in their entirety three to four times a day, so for the first time, retailers know the state their stores are in, enabling them to better manage the customer experience. It’s frustrating going to the store and finding the product you want isn’t there. What we often find is that 40-60 percent of these out-of-stocks are controllable, and the product is in the backroom, but no one knows they need to add it to the shelves. There are often hundreds of thousands of products in these stores, so it’s very time‑consuming to do product audits with labor. With Tally you get better data, more optimized labor pull, and more accountability around those pieces.” Tally also performs price and product location audits. With this new set of data, the robot promises retailers a transformed experience and strong ROI. Currently, more than a dozen leading retailers are using Tally, with deployments in over half of the US and four other countries. As stores become smarter and more connected, Tally promises to accomplish even more for retailers.

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“We consider the LP benefits today to be almost secondary, but as the technology becomes more ubiquitous, the value within LP will only continue to increase,” Bogolea said. “And what we regularly see in stores is this new world of data fusion with computer systems, security systems, and more to help combat ORC by leveraging data.” Another benefit of Tally is that you can purchase it as a service solution, so it’s not a large, expensive infrastructure project. Bogolea recommends those who are hesitant start by deploying the technology in just a handful of stores. “Those that are willing to take the leap say it’s an incredibly eye-opening experience,” Bogolea said. “By leveraging this data, you see a strong ROI—often three to four times your ROI in thirty to sixty days—and as you layer these additional solutions the ROI only increases.” “With the challenges around supply chain, labor shortages, and increased competition, we’ve never had more interest in our business than we do now. We really believe this technology is here to stay.”

Curbside Delivery For years, companies like Amazon have been attempting to deliver online orders via drone. Unfortunately for them, FAA regulations have proved stickier than expected, and we are still a long way away from that reality. The ground is much more friendly to autonomous solutions though, and robots delivering buy online pickup in-store (BOPIS) orders is a clever baby step. Post-pandemic, curbside delivery persists as a popular option for consumers. The downside for retailers here is that labor is lacking more than ever, and bringing orders out to customers can be time‑consuming for short-staffed teams. In an attempt to solve this problem, some retailers have created locker systems inside stores where customers can grab their own orders. However, this isn’t as consumer-friendly—they still must enter the store and carry the items to the car themselves. Enter Ottonomy: a company that built a robot as big as a locker that can deliver online orders to customers’ cars. Co-Founder and CEO Ritukar Vijay said these robots move only three to four miles per hour and carry out hyperlocal deliveries with a radius of 1.5 miles, making them perfect for BOPIS. “We’re focusing on hyperlocal deliveries at this point because for online deliveries, there are e-commerce giants like Amazon and DoorDash Ritukar Vijay that can already deliver products within an hour,” Vijay said. “There is a unique position for retailers in the next two to three years for harnessing the strength of hyperlocal deliveries.” Ottonomy robots can carry a much larger load than many other similar offerings in the market, and they can still steer and drive themselves through tight spaces. “Retailers have tried lockers [for BOPIS], but it has not been successful,” Vijay said. “Those lockers are pretty much static; you still have to go to the locker. Our robot is like a locker on wheels. The mobility adds tremendous value.” Another unique feature of Ottonomy robots is the screens on them which can display ads, generating revenue for the retailers that own them.

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“Brands pay retailers to put their ads on the robots, and then retailers can earn money from the robots, which can be a very healthy circle of economy that improves the supply chain, improves operations, and makes a new revenue stream—you’re getting autonomous robots and making money,” Vijay explained. “Robots are the way to move forward to leverage the full strength of brick-and-mortar stores.”

Have We Piqued Your Interest? This article only skimmed the surface of what autonomous solutions can accomplish in retail. The technology is rapidly growing in reliability and capabilities, and new robotics companies are popping up every week. So, if you’re feeling curious about taking the jump into the world of robotics and feeling unsure of how to begin, ask around. You may be surprised which retailers are already using the technology. “Speak with those who have deployed robots at scale not for the technology’s sake but for the transformative business case and ROI they receive,” said Simbe’s Brad Bogolea. “It’s easy to pick up the phone and we often try to connect prospective customers with existing ones so they can hear how this technology really helped them.” And if you are already using this technology, don’t be afraid to share your experience, good or bad. “I understand you want to protect your brand, but sharing information at conferences and through whitepapers is very important,” said Stacy Stephens of Knightscope. “The technology is still in its infancy and can be improved, so all feedback is beneficial. [And if you can’t find a retailer with experience] take fifteen minutes to book a discovery call on our website and show up with an open mind, ready to learn.”

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Courtney Wolfe is managing editor digital focusing on expanding the magazine’s digital content and reach. She most recently was managing editor for SDM Magazine, a trade publication for security systems integrators. She received her bachelor’s degree in multimedia journalism from Columbia College Chicago. She can be reached at CourtneyW@LPportal.com.

Innovation Special Edition 2023


BRIDGING THE DIGITAL AND PHYSICAL How Digital Twins Are Reshaping Retail By Tom Meehan, CFI

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igital twin technology is already revolutionizing the manufacturing sector. But its potential for retail is just as great. Some retail professionals may be unfamiliar with the term digital twin. But chances are, they’re already using some form of this technology. In today’s fast-paced business environment, digital transformation has become the driving force behind success and innovation. One of the most promising technologies to emerge in recent years is the digital twin. This concept, though initially developed for industrial applications, has significant potential in the retail sector. In this article, we will explore what a digital twin is, and how it can revolutionize the retail landscape. Essentially, a digital twin is a virtual replica of a physical object, process, or system. It is used to mimic, replicate, and predict the real-world behavior or activities of its physical counterpart. By leveraging advanced technologies such as the Internet of Things (IoT), cameras, alarm sensors, Bluetooth low energy (BLE) beacons, RFID, artificial intelligence (AI), machine learning, and data analytics, digital twins allow businesses to monitor, analyze, and optimize the performance of their assets throughout their lifecycles. This digital-physical connection enables organizations to make more informed decisions, identify problems before they escalate, and reduce overall costs. In the field of asset protection, businesses can use digital twin technology to help identify or predict deviant behavior. This is one of the most exciting fields in digital technology, and for good reason. Its application to the retail industry is just beginning to emerge.

Digital Twins and RFID: Natural Companions Retailers are familiar with radio frequency identification (RFID), which is an established tool in the supply chain and logistics sector. RFID technology has significantly enhanced inventory management, quality control, and traceability of parts or products for businesses of all types. The unprecedented visibility and control it provides have made it indispensable for retailers. RFID tags store electronic information that can be conveyed to an RFID reader via an antenna. The information can be accessed without direct contact or line-of-sight scanning, making RFID a significant improvement over barcode systems. When RFID is combined with digital twin technology, it can revolutionize the management of products and other processes. This combination is already showing great promise in the manufacturing sector. An item’s RFID data can provide real-time visibility into its journey through the manufacturing process. This data can feed into a digital twin’s system, providing a dynamic and responsive model that can adapt to real-time changes. The result is a holistic production process view, which in turn can lead to better decision-making and increased efficiency. Imagine a manufacturing assembly line with RFID tags on each part and product. These tags provide real-time data on the location, status, and condition of assets at every point along the way. That data is fed into a digital twin of the assembly line, which then simulates the entire manufacturing process. With this model, manufacturers can monitor the process in real-time, identify bottlenecks or inefficiencies, predict potential malfunctions, and optimize the assembly line’s overall performance. This seamless integration of digital twins and RFID can also enhance traceability,

Butusova Elena/ TrifonenkoIvan / Shutterstock.com

INNOVATION

DIGITAL TWINS


improving management’s ability to track and resolve product defects. The result? Less downtime, decreased recalls, reduced risk of human error, and ultimately, better quality control. As products move through the supply chain, digital twins can be crucial in improving visibility and efficiency. By using RFID tags to track the movement of raw materials, components, and finished products throughout the supply chain, businesses can create a digital representation of their supply chain network. This allows them to identify issues, optimize inventory levels, and ensure timely delivery of products. In retail, the technology already exists; it’s all about how you utilize the digital twin concept. You likely already have multiple applications that fall into the category of digital twins; it’s all about how you harness them.

The Many Uses for Digital Twins in Retail The potential of digital twin technology for the retail sector should now be obvious. Beyond the management of inventory, it holds vast promise in a wide variety of areas, such as: ● Store Design and Layout Optimization. One of the most direct applications of digital twins in retail is the creation of virtual store models. By simulating customer traffic and interactions within a digital environment, retailers can test and optimize store layouts, product placements, and signage before implementing changes in the physical space. This approach minimizes disruptions and costs associated with trial-and-error strategies, while enhancing the overall customer experience. ● Inventory Management and Supply Chain Optimization. Digital twins can significantly improve inventory management by accurately predicting demand, identifying trends, and optimizing stock levels. By integrating real-time data from IoT sensors and other sources, retailers can monitor product movements across the supply chain, improving visibility and reducing stockouts and overstocks. Furthermore, digital twins can help identify bottlenecks and inefficiencies in the supply chain, enabling proactive adjustments and cost savings. ● Cameras and Computer Vision. By creating a digital twin with a store’s camera system, retailers can analyze customer behavior and gather insights that can be used to improve store layout and product placement. Retailers can optimize staffing levels and improve security measures by analyzing foot traffic patterns and

BY UTILIZING DIGITAL TWIN TECHNOLOGY, RETAILERS CAN SIMULATE NEARLY ANY ACTIVITY, ENABLING A QUICKER AND MORE PROACTIVE APPROACH TO TESTING ASSUMPTIONS.

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identifying potential areas of concern. Managers can also create models to detect or predict deviant activities. ● Workforce Efficiency and Safety. Worker activity and movements can be monitored with RFID. Management can then integrate this data with digital twins, optimizing workforce allocation and ensuring compliance with safety regulations. Potential hazards can be identified before they result in accidents or injuries. ● Personalized Customer Experiences. Digital twins can offer unique insights into customer behavior, preferences, and buying patterns. By analyzing this data, retailers can create personalized marketing campaigns, product recommendations, and promotions tailored to individual needs. Digital twins can be used to simulate different customer personas, enabling retailers to refine their strategies and maximize customer satisfaction. Retailers can also identify trends for early identification of fraudulent activities. ● Virtual Fitting Rooms and Augmented Reality. Used in combination with augmented reality (AR), digital twin technology can revolutionize the in-store and online shopping experiences, bridging the gap between these two worlds. Virtual fitting rooms enabled by digital twins can allow customers to virtually “try on” clothes. This simplifies the decision-making process and saves time for the consumer while reducing the retailer’s need for physical fitting rooms. ● Predictive Maintenance and Energy Efficiency. Retailers can leverage digital twins to monitor and optimize the performance of their facilities and equipment. Predictive maintenance capabilities help identify potential issues before they escalate, minimizing downtime and reducing maintenance costs. Furthermore, digital twins can be used to analyze energy consumption patterns, leading to more efficient resource allocation and energy savings.

A Technology with Limitless Possibilities The digital twin is a powerful tool that holds immense potential for the retail industry. By harnessing this technology, retailers can optimize their operations, enhance customer experiences, and drive overall growth. By utilizing digital twin technology, retailers can simulate nearly any activity, enabling a quicker and more proactive approach to testing assumptions. As digital transformation continues to shape the future of retail, embracing digital twin technology will be essential for retailers to remain competitive and agile in the face of ever-evolving challenges. Tom Meehan, CFI, is retail technology editor for LP Magazine as well as president of CONTROLTEK. Previously, Meehan was director of technology and investigations with Bloomingdale’s, where he was responsible for physical security, internal investigations, and systems and data analytics. He currently serves as the chair of the Loss Prevention Research Council’s (LPRC) innovations working group. Meehan recently published his first book titled Evolution of Retail Asset Protection: Protecting Your Profit in a Digital Age. He can be reached at TomM@LPportal.com.

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Innovation Special Edition 2023


INNOVATION

A Loss EMPLOYEE Prevention CYBERCRIME Psychology AND DEVIANCE Perspective

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n increasingly digital workplace provides opportunities for innovation and growth, but it also creates significant threats to businesses, including devastating types of employee‑driven cybercrime and deviance. Cybersecurity Ventures broadly estimates that overall global cybercrime costs will grow by 15 percent per year over the next five years, reaching $10.5 trillion annually by 2025. This estimate of damages is based on all sources of cyberthreats (e.g., cybercriminals, nation-state-sponsored threats, organized crime, insider threats, etc.). However, the purpose of this column is to focus more narrowly on employee threats and the types of workplace crimes and counterproductive acts they can commit or inadvertently assist through their negligence. Therefore, the tenets of loss prevention psychology (LPP) should prove useful to better understand, prevent, and remediate a greater percentage of insider cyberthreats.

Cybercrime: The Digital Pandemic Employee-driven cybercrime can be devastating to a company’s bottom line, brand reputation, and overall survival. A singular instance of cybercrime can potentially cripple an organization, leading to significant financial losses, damage to the company’s reputation, and long-term impacts on consumer trust. Given these high stakes, LPP applies an integrative, multi‑faceted approach to mitigating cybercrime risks. It emphasizes the importance of technical measures (secure systems and encryption), human measures

(employee education about cyber risks and safe practices), and organizational measures (risk-focused pre-employment screening, robust HR and IT policies and procedures, and an ethical culture that deters criminal behavior). Common types of employee cybercrime include the following: ● Data Theft: Unauthorized access and extraction of the company’s sensitive or proprietary data. ● Hacking Company Systems: Unauthorized intrusion into the company’s computer systems or networks with malicious intent. ● Insider Trading: Using confidential company information for personal financial gain. ● IT Sabotage: Deliberate actions to damage, disrupt, or slow down the company’s IT systems. ● Phishing Attacks Against Colleagues or Company Partners: Deceptive attempts to gain sensitive information by posing as a trusted entity within company communication channels. ● Installing Ransomware: Installing malicious software designed to block access to the company’s computer system until a sum of money is paid. ● Software Piracy: Unauthorized copying, distribution, or use of copyrighted software using company resources. ● Cyber Espionage: Illicitly accessing confidential information held within the company for personal gain or to benefit another organization. ● Identity Theft: Stealing and using a colleague’s or customer’s personal data for personal gain. ● Cryptojacking: Using the company’s IT resources to mine cryptocurrency without authorization.

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By John W. Jones, PhD


● Anonymity: Employees might think their online actions are

Employee Deviance in Cyberspace Employee deviance is less devastating than cybercrime, but the cumulative effect of lower-grade cyber misconduct can still adversely impact the financial and operational success of an organization. Employee deviance in cyberspace encompasses behaviors that violate company rules, norms, or expectations, usually resulting in harm to the organization or its members. Examples of cyber deviance include excessive personal use of the internet during work hours, spreading rumors or sharing inappropriate content (e.g., online pornography), unauthorized access to confidential information, and the misuse of company systems or data. Though they may appear benign or trivial on the surface, these counterproductive employee behaviors can cumulatively lead to significant financial loss and deterioration of organizational culture, especially if the acts inadvertently support cybercriminals. Some common forms of employee cyber deviance include the following: 1. Unauthorized Access: Using company resources to gain access to data or systems without permission. 2. Misuse of Information: Using sensitive company information for personal gain. 3. Inappropriate Use of Company IT Resources: Using company networks or equipment for personal activities or gain. 4. Inappropriate or Offensive Online Communication: Sending inappropriate, offensive, or harassing messages via company networks or devices. 5. Cyberloafing: Spending excessive amounts of work time on non-work-related internet activities. 6. Workplace Cyberbullying: Using digital communication tools to harass or bully coworkers. 7. Identity Deception: Misrepresenting oneself online, often to gain unauthorized access or information. 8. Data Hoarding: Accumulating and storing sensitive company data for non-legitimate work reasons. 9. Digital Piracy: Unauthorized copying or distribution of copyrighted digital content using company resources. 10. Creating or Spreading Malware: Developing or disseminating malicious software via company networks or devices.

Moving Toward a Secure Cyberspace: The LPP Approach Underpinning the LPP approach to addressing cyberthreats is the recognition of the central role played by human behavior and the psychological mindsets that drive such behavior. For instance, LPP focuses on proactive measures like using validated risk and talent management assessments to identify potential insider cyberthreats during the recruitment and hiring phase. These job-relevant measures help to ensure that conscientious employees with high integrity, trustworthiness, and emotional intelligence, who are less likely to engage in deviant or criminal behavior, are brought into the organization. Current employees can also be routinely surveyed for the status of their job-relevant attitudes and perceptions. Illustrative examples of the types of current employee mindsets that can lead to cybercrime and deviance can be summarized as:

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untraceable or anonymous, which can lead to increased risk‑taking or irresponsible behavior. This illusion of invisibility might allow employees to act in ways they normally would not act if their identity was known. ● Entitlement: Employees who feel they are underpaid or not appreciated might believe they are justified in misusing company resources. This could include everything from misusing company time for personal tasks (i.e., cyberloafing) to outright theft of data or IT resources. ● Revenge: Employees who feel wronged by their employer may turn to cybercrime or deviance as a form of retaliation. This could manifest in various ways, including data theft, sabotage, or spreading malware. ● Thrill-Seeking: Some employees might engage in cybercrime or deviance for the thrill of it, viewing it as a challenge or a game. This could lead to high-risk activities like unauthorized access or hacking. Moreover, LPP underscores the necessity of regular, comprehensive training and development programs. These programs educate employees about potential cyberthreats, the impact and consequences of employee crime and deviance, and the importance of adhering to cyberhygiene principles (i.e., the specific steps that users of computers and related information technology can take to improve their online security and maintain system health). However, training programs are also needed to teach employees about evidence-based stress management coping skills and how to access an employee assistance and counseling program if they are experiencing any mental health concerns. By focusing on mental health and wellness in general, and cybersecurity in particular, employees are better enabled to contribute to a secure digital work environment. Finally, LPP accentuates the importance of a positive organizational culture in mitigating cyberthreats. An organization that values integrity, respects privacy, and fosters an atmosphere of trust and openness reduces the likelihood of cybercrimes, and discourages deviant workplace behavior. Illustrative examples of dysfunctional corporate cultures that must be avoided at all costs are summarized as:

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“BY FOCUSING ON MENTAL HEALTH AND WELLNESS IN GENERAL, AND CYBERSECURITY IN PARTICULAR, EMPLOYEES ARE BETTER ENABLED TO CONTRIBUTE TO A SECURE DIGITAL WORK ENVIRONMENT.”

Innovation Special Edition 2023


INNOVATION

EMPLOYEE CYBERCRIME AND DEVIANCE

Definition

Loss Prevention Psychology (LPP) Interventions

Traditional Loss Prevention (TLP) Solutions

These are a set of behavioral interventions based on the principles of human psychology designed to understand, predict, and prevent employee behaviors leading to loss. They focus more on understanding, assessing, and shaping human behaviors to create a preventive culture within the organization.

These are traditional loss prevention solutions, many being largely reactive and focused on traditional security measures, policies, and compliance mechanisms to prevent loss due to employee actions.

Cybercrime ● Training programs to educate employees about the seriousness of

Proactive measures

Reactive measures

cybercrimes, the different forms they can take, and the individual’s role in prevention. ● Creating an ethical culture that discourages criminal behavior. ● Use of pre-employment psychological assessments and current employee surveys to identify potential internal threats.

● Incident response plans that involve psychological first aid and

trauma support in the aftermath of a cybercrime incident. ● Applying psychological principles to understand the motivation behind cybercrime and preventing future occurrences.

● Strict policies and compliance requirements to

deter criminal activities.

● Implementation of security measures like

firewalls, intrusion detection systems, and encryption to protect against external threats.

● Forensic investigations to track down

the perpetrators.

● Legal action against identified criminals. ● Recovery and contingency plans to restore

normal operations.

Cyber-Deviance ● Pre-employment screening assessments that predict tendencies

toward deviant behavior at work.

Proactive measures

● Risk-oriented current employee surveys to identify hot spots for risk. ● Regular training programs to raise awareness about the

consequences of cyber deviance.

● Employee contracts that explicitly mention

disciplinary action against deviant behavior.

● Monitoring systems to track and deter

deviant behavior.

● Fostering a positive organizational culture that discourages

deviant behavior.

Reactive measures

● Counseling and coaching interventions for individuals identified as

engaging in cyber deviant behaviors. ● Organizational surveys and psychological risk assessments to identify hotspots and target areas of concern.

● Lack of Cybersecurity Culture: A company that does not

prioritize cybersecurity can inadvertently encourage criminal and deviant behaviors. Without proper policies, training, and awareness programs, employees might not realize the severity or potential consequences of their actions. ● Unethical Culture: Companies that foster a culture of ethical laxity, where bending or breaking rules is accepted or even encouraged, may see higher rates of employee cybercrime and deviance. This could range from minor acts of misuse of company time to more serious offenses. ● Poor Communication: If communication within the company is poor, employees might not understand the importance of following cybersecurity protocols, or they may not feel comfortable reporting suspicious behavior. A culture that encourages open communication can help mitigate these risks. ● Extended High Stress Environment: Companies that create and extend high stress work environments may drive employees to act in ways they otherwise would not. Constant stress can lead to poor decision-making and may make employees more susceptible to engaging in cybercrime.

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● Disciplinary actions against individuals found

guilty of deviant behavior.

● Security audits to identify breaches and take

corrective action.

In summary, the LPP approach offers a comprehensive framework to tackle employee rendered cybercrime head‑on, emphasizing prevention, education, and an organizational culture that encourages positive employee behavior in the cyber realm. LPP can bolster traditional loss prevention solutions to strengthen all efforts aimed at preventing employee cybercrime and deviance.

John W. Jones, PhD, is the executive vice president of research & development at FifthTheory, LLC (www.FifthTheory.com). Dr. Jones is a licensed psychologist in Illinois who serves as FifthTheory’s principal thought leader in the research, development, and delivery of personnel risk and talent management assessment solutions. Dr. Jones has more than thirty years of experience in loss prevention psychology, he received his PhD in applied psychology from DePaul University, and holds an MBA from the Keller Graduate School of Management. His current areas of research include the psychology of workplace violence and incivility, employee theft and collusion, on-the-job illicit drug use, trauma-informed leadership, and service excellence. Dr. Jones was the founding editor of the Journal of Business and Psychology.

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Insight LPR’s Matrix Suite Boosts Retailers’ LP Against ORC O

rganized retail crime poses a significant threat to retailers worldwide, resulting in billions of dollars in losses annually. To combat this growing problem and enhance their loss prevention strategies, retailers are turning to cutting-edge solutions like Insight LPR’s Matrix suite. This suite of innovative tools leverages license plate recognition (LPR) technology to provide retailers with powerful capabilities for identifying and deterring criminal activity. Insight LPR’s Matrix suite offers a multifaceted approach to enhancing retail loss prevention and combating ORC. It provides real-time tracking and alerts, allowing retailers to identify suspicious vehicles promptly and triggering immediate responses to potential theft incidents. Furthermore, the suite serves as a crucial tool for evidence collection during criminal events, providing high-quality images and timestamps for law enforcement investigations. Its mere presence acts as a powerful deterrent, discouraging criminal activity through constant monitoring. Additionally, the Matrix suite supports data analytics by analyzing historical data to pinpoint patterns and vulnerabilities, informing strategic decisions. It also integrates seamlessly with various databases, such as law enforcement watchlists, enhancing identification accuracy while reducing false positives. Insight LPR’s Matrix suite provides retailers with a comprehensive and technologically advanced solution to combat ORC and enhance their loss prevention strategies. By leveraging real-time tracking, database integration, pattern recognition, evidence collection, deterrence measures, and data analytics, retailers can significantly reduce losses and contribute to the overall safety and security of their stores and customers. Discover how Insight LPR’s Matrix suite can be tailored to bolster your initiatives in combating ORC. Explore our technology at www.insightlpr.com/technology.

www.insightlpr.com

INNOVATION

PROFILE


THE INTERSECTION OF

INTERVIEWING AND INNOVATION

By Dave Thompson, CFI

O

ne of the most human-centric tasks of the loss prevention professional is the responsibility to conduct investigative interviews and have sensitive conversations. Although this interaction is heavily dependent on human interaction, technology continues to impact the process. Innovative ideas and technological advancements can often supplement, strengthen, or even replace certain job tasks. Professionals who are resistant to the evolving world of technology and artificial intelligence (AI) will find themselves well behind in the progression of our industry. As we explore areas where technology has impacted investigative interviewing, it’s important to understand its current limitations while also embracing the opportunities it can create. Using innovative technology to conduct research, incorporating solutions into the investigative strategy, and leveraging these tools while conducting the interview are all ways to create a more efficient and effective process.

Research Studies The concept of “evidence-based” interviewing means that the methods and tactics used have been researched by the academic

community and its teachings are reliant on these findings. The importance of strategic rapport development and the avoidance of coercive techniques are examples of areas in which research has helped to inform the investigative community. However, one of the obstacles in designing research around interviewing is trying to replicate real-world “interrogations” in an experimental setting. Another problem, historically, has been attempting to assess actual interviews based on an investigator’s or a suspect’s recall of the conversation. Technology has helped scholars in their efforts to overcome both issues. Electronic recording of interviews has helped to memorialize conversations and provide samples of real interactions for researchers to compile. There are some innovative programs out there that will also allow researchers to code for specific tactics while watching a video of an interview. Markers to indicate admissions, coercive tactics, or other measurables can then be used to compile large data sets providing investigators with incredible insight.

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INNOVATION

INTERVIEWING


CREATING MORE REAL-WORLD RESEARCH STUDIES WHILE INCREASING THE MEASURABLE DATA POINTS WILL ONLY HELP TO INFORM INVESTIGATORS.

Hopefully, long gone are the days of having to place a VHS tape in a video recorder for each interview. With improvements in digital storage, whether locally or cloud-based, many organizations are finding it more cost-effective to retain high-quality recordings. The recording devices themselves have also evolved exponentially in the last few years including body-worn cameras, portable devices, and some with AI functionality to follow the speaker or even transcribe the conversation.

Investigative Tools Virtual reality (VR) has also made its way into investigative interviewing research. Dr. Hayley Cleary, at Virginia Commonwealth University, is leading a study on interrogation tactics with youthful subjects using VR technology. Creating more real-world research studies while increasing the measurable data points will only help to inform investigators. Technology has made this possible and it has made collecting results more efficient.

Remote Interviews In the last few years, due to both the pandemic and increasing travel costs, many investigators have relied on technology to conduct interviews remotely. Phone interviews have long been a reliable resource for investigators, but technological advancements in recent years have allowed for a more engaging experience. The use of innovative software to host video meetings combined with high-quality video equipment has allowed investigators to manage cases more efficiently. Conducting interviews remotely has several benefits, including the timeliness of the conversation and reduced travel costs. It may also serve to better protect the reputation of the interviewee without an investigator needing to show up on location and have a closed-door meeting. Although some cases and conversations may not be suited for a remote interview, investigators should look for innovative ways to use this technology. The ability to record interviews, bring additional witnesses into the conversation, screen‑share evidence for discussion, or even capture statements remotely are all innovative ways to leverage this technology.

Electronic Recording The recording of interviews in the private sector has consistently grown in popularity, partly due to the availability of better (and more cost-effective) technology. Recording interviews has several benefits for an organization and its staff. The resulting transparency in these conversations can have multiple side effects and benefits. When interviewers perform as instructed, the recording can serve as a valuable piece of evidence demonstrating the fairness and ethical approach to the conversation. Conversely, if interviewers behave outside of company policy, this can provide important insight to leadership on how to best correct the situation and provide more training or accountability. Recording can also prove to be a valuable training tool for other investigators—something that WZ has utilized since its inception in 1982.

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Outside of the interview room, investigators continue to leverage innovative solutions to support their investigations. License plate readers, facial recognition, AI functionality within video surveillance, RFID, and GPS tracking devices are just a few of the trending resources seen throughout the industry. Although this technology can be essential in an investigation, interviewers should also be aware of the potential for misuse of the information or even faulty data. False matches on facial recognition or tagging a vehicle that has a stolen plate may lead an investigator down the wrong path. When it comes to strategizing an interview supported with circumstantial evidence, investigators should explore potential explanations or alternative theories. Evidence can be used strategically throughout a conversation, but an effective interviewer will explore each potential explanation or excuse for the evidence in front of them.

Artificial Intelligence Investigators are quickly becoming well-versed in the benefits and the significant risks of AI within the workplace. Using AI chat platforms can prove to be an efficient way to accomplish tasks and conduct research. However, AI has also been used to create “deepfake” videos, fake emails, phone calls, text message threads, or other potential evidence that, on its surface, appears real. Investigators must remain informed about the capabilities of this technology to best strategize an investigative interview and understand the credibility of the evidence they are using. As AI promises to replace human interaction for customer service calls, sales pitches, and other tasks, investigators must not lose sight of the importance of sincere empathy and rapport within investigative interviews. Embracing new technology and continuing to innovate is essential, but relying on it without an investigative mindset is incredibly dangerous. David Thompson, CFI is president and partner at Wicklander-Zulawski & Associates, providing investigative interview and interrogation training to a global audience. He has served as a subject-matter expert in developing curriculum and providing consultation to investigators, attorneys, and the academic community. He can be reached at dthompson@w-z.com. Scan the QR code and answer questions about this article to earn CEUs towards your CFI designation or to learn more about the advantages becoming a Certified Forensic Interviewer.

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INNOVATION

PROFILE

Get in the Alpha Zone! F

or over fifty years, Checkpoint’s Alpha High-Theft Solutions have been pioneers of the “open display” security philosophy. Globally, Checkpoint provides retailers with some of the most innovative and advanced anti‑theft solutions for high-theft items. In an ever‑changing world, Checkpoint strives to grow and adapt to those changes and help customers to do so through technological innovation. Alpha High-Theft Solutions is introducing a new anti‑theft product locationing system: Alpha Zone. The Alpha Zone solution offers zonal protection of display or high value products without having to secure the products to store fixtures. This allows consumers to shop in an open display environment by allowing them to touch and use the product, while minimizing the store’s risk of theft. Alpha Zone protects products in real time, 24/7. It is simple to use and highly effective. The Alpha Zone system is comprised of UHF RF tags that are applied directly to the product, Alpha Zone hubs, and a deactivation remote control. It is quick and easy to install and can be implemented the same day.

How It Works The Alpha Zone hub emits a signal to the activated tags. The hub can be placed where needed to protect specific products. Multiple hubs placed around the store create multiple zones of protection for stronger theft protection. Zone tags will be offered in different forms, such as small adhesive hard tags and Cableloks®, and Alpha Bottle Caps and Keepers® Security Devices. Each tag contains a motion sensor, and when the product is moved, it searches for the signal emitted by the hub. If the product goes out of the hub’s range, the alarm in the tag will trigger. Once the product is returned to its zone, the alarm will stop. The tag will also alarm if the tag is tampered with. The tags must be deactivated by using the deactivation remote control. The deactivation remote control is to be used when removing the tag during the purchasing process or to stop an alarm from sounding in a non-theft event. Alpha Zone product protection devices and tags are optimal for open display because they do not obstruct the product. This allows retailers to maintain an “open display” environment and gives customers a better shopping experience.

www.checkpointsystems.com

Putting It to the Test A recent retail test was conducted in April of this year. The retailer removed all current product protection and only used the Alpha Zone Cableloks®. Since installation, the retailer reported that not a single item has been stolen. Eric Servais, national account manager at Alpha, says, “Initially, the technology and idea behind this test was theoretical. We weren’t exactly sure how it would be received within the retail store environment since this was the initial proof of concept for this technology. After over four months of time in the store I am happy to say that the system not only functioned as it was supposed to and the customer experience was not affected at all, but not one display item was stolen or lost from the zoned area. The proof of concept was successful, and I am already working on more store locations with this customer to introduce the Alpha Zone system. Additionally, I have all the confidence in the world to introduce this technology to my other relevant customers.” The Alpha Zone is a zonal anti-theft solution for the modern retail world. This new innovation creates the open display environment today’s customers enjoy with the anti‑theft protection retailers need for their high-theft products. This is another innovation from Checkpoint’s Alpha High‑Theft Solutions to help retailers sell more and lose less.


SELL MORE. LOSE LESS. Loss prevention solutions from

www.checkpointsystems.com


But While We Are On The Subject... By Cory Lowe, PhD

CoreDESIGN / ShutterStock.com

INNOVATION

TECHNOLOGY ALONE WILL NOT SOLVE THE PROBLEM


T

he LPRC regularly receives requests from retailers asking, “What are we not doing that we should be?” or “What are other retailers doing that we should try?” Often, these organizations have some of the most advanced loss prevention programs; they have technology and gadgets galore; and they have ORC teams packed with seasoned veterans, but they are still trying to figure out what they can do. In this article, I will make two arguments. First, I want to explain why technology will only get us so far. The LPRC has traditionally conducted research on which solutions are effective. Today, retailers are equipped with a lot more evidence than they ever have been and have adopted many of these effective technologies and strategies, yet they are still facing tremendous retail crime problems. Because of this, it has become clear that policy change is necessary to make what retailers do matter. Second, I will review a variety of things that retailers can do to prevent retail crimes and build cases that will draw the attention of law enforcement and prosecution. I am enthusiastic about many promising and effective technologies. However, it is irresponsible to tout the benefits of these solutions without acknowledging that the benefits are often dependent on the actions of federal and state criminal justice systems. This also means that if retailers want to deploy the right solutions and strategies in the right place, then retailers need to use technologies strategically and according to whether they can expect a criminal justice response.

The Limits of Technology and Traditional Strategies When we discuss retail crime prevention at the LPRC, we typically discuss tactics according to three broad offender deterrent strategies, including (1) increasing the risks associated with retail crime, such as the risk of arrest and punishment; (2) increasing the time and effort required to commit retail crimes (i.e., target-hardening); and (3) reducing the benefits associated with retail crimes. Unfortunately, there is only so much that retailers can do to prevent losses while still achieving their primary mission, which is to serve and satisfy their customers. Because of the current climate and the nature of many retail crime problems, many strategies are either not an option or are likely to have limited effects on the retail crime problem. For example, retailers can increase both the risk and effort associated with committing a crime by taking a more “hands-on” approach. Every day we see videos of brazen and aggressive thefts where the offender clearly believes that no one is going to intervene during the commission of their crimes, and there will be little or no consequence for their behavior. Unfortunately, contemporary offenders are often willing to injure or even kill employees and guests over merchandise, so it is understandable

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“LPRC SURVEYED NEARLY 800 INDIVIDUALS AND FOUND THAT SOLUTIONS SUCH AS LOCKING CASES ARE WIDELY DISLIKED FOR THEIR INCONVENIENCE.” for retailers to be reluctant to endorse “hands-on” responses to retail offenders. Second, retailers can use target‑hardening approaches that are effective in preventing retail crimes. However, these measures often have the unfortunate side effect of reducing sales and driving customers to their online competitors. For example, the LPRC surveyed nearly 800 individuals and found that solutions such as locking cases are widely disliked for their inconvenience. In other words, target-hardening strategies may reduce merchandise loss, but they also reduce customer satisfaction and sales. Finally, retailers can enhance their evidence and intelligence‑gathering capabilities to build cases that will draw the attention of law enforcement and prosecutors. However, retailers must consider: if every retailer improves their capabilities, what will happen? Prosecutors and law enforcement will still have limited resources and will still have to prioritize certain cases over others. The reality is that there is more crime than the criminal justice system can address. This always has been and likely always will be the case, but it appears like this has become more of a problem in recent years. In other words, technology can only do so much because addressing the retail crime problem will require policy change. Target-hardening is sometimes undesirable because it harms the customers’ experience, and it is unjust for law-abiding citizens to be forced to jump through hoops to buy a razor (and other products) because of the behaviors of a small group of offenders. Furthermore, intervening in crimes in progress can be harmful to everyone involved, but, most importantly, many loss prevention and security solutions require that there be criminal consequences to have any “teeth.”

Effective and Promising Solutions Retailers face many loss prevention challenges; however, it is the challenges that involve high-frequency, high-impact offenders that require greater focus. One of the few findings that approach being a criminological “law” is that a minority of the offending population is responsible for most criminal incidents; similarly, a minority of locations generate most crimes. For example, at the LPRC Impact Conference in 2022, a leader at one of the largest retailers in the world reported that approximately 90 percent of known losses were due to approximately 10 percent of known offenders. Similarly, longitudinal studies have repeatedly revealed that approximately 5-10 percent of the offending population is responsible for over 50 percent of the offenses. Because of these findings, the LPRC believes that retailers can achieve the greatest reductions in violence and loss by focusing on high-impact offenders.

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Innovation Special Edition 2023


INNOVATION

TECHNOLOGY ALONE WILL NOT SOLVE THE PROBLEM

However, there are other reasons to target high-impact, high-frequency offenders, and these are best illustrated using the example of locking cases. Many of the most effective loss prevention solutions are inefficient. The efficiency of an LP solution is the extent to which a solution reduces loss given its effect on employees, paying customers, and the retail company itself. Locking showcases may inconvenience some guests to deter a, relatively speaking, small group of offenders. To the extent we can target known offenders, we can avoid disappointing customers and driving them to competitors. Some solutions that are effective or promising include technologies that enable retailers to identify, detect, and investigate high-impact offenders and offender networks; solutions that leverage the “value exchange” mechanism; intelligence-sharing solutions; trackable and traceable product protection and investigation devices; and solutions that enable parking lot surveillance.

Intelligence Sharing: Advanced Case Management and Link Analysis Many solutions enable retailers to share information about offenders and their offenses. Many of these, such as automated license plate readers, signals intelligence platforms, and facial recognition, are used internally to gather intelligence. However, there are other systems that enable retailers to manually enter incident information into a system that can then be shared with other stores, and possibly even other organizations, if the retailer so chooses. The LPRC refers to sharing among stores in the same company as “within‑retailer” sharing and sharing among different retailers as

“I AM ENTHUSIASTIC ABOUT SIGNALS INTELLIGENCE TECHNOLOGY PRIMARILY BECAUSE IT DOES NOT AFFECT PAYING CUSTOMERS YET DELIVERS VERY USEFUL INFORMATION ABOUT DEVICES ASSOCIATED WITH CRIMINAL INCIDENTS AND CAN PROVIDE RETAILERS WITH A HEADS‑UP WHEN OFFENDERS ARRIVE AT A LOCATION.”

“between‑retailer” sharing. Both are important because the most sophisticated ORC offenders (and often the most financially impactful) rely on the fact that retailers are not effectively sharing information between stores or companies. This failure to share information reduces the likelihood that known offenders will be recognized, which reduces retailers’ ability to respond effectively. Of course, more aggressive and violent offenders—who tend to be less organized—also benefit from the lack of communication both within and between retail companies. New tools give retailers the ability to share information efficiently and effectively among their stores and with other retailers if they choose to. In many cases, the number of fields in incident reports can be restricted to ensure that only the most important fields are completed by workers—this enables greater efficiencies, while also ensuring that retailers have a common set of data points across incidents that can be used for link analysis. Link analysis is a technique where investigators look for connections between cases; oftentimes, the focus is on individual suspects, but link analysis can also focus on linking cases involving the same automobile, individuals with similar attire, the same modus operandi, or the same or similar targets, among many other factors. Regardless, link analysis enables retailers to connect incidents and suspects and generate additional leads and evidence as well as build “larger” cases in terms of the amount of merchandise involved. The size of a case is important because research shows that this is often a determining factor when it comes to whether law enforcement investigates, or prosecutors prosecute a case. Today, there is software that can automatically analyze large amounts of incident records (e.g., offense narrative, suspect description, time, date, etc.), and, based on the incident records, generate a probability that two cases are linked. Retailers have provided anecdotal evidence that this software and software like it can accelerate ORC investigations. Any tool that makes it easier to capture incident data and conduct link analyses can help to focus deterrent and disruptive efforts on known offenders; investigate ORC; and identify gaps or vulnerabilities in LP and security programs. For example, if incident records reveal that offenders are using a common strategy to commit fraud or theft, then it suggests that there may be a common vulnerability that offenders are exploiting and that leaders should address. However, without valid incident data, retailers may never be aware of common patterns across offenses and loss incidents. Patterns of offenses and loss incidents across locations almost always point to systematic vulnerabilities (e.g., lack of effective deterrents) or systemic threats (e.g., traveling ORC groups).

Trackable and Traceable Product Protection and Investigation Devices: RFID and GPS One of the major limitations of traditional EAS (electronic article surveillance) systems is that they do not enable item‑level identification or surveillance; rather, EAS has been

Innovation Special Edition 2023

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and continues to be a rather “dumb” technology. Because of this, they are of limited use in ORC investigations, where it is critical for investigators to confirm that merchandise found in a fencing location was illegally obtained.

RFID RFID is an older technology that is still under-utilized by many retailers, given its potential. For example, many retailers adopted RFID technologies and encouraged source tagging because of supply chain-related and inventory management concerns. However, some loss prevention teams soon realized that this technology could be used for investigations. By reconciling point of sale (POS) data with RFID electronic product code (EPC) tags exiting the store, they could accomplish a few important goals. First, RFID enables retailers to understand how many specific items are exiting a store at a specific time. This provides retailers with precise information about when an incident happened. Clearly, this would make it easier to determine what kind of merchandise and how much was involved. However, this system can also be integrated with video systems so that cameras capture video of the individual walking out the door. This is a huge opportunity to enhance the efficiency of investigations because investigators spend less time reviewing footage to build cases and can focus their efforts elsewhere. How RFID affects investigations is what’s most important. When doing controlled buys or investigating fencing locations, RFID provides evidence that merchandise being purchased from suspected fences, or being sold in suspected fencing locations, was likely obtained illegally. This and other approaches to item-level serialization are important because investigators must prove that merchandise was originally stolen from a store location, and RFID provides item-level information.

Zenzeta / ShutterStock.com

GPS Trackers Global position system (GPS) trackers are another widely used tool. While GPS trackers have been around for a while, a greater number of retailers are using them to track a greater number of assets. For example, in the past, retailers have used them to track stolen cash; now, retailers are using them in many different products and packaged goods, including controlled substances, fragrances, watches, jewelry, handbags, electronic power tools, clothing, electronics, and even athletic wear.

“TECHNOLOGY IS ONLY PART OF THE SOLUTION—THERE ARE MORE FUNDAMENTAL ISSUES THAT MUST BE ADDRESSED IN MANY JURISDICTIONS IF WE EXPECT THESE SOLUTIONS TO SIGNIFICANTLY AFFECT CRIMINAL BEHAVIOR.” Retailers will typically place a GPS tracker in a high-theft product’s packaging, while also rendering the barcode inoperable. When offenders steal multiple items, they also take the package containing the GPS tracker. Chain drug stores, discount and off-price retailers, department stores, general merchandise retailers, grocery stores and supermarkets, home improvement retailers, and other sectors have all reported success using GPS trackers for ORC investigations as well as rapid response to thefts, robberies, and burglaries.

Identifying and Detecting Serious Offenders As noted earlier, the closest thing criminology has to a “law” is that a minority of offenders are responsible for a majority of the incidents. Fortunately, there are several technologies that can enable retailers to identify known offenders and then detect the individual, devices, and automobiles with whom the suspect is associated when they appear at different locations. They include automated license plate recognition, signals intelligence, and facial recognition technologies, among others. Using these tools to identify high‑frequency offenders is important because it allows retailers to link a greater number of incidents to build strong ORC cases involving a greater value of merchandise—two key factors influencing whether law enforcement and prosecutors will act.

Automated License Plate Recognition Automated License Plate Reader (ALPR) technology is a system that uses optical character recognition (OCR) and image analysis to automatically read and interpret license plate

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TECHNOLOGY ALONE WILL NOT SOLVE THE PROBLEM

because they were able to detect the presence of individuals who had made threats, as well as identify individuals who were engaging in stalking. information from vehicles. It typically consists of high-resolution cameras, specialized software, and a database. An increasing number of large retailers in many different sectors are using license plate readers, and several have reported immense success, including those in the home improvement and general merchandise sectors. One of the reasons retailers are praising ALPRs is they are increasing the efficiency of investigators. They can detect when vehicles are at different locations, and they can link incidents together to build cases. Unfortunately, most of the ALPR research is focused on their use in law enforcement contexts, where they have been widely adopted by at least two‑thirds of larger agencies. Research reveals that their use can improve investigations, including automobile theft, robbery, and potentially other serious crimes.

Face Matching Several retailers are currently trialing facial recognition, while others have been using this technology for a while. In every loss prevention use case of which I am aware, retailers are enrolling known offenders into a database. Next, when the offender enters a location with the software installed, it can detect the presence of the known offender. This information can then be used to respond or can be used later during an investigation. Similarly, video can be analyzed with the software after the fact to identify when an offender was in a store location. In 2022, the LPRC conducted research that indicated loss prevention professionals were highly inaccurate when shown fictional suspects and then asked to identify the fictional suspects in 20-person lineups. Shortly after, these lineups included an image of the original “offender” but from a different angle, with different clothes, or under different lighting conditions. The practitioners only identified the original suspect 23.3 percent of the time. When controlling for all other factors, those who were assisted by an accurate match from FaceFirst’s face matching software were 7.1 times more likely to identify the suspect. However, the LPRC study was a survey experiment and had other limitations because we wanted to examine the effects of the technology under controlled conditions. We will need additional research to understand how facial recognition impacts loss, crime, and investigations in real-world settings. The LPRC is currently working with a retailer to understand how face matching affects the progress of ORC investigations as well as the outcomes associated with investigations. Nevertheless, I am enthusiastic about this technology because of anecdotal evidence from several retailers who are using it. There are several stories of retailers building larger cases using the technology and being able to review video and quickly link offenders to many incidents of which they were unaware. When I interviewed ORC investigators in 2022, they told me that the most time‑consuming task was often reviewing video footage; with technologies like face matching, this time can be reduced. I have heard stories from retailers who were able to thwart crimes

Innovation Special Edition 2023

Signals Intelligence Wireless “smart” devices such as phones and watches are ubiquitous. In fact, most automobiles produced today include wireless functionality (e.g., cellular capability, Wi-Fi, Bluetooth connectivity, etc.) as a standard feature. All these devices require wireless signals to operate which can be detected and used in investigations. This is particularly important for investigating serious and high-frequency offenders. For example, if an offender walks into a store with their cell phone and an incident is recorded, when the offender enters another store, the device can be identified as associated with a known suspect, which can then draw an investigator’s attention to the suspect. Given that ORC offenders typically move from store to store committing crimes, it is important to know when they or their associated devices are on the premises. Unfortunately, there is very little research on the effects of signals intelligence in retail loss prevention and investigations; however, the LPRC is seeking retailers to participate in research. I am enthusiastic about this technology primarily because it does not affect paying customers yet delivers very useful information about devices associated with criminal incidents and can provide retailers with a heads-up when offenders arrive at a location. Moreover, signals intelligence technologies do not rely on the field of view of a camera to detect a signal and often have a large range. This distinguishes it from camera-based analytics that rely on the quality of the image, the position of the camera, and its field of view.

Mobile and Mounted Surveillance Units (MSUs) One of the greatest challenges associated with facial recognition and signals intelligence technologies is being able to use them in the most critical areas such as the parking lot and beyond. However, solar-powered surveillance units that are equipped with cellular data transmission provide both electricity and data transmission to enable these types of technologies and beyond. Fundamentally, these technologies enable retailers to capture images and video in parking lots. Historically, retailers have not been able to sufficiently surveil their parking lots—even if power was available, data transmission was not. MSUs can enable retailers to surveil parking lots as well as the surrounding areas. Recently, the LPRC participated in the ACCESS Taskforce study which examined the effect of LiveView Technologies’ (LVT) MSUs on crime. LVT deployed approximately forty-nine MSUs across retail locations in Opelika, Alabama and Paducah, Kentucky. These cities were selected for the study because retailers had not deployed the units in these areas yet. The results from this trial showed that the MSUs were associated with declines in several types of crime, including declines in shoplifting and trespassing.

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TECHNOLOGY ALONE WILL NOT SOLVE THE PROBLEM

LPRC’s knowledge of retailers’ independent trials also suggests that MSU’s not only reduce retail crimes but also alleviate non-criminal issues in parking lots involving loitering and other related issues. The LPRC is also finalizing the results from a study of the LVT units’ effects on homelessness-related problems. The results showed declines in problematic behaviors after the deployment of LVT units at stores across a national retailer’s locations.

Body-Worn Cameras Several retailers are also trialing body‑worn cameras (BWCs) in retail, which are exactly what they sound like—cameras that are worn on the body to capture what happens during an incident. I am cautiously optimistic about this solution because some research indicates that it may reduce incidents, but also because

it can enable retailers to collect evidence and intelligence about offenders and their offenses. Importantly, all the major manufacturers’ solutions include the ability to capture audio (although this can be disabled to comply with or avoid regulatory and privacy concerns). I am cautious with my optimism for several different reasons. The two primary reasons I am cautious are that there is very little research on BWCs in non-law enforcement settings, and secondly, the research that exists is not conclusive about whether the cameras reduced aggression and violence against officers. BWCs are certainly useful for generating evidence that could be used for investigating crimes, and they could even be used for training purposes in retail. However, the evidence from studies with law enforcement is inconclusive with regard to a BWC’s effect on behavior. Some studies show that BWCs are associated with less aggression among officers wearing the cameras and less aggression among those who are being recorded, but this is not a universal finding. The theory behind the effects of BWCs makes sense; when people know they are being recorded, they should be more likely to be on their best behavior. However, retailers need to test BWCs to understand their effects and the conditions under which they are effective in retail environments.

Applying Targeted Friction to Those with Criminal Intent In recent years, the LPRC has conducted research on how retailers might apply targeted friction to those with criminal intent. One way to do this is to require guests to identify themselves before accessing products, entering a store, or entering a specific area within a store. Those who planned on committing crimes would not want to identify themselves because it would provide evidence that could be used to investigate them and their crimes. On the other hand, those who just wanted to shop would theoretically be willing to identify themselves because they have nothing to hide. In the past, a few retailers applied this concept to self‑checkout lanes; however, it was abandoned because of difficulties with implementation and customer satisfaction issues. Nevertheless, another solution provider developed a locking case that enables customers who identify themselves to enjoy self-service access to merchandise. This device can be configured with multiple access options, including cell phone, retailer app, and loyalty card options. The LPRC surveyed nearly 790 people to explore their willingness to use the self-service case and to exchange their personally identifiable information for access to merchandise. The results indicated that customers would be willing to use it, especially the loyalty card and retailer app options. Similarly, interviews with offenders revealed that almost none of them would trade their identity for the opportunity to steal. In other words, there is evidence that this approach provides benefits to paying customers (being able to access merchandise without assistance from cases) while creating risk for offenders (trading their anonymity for the opportunity to steal).

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reddees / ShutterStock.com

RETAILERS NEED TO TEST BODY-WORN CAMERAS TO UNDERSTAND THEIR EFFECTS AND THE CONDITIONS UNDER WHICH THEY ARE EFFECTIVE IN RETAIL ENVIRONMENTS. Later trials have also revealed that this self-service locking case is associated with reductions in merchandise loss in the case of family planning and personal care at a national grocer as well as reduced losses and increased sales in the liquor category in a West Coast grocer. Other trials are currently in progress, although we are seeking a national retailer to participate in a randomized controlled trial.

outright refuse to prosecute crimes, or because the penalties for certain crimes are negligible.

Public Policy: Retail’s Greatest Challenge

Conclusion

Retailers can take all these steps, but unless jurisdictions are using evidence‑based crime control policies, it will be difficult to return to more peaceful times. For example, if retailers spend millions of dollars on technologies that can help them build cases, but do not receive support from law enforcement or prosecutors, then retailers will just have a lot of technology with no “teeth.” For deterrents to be effective, they must pose a credible threat to offenders and increase the risk of negative consequences. That is, the offenders must believe that technologies are going to increase the likelihood that they will be arrested or prosecuted, or that the technology is going to make committing the crime more difficult. This is because the amount of time it takes to commit a crime is a concern among offenders, in part, because crimes that take longer to commit also increase the amount of time someone can intervene and the likelihood that they will do so (e.g., apprehend and detain them). Unfortunately, in many retail stores across many jurisdictions, it is unlikely anyone is going to intervene in an active offense, and many law enforcement agencies prioritize violent criminal cases over property crimes. In the end, there must be a credible threat of negative consequences for deterrents to influence behavior. These consequences do not seem to exist in many parts of the country either because law enforcement is unable to investigate more crimes, prosecutors are unable to or

Throughout this report, we have listed technologies where there is empirical evidence supporting their use, or strong theoretical reasons to believe the solutions will be effective. We have purposefully avoided mentioning specific solution providers because there are many solution providers who offer the solutions discussed throughout this report. We have only mentioned specific solution providers when a specific solution was involved in the research. The LPRC would be glad to discuss all these solutions further and is open to all opportunities to conduct research. As mentioned throughout the report, much of the existing research is focused on the public sector, and many of these technologies lack sufficient evidence to make conclusive statements about their effectiveness in retail. However, technology is only part of the solution—there are more fundamental issues that must be addressed in many jurisdictions if we expect these solutions to significantly affect criminal behavior.

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Cory Lowe, PhD is a senior research scientist at the Loss Prevention Research Council. He received his doctorate in criminology in 2020 from the University of Florida where he specialized in crime and delinquency prevention, communities and crime, criminological theory, and research methods and data analysis. Lowe has published in peerreviewed journals and other scholarly publications on the causes of crime, crime and delinquency prevention, and the factors associated with substance use and delinquency. He can be reached at Cory@LPresearch.org.

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How Revolving

RFID Technologies Are Changing the Retail Landscape By Sam Boykin


R

apid technological advances have made radio frequency identification (RFID) an increasingly powerful tool when it comes to loss prevention and inventory management. While RFID was first used during WWII to identify and track ships and aircraft, it wasn’t until the 1990s that retailers began to adopt the technology. But like other emerging innovations at the time such as cell phones, early versions of RFID were clunky and costly, and the nascent industry failed to gain widespread traction. “The technology just wasn’t mature enough,” said Tom Meehan, president of CONTROLTEK, which specializes in tamper‑evident packaging, retail asset protection, and RFID solutions. “Fast forward to today, costs have come down, microchips are smaller and faster, and you have a solution that’s scalable.” Not surprisingly, big retailers like Walmart, Target, and Macy’s were some of the first to use RFID to help track their massive inventories. And then, the rise of Amazon and e-commerce changed everything. “Department stores suddenly had an urgent problem they had to address,” said Ned McCauley Jr., director of sales, IoT, and smart sensors at Sensormatic Retail Solutions. “They were losing market share to the e-comm players. They knew that if they didn’t know what they owned, and where it was, they couldn’t compete. And that’s where RFID really started.” COVID-19 further accelerated this trend, with RFID helping retailers fulfill and track the sudden spike in online orders. An Accenture study conducted during the pandemic indicated that 47 percent of responding North American retailers were in full RFID adoption, 37 percent in implementation stages, and 10 percent were piloting RFID in 2020. In 2022 Walmart mandated its suppliers tag all home goods, sporting goods, electronics, and toys with RFID. The corporation indicated it plans to extend the RFID requirement to more categories in the coming years. As developers and manufacturers continue to refine RFID technology, it’s becoming a more viable option for a growing number of other retailers, both big and small. Randy Dunn, director of customer success at Zebra Technologies, said RFID’s growing presence reminds him of when retailers were first questioning whether they needed an e-commerce website to compete in the future.

“The technology just wasn’t mature enough. Fast forward to today, and costs have come down, microchips are smaller and faster, and you have a solution that’s scalable.”

adoption, I believe, is a similar type “Today, with just of “RFID decision,” he said. “It’s obvious that the world’s best retailers have embraced RFID the sweep of a and received the benefits of inventory accuracy, loss detection, and supply chain hand, you can efficiency. It’s hard to imagine a 2030 world‑class retailer that hasn’t reaped the scan upward benefits of what RFID provides across a range of use cases that are critical to better of 1,000 tags serving their customers.” As these seismic shifts continue to impact a second from the landscape, here’s a closer look at what’s with RFID technology and how it’s some twenty-five new changing the way retailers operate. feet away.” Software and Hardware

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Dunn said he’s seen incredible technological advances with both RFID readers and RFID tag sensitivity during his 20-plus-year career in the industry. Tag innovations are especially impressive, he said, as they’ve gotten smaller, yet also more robust, equipped with powerful microchips. Today, with just the sweep of a hand, you can scan upward of 1,000 tags a second from some twenty-five feet away. And some tags are manufactured for use with products made of metal or that contain liquid, which previously could not be scanned by a reader. “The industry is on its seventh generation of endpoint RFID tag chips and RFID readers are on their third generation of reader engines improvement,” Dunn said. “That combination of advancements has made RFID a much more manageable technology from a physics perspective, a deployment perspective, and a problem-solving perspective.” One big problem RFID addresses is inventory management. Dunn said that having accurate data about shortages and planning for those shortages is critical to maintaining an efficient and profitable operation. Sensormatic’s McCauley said that RFID is a critical tool when it comes to inventory distortion, which totaled $1.993 trillion worldwide in 2022, according to IHL Group. That distortion typically starts at the store level.

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REVOLVING RFID TECHNOLOGIES

“When inventory hits the back of the store, that’s when the chaos starts,” McCauley said. “That’s when you’re breaking open boxes, putting items on the shelf or in the back room, and things are getting damaged, stolen, and mis-scanned. Before you know it, you have this gigantic gap between what the system of record thinks you have versus reality.” Meehan with CONTROLTEK stressed that today’s mobile RFID readers are far different from similar handheld devices from the past when an employee had to scan each item individually. “Today, you can inventory a store in minutes versus manually counting for days,” he said. “And with RFID, you can do that multiple times a month, where before, you’d usually have to close the store to take inventory.” Meehan added that RFID technology not only makes the inventory process faster but also more accurate. Typically,

Checkpoint Systems, which develops, manufactures, installs, and supports RFID solutions. He said Checkpoint develops RFID technology for both loss prevention and inventory management. With loss prevention, RFID tags can trigger audible or visual notifications when someone exits the store without paying for an item, similar to electronic article surveillance (EAS). The main difference is RFID tags can also identify exactly which item is being taken from the store. “With RFID, you get item-level information, the quantity, and the time that it’s going out the door,” Panebianco said. “And if the retailer has already implemented an inventory management program with RFID software, they use those data points to see what’s potentially being stolen and then update their inventory based on that.”

Fixed and Mobile Readers McCauley said most retailers who employ RFID typically start with a mobile reader, which is as simple as connecting a small reader to a mobile phone or using an in-store mobile device. Mobile readers are mature and working at scale, and they’re relatively low-cost. Fixed readers, on the other hand, are usually used to cover choke points, like loading docks, store exits, fitting rooms, or points of sale. “When you get into a fixed reader infrastructure, it’s a completely different animal, and where most advancements are taking place,” McCauley said. “Fixed readers are for specific use cases that require super-high levels of accuracy in order to be effective.” Dunn with Zebra Technologies said that as recently as ten years ago, virtually all RFID projects, particularly in the retail industry, utilized mobile RFID readers to scan tags in support of the “beachhead” use case of inventory management. Today, many industries, such as transportation, logistics, and aerospace, have realized that using fixed RFID readers to capture the RFID data is their best approach. “That approach does create new needs from RFID software,” said Dunn. “Creating accurate RFID events coming from RFID fixed readers is putting more pressure on RFID software to make sense of the vast amounts of data. And it has required software providers to add more functionality in this area.”

“Retailers now have camera footage, video analytics, customer conversion data, and all of these inventory data points and they’re putting all this sensory information together to paint a fuller picture about the customer journey, without any privacy concerns.” retailers that don’t employ RFID have a 65 to 70 percent inventory accuracy rate, compared to about a 98 percent accuracy for retailers that do use RFID technology. “The original purpose of RFID, inventory management, is still the most important, and where you’ll have the highest return on investment,” Meehan said. “It helps you increase sales because you know when you’re out of something in almost real-time, so you can replenish it. That’s the real advantage.” In addition to inventory management, RFID is an increasingly viable option for loss prevention. Frank Panebianco is vice president of sales and marketing at

“As a retailer, you want to deliver the right product at the right time, whether that’s in the store or online. And RFID is the engine that can get you there.”

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In addition, RFID’s expanding capabilities, including storing data in the cloud, have helped bring about the practice of “sensor fusion,” a process of combining sensor data derived from various sources to help create fuller and more accurate information. “Retailers now have camera footage, video analytics, customer conversion data, and all of these inventory data points,” Meehan said. “They’re putting all this sensory information together to paint a fuller picture about the customer journey, without any privacy concerns.”

Cost and ROI Meehan stresses that like with most technology adoption, there’s an associated cost with implementing RFID. “Once you start using it, you absolutely can see the benefit and ROI, not to mention the labor savings of inventory. And really, just having cleaner data is more important than anything.” McCauley said RFID costs have dropped dramatically over the past fifteen years, with the cost of the tags decreasing some 200 percent since 2018. “And that’s driven by scale, and with

scale comes efficiencies, including improved performance, with smaller chips that have more memory,” he said. Panebianco estimates the average price for RFID labels is in the 6-cent range, which is way down from where it was even five years ago. “You go back a little further, and the cost was $.50 to a $1 a label, which was not sustainable,” he said. “But as technology has improved, there’s more ROI for retailers, and that’s a monumental step. As a retailer, you want to deliver the right product at the right time, whether that’s in the store or online. And RFID is the engine that can get you there.” Originally from North Carolina, Sam Boykin is a San Antonio-based writer who has written for a number of regional and national publications, including Men’s Journal, Outside and USA Today. He previously served as editor-in-chief for the San Antonio Business Journal and managing editor for the Sacramento Business Journal.

With

Without ALTO Unsafe environment, low in-store employee morale, high turnover

Improved safety for store associates & customers

Delayed or lack of response from police

Partnership with police and improved response

Low or no consequences = Increase on recidivism

Increased prosecutions = Positive resolutions

High shrink

Reduced shrink www.alto.us

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INNOVATION

ORCA DATA-SHARING

Technology in Action Can Lead to Powerful Results By Jacques Brittain, LPC

W

e have often heard it said that information is power. But in real terms, that idea is largely incomplete. The fact is, with most of us having access to millions of pieces of information literally at our fingertips with the touch of a button or the swipe of a thumb, information is only power if you can effectively use it and constructively act with it. Knowledge is power. We must be able to sort through all the information at our disposal, process what it is and the value it holds, manage the best and most effective ways that information can be useful for us, and then apply what we’ve learned to achieve our objectives. It is vital that we connect the dots and do so in a way that others can understand and follow to bring investigations to their successful conclusion.

This is why data-sharing programs have become so essential to organized retail crime investigations. In response to the alarming rise of organized retail crime, retailers have teamed up with law enforcement agencies to launch secure data-sharing programs as an integral part of the various organized retail crime associations (ORCAs) across the country. This allows these agencies to work in concert to report, monitor, and investigate all forms of organized retail crime using a secure, private platform to protect the integrity of the investigation. These databases provide a proactive tool that uses a secure web interface for data entry, incident alerts, viewing files as part of ongoing investigations, and ongoing incident queries. Information related to organized retail crime and related criminal investigations is entered into these databases,


“ WITH THE ABILITY TO LINK SUSPECTS AND VEHICLES AND OTHER INCIDENTS allowing investigators to create ACROSS THE automated alerts and conduct queries based on selected criteria that could PLATFORM TO OTHER align with similar investigations they are engaged in. Photos, video footage, ORCAS AND STATES, and other valuable data can typically be THE COUPLE OF attached to incident profiles as well. MINUTES TO SUBMIT How We Got Here In the summer of 2020, as the AN INCIDENT CAN PAY ORCAs in Action initiative was just HUGE DIVIDENDS getting underway, LP Magazine held a closed-door meeting with the leaders of IN SUSPECT all the various ORCAs across the country to review their most pressing needs and IDENTIFICATION AND how to best support the ORCAs in their BUILDING CASES.” efforts. While data-sharing opportunities

needed to provide the ORCAs with a great way to share information—and do it for free.” By building a national network of information sharing done the right way—and in a very secure manner—these solutions have benefited all the ORCAs. The support and subject matter expertise from the solution provider community have laid the groundwork for a solution that provides confidence and credibility in the program, all while removing a financial burden that up until this point was hindering the growth of many of the ORCAs.

were previously part of the ORCA —Ed Fritz ORCAID platform, there were several concerns How It Works raised about the existing offering, and a unanimous request was made to The platforms that the ORCAs are search for and implement world-class data-sharing programs currently using feature an open-share concept, with a feel to enhance communication, support ORC investigations, and similar to a social media platform. Once you log in, you will ensure the privacy and security of the information network. typically see a newsfeed of information and events, including To support this request, an ORCA Leadership Technology the most current incidents occurring within the ORCA network. Summit soon followed, with six technology-driven loss Fundamentally a retail crime intelligence platform, it includes prevention solution providers generously offering their support. event reporting, subject profiles, vehicle profiles, methods of The ORCAs were free to choose from among the solution operation, and other related information. You can then filter the providers that best fit their individual needs and partnerships feed to capture things that are relevant from a county, state, or quickly evolved. Appriss Retail, Auror, Detective Analytics, national perspective. It’s real-time sharing, built to get as many Innovise, Ministry of Ideas, and Trueth were among the solution eyes across it as possible. providers that took part. “Retail investigators and law enforcement members post “Supporting the ORCAs is about supporting our communities,” informational bulletins and crime events into the database says Jason Bier, president at Treuth and general counsel and and the platform seamlessly shares the data with other ORCA chief privacy officer at Adstra. “That was our primary motivation. members throughout the country,” says Jake By taking part in this initiative, we saw an opportunity to support Crank with the Nevada ORCA (NVORCA). retailers, law enforcement, and the communities they serve. “It’s a very easy platform to navigate. Posting We believe that driving innovation to improve intelligence and a bulletin generally takes anywhere from communication is a critical cog in the fight against organized four to five minutes. The beauty of it is that retail crime and concluded that we want to be part of it brings all the ORCA groups together in a the solution.” secure setting, allowing us to link cases both “After gaining a better understanding of locally and nationally if needed.” what the ORCAs are all about, we came to That intelligence is then visible to any other the decision that it made sense for us to ORCA that’s part of the network. Reporting Jake Crank support these critical data sharing networks,” includes details like what was stolen, what revealed Bobby Haskins, vice president of the subject was wearing, distinct features they may have, and retail partnerships at Auror. “But we also felt any other information that would pertain to other reports that that there was more that we could do. With LP and law enforcement might complete. The information is all the other challenges they were facing, we entered into the platform in a structured way so that distinct felt the ORCAs shouldn’t bear the expense information, like specific clothing items, can be entered into the of supporting the data share and all the database. Photos and videos can be uploaded as well. Bobby Haskins costs that go along with it. With all the other “Ultimately, the goal is to identify trends, connect incidents needs they have, we truly believed that taking steps to remove across different retail locations and jurisdictions, and identify the friction that comes along with those expenses was in the major players in the organized theft rings impacting our best interest of the industry. We came to the conclusion that we communities,” added Chad McManus CFI, CFE, LPC, with the Georgia Retailers Organized Crime Alliance (GROC).

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ORCA DATA-SHARING

Technology Leading Change “The system may be a little more difficult than sending an email to a group, but is still very simple inputting individuals, vehicles, and other information,” says Ed Fritz, crime prevention supervisor with the city of Boise police department (ORCAID). “However, with the ability to link suspects and vehicles and other incidents across the platform to other ORCAs and states, the couple of minutes to submit an incident can pay huge dividends in Chad McManus suspect identification and building cases.” Every ORCA member can post and share information, though not required. With some organizations more cautious about sharing information, membership and participation are still welcomed and invited regardless of whether you are posting information to the platform. As a member, you always have the ability to digest the available information, apply what you’ve learned, and comment and contribute in other ways. Inside the platform, Ed Fritz members can communicate with each other without ever having to submit an incident into the system.

Privacy Standards The individual ORCAs control who can load information into the platforms and who can see it. There are a lot of eyes viewing every ORCA member before they’re ever added to the platform. An audit trail also helps from a privacy standpoint with checks and balances for those involved. “Each ORCA approves their members through a specific vetting process, which allows for a safe space for users with granted access,” says Carolyn Doran with the New York, New Jersey, and Pennsylvania Metro Area Organized Retail Crime Alliance (METRORCA). The ORCAs have both retailers and law enforcement that vet incoming members and approve their inclusion before they’re able to gain access and then share Carolyn Doran and view intelligence information.” “Above and beyond the vetting that takes place within the ORCAs, we also review new member information before allowing them to use the platforms,” says Haskins. “If someone has questions about the platform and the privacy and security measures in place, we welcome a conversation with their legal and privacy teams to talk them through how we have built privacy by design into the platform. Our CEO is a former privacy attorney. It’s a safe environment where you know who has access to it, how it’s being shared, and who is viewing it in a manner that’s much more controlled than the ways that this same information has traditionally been shared. Everything we do here, we think through the privacy framework first. We want to make sure we always meet or exceed the privacy standards that are out there.”

Innovation Special Edition 2023

Maximizing performance and finding the best ways to improve what we do and how we accomplish our goals is what innovation should be all about. By effectively applying the tools of technology to build networks and more effectively approach the devastating impact of organized retail crime, we are further heightening collaboration between retailers and law enforcement partners across the nation. The ability to easily track suspects, identify ORC trends, link cases, and share information is critical. This truly takes the battle beyond city and state borders and gives us the ability to collaborate with partners across the nation. Investigators become more proactive, trends and suspects can be more accurately identified, and cases are built faster and stronger. It allows us to quickly recognize evolving threats and adopt effective preventive measures. From a networking and partnership perspective, it allows direct access to those actively engaged in ORC investigations and related cases to improve efficiency and drive results. “ORC in Oregon is now more than ever a collaborative effort, where retail investigators work together and hand-in-hand with law enforcement,” says Jeremy Girard with the Oregon Organized Retail Crime Association (ORCAOR). “And it all starts with information sharing. Many case partnerships have been created after network sharing. It builds interest as well as information, leading to stronger investigations and more productive Jeremy Girard outcomes. Sharing information will often give the next city or state down the corridor a heads up, save the next retailer from becoming a victim, and when handled properly, deter crimes and solve cases.” “By connecting and keeping each other informed, we have learned that taking a community approach is the most effective way to expose and deal with the ORC problem for what it is,” says Rob Black, president and CEO of the New Mexico Chamber of Commerce (NMORCA). “We’re all dealing with the same problems and often the same people. Today, we are learning to deal with that in a unified way. Our network, with partners all over the state falling under the same umbrella, is what Rob Black makes it special. We get the advantage over the bad guys. Working together and using the platform to our advantage, we get to see the big picture. We get to focus on the criminal network, not just the individual crime. The technology exists to remove the anonymity of individuals who hop from retailer to retailer and expose them for who and what they really are.”

The Last Word on Data-Sharing Data-sharing platforms may be one of many tools now available in the ORCA toolbox, but it’s an important one.

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Organized Retail Crime Associations

Finding ways to maximize productivity and build positive results in the fight against this multi-billion-dollar problem should include every option at our disposal, pushing the limits of our efforts and ingenuity. Enhancing our ability to communicate information and work together should be a no-brainer. The ORCAs are doing a tremendous job of opening eyes and minds to the depth of the problem, but also finding new and creative ways to lead the charge. With that in mind, we’ll give the ORCAs the last word on the value of the data-sharing networks. “As with anything, success can only come with the support and individual efforts of all our partners,” says Fritz (ORCAID). “I feel we have been successful in our efforts and can only see that success growing as we continue to foster our partnerships, using the technology to build connections and make sharing seamless. We are all connected through ORC. This tool just gives us the ability to recognize those connections quickly and more effectively.” “More and more retailers are getting involved in ORCAs and information sharing,” says Crank (NVORCA). “Retailers are partnering like never before—and as a direct result, we are seeing wins like never before. However, there are still many great companies that are unwilling to share information or engage in the ORCAs. I would urge those companies to reconsider that approach. Numbers don’t lie. ORC is getting worse and the only way we can hope to battle the problem is by working together and collaborating.” “When it comes to ORC and taking down these criminal networks, information sharing is more important than ever,” says Girard (ORCAOR). “For those retailers that remain hesitant to share information on ORCA sites or participate in our regular ORC meetings, I strongly believe they need to rethink their policies and understand that they are only slowing down the fight.” “Bridging the gap between law enforcement and retailers has always been one of our primary goals at GROC,” says McManus. “ORCAs allow investigators to become more proactive. Through the platform, investigators and stakeholders now have contacts in most jurisdictions across the state. Our network has allowed enhanced collaboration between retailers and law enforcement, leading to more coordinated efforts. With the ability to receive real-time information, trends and suspects can be identified, and cases built faster and stronger. We have seen improved communication and partnerships, consistently leading to successful collaboration between retail and law enforcement to build cases and take down ORC suspects.”

LPM

“As with most anything, success will come to those that seek it,” says Doran (METRORCA). “By utilizing a platform that allows contributors to remain cross-functional, we have an impact on dismantling these crime networks through continuous efforts and collaboration. The database also allows for consistency across several ORCAs, making it easier and more efficient to identify and prosecute ORC groups. I feel that these efforts have been extremely successful—in fact, pivotal to the success of several large-scale ORC investigations. The more robust the membership, the more we are able to collaborate, influence change, and combat ORC in our communities.” “We have momentum that we have never seen before,” adds Black. “We are consistently seeing offenders identified and prosecuted. Law enforcement takes an active role in identifying suspects and working with retailers to build cases. All of this is new to New Mexico, and we couldn’t be more excited. Our retail members have shown amazing leadership by working collaboratively across companies and law enforcement agencies. The deep level of collaboration between business, law enforcement, and prosecutors is making a difference in New Mexico and the New Mexico Chamber of Commerce is proud to be part of the solution.” Take the leap and get involved! To learn more about the ORCAs in your area of responsibility, scan the QR code.

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Jacque Brittain, LPC, is editorial director for LP Magazine. Prior to joining the magazine, he was director of learning design and certification for Learn It Solutions, where he helped coordinate and write the online coursework for the Loss Prevention Foundation’s LPC and LPQ certifications. Earlier in his career, Brittain was vice president of operations for one of the largest executive recruiting firms in the LP industry. He can be reached at JacB@LPportal.com.

Innovation Special Edition 2023


Transforming Loss Prevention Using Analytics By Allie Falk

VLADGRIN / pikepicture / ShutterStock.com

INNOVATION

Data-Driven Defense


“ MULTI-USE AND MULTI-PURPOSE SOLUTIONS ARE WHAT CONSUMERS ARE AFTER.” —Robb Northrup

T

echnology is evolving at a rate that can be overwhelming. Extraordinary concepts are developed daily, with modern technologies rapidly advancing and trends constantly fluctuating based on the needs of businesses and the demands of consumers. Every day, there are stories in the media about developments in technology, such as artificial intelligence (AI). Even data analytics, which have been around for a considerably longer amount of time compared to AI, are changing and improving at faster speeds than imaginable a few years ago. Those of us who are less familiar with data analytics may be asking, ‘What really are analytics anyway?’ To be precise, analytics are the systematic computational analyses of data or statistics. Analytics are applied with the aid of specialized systems and software. Inevitably, concerns arise due to the rapid advances in technology like analytics. How do I measure its accuracy? How do I maintain data privacy? How do I implement new strategies based on data extracted from analytics? Will analytics cut employee headcount? Moreover, as findings emerge through the consolidation and cross-analysis of data, LP professionals will discover both advantages and disadvantages throughout the process. To offer you a deeper look at these issues, we reached out to a group of industry-leading solution providers to get their take on this evolution. We asked them to talk about both the positive and negative ways that analytics are changing the world of loss prevention. Here is our summary of the topics discussed along with their valuable and varied points of view on each.

Product Advancement and Shifting Demand Inevitably, as analytics evolve, products will continue advancing at a rapid rate to fulfill consumer demands. In response, there is a need for solution providers to remain on the cutting edge to ensure their offerings continue to evolve to meet those demands. “AI and analytics have become more efficient and straightforward; they are speeding up the customer experience,” said Axis Communications Segment Development Manager James Stark. “As analytics have progressed, I think the biggest advancements in our products revolve around our chipsets, enabling intelligent data to be processed at the edge—or far edge of cameras. The camera is only transferring back critical pieces of information that you’re looking for, also known as metadata in this case. It also enables our partners who are in the AI space to reside on the edge with us, getting that information back for the video. At the end of the day, a good customer experience is what it’s all about.” Loss prevention practitioners also want easy-to-use and accurate tools. LP teams have expectations that their weapons to fight crime will be as straightforward as the other digital devices in their lives. Data analytics should be no exception.

LPM

“We can now control bandwidth to where people can pick up their cell phone using a 4G or 5G connection and look at live recorded CCTV systems without a bandwidth issue for their company,” said Keith Aubele, chief security officer at Salient Systems. “Being able to assess the analytics while simultaneously viewing video footage without a bandwidth restriction is phenomenal, and this progress in technology is only going to continue.” Multi-purpose solutions are in high demand. Integrating analytics to create solutions that accommodate this provides a more efficient experience, and supplies retailers with the functions they need to prevent loss, such as Keith Aubele clearer store communication. “Multi-use and multi-purpose solutions are what consumers are after,” according to Robb Northrupp, director of marketing and communications at siffron. “As technology has evolved, we have added a device that can transmit wirelessly. It can then communicate to retailers’ systems, whether that’s the electronic article surveillance system, cameras, or any sort of store communications. By analyzing those triggers and aggregating results with analytical data, we will only continue to see this sort of Robb Northrup intelligence and make a shift on the LP side of things.” Vendor management system (VMS) platforms are a good example of a multi-use solution. “If you want to add a facial recognition analytic, if you want to add a bottom‑of‑the‑basket or cart detection analytic, or if you want to add a shopping cart analytic, you can do that all in one platform, and most of the time it costs you absolutely nothing,” said Aubele. “Just as important as having data analytics available is James Stark the opportunity for retailers to digest shared data and insights to improve customer service.” “Nowadays, the ability to review and act on data across stores, regions, and channels has increased,” reveals Pedro Ramos, chief revenue officer at Appriss Retail. “As delivery options have grown, retailers have an increased need to push recommendations to the customer service desk to counter ‘item-not-received’ and ‘did-not-arrive’ claims. Finally, having a streamlined way to present insights—not just Pedro Ramos data to different audiences, has also been

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Innovation Special Edition 2023


INNOVATION

DATA DRIVEN DEFENSE

driving more conversations about standard libraries, reports, and dashboards.” Staying current with the rapid change of pace in technology, embracing the capabilities it holds, and flexing to use this critical tool in other areas of the business are all crucial. “Our platform has evolved significantly with the advancements in analytics, embracing the power of AI and machine learning,” Ramos continues. “These innovations have enabled our platform to offer retailers even more precise and real-time insights into their operations. AI is used to detect and flag anomalies both within and across the stores, letting loss prevention experts work more quickly to investigate. We have also moved to offer solutions in other aspects of the retail business, including claims and appeasement processes within the customer service department.”

Customer Satisfaction Starts with Safety The bottom line for every retailer is keeping their customers and employees safe. Identifying threats sooner makes it possible to prevent incidents from occurring altogether. Facilitating quicker emergency response is also a significant advantage and can save lives. As this technology continues to improve, more retailers are

the positive customer feels safer, while the negative customer is more easily detected and can either be apprehended or deterred. “The ability to apply forensic analytics is so crucial in moments of violence. You don’t want employees or your customers getting hurt trying to intervene and take these people on because the threat of violence is such a risk,” added Stark. “It’s becoming very prominent, and I think there are a lot of retailers out there looking for solutions that help train staff to react appropriately or can forensically put a case together and show law enforcement, ‘Hey, this is the group of individuals and here’s the information we have.’” Identifying ORC can be a complicated, difficult process. With the help of data analytics, obtaining the information needed to identify offenders not only becomes easier, it can also turn into solid evidence. “There’s no silver bullet with ORC because it looks very different,” Stark reveals. “But AI and analytics have gotten to a point where they’re providing us with the data, we need to ensure we can act safely and accordingly to each scenario. For example, say you have surveillance footage of someone in a brown top and a blue hat who stole from your store. You can then tell your analytics search, ‘Show me everyone with a brown shirt and a blue hat’ and it’ll supply me with all video footage of a person wearing a brown shirt and a blue hat. Analytics collects all that data and presents it in a much more straightforward way to the end user so they can then build a case.”

“ THE ABILITY TO APPLY FORENSIC ANALYTICS IS SO CRUCIAL IN MOMENTS OF VIOLENCE. YOU DON’T WANT EMPLOYEES OR YOUR CUSTOMERS GETTING HURT TRYING TO INTERVENE AND TAKE THESE PEOPLE ON BECAUSE THE THREAT OF VIOLENCE IS SUCH A RISK.”

—James Stark

investing time and money in analytics to ensure a safer shopping environment for everyone. “Whenever a retail organization is looking at deploying defenses and being safe and secure when ORC comes into play, understanding the concept of the positive customer and the negative customer is crucial,” Aubele stresses. “You have two types of people who walk in the store: a positive customer with the intent to purchase items and to pay for those items, and a negative customer with the pure intent of shoplifting or executing their ORC scheme. You must put together programs that will impact both the positive and the negative customer.” For example, if there is information about a known ORC offender in the area, the store can insert data into the camera or surveillance system—including specific characteristics—thus creating greater potential to identify that criminal. As a result,

Innovation Special Edition 2023

Customers want to shop in safe environments where they can find the items they want; analytics contribute to the overall customer satisfaction experience. “When used to reduce shrink and fight organized retail crime, analytics help ensure in-stock inventory accuracy, which makes shopping easier for consumers,” said Ramos. “Advanced analytics play a role in identifying emerging external crime patterns, allowing retailers to allocate resources more effectively and mitigate the impact on both shoppers and employees. Retailers can also use advanced technology, powered by predictive algorithms and statistical models, to identify and deter return fraud and abuse without isolating consumers making a good-faith return.”

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LossPreventionMedia.com


“ VALIDATE THE ANALYTICS RESULTS BY COMPARING THEM WITH EXTERNAL DATA SOURCES OR INDUSTRY BENCHMARKS. THIS CAN HELP IDENTIFY POTENTIAL BIASES OR ERRORS IN THE ANALYTICS.” —Keith Aubele Measuring Data Accuracy There are various methods of measuring analytics’ accuracy, but no analytics system is perfect and there will always be some degree of uncertainty. Through regular evaluations and iterations, analytics systems will continue to improve in accuracy and reliability. “Measuring the accuracy of data analytics and predictive models comes down to continually analyzing a diverse range of data sources and comparing it against actual incidents of theft or fraud,” shared Ramos. “Continuous monitoring and validation against real-world outcomes, as well as incorporating feedback from loss prevention experts, contribute to an ongoing assessment of accuracy and the refinement of analytics strategies.” Stark recommends a “proof-of-concept” period with one selected store or small group of stores. “Once the analytics are live and calibrated, it is a matter of monitoring the process to ensure desired results,” he stated. “Much like other programs, once you have your baseline and success criteria established, you can then test functionality and build out reporting to ensure the analytic is doing what you have been told it will do, and if you are getting the desired results.” Accurately measuring the value of data analytics is critical. Here, Auebele breaks down the evaluation process: ● Inventory Accuracy: Retail analytics often rely on inventory data to generate insights. Comparing the reported inventory levels from analytics with actual physical counts can help identify discrepancies and assess accuracy. Retailers typically conduct inventory once a year in the hardlines area (grocery and cost departments are monthly). Sometimes, segmenting off an area (say, over-the-counter areas of pharmacy) and conducting specialized inventories to validate impact, e.g. after a thirty-day run, is ideal. ● Forecasting Accuracy: If your retail analytics system includes forecasting capabilities, measure the accuracy of its predictions. Compare the forecasted sales, demand, or inventory levels against actual results to gauge the system’s performance. ● Comparison with External Data: Validate the analytics results by comparing them with external data sources or industry

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benchmarks. This can help identify potential biases or errors in the analytics. Additionally, lean on research groups like the LPRC at the University of Florida to enlist their help or guidance in real-world analysis of specific analytics. ● Return on Investment (ROI) of Analytics: Measure the impact of the retail analytics insights on business outcomes. If the insights lead to improved sales, reduced costs, or other positive effects, it indicates the analytics are providing valuable and accurate information.

Maintaining Data Privacy Compromised personal information can lead to multiple forms of fraud, such as cyberattacks, identity theft, and financial fraud against your customers. It can damage a company’s reputation and undermine consumer trust and loyalty. Not surprisingly, data privacy remains a concern when evaluating data analytics tools. Aubele offers a list of best practices to ensure data privacy while using data analytics: ● Specific Data Usage: Only collect and store the data necessary for the retail data analytics purpose. ● Clean the Data: Anonymize customer data before using it for analysis. ● Encryption: Ensure that all data collected and stored is encrypted through its life cycle, to protect it from unauthorized access. ● Access: Implement strict control to limit who can access the data. ● Audit Trails and Regular Audits: Maintain detailed audit trails of data access and utilization to track any misuse or unauthorized access. Frequently audit processes and policies to ensure compliance. ● Secure Storage: Use only the highest-level secure data storage solutions with robust security measures and redundancies in place, such as firewalls, intrusion detection systems, and regular security updates. ● Data Retention Policy: Establish a clear data retention policy that outlines how long data will be stored and when it should be securely disposed of. ● Training: Train employees on data privacy best practices and the importance of protecting customer information. ● Third-Party Vendors: If your third-party vendors are utilized for retail analytics, ensure they have strong data privacy policies and adhere to relevant regulations.

Innovation Special Edition 2023


INNOVATION

DATA DRIVEN DEFENSE

While collecting and retaining consumer data may be an essential practice to identify suspicious patterns and stop repeat offenders, it has its risks. Ramos cautions, “To collect and utilize data, there must be a balance, including adhering to relevant privacy laws and ensuring consumer trust.” Stark added, “I strongly recommend partnering with your IT security teams and ensuring your company’s data privacy standards are met prior to any technology deployment involving data governance.”

Making Informed Decisions Informed decision-making is crucial for the success of any retailer. Insufficient data can lead to decisions being made

into the parking lot. This type of technological advancement prompts the staff to engage and be more aware of what’s going on, improve store safety, and detect and deter any potential illicit activity.” When choosing solutions, decisions should never be made in a silo or based on a single criterion. When evaluating data analytics solutions, determining which solution to choose must be based on the overall value of the product and how it will be used across the enterprise. “Companies must consider a number of different factors when investing in a data analytics solution,” Aubele said. “First, you must consider the return on your investment. One potentially negative aspect is that analytics solutions do not come cheap, and there are several different options to choose from. Additionally, there are fractional analysts needed to gather and interpret the information. As a result, cuts may need to be made somewhere else to compensate for the added expense. Ideally, we find

AS DATA ANALYTICS AIDS IN SIMPLIFYING OPERATIONAL FUNCTIONS, PERFORMANCE WILL CONTINUE TO IMPROVE, AND MOST IMPORTANTLY, IT WILL CREATE SAFER WORKING AND SHOPPING ENVIRONMENTS. based on assumptions alone. Having accurate and complete information provides a more thorough understanding of the context and decisions are made based on facts, rather than emotions or assumptions, which inevitably saves time and money. “Predictive analytics can help retailers anticipate potential loss events and make informed decisions on how to reduce shrink and improve profitability,” said Ramos. “In recent years, data analytics has improved by using advanced AI and predictive algorithms to analyze transactions in-store and online. This data is vital for retailers to identify potential theft or fraudulent behavior in real-time, enhancing their ability to respond swiftly to threats such as returns fraud or internal theft.” Analytics have created a world in which decision-making has become much more deliberate. Being able to see data in real-time and analyze past performance enables retailers and employees to also significantly shift the way they approach safety measures, shopping behavior, the customer experience, and more. Employees with real-time information can prevent loss and increase sales. “Analytics offer growth potential, providing the means to drive data and in turn, support strong decision-making,” Northrup added. “This can happen both at the corporate level and on the floor for the everyday employees. They are now better equipped to understand what’s going on in the store each and every day.” “Let’s say a theft incident occurs, and the perpetrator heads to another store in the same market,” shared Stark. “With License Plate Recognition (LPR), the car license plate is loaded into the system, and staff would immediately be alerted as the car pulls

Innovation Special Edition 2023

solutions that balance our needs and the cost of the solution with minimal impact on other resources, such as headcount, resulting in lower shrink and less risk.”

An Optimistic Future As data analytics aids in simplifying operational functions, performance will continue to improve, and most importantly, it will create safer working and shopping environments. “The outlook for loss prevention is promising,” said Ramos. “With the integration of AI, machine learning, and real-time data analysis, the field of loss prevention is poised to become increasingly proactive, precise, and simple for retailers to implement. Through actionable insights from data, retailers will see improved efficiencies. The continued advancement of analytics in loss prevention holds the potential to revolutionize the way retailers safeguard their operations and assets.” Allie Falk is assistant editor for LP Magazine where she focuses on social media, daily e-newsletters, interviewing LP experts for magazine articles, and crafting email blasts. Prior to LPM, she was a digital content marketing intern for Tyler Technologies, the leading CAD software provider in the US, where she was awarded ‘Spotlight Intern’. Allie received her bachelor’s degree in communications from the University of Detroit Mercy in 2022, where she was awarded Communications Student of 2022. She can be reached at AllieF@LPportal.com

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