A timeline of the history of retail loss prevention surely would have as one of its key moments the introduction of video surveillance.
It began in the 1970s, when analog cameras came on the scene to offer evidence of crooks coming into stores and doing bad things. But as any loss prevention expert knows, those early days of video were marked by streaky, grainy and haphazard images.
“We’ve all seen those old videos,” says Alan Davis, co-founder and president of Iomnis Surveillance Solutions. “In the first clip you see them walking toward the counter. In the second frame they are already over the counter. In the third frame they are out the door. It didn’t catch a whole lot.”
With the advent of networked IP video, companies like Iomnis are changing the paradigm for how retail LP is using video in stores going forward. Loss prevention remains the primary activity, but video’s use is expanding to other retail touchpoints, including marketing, merchandising and store operations.
While IP video has been around for several years, camera technology also has improved considerably. Combined, the two are creating new efficiencies for retailers, Davis says.
“You can actually catch quite a bit with the three-, four-, five-, 10- and 20-megapixel cameras. You not only can see the person clearly, but you can actually count the hair on their face,” he says. “It’s a remarkable change. IP allows us to do those things.”
Video seems to have become a staple technology. A September 2011 study from the nonprofit Urban Institute chronicled how public video surveillance systems are helping reduce street crime in American cities like Baltimore, where more than 500 cameras have been placed downtown, and Chicago, where police officers can monitor some 2,000 cameras in real time. And in April 2013, a retailer’s video provided to law enforcement led to the identification and eventual capture of the alleged perpetrators of the Boston Marathon bombings.
IMS Research reports that the video surveillance market is heading for “a tipping point” in 2014, when network video surveillance sales will overtake analog equipment sales. A June 2012 report from researcher MarketsandMarkets forecasts that the global video surveillance market will reach $25 billion by 2016, growing at an annual compound rate of 19 percent.
Advances in video surveillance technologies have occurred rapidly over the past decade, MarketsandMarkets notes in its report. “The innovation of digital systems has made it swifter and systematic to store and retrieve data as compared to wasting time in watching videotapes,” the report said. “The video surveillance industry is surging rapidly, not only in terms of technological advances, but also in terms of adoption in new applications sectors.”
Operations and PCI functions
Networked IP camera systems represent a major technological improvement over the old analog systems, Davis says. Besides producing higher quality images, emerging IP systems are smaller, more functional and easier to operate. Users can quickly access video data through Internet applications with the ability to finely specify activity through pinpoint framing.
Davis says IP video gives loss prevention the ability to escape what he calls “pseudo loss prevention,” where the focus was more on reacting to losses rather than preventing them in the first place. Cameras fixed on the point of sale to deter internal theft and scams, for instance, can detect schemes like the “friendly cashier” who fakes the scanning of merchandise on barcode readers or the customer service associate who accepts unpurchased merchandise for return.
He also notes that video is creating opportunities for savings by supplanting many visible signs of store security, like LP personnel stationed at entrances and exits.
The use of video in other areas of the retail enterprise represents a dynamic, fast-moving industry trend, says Brad Fick, president of Direct Source, a vendor of retail industry hardware, software, installation and integration services.
“Instead of having to send somebody out to tour the store to see if the backroom is clean or … if the fire emergency exits are clear or … if certain displays are set the way they should be, you can actually do that now in real time with true IP-based technology,” he says.
Fick says he has also worked with big-box clients on using video monitoring to secure network rooms that house payment information. “They would be able to show for PCI reasons that nobody entered the room without authorization,” he says. “If somebody entered the room without authorization you have the video.”
Noting that loss prevention budgets often go wanting when compared with other business units like marketing and information technology, Davis says retail LP should expect to benefit greatly when other departments are sharing in the costs.
“One thing that loss prevention always has trouble with, no matter how much money you have or don’t have, is that you do run out of money,” Davis says. “If you are dual purposing these cameras for marketing, store design, traffic flow and loss prevention, you’re dipping into a lot of different budgets.”
An IMS Research study, “IP Trends in Security — A Survey of Systems Integrators and Installers in Europe and North America — 2012 Edition,” noted that IT managers, whose budgets are typically larger than those of security, will be among “key influencers” determining which IP-based video surveillance products are chosen.
Rather than security managers acting as the primary buyer of IP-camera systems and going to the IT department about incorporating the equipment into the network, “increasingly the IT department will buy the security equipment from their budget and incorporate the device into their network,” according to the study.
Traffic-counting and analysis
Store design, analytics and traffic flow figure to be primary areas of IP video use that will be of great interest to store marketers and merchandisers, Davis says.
In convenience stores, cameras are being used to track how customers make their way to items for purchase and what path they travel in stores, he says; the c-store industry is using the data to situate goods, for instance, to help customers flow quickly in and out of the store.
An emerging use for IP video is dwell analysis or people counting. Analytics permit retailers to identify attributes and patterns of behavior through analysis of video streams. Content can be indexed and searched quickly in near real time, allowing organizations to respond quickly to video data and security challenges faster and more effectively, according to one solution from the IBM Intelligent Video Analytics platform.
“By using video, you can say, ‘Here is how the flow in our store is working. If we make some adjustments, people will see some of the other products in our store and be able to leave quickly,’” Davis says.
Iomnis Surveillance Solutions also is working on the design of stores, warehouses and retail distribution centers through networked IP video systems. The company’s software can upload computer-assisted design files and blueprints and build virtual tours of areas where designers can “walk around in first person and third person,” move virtual objects around and save desired files back into the CAD.
With these simulations, “you can see how the traffic … and the flow of your store changes when you move gondolas around,” Davis says. With virtual cameras in place, designers can ensure, for instance, that blind spots for both store design and loss prevention purposes are eliminated.
With virtualization, some retailers are finding they no longer need to build expensive models of stores or departments, he says.
“You will essentially build copies of stores where you can move merchandise around to make sure they have the right feel before you build … or change a bunch of stores. You can look inside and see the walls,” he says. “We can color them for you. We can add lighting … [and] virtual people.”
Remote support and monitoring
Fick says developments are moving quickly in the networked IP video space. Systems are increasingly being tied into tablets and smartphones that give store personnel increased mobility in loss prevention and store operations.
In some instances, store personnel are using the devices to feign conducting inventory checks while easily tracking suspicious activity and feeding real-time information to the server. Managers visiting stores can also monitor store activity from their mobile devices before entering the location, Fick says.
“They can do all of these compliance checks before they even show up,” he says. “We’re seeing more and more remote support for the stores or remote compliance monitoring for the LP technology.”
Despite the promise and opportunities, Fick says the retail industry’s adoption of networked IP video will need some time to gain a foothold in C-suites before accelerating. The industry still has many questions about the best way to deploy it and the business case is evolving, he says, adding that supplanting analog cameras with IP video doesn’t always mean fewer cameras, but does mean greater flexibility and coverage.
“There’s an investment,” he says. “You’ve got to get senior management to understand not only the return on investment, but the additional value beyond the ROI that the retailer would get.”