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The right balance for retail budgets?

by Benchmark

The cost of retail crime is significant, with the latest figures from the British Retail Consortium estimating the annual cost to be £660 million. Despite this, many retailers are under financial pressure and are therefore reluctant to increase investments in security systems. Installers and integrators must add value to systems in order to win contracts, and today’s technologies make this a simpler task for many applications.

Retail crime is a massive business, costing over £660 million per year according to the latest figures from the British Retail Consortium. The fact that retail crime has such a significant impact on the sector could be construed as showing that security systems have little impact on the problem. However, this is much too simplistic a view to hold.

The problem with retail crime is that it comes in many different guises and is affected by several factors, which can change rapidly. The retail environment is, by its very nature, a high risk one. Most retail outlets have to be welcoming and have the most sought-after goods – usually the high price items – on display. Such open access to valuable goods will always attract the attentions of criminals as well as legitimate shoppers. The problem here is that the precise offences committed are hard to predict, and could cover theft by customers and staff, shoplifting, violence or the threat of violence against staff, robbery, fraud or vandalism.

Identifying potential criminals is also very difficult. They can operate alone or in gangs, use fraudulent methods or intimidation, be young or old, even be or in collusion with trusted members of staff, etc..

For these reasons, predicting retail crime and acting accordingly to mitigate the risk is difficult.

The numbers

The report illustrates the breakdown of risks faced by retailers. The largest risk remains as customer theft, which accounted for 75 per cent of all offences recorded over the survey’s 12 month period. It also is responsible for 66 per cent of all losses (£438 million).

The report identifies that one of the issues potentially driving the prevalence of customer theft is that the police do not tackle issues of theft due to the lack of resources, which coincides with a growth of organised criminal gangs targeting the retail sector. IT is worth noting that 56 per cent of retailers indicated that they believed the police performed ‘poorly’ or ‘very poorly’ with regard to tackling retail crime.

The second largest risk is fraud. This accounts for 18 per cent of incidents, with losses estimated at £183 million. The threat of cyber-based crime is also highlighted as something that retailers expect to grow significantly in the next few years. However, currently it is unlikely to become more significant that incidents which occur at high street premises.

Violent crime has also risen by 40 per cent in the past year. Violent crimes represent 4 per cent of all incidents. These are comprised of violence with injury, violence without injury and abusive or threatening behaviour.

The remaining three per cent of incidents are made up of burglary, robbery, criminal damage and theft by others.

Adding value

Some installers and integrators take the view that retailers often consider security systems to be something of a grudge purchase. Whilst many retailers do look for cost-effective solutions, the reality is that any security system which does not offer a potential return on investment will often be viewed as having a lower value proposition.

To be fair, this is generally true of any security system (or for that matter any system) sold into any application. The evolving technological landscape has conditioned an increasing number of businesses and organisations to expect added value from advanced technologies.

It is important that installers and integrators properly differentiate value from price. Good value does not always mean the lowest price. Indeed, a low cost system with little return on investment will be poor value, while a higher price systems with additional benefits for the retailer will represent better value, as the return on investment is enhanced.

A focus on price will often lead to the specification of a basic system, and this will inevitably mean that added value elements cannot be introduced. The irony is that by aiming to hit a lower price point, the offered system has less value for the retailer.

Some might think that networked and integrated systems are too costly for retailers. The feeling of some installers and integrators is that an investment in IP-based systems simply cannot be justified for such applications.

It must be accepted that chasing a low price is all well and good where the retailer simply wants to record average quality video, maybe looking back at it once an incident has occurred. However, the capabilities of IP-based systems has changed dramatically in recent years, and so have the attitudes of many retailers.

Meeting needs

Technological developments in sectors outside of the security industry – smartphones and tablets, advanced communications, flexible and mobile IT, smart buildings and the Internet of Things – have dramatically changed expectations.

Not only do retailers expect additional flexibility, functionality, scalability and enhanced performance, but they are willing to invest in systems that deliver it. Business intelligence and the addition of management benefits serve to make investments in security more attractive, because they add a real return on investment.

Selling a network-based solution to a retailer shouldn’t be a challenge, as they will already be using the technology for other systems. It makes no sense whatsoever for any retailer, small or large, to rely on network technology to run its core business needs (stock control, accounting and invoicing, communications, customer management, marketing, etc.) but to opt for a separate, isolated and somewhat limited technology for the system that provides security and site control.

There will be those who argue that security should be kept apart from other systems, but such thinking has to be put into context.

Networked security systems are actually advanced data collection and management systems. Much of the data collected can used to realise benefits in other business areas, and as such add true value and a genuine return on investment. If offered the ability to use that data without compromising the overall security of the site, will any retailer ignore the potential benefits in favour of a small cost saving and a less effective system?

Retailers’ expectations are increasing significantly, but the cost doesn’t have to. Many of the developments allowing smarter system design enjoy economies of scale, and the price differential between a ‘smart’ and ‘dumb’ system is not as great as many think.

Because of the inherent flexibility of IP-based systems, these solutions offer scalability, meaning that as the retailer’s needs change, the system can be expanded or upgraded without the initial investment being wasted. Existing devices can be used as a part of the upgraded solution, with new devices easily added. These include access control, device automation, business intelligence, smart technologies, marketing products, etc..

Retail benefits

Professional networked security solutions from credible manufacturers are typically flexible systems which have been specifically developed with the needs of certain applications in mind. Often feature-rich and designed for specific challenges relevant to retail applications, the systems can offer a wide variety of added-value elements that bring efficiencies to the retail environment.

For example, an IP-based video surveillance system can offer a cost-effective high quality security option that helps to prevent theft in store.

The captured video can also provide a range of other benefits too. It can be used to deliver heat maps, identifying the areas within a store where footfall is most prolific. This adds value when merchandising, which in turn can ensure the store layout is optimised for revenue generation.

Analytics can also assist with queue monitoring. The high street retailers are under pressure from on-line suppliers, and so it is vital that the shopping experience is pleasurable in order to prevent customers from spending their money on-line. Queues are a major source of dissatisfaction for customers, so the ability to quickly flag point of sale delays to management helps with customer retention. It also helps with staffing allocations, making personnel more efficient.

People counting can identify trends, helping store management to identify their busiest and quietest times of the day. This can assist when creating staff rotas, and ensures that tasks such as restocking are carried out prior to periods of intensified customer activity.

The increasing accuracy of gender and age identification analytics also ensures that stores are able to target customers with appropriate advertising and marketing messages when they are in store. By making this messaging more effective, the retailer can enjoy enhanced sales, and can also push add-on sales with precise targeting.

These various added-value propositions can also be offered as a part of the security system, and are delivered by th installer or integrator. The added flexibility eliminates any ‘grudge’ element when purchasing security systems, and also allows the retailer to allocate budget for other purposes to the system.

These additional benefits can be realised in real time, allowing the management to adopt a very proactive approach. It is also important that all the additional functions can also allow the generation of reports, enabling the retailer to cross-reference sales and staff performance with accurate data when reviewing trends and behaviours.

In summary

There are a number of important considerations when looking at retail solutions. The first is that retailers are not always looking for low-cost systems. If price is their major concern, this might be because they’re unaware of the potential for added value.

Retailers are expects in selling and merchandising; installers and integrators are experts in security, so it’s important to ensure they understand the value on offer.

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