Magazine Article | July 1, 2003

Quit Getting Robbed

Source: Innovative Retail Technologies

Survey says: retailers lost $32 billion in inventory shrink last year. What security systems are you deploying to avoid increasing that statistic?

Integrated Solutions For Retailers, July 2003

etailers hurt by a stumbling economy should first consider those investments that will help stop fiscal bleeding that's preventable. Today's retailer can't avoid operating with a cost-side-down mentality, but certain expenditures that provide real, quick payback value and help stores save margins shouldn't be overlooked. Integrating a security system with your POS is a good place to start. Here, Lee Pernice, retail marketing manager at ADT Security Services, shares her thoughts on the benefits of POS/security integration.

1. What kinds of security solutions are recommended for retail environments?

Pernice: There are a variety of security solutions available to retailers to address a number of issues. According to the 2002 National Retail Security Survey, conducted by the University of Florida and funded by ADT Security Services, Inc., inventory shrink cost retailers more than $32 billion in losses in the United States alone.

Traditional electronic article surveillance (EAS) systems and source tagging programs help retailers attack shoplifting, which is responsible for 32% of total shrink. However, these systems are now being integrated with POS transactions and data mining software to help retailers manage their EAS programs on an enterprise-wide basis from a single location. ADT Security Services recently introduced UltraLink alarm management systems that provide automated alarm logging, centralized analysis and reporting of alarm events, and the ability to tie digital video images to those events.

Employee theft is also an ever-increasing problem for retailers, with more than 48% of all losses coming from this source. This is an all-time record high for this category. Retailers are turning to digital video, data mining, and integrated POS/EAS deactivation to stem this flow. ADT partners with companies like Datavantage to marry POS exception monitoring and data mining with its Intellex Digital Recording Devices.

2. What kind of demand is there from large retailers for security solutions?

Pernice: There is a large demand for all of the solutions mentioned above. With retail sales slowing, new store openings on the decline, and a generally tough economy, retailers must look to technology to help them increase their profitability.

3. How do security systems integrate with and maximize the use of LP (loss prevention) programs?

Pernice: All loss prevention programs today build upon each other. New advances in automated alarm management not only help identify areas of losses, but also can contribute to more efficient operations throughout the store in areas such as employee training, source tagging compliance, and EAS system diagnostics.

4. What are the three most important features any retailer should look for in a security solution?

Pernice: Compatibility with existing store operations, ease of use, and features that allow the security solution to work in harsh environments.

5. Where's the justification (both obvious and not-so) for upgrading security solutions?

Pernice: As with any technology, advancements bring new benefits. Just like POS systems, security continues to evolve. Today's UltraMax anti-shoplifting systems deliver a higher performance rate because they are not affected by metal or liquid content and have a small footprint, which allows even the smallest items to be protected against theft. Deactivation devices have also evolved so that they are now integrated into the actual scanner, saving space at the front end and providing seamless deactivation. Digital video recording is far superior to the analog VCR units that many retailers have in place. Digital video can be compressed and sent over networks to centralized locations, the images do not degrade with use, and the "visual information" can be linked automatically to pre-determined events.

6. With what other retail systems SHOULD a security system integrate, and why?

Pernice: A security system should be integrated with the POS to stop employee theft and with wireless networks to move video and data to a central location to enable enterprise-wide management of a retailer's loss prevention program. Security solutions also can be used to help monitor merchandising displays to ensure that the proper products are in the proper place at the proper time.

7. To what degree do security systems need to be customized from retailer to retailer?

Pernice: The foundation for security systems is fairly standard. The customization plays a role in the size of the location and the amount of individual components that are needed.

8. What's the future in security systems for retailers? What's the vision?

Pernice: Many retailers are beginning to look at radio frequency identification (RFID) applications to address losses in the supply chain. While today's security solutions are effective in preventing losses in the front of the store, RFID will provide enormous benefits to what some experts claim to be a $250 billion a year problem created by inefficient supply chain management.