In the late spring of 2001, I wrote an article for the premier issue of an industry magazine that turned out to be the cover story for that edition. The story was about rrganized retail crime (ORC), and it was a subject matter about which the industry knew very little at the time compared to what it knows today. In that article, I described what ORC was, how it was happening and gave some insight on why it was happening. Now, almost everyday, there is a story somewhere in the mainstream media about how ORC has increased in the sour economy during the last 18 months or so, the emergence of legislation designed to impact ORC and the controversy evolving over the sales of stolen goods on some internet auction sites.
Several years later, I wrote another article for this same publication which appeared in its January/February 2003 edition about emerging trends in loss prevention. In that story I wrote:
“Today, more than ever, there is a need for increased intelligence and effective ways to protect assets. Access to data, and utilizing the results of the analysis [of that data] to improve productivity and efficiencies and detect potential theft, fraud and other forms of loss is essential. Effective supply chain monitoring by loss prevention will uncover and resolve many opportunities to impact previously unmeasured loss, from outright product and cargo theft to vendor manipulation and fraud.”
In that story, I also pointed out among other observations how ORC was a growing concern; refund fraud was an area of opportunity for retailers to improve their bottom lines; tracking product in the supply chain through various overt and covert technologies was emerging; how data mining techniques were leading to rules based exception reporting; and how intelligent video technology networked through internet protocols would eventually replace the analog cameras in which so many of us had made heavy investments.
That story ran more than six and a half years ago, and today, retailers are using collaborative data bases to share ORC intelligence (albeit with some room for improvement, but it’s a start), how numerous states have written statutes into law identifying ORC crime and assigning appropriate penalties for those crimes. In addition, some retailers are using covert GPS tracking technology to detect when their cargo in their supply chain has suddenly gone off course and its use facilitates the subsequent investigation leading to recovery. Retailers are also increasing their use of IP cameras to supplement operational business intelligence collection designed to improve store operations as well as loss prevention efficiencies.
So now, more than halfway through 2009, what emerging trends do I see evolving in our industry that will help us as we move into the second decade of the 21st century?
The supply chain remains a fertile pioneering field for loss prevention and it starts with our taking the initiative to assess the risks of all of our vendors: those from whom we purchase merchandise to sell in our stores and on our websites, as well as those from whom we purchase goods and services. Risk assessment technology integrated with rules-based exception reporting through sophisticated data mining techniques will have a measurable impact on profitable business continuity for retailers.
The recognition of the value of implementing business intelligence software will increase, leading to more and more valuable business intelligence technology with greater and faster return-on-investments for retailers. The outsourcing of the analytics to trusted service providers will grow more commonplace as retailers realize they really don’t need the cost burdens associated with the overhead to support an internal infrastructure and can gain more efficiency through a SaaS [software as a solution] model with a trusted provider.
The effective use of video facial recognition technology will grow in the retail industry. I predict it will start its growth in access control (maybe in the IT centers) and will quickly spread to the stores where it will be networked to identify apprehended thieves to provide responding law enforcement with undisputable historical evidence to increase the criminal charge from shoplifting to ORC felony levels.
And, finally, I predict that the primary purchaser of IP cameras within retailers’ organizations will not be loss prevention but store operations and perhaps the merchandising or marketing departments. Loss prevention will be a beneficiary of these purchases, but the capital budget necessary will come from someone else’s budget, not loss prevention.
So here is the challenge for the leaders of tomorrow: resurrect this article six or seven years from now and see if my predictions were accurate. There will be some from the group of retail loss prevention leaders of today who will be writing articles then about emerging trends, and I really look forward to reading them.