Designing a retail solution depends on the nature of the business. We look at how security is implemented differently in apparel stores, electronics chains, fast-food restaurants and convenience stores. Finally, the future of retail lies in networked solutions, particularly the cloud.
Designing a retail solution depends on the nature of the business. We look at how security is implemented differently in apparel stores, electronics chains, fast-food restaurants and convenience stores. Finally, the future of retail lies in networked solutions, particularly the cloud.
Shopping behavior has changed. Stores are becoming showrooms for consumers to flip through the hottest novels, then hunt online for the best deals. The fall of US book megastore Borders demonstrates retail must cater to Web-savvy buyers. The business of retail is open access for shoppers. Security cannot interfere with sales. “The difference has to be driving business efficiencies,” said Patrick Lim, Director of Sales and Marketing, Ademco Far East. “A common method of ROI measurement would be to use value of goods stolen before and after a system is in place. However, that is quite subjective between a supermarket and a jewelry store, where the size of the crowd and average value of goods is vastly different.”
A solution must serve user needs. If a retailer only focuses on cheap solutions, it will not see robust performance, said Jun Zhou, Industry Account Manager for Hikvision Digital Technology.
Integrated security working in concert with business systems yields greater benefits. “The high-end solution comprises an integral concept in which all security systems complement each other or constitute components of one solution that are also required for other solutions,” said Klaus Lienland, Business Development for Bosch Security Systems. “This significantly reduces installation costs, line network expenditure and frictional losses between elements.”
Retailers come in many forms and with unique needs. High-end apparel and high-value electronics require asset tracking. On the other end of the spectrum, eateries such as quickserve restaurants (QSRs) emphasize efficiency.
Integration Roadblocks
Retailers may balk at security if they have a large investment in existing equipment. “If everyone built new stores and didn't have legacy products, it would be different,” said Jim Shepherd, National Account Manager at Protection One. “But most retailers have legacy products, which you have to breathe life into and maintain. Retail has become a hybrid investment, where they continue to support the legacy equipment and migrate portions to IP when it makes sense.” 
Equipment vendors must provide a migration path for legacy solutions. “What that means for a retailer is there is no need to forklift products and throw stuff out,” said Kostas Mellos, Commercial Leader for Video and Transmission for Interlogix, UTC Fire & Security. “A DVR sooner or later is going to outlive its usefulness. It's better to have a plan of migration, rather than having a failure one day and trying to deal with that.” 
Each retailer has unique concerns and equipment, making integration challenging. “Probably the most interesting aspect is to interface with existing systems,” said Tom Coyle, VP of Information Solutions for Avery Dennison. “The nice thing is standards have come a long way. Now there are brokering systems that enhance the connectivity between systems. It's not simple to construct these interfaces, but it's much simpler than it was 10 years ago.” 
Bringing together old and new systems includes supporting pointof- sale (PoS) management, access control, alarm monitoring and HVAC. “It doesn't matter how many bells and whistles a technology has if those features do not add value to the customer,” said Matt Steinfort, President and CEO of Envysion.
However, integration is easier said than done. “Integration is hard because everyone does the fingerpointing game and says it's someone else's problem,” Shepherd said.
Understanding Technology
New solutions promise to ease old pains, but vendors usually oversell products. While each technology does specific things well, an isolated system will be limited.
RFID has increased uptake, as it improves business processes, said Frost & Sullivan in its “RFID in the Apparel Industry” report. Performance factors will determine the success of a deployment, such as write rates and read rates. “With write rates gaining prominence, the need to store more data in RFID chips is expected to emerge,” the report found.
Unfortunately, RFID in electronic article surveillance (EAS) can be easily defeated on its own, Lim said. This requires a secondary verification, which is usually done through video. Coyle added, “An EAS tag effectively provides a narrow functionality, sounding an alarm at the doorway. However, these EAS technologies do not provide an exact identifier for each product and store managers don't know the identity of the specific items that were stolen.”
Limited Intelligence
Intelligent video analysis has gotten a bad name, particularly for people counting. “Many people have the wrong impression that they can use the same camera for video recording and analysis,” said Wallace Ma, CMO for TeleEye. “Sometimes customers don't fully understand the technical constraints.”
Camera angles and calibration affect results, as well as retailer satisfaction. For accurate counts, other sensors can provide verification for analytics, Ma said. [NextPage]
Apparel
Shoppers can sample music online, but there's no way to virtually try a shoe on. Item tagging in apparel provides valuable inventory information while also securing merchandise. “The adoption of RFID is expected to have a significant impact on various business processes within the apparel industry,” said Frost & Sullivan in its report.
The benefit of RFID is multiplied for efficiency. “If you focus on the security piece, the security is boosted with RFID in place — not just in the store but along the chain,” Coyle said. “You pay for one capability and get many things, possibly including inventory accuracy, loss prevention, an enhanced customer experience, improved marketing and more.”
As apparel stores are designed to be inviting, security equipment should be discreet. “Products such as cameras should get smaller, not only to lower power consumption, but also to match the interior of the retail shops easily,” said Iida Atsushi, Manager of Security Solutions, APAC Professional Solutions, Sony Electronics. “Therefore an industriallooking camera would not match from an aesthetics point of view.”
While cameras are shrinking, HD imaging is booming. A shopping mall in the Philippines replaced SD analog cameras with HD ones and improved identification. “They found the video is clearer and gives them more information for management and security applications,” Ma said. 
High resolution and frame rate strengthen identification. “There are many powerful camera lenses out there that can show you exactly how the target looks, but without a high frame rate capacity of at least 60 fps, it isn't easy to capture the moment the thief puts the item into his bag,” said William Ku, Director of Brand Business for Vivotek. “Without footage of that specific scene, the store would have a hard time proving it in court, not to mention prosecuting the criminal.”
A frequent selling point for HD or megapixel is that a single camera can replace multiple SD ones. While the exact amount differs, wide areas of a store would benefit from higher resolution, such as the checkout zone or stockroom. “Megapixel cameras yield greater ROI than conventional cameras in the long run and in many cases immediately,” said Becky Zhou, APAC Sales Director for Arecont Vision. “There are also operational benefits in a retail owner's ability to view the store remotely to ensure that customers are being served in a timely manner or that employees are being honest.”
However, bandwidth constraints will limit how megapixel video is transmitted. “A 10-megapixel camera may replace five other cameras, but vendors leave out the part that it uses so much of the pipeline that it's not even usable remotely,” Shepherd said. “Retailers cannot afford to invest in the network. Some operate off DSL and there's no way to put a megapixel camera on that.”
Video produces incredible amounts of data , as megapixel increases data three- or fourfold. “For large stores with 30 to 40 cameras, it doesn't make sense to constantly transmit the video to a central location,” Mellos said. “We advise people to leave the video in the store, usually in IT closets and transmit or search for data needed.”
Transmission data that has priority over video include panic or fire signals, as well as business data. “PoS is either sent in real time, or daily or nightly,” Mellos said.
Electronics
Big-box retailers for consumer electronics boast the latest gadgets. While the customer experience is hands-on like apparel, merchandise cannot leave the display. “As demonstrated by numerous consumer studies, open display and availability of merchandise at all times have a positive impact on increasing retail sales,” said Steve Sell, VP of Global Marketing for Checkpoint Systems. “We are working very closely together with consumer packaged goods companies and retailers in developing solutions which can open up displays as much as possible.”
For an electronics retailer, sample products need to be accessible to shoppers. “We are living in a new era now and consumer experience is all that counts,” Sell said. “Imagine if retailers lock expensive high-theft merchandise into cabinets — of course there will be no shrink but sales will be largely reduced.”
A study of big-box retailers Target and Best Buy exemplify differences in their security approaches. Both sell popular Apple devices, but Target locks them away, while Best Buy does not. “Best Buy outsells Target for iPhones and iPads, because the consumer does not want to wait for someone to unlock the display case,” Shepherd said. “It goes back to understanding customers and how to impact shrink without impacting sales.”
Most large chains have a management-based plan for each store. “When a store gets secured by whatever way — be it video surveillance, intrusion or access control — the loss prevention personnel will get a good sense of how the store is doing from a shrinkage perspective,” Mellos said. “They use a significant amount of data monitoring internally to understand where shrinkage comes from and then take the appropriate actions.”
National retailers look at data in terms of value, rather than petty crime statistics. “They don't spend a lot of time on capturing criminals,” Shepherd said. “Retailers are moving from being reactive to proactive.”
QSRs
The QSR segment does not require item-level tagging — value meals do not generate the same margins as luxury handbags. Instead, efficiency is the key metric for casual dining establishments. “By The Rockies had been testing video surveillance in a subset of our locations, and we decided to capitalize on the opportunity to drive profitability improvements by integrating video with our PoS system at all of our locations,” said Mike Davis, Loss Prevention Manager. “We started by carefully investigating a variety of video surveillance offerings, and we narrowed it down to two providers.” It deploys a hosted video solution from Envysion, which was among the two options tested.
Field tests provide retailers with a better understanding of how security can bolster their business. “We work with a retailer's finance team to align on the key metrics that matter to the organization, whether it is reduced loss, improved sales conversions or lower costs of goods sold,” Steinfort said. “Then we track these metrics and measure them against both the store's performance before it implemented Envysion and a control group to filter out economic and seasonal variables that can impact a store's performance.”
This side-by-side comparison gives retailers hard data on security benefits. In customer pilots, ROI averaged 844 percent, with some retailers seeing ROI of up to 2,500 percent, Steinfort said. 
Security reports can gather relevant store data, as QSR chains operate across many locations. “A major part of our requirements was a robust and customizable reporting capability that integrated our PoS data to video,” Davis said. “We also needed an easy-to-use, single system to view video and PoS data. With more than 100 locations, we didn't have time to log into each restaurant's DVR separately to review the footage and then log into a separate system to view the PoS information.”
Effective video-PoS integration prevents and detects employee theft or carelessness. “However, to render such a solution realistic and functional, a highly complex interface is required for communications between the cash register and other technologies,” Ku said. “A system is still needed at every branch for a chain with multiple locations.”
By The Rockies was able to use video-PoS integration to identify and reduce fraudulent transactions, such as fabricated voids, refunds, discounts and comps. “As a result, we're realizing a cash impact of thousands of dollars per month per location,” Davis said. “In some of our restaurants we have also deployed audio recording. This has been tremendously helpful in validating HR claims of sexual harassment and customer complaints.”
Convenience Stores
Large chains such as 7-11 will deploy security for operations, such as alarm monitoring at high-risk stores. “A lot of our customers in the U.K. and South Africa set up security in their retail shops for video surveillance, alarms and panic buttons,” Ma said. “If there's a robbery incident, the people in the store can press a button and trigger the DVR to signal the video response center or monitoring center. Then the operator at the video response center can receive the alarm and see the live situation at the customer's premises.” [NextPage]
Real-World Solutions
While technology can work wonders, some retailers have unrealistic expectations. “Everything is possible if the funding is there,” Mellos said. “But sometimes, what we call bleeding- or cutting-edge might not be appropriate. Retail is running on fairly slim margins, so shrinkage is very important.”
In the real world, some solutions may not perform as expected. “One of the most ridiculous situations I encountered was to improve the capture of shoplifters with video surveillance integration to the EAS,” Lim said. “It sounded straightforward but because the EAS system was easily defeated by experienced shoplifters, there were no alarms in the first place. The false alarms were also quite ridiculous, as many retailers did not ‘untag' and thus a customer wearing a shirt bought a year ago would trigger the EAS system.”
For megapixel imaging, some customers do not understand the bandwidth and storage issues it incurs. “The transmission of large megapixel cameras at large quantities is the No. 1 request, or the transmission of video to a central location,” Mellos said. “It can be done, but most retailers are not willing to build or purchase the infrastructure needed to achieve the results.”
Calibrating intelligent video requires continued education as well. “The use of analytics for customer behavior is another user request, such as waiting on display or queue length,” Mellos said. “It can be done, but would be used on top of something that's working.”
Future Developments
Networking is the wave of the future. From greater visibility in RFID to hosted video, IP introduces greater efficiency in retail operations. “For many years, people have heard about the Internet of Things,” Coyle said. “In the early days of RFID, reliably collecting or reading an RFID tag could be a challenge. Nowadays the bigger issue is how to best exploit and leverage the newfound visibility data after it is read.”
One way to leverage data would be smarter search capabilities for operational benefits. “It would be great to be able to search for a specific type of repeated motion,” Davis said. “For instance, after every transaction the employee should close the drawer. If that motion is absent, it could mean the employee is purposely leaving the drawer open so he can avoid entering cash transactions into the PoS or he could have forgotten to close it before going to get the customer's meal. It's either an operational policy violation or theft, either of which needs to be corrected.”
Video analysis is becoming more accurate and using footage actively. Improvements in facial recognition, behavioral analysis and people counting will benefit retailers, Zhou of Hikvision said.
Integrating facial data with identification could apprehend repeat offenders. “Let's say a mall has a criminal record database,” Ku said. “With a real-time biometric pairing system, when anyone with a criminal record shows up, the camera would detect it and send signals to security.”
Cloud Services
Retailers receive the most benefit from hosted services, as the provider handles storage. Bandwidth increases will make hosted video more feasible. “We will see more cloud-based hosting, removing bandwidth demands from the infrastructure,” ?kesson said. “With remote access, a store manager can view the images from any number of different stores in real time from anywhere, even on a device such as a mobile phone. This is a huge change from the old analog days.”
For retailers who want information on-demand, a hosted solution can be a future-proof investment. “Users have instant access to new features and functionality by simply logging into the application,” Steinfort said. “The customer no longer suffers from the technology obsolescence that comes with model year development cycles, and the IT team is no longer burdened with software patches or equipment upgrades.”
Shoppers in stores are protected by retail security, which also makes their buying experience more pleasant. Depending on the nature of the business, security can streamline operations and provide an attractive ROI.