Will Dropping Retail Traffic Impact Physical Security / Surveillance Sales?

The Wall Street Journal has an interesting review of how retail foot traffic in stores has declined very significantly since 2010. Here's a key chart:

First, a question:

In the last decade, it seemed that retail stores were always expanding. That was clearly good for security. Each new store got new cameras, DVRs, EAS, etc. Even after the recession started in 2008, it did not seem that horrible.

But it appears now that online shopping is really starting to take a toll on physical stores.

Anyone with recent experience seeing an impact or not?


fewer and fewer retail store will impact all trades also utilities, automobiles erc., etc. I see the group is only 54 stores from malls as well... did they say what is contributing to the decline? Based upon it being mall stores it would lead me to believe thatshoppers are buying online...

"Will Dropping Retail Traffic Impact Physical Security / Surveillance Sales?"

Yes.

Loss prevention budgets are predicated on physical store sales. Online sales are not included in that determination

That said, certain segments of retail won't lose in store traffic to online - Apparel/Dept. Stores, Food & Drug and DIY being the leaders of that group

Scott, do you think that will make physical retailers more aggressive about adding technology like analytics (to try to stem the declines) or less motivated to do so (i.e. why through good money after bad?)?

First off, most retailers have an online presence, so whether you buy it online or in the store, they just want you to buy it now while you're thinking about it. One of the key buzzwords in retail right now is "omnicahnnel" which is the strategy of immediate fulfillment whether you're online, mobile or in the store.

If you see something you want, they want you to buy it right now - wherever you are:

So the while the in store experience is still important, it's now just a piece of their overall strategy. When customers are in store the technologies they are primarily spending money on are those designed to drive that sale and whatever impulse (add on) sales that can go with it. A great example is the technology used in department stores that allows a customer to scan the UPC of a red dress on a tablet or kiosk then offers suggestions for shoes and a handbag to go with it.

The other technologies that are hot are real time inventory and replenishment. If that red dress is not in her size when she gets to the store, she may go looking for it at a competitor or just forget about it. This is where employee engagement in the store becomes important. The sales associate can either try and find it at another store, see if it's available from online or in route from distribution and get the sale.

This is where analytics come in. I'm seeing there are a lot of analytics being offered to retail right now. Many of these aren't video based however.

There are multiple technologies being offered that can count traffic, track customer movements through the stores, identify where they dwell and in some cases alert employees if a customer needs assistance.

What I can't provide is how accurate the data is and how the price point compares to video analytics.

To answer your question (finally), I'm seeing some of our customers deploy the technology to try and learn more about the foot traffic behavior in the stores. But those expenditures are way behind the dollars being spent on trying to drive immediate fulfillment

Great feedback, thanks!

One other question - if foot traffic is going down, does that mean shrink/loss is declining at a similar rate or are 'old school' thieves still focusing on shoplifting / stealing from stores?

There are several major surveys done in retail each year on shrinkage. The ones I've read vary, This one said shrink rose 18% in 2012 while this global survey said shrink was flat at 1.4% of sales

The major causes of shrink in North America are consistently rank Employee Theft #1 followed by Organized Retail Crime (ORC) #2 - regular shoplifters are farther down the list

What's always been interesting to me is Europe is the exact opposite - Shoplifting is what they perceive as the biggest source of loss

"What's always been interesting to me is Europe is the exact opposite - Shoplifting is what they perceive as the biggest source of loss"

That is interesting.

Why do you say 'what they perceive as'? You don't believe what they are perceiving is true? Do they do studies like NRF does here?

For the record, it doesn't make any logical sense to me either that they should be different... :)

Or are American employees more dishonest / prone to steal from their employeer?

The surveys I cited are the perceptions of the companies that responded. Because the merchandise or tender is missing it is counted as shrink, but there is no definitive way to know how it went missing.

Some companies use their apprehensions as the basis to calculate their answers. If total shrink was $1M, and they caught $300K of employees and $200K of ORC/shoplifters they might answer 60% of their shrink was internal and 40% external.

But because they didn't catch 100% of the losses there remains a certain amount of guesswork in their estimates.

I've talked with some of the Euros retailers, and their perception is they pay their employees better so the problem is shoplifters. That said, I've also seen some of their LP programs, they are way behind the sophistication of the North American retailers. They don't use video at anywhere near the levels we do here, and what they do use is watching the sales floor for thieves rather than the POS or back doors.

As mentioned, I'm very dubious of their perception of little employee theft

hmmmm...

So, RE: retail loss statistics:

US retailers just make stuff up (so to speak), while European shopkeepers just admire the Emperors new (possibly stolen) clothes? :)

Two trends are impacting LP sales in retail. First, there is a consensus among analysts that there are too many Bricks-and-Mortar stores, which means there are going to be less stores in the future, hence less LP sales. At the same time, there is strong talk about 'knowing more' and 'doing more' with the physical store. In addition to RFID for inventory and LP management, this means a push towards in-store analytics, which, in turn, will increase video sales. How will the trends 'wash' each other remains to be seen.

That said, retailers are demanding more. Now that IP cameras are becoming prevelant and server costs go down, we will see more sophisticated video analytics. So far the focus was the cashiers area, but the thinking is shifting toward customer interactions and stay time. This is not easy to do. In a way, facial recognition is easier than people counting (motion and standing behaviors), because in facial recognition we compare images to an image, and in behavior analytics the range of motions is wide, and the technology also needs to take into account changes in temprature and shadows.

My experience has been that Europe (specifically U.K.) has always been the trailblazer in developing the technology, from counting to queue management. America, on the other, is the center of roll-outs, where both technologies and concepts are tested in detail. Asia is now pushing toward cheaper products, which changes the solution mix. To me, the charm of the business is the combination of global nuances with the consistency in requirements.

Underlying all of this is a shift in the attitude toward employees, from liablities (cost and theft), to revenue generators (engagement, training, and Tender Loving Care...). Under all the hype of mobile and analytics technology, the big change in retail is in the nature of interaction between employees and customers.

Bottom line, integrators who will make the effort to learn the 'language of retail' will win big.