Reducing Retail Shrinkage With Video Surveillance

The evolution of in-store shopping behaviors combined with the continued e-commerce boom has increased the importance for retailers to secure profit margins. Loss of inventory due to customer and employee theft can impact these margins significantly, meaning theft prevention should be a key focus area for retailers. The numbers prove this: According to a survey from the National Retail Federation and consulting firm Appriss Retail, retailers lost nearly $62 billion in 2019 due to inventory loss, representing 1.6 percent of total sales for the year. However, retailers can prevent such shrinkage — both inventory and profit-wise — by implementing video surveillance tools with powerful analytics technology that can address core issues and provide helpful solutions.

Direction Detection

Video-based people counting is an established solution in retail, but it’s also important to know where exactly shoppers are travelling throughout a store. For instance, if a customer tries to access restricted exits or store areas, which could be indicative of foul play, video surveillance tools should be able to detect and react to such activity if no employees are around.

Direction detection technology is a robust video surveillance solution that’s capable of tracking customer movement in a defined store area. In addition to tracking visitor numbers, analytics featuring direction detection can trigger an alarm when someone enters or exits through an area they’re not supposed to. This detection technology can further be enhanced by, for example, integrated flashing lights or alarms that alert shop staff and security guards that there's reason to investigate the encroached area.

Random Screening Selection

Luxury shops and large distribution centers are two areas in the retail world that typically experience significant inventory loss due to internal theft. While employee theft is a major cause of retail shrinkage, retailers often neglect to consider this when it comes to loss prevention strategies. This leaves gaps in video surveillance coverage — such as in staff-only areas — meaning internal thieves know exactly where to go if they don’t want to be caught on camera doing anything illicit.

In addition to increasing surveillance coverage in a store where appropriate, one of the best strategies retailers can implement to reduce employee theft is to conduct spot staff inspections, which means randomly selecting staff members to undergo inspection without prior notice. However, if this type of strategy is not carried out carefully, staff morale can become extremely damaged. With the use of enhanced people counting analytics technology, these spot checks can be systematically carried out without allegations of unfairly targeting certain employees. Furthermore, these analytics systems are customizable, meaning the selection percentage can be adjusted, and organizations can decide how to alert security personnel when a check is due. This random selector technology is especially well-suited to self-checkouts and store exits.

An Integrated Approach

While video is still the most utilized form of physical loss prevention technology, it’s important to take an integrated approach to ensure the highest caliber of inventory — and profit margin — security. For example, combining point-of-sale video surveillance with exception-based reporting that can analyze transactions and pick out abnormal behavior, along with electronic article surveillance (EAS) tied to video for verifying events, is an incredibly effective way to reduce shrinkage.

It’s also important to consider that certain store areas are at higher risk for theft than others, and both employees and customers are capable of figuring out different ways to take items from stores without paying for them. However, advanced video analytics offer a plethora of solutions that can reduce such cases of retail shrinkage. This technology can help protect against theft, for example, by conducting automatic shopping basket analysis to identify items that have entered a basket but not been paid for. Additionally, retailers can implement clever algorithms to detect theft at self-service checkouts where shoppers may try to avoid scanning items.

As the retail industry continues to change and evolve, loss prevention strategies must keep up as well. In many cases, the hardware investment has already been made, so integrating physical solutions with intelligent software-based solutions should be a key consideration for retailers looking to tackle inventory loss head-on. By taking advantage of modern video surveillance and analytics technology integrated with other systems, retailers have the opportunity to significantly reduce shrinkage and protect profit margins now and in the future.

Hedgie Bartol is the retail business development manager for the retail segment in North America at Axis Communications. By combining intelligent technology and human imagination, Axis Communications offers solutions based on sight, sound and analytics to improve security and optimize business performance.