Take the guess work out of securing and optimizing your business.

Going Beyond Video Review to Implement Business Intelligence Analysis

While a number of companies have specialized for some time in tools to help identify suspect transactions, the new focus needs to be on how to not only identify a suspect individual transaction but on a comprehensive, data-driven method to identify employees who are the worst offenders—by company, region, division, store.  All retailers have learned over time which type of Point of Sale (POS) transaction or combinations of transactions may indicate employee theft in their stores. Typically, retailers will have 20-30 types of transactions (cancel followed by… or no sale followed by… or excessive returns, etc.). Of the 20-30 transaction types, some are much more likely to be theft.

A great way to find top offenders is to assign a weight to each type of transaction or exception (giving higher weights to transactions with higher potential for theft), so that chronic offenders visibly bubble to the top of the list for each transaction (or exception) monitored. Doing this in combination with a straightforward and quick way to review all transactions and the associated video increases the effectiveness of the trained loss prevention professional and also provides a tool where regional managers and others can easily get involved and contribute to reducing shrink. This sounds great, but what’s happening in the actual stores?

A recent Aberdeen Group study indicated that 45% of retailers struggle to get timely data and only 26% of retailers have implemented any exception reporting program like those described above. Since Big Data management tools that deliver timely data are increasingly available, and there is minimal capital investment to implement a cloud-based Big Data exception reporting solution, we expect the percentage of retailers who implement such reporting systems to greatly increase over next few years.

Business Intelligence in Action—Three Mini Retail Case Studies

Dead Simple to Use. One of my favorite retail loss stories is from one of the first end users I worked with to implement an exception reporting business intelligence software product. Upon implementation and full monitoring of POS data from this head of Loss Prevention’s 1,500 stores, the company had 8,000 employees processing over 2.5 million transactions daily. We scheduled a webinar training session with his team to get them started on the software, and in the email invitation we included a login and password he could use for the dashboard of his new LP solution. Five minutes after sending him the email, he wrote back, “I love it, it’s so easy to use I just caught the first person!” The best, most effective BI packages must be very easy to use and capable of finding “the needle in the haystack” without 16 complicated maneuvers and writing your own code. It must provide that all-important return on time invested. I recently learned that this same end user projects that one of their analysts will reduce shrink by approximately $1.2 million in one year using the software package.  One person. Over one million dollars saved. That’s huge!

Integrated Video for Instant Review. The ability to review video associated with POS exceptions has traditionally been a weakness in exception-based reporting systems. Typically, systems provide the time and date of the POS exception and then the end user has to crank up their DVR software to manually input the parameters to be applied to request the relevant video. In such scenarios the end user has to wait for the video to be uploaded from a distant store. In most retail applications the network links to the stores are very low speed—we have customers who still have 64Kb transmission—and security video almost always is allocated only a portion of the network connection, so more critical store operations such as POS and credit card data can be processed. I have seen it take more than 10 minutes to review a one-minute POS transaction. This is not very good when measuring return on time invested especially when it’s repeated over and over.

The best BI software utilizes a scheme where all POS exceptions that show high probability of theft, and therefore are expected to be viewed, are uploaded to the cloud in the background, when bandwidth is available, where they can then be played in a “YouTube” like video format. By using such a video preload capability, one end user’s corporate investigators, who had been closing just one or two cases a month, closed 100 cases in the first full year of use. Because they could review video quickly they were able to look at far more exceptions and close more than 5x the cases on an annual basis.

Using Video for What Can and Can’t Be Seen. Tight integration with video enables Loss Prevention professionals to create compound exceptions that are based not only on POS transaction data but who is in the camera scene as well. Using that capability, we can create an exception for a product return when no customer is present. We use video analytics to review the video for a customer in the area where a customer should be standing during the return.  If there is no customer, then we flag the exception as a return with no customer present. The odds that this type of transaction involves theft are very high. When we turned this function on for one end user who had only 100 stores, they caught 30 employees in the first month. Several were trusted employees in good standing who had worked for the company for over five years--proving you often really don’t know where your shrink is coming from.