Magazine Article | May 20, 2008

Inside H-E-B's DVR Implementation

Source: Innovative Retail Technologies

Digital video reduces shrink, improves safety and operations at $11 billion H-E-B.

Integrated Solutions For Retailers, June 2008

FeatureH-E-B is the 100+-year-old staple of the Texas grocery scene, a 300-store dynasty, if you will, that stretches into Mexico and employs 60,000. It's the safety of these employees (along with the 370 million customers it serves annually) and the protection of its $11 billion in sales that led the family-owned business to implement first-generation DVR technology in 100 of its high-risk stores back in 2003. The company ranks among Forbes' top 10 privately held enterprises in the country, and its DVR investment is seen as one means of preserving the revenue and reputation it built to get there.

The technology in the initial 100 stores outfitted with DVRs became outdated fairly quickly, and in 2006, 200 of H-E-B's stores were still running what Lexie Granderson, director of LP (loss prevention) planning and analysis there, deemed "antiquated" VCR systems. "With the life cycle of the VCR coming to an end, we had to find a solution to replace all of our VCRs," says Granderson. In addition to VCR technology becoming obsolete, it was time-consuming and labor-intensive for the area loss prevention managers at H-E-B to drive to stores to review videotapes. The quality of video was poor, changing tapes was a manual and often-forgotten process, and the tapes had no search capability, which created inefficient investigations. But as it embarked on the search for a DVR provider, Granderson says her department was careful not to choose a technology that was too sophisticated to operate. "Our store-level personnel are not necessarily technology savvy, nor do we want them to have to spend much time with a DVR system. They are there to sell groceries. So we sought an affordable solution with a solid warranty that employees at all skill levels could operate." 

Choosing A DVR Solutions Vendor
H-E-B has honed a sophisticated approach to security and shrink prevention. The company's LP department applies what it terms a shrink-and-security toggle to each store. Technology needs are based on the findings of this methodology.

H-E-B's DVR system RFP process began collaboratively between the grocer's LP and IS (information systems) departments. The main decision-making team consisted of Granderson and the systems integrator from the LP department and three people from the H-E-B IS department. The LP representatives lobbied for the company's needs from a business perspective, while IS represented the company's network, installation, and maintenance concerns.

Initially, eight DVR vendor solutions were in the running. Each vendor was given a thorough questionnaire, and H-E-B's LP department executives met with each to discuss its unique requirements. Based on findings of the questionnaires and face-to-face meetings, the number of vendors in the running was whittled to three. Those final three contenders' solutions were brought into H-E-B's lab, where the retailer's IS department tested them on the network. When it chose the solution from Mitsubishi, H-E-B kicked off a 60-day test to validate its decision.

Granderson says that cost and user interface simplicity were major factors in the decision, as was Mitsubishi's warranty. "They offered a five-year warranty, which was unheard of in the industry. All the other manufacturers in the running offered no more than three years," she says. Finally, Granderson says the vendor's diligent response to requests throughout the RFP process also set the tone for the level of customer service H-E-B came to expect.

"When we started the RFP, Mistubishi offered us a different solution than the one we're currently running. Once we piloted it, they told us that it was really more than what we needed and set us up with a more cost-effective, tailor-made, equally functional alternative." Upon completion of the 60-day pilot, rollout commenced and was complete within six months. A total of 800 DVRs were installed in the 200 stores that were previously running VCRs.

Training: Multiple Disciplines, Multiple Approaches
Prior to installation at the first round of stores, the Mitsubishi team trained the LP and IS teams at H-E-B for three weeks on the use of the system. During installation at the first round of stores, the H-E-B team traveled with Mitsubishi and assisted with the creation of step-by-step guides for future installations. The vendor and retailer also worked together to customize end user training for H-E-B's different constituents: the LP and risk management offices, which each use data from the DVRs, and the store-level associates, who are tasked with device-level operation of the units. Because each team is focused on using the system in slightly different manners, training and supporting documentation were customized. Then, the LP and IS team at H-E-B spent three weeks traveling to stores to train store-level associates (LP managers and store leaders).

Networked, Centrally Monitored Video Enables Control, Integration
The Mitsubishi DVR solution is network-enabled, meaning video data can be shared over the network. "We're able to work cases a lot faster now," says Granderson. "Before, we would have to drive to our stores to work on cases, and LP staff was forced to pull tapes and search them for events. One LP manager could be responsible for 16 stores, which can span a 5-hour drive in Texas," she explains. Today, LP managers can log on to the system via H-E-B's broadband network. Remotely, they can review video footage or even log in to a store camera in real time. This saves hundreds of man-hours and thousands of dollars spent on fuel.

The networked system enables central monitoring of stores for alarms. Previously, LP staffers were alerted to alarms via automatic e-mail. Today, e-mail alerts are sent not only for alarms, but to notify headquarters when a DVR has lost power or if a hard drive is malfunctioning. In addition to the e-mail message, the DVR system integrates with proprietary software at H-E-B that sends on-screen pop-up windows to an LP monitor's work station and the central station linked to the camera, door lock, or fire alarm that detected a problem, enabling video verification of alarms. The Mitsubishi system also features a health alert monitor that can be accessed via dashboard to ensure that security devices on the network are functioning properly.

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 On The Web: The NRF Loss Prevention Expo Vendor Spotlight.


Since the DVR project was implemented, H-E-B has worked with Mitsubishi to customize some software integration. Specifically, the vendor and retailer worked together to build an interface between the DVR system and H-E-B's POS software. This software allows HEB to search by different criteria, including transaction number. "For instance, say a customer comes in with a receipt and says, 'I bought baby formula but didn't get it.' We can type in the transaction number, and it takes us right to the video of that transaction," explains Granderson. "The video shows everything that was purchased in that transaction and how it was paid for all through our POS data. So we can say, 'Sorry, ma'am, we have video showing that you purchased it and we put it into your cart."

With much work done, the project is not yet complete. H-E-B plans to install the system in its 25 Mexican stores, which are currently running the first generation DVR solution the chain had been using previously. But before the system can be rolled out south of the border, Mitsubishi is creating its user interface in Spanish. Then, H-E-B will handle training for the Mexican stores.

Granderson admits the project was an expensive undertaking that did not yield immediate ROI. "The reason for the overhaul was to switch out the VCR," she says, and because a DVR is considerably more expensive than a VCR, there's no increase in ROI based on the switch-and-replace alone. But Granderson's rationale for real-time, remote security is much bigger than dollars and cents. "We know we're more efficient from an operational and case management standpoint, and we know our video quality is much better. But as for ROI, you can't put a dollar amount on someone's life," she says plainly.