According to a National Retail Federation survey from 2010, at that time only 25 percent of retailers integrated POS and video. The problems preventing this integration were lack of standards, numerous different POS systems, and other compatibility issues between video and POS information. Five years down the road, this integration has gained much popularity and is now commonly used by retailers. a&s spoke with several companies to learn more how POS and video integration help retailers with loss prevention.
POS and video integration is gaining ground and is now becoming an industry common practice. Although several challenges still hinder their full integration and then further stop sweethearting.
Market segmentation is not the only problem facing the integration of POS data with other systems. Knowledge gaps as to what solutions are available to retailers, or even what this integration means are faced by solution providers.
“One of the challenges is the lack of standards in regards to integration. We see that the definition of POS integration is very broad. Each client interprets it differently, from text overlay on the video to more advanced solutions. Even end users don’t have a consensus on what it means. There is also a market education problem, some clients don’t even know what is possible,” mentioned Mike Compton, President of Digiop.
Even when a client decides to go forward with POS-video integration there are internal hurdles to be overcome. “In some chains the IT department wouldn’t allow access to the POS data for fear of exposing customer payment information. In others, the providers of the recording technology didn’t have open standards or the framework to correlate the transactions with the associated video,” explained Scott Thomas, Global Director of Business Development for Retail and Banking at Genetec.
With numerous POS vendors, data being handled differently from system to system, and no industry standard in sight, individual development efforts are required for each new integration. Digiop is taking a different approach, rolling out later in 2015 a universal driver for POS integrations.
Fighting “Sweethearting” Scams
One of the most common forms of fraud involving employees is “sweethearting,” in which the cashier passes items without scanning them for a friend or family members. This sleight-of-hand at checkout is particularly difficult to spot and several solutions involving the integration of video surveillance and POS data are trying to solve this problem.
Retailers do data mining on their POS data and try to find anomalies in cashiers’ performance. To tackle more sophisticated fraud, like “sweethearting,” data analytics may be required in combination with video analytics. However, exception-based reporting is looking for the exceptions, it assumes that the rest of the times everything is okay.
“The problem is that exception-based reporting is looking for the extreme situations, and can’t detect the ones that are hidden by environmental ‘noise’ such as employees continuously stealing small amounts avoiding detection,” Malay Kundu, Founder and CEO of Stoplife Checkout Vision Systems said. “Sweethearting is an Achilles heel for retailers. It leaves no data trail and can’t be data mined and detected using POS data.”
Are Video Analytics Reliable?
Opinions in this matter differ and should be reviewed critically. “The market is still suffering from the stigma created by early players and fallout for early adopters in the analytic space. Analytic engines in the market are now mature, but market acceptance hasn’t quite caught up. However, we are starting to see the tide changing in terms of perception as we demonstrate more real-world examples of how analytics have successfully been used,” said Justin Lee, GM of Asia at Tyco Retail Solutions.
While video analytics have good performance and usability in applications like heat mapping, identifying dwell time, and customer flow through the store, successfully detecting sweethearting is more challenging.
Future Prospects
Technological improvements, among them the growing use of IP equipment, will make integrations easier. “Going forward, increasingly we’ll be able to get data directly from central computers, as opposed to connecting with every register. Connecting with every register right now is somewhat of a hardware nightmare. The challenge will get easier as data exchange formats mature and we see more IP adoption,” predicted Charlie Erickson, Director of Product Management at 3xLOGIC.
Together with the growing adoption of IP infrastructure, more and more integrations will be possible. These integrations of different systems will allow retailers to gain insights and benefit beyond loss prevention. The combination of POS data, video footage, video analytics, and data mining will help retailers not only curb shrink, but more importantly get a more complete understanding of their clients, what they buy, where, and how.