Frost & Sullivan - Retail Security - Discussing the Growth Potential


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Frost & Sullivan - Retail Security - Discussing the Growth Potential

  1. 1. Retail SecurityDiscussing the Growth Potential Satish Lele, Vice President Industrial Practice October 14, 2011
  2. 2. About Frost & Sullivan 2
  3. 3. The Frost & Sullivan Story Emerging Research Growth Partnership Visionary Innovation 1961– 1961–1990 1990– 1990–Today Today– Today–Future 1961 1990 TodayPioneered Emerging Market Partnership Relationship& Technology Research with Clients Visionary Innovation• Global Footprint Begins • Growth Partnership Services • Mega Trends Research• Country Economic Research • GIL Global Events • CEO 360 Visionary Perspective• Market & Technical Research • GIL University • GIL Think Tanks• Best Practice Career Training • Growth Team Membership • GIL Global Community• MindXChange Events • Growth Consulting • Communities of Practice 3
  4. 4. Our Global Footprint 40+ OfficesScanning the Globe for Opportunities and Innovation 4
  5. 5. Frost & Sullivan is a strategic consulting company that helps clients growtheir businesses. We have a total of 2000 staff in 40 countries Our Lead Offer: Growth Partnership Services 1 Research Services TEAM 2 Growth Consulting 3 Training Market Engineering Research Growth Consulting Corporate Training & Analyst Briefings Growth Workshop Development Market Insights Whitepapers Industry Tracker Top of Mind Surveys Mover & Shaker Interviews Growth Opportunity Newsletters Client Councils Best Practices Analyst Inquiry Hours Awards Customer Research Economic Impact Articles Country Industry Forecasts Financial Benchmarking & Analysis Technical Insights Research Technical Insights Alerts CLIENT PORTAL & E- BROADCASTS 5 5
  6. 6. Our Industry Coverage Automotive & Transportation Aerospace & Defense Measurement & Consumer Information & Instrumentation Technologies Communication Technologies Automotive Energy & Power Environment & Building HealthcareTransportation & Logistics Systems Technologies Minerals & Mining Chemicals, Materials Electronics & Industrial Automation & Food Security & Process Control 6
  7. 7. Frost & Sullivan Physical Security Practice Coverage PHYSICAL SECURITY / ACCESS CONTROL MARKET Electronic Access Control Systems Surveillance and Others (EACS) – Hardware Monitoring • Intrusion Detection System • Card access • Video Surveillance Systems (IDS) • Proximity cards (RFID) & • RFID, RTLS, EAS • Cameras (Analogue & IP) readers • Alarm Monitoring • DVR • Contactless Smart cards • Biometrics • NVR & readers • Perimeter Protection • Video Server • Keypad • Software • Video Analytics • Biometrics • Encoders • Smart Cards • Integrated Readers • Software • Other EACS hardware: Controllers, EM lock, etc Source : Frost & Sullivan 7
  8. 8. Focus Points Retail SecurityOverview of retail industry- Challenges and DriversTechnology AssessmentRegional Analysis of the Retail industryPricing TrendsAsia Pacific Growth PotentialFuture Outlook for Retail security 8
  9. 9. Overview 9
  10. 10. Global Retail Industry Global Retail Sales Forecasts 2014 India and China leading the growth in 2013 retail salesYear 2012 2011 2010 0.0 2.0 4.0 US$ Trillion 6.0 8.0 10.0 W. Europe Americas Asia Pacific Source: PWC Publication 2010• China is the world’s second largest retail market after the United States.• China experienced a year-on- year retail sales growth of over 14% in 2010.• Emerging markets fuelled by increasing consumer spending and increased international retailers footprint. I• Medium growth of 5-7% due a balance between saturated western European and growing eastern European retail sector. 10
  11. 11. Major Drivers Drivers 1-2 Years 3-4 Years 5-7 YearsIncreased focus on loss prevention to reduce retailshrinkage . High High HighThe need for flexible innovative solutions and excellent High High Highcustomer service drive demand for securityIP technology to bring about integrated systems andremote monitoring Medium High HighIncreasing footprint of international retailers expandsopportunities for security vendors in emerging markets Medium High HighUse of security solutions as business and management Low Medium Hightool opens up new avenues for vendorsDecreasing cost of latest technology in security space Low Medium Highdrives investment from the price-conscious retailers 11
  12. 12. Major Challenges Challenge 1-2 Years 3-4 Years 5-7 YearsRetailer’s requirement for tailor-made solutions High High Mediumincreases the need for customizationLow awareness among retailers about latesttechnology hampers the adoption rate for the same High High MediumHigh influence of distribution channel partners on end-user decisions necessitates strong vendor-partner High High MediumrelationIncrease in the number of decision makers involved inprocuring security. Medium Medium LowThe availability of low-cost security equipment has Medium Medium Lowmade price the key differentiator 12
  13. 13. Technology Assessment 13
  14. 14. Technology Segmentation in Retail Security Video Intrusion Electronic Article Access Control Surveillance Detection Surveillance (EAS)• Most popular form of • System is primarily • Most popular retail security (after • Primarily used for EAS). the only line of technology used by employees of stores. defense in store after retailers. work hours.• Key trend is in having video • Access control is surveillance on IP • Provision of tags at technology. • Modern day systems essential at critical the manufacturing sites in the store. are connected with site of the product local security itself is becoming a agencies. key trend. 14
  15. 15. Technology Segmentation in Retail Security Security Priority for Expected Growth Purpose Life Span Systems Retailers Rate EAS To curb shoplifting 15-20 years 3-4% Video To prevent vandalism and curb shoplifting 8-10 years 6-8%Surveillance Intrusion For basic security of building infrastructure 10-12 years 1-2% Detection Access To restrict and allow staff access 15 years 4-5% Control Source: Frost & Sullivan 15
  16. 16. Regional Analysis 16
  17. 17. Regional Analysis of the Retail IndustryPercent Contribution Asia Americas Pacific, 1 , 48% 7% W. Europe, Source: Frost & Sullivan 35%• North America and Latin America, are the major contributors of the physical security solutions in retail irrespective of the type of retail. It is closely followed by Europe (35 percent). These two geographic regions have a huge installed base of analog systems.• Asia is an emerging market, with low current overall contribution; however, it is expected to have a higher CAGR in the upcoming years. 17
  18. 18. Factors Influencing Retail Security Factors Influencing Retail Americas W. Europe Asia Pacific Security Budget available for security High Medium Low Preference given to manned guards Medium Medium High Trend Towards IP High High Medium Increased Focus on Retail Shrinkage High High Medium Acceptance of Security in Retail High High Medium Penetration of Retail Security High Medium Medium Source: Frost & Sullivan 18
  19. 19. Physical Security Solutions in Retail By Type of Retailer Physical Security Solutions in Retail Market: Percent Spilt Physical Security Solutions in Retail Market: Percent Spilt Between Big Box and Small/ Independent Retailers (Asia Between Big Box and Small/ Independent Retailers (Americas) Pacific) Small/ Small/ Independe Independen nt t Retail, 9% Retail, 30% Big Box Retail, 70% Big Box Retail, 91 % Physical Security Solutions in Retail Market: Percent Spilt Physical Security Solutions in Retail Market: Percent SpiltBetween Big Box and Small/ Independent Retailers (W. Europe) Between Big Box and Small/ Independent Retailers (World) Small/ Small/ Independen Independen t t Retail, 23% Retail, 20% Big Box Big Box Retail, 80% Retail, 77% Source: Frost & Sullivan 19
  20. 20. Pricing Trends 20
  21. 21. Pricing Trends Retail Security Pricing Price Parameters Sales Channel• Highly price sensitive • Various factors form the • For most vendors in vertical of security. final cost of a security Asia, sales of products systems. takes place through Highly • Cost of installation distributors. competitive• Retailers are restricted by reducing price • Cost of maintenance security budgets. • Training and technical sensitive support also provided by • Cost of software licensing of distributor. market• Some retailers select security technology/vendor • Training costs purely on price rather (especially if retailer has than accuracy. high attrition rate). 21
  22. 22. Pricing Trends for Physical Security in Retail • IP video surveillance is a key trend.VideoSurveillance • Through IP technology, retailers are now employing “remote viewing” of security footage from mobile devices such as mobile phones, tablets and PDAs. • Current trend involves having the products “tagged” at the manufacturing site itself.Electronic ArticleSurveillance • This reduces the cost for the retailer in terms of man hours spent by employees that would otherwise tag each item. • The intrusion detection systems used are basic ones, and once the system isIntrusion installed, it has a life span 8 to 10 years.Detection • They form a smaller, but important, part of the security investment • Scalable systems are used. • Higher proportion of the cost is for the card reader.Access Control • Lesser than 5% of the total security investment is from access control, as it is not used largely in retail outlet. Source: Frost & Sullivan 22
  23. 23. Asia Pacific Potential 23
  24. 24. Asia Pacific- Retail Sales Growth by Volume (%) 18.0 15.0 12.0 9.0 6.0 3.0 0.0 -3.0 2010 2011 2012 2013 2014 Source: PWC Publication 2010 • The outlook for Asia Pacific overall remains positive, with average growth of about 6% • Growth will continue to be unevenly distributed, with China driving regional momentum • India’s annual growth will increase from 3.9% in 2011 to 5.8% in 2014 • Vietnam will be a rising start, with growth averaging over10% annually to 2014 24
  25. 25. Asia Pacific Retail Security Potential Growing popularity of Asia, a high growth market organized retail, inflow of after Europe and North FDI with entry of America multinational retailers in China Retail Security Potential Vendors increasingly Supporting infrastructure providing customized and adoption of new solutions, E.g., ADT technology to drive markets Security in future Move to more advanced and expensive solutions to tackle issue of retail shrinkage 25
  26. 26. Information Security Trends in Asia Pacific Retail Key Technological Trends for 2011 E- commerce next major area for retail• Increasing budgets towards data protection. • Japan is ahead of its Asian peers with e- retailer Rakuten, positioning itself for global• Vendors providing the use of “cloud” as a viable expansion. option for the storage of critical data. • Online retailing still in nascent stage in China.• Remote accessing tools creating interest for security officers/personnel. • Online transactions through mobile phones taking place in Japan and South Korea. 26
  27. 27. Key Megatrends in Retail Security Smart Buildings Smart Communication Smart buildings to provide Smart communication to retailers with vital allow for remote access to information on store critical data. performance. Business Intelligence Cloud Computing A solution for retailers to The next stage in evolution target their customers more in storage and accessibility effectively. of critical data. 27
  28. 28. Innovating to ZeroCurrent Scenario 2011 Scenario 2020 Shrinkage losses continue Shrinkage losses to be across the globe ranging eliminated through from 1 – 3 % of retail sales integrated security systems. globally. • Through real time inventory Shoplifting , employee theft “INNOVATING management, costs in and losses from inventory storage and time to market mismanagement, product will be reduced. defects from the TO • Furthermore, retailers will be source, items being able to monitor each item misplaced at the stores etc. ZERO!” thus preventing all account towards mismanagement of items. shrinkage. Business intelligence Retailers looking at new solutions providing means to target customers information on customers and in utilizing present habits and purchases will technology to help them allow retailers to target achieve this customers more effectively thereby increasing sales. 28
  29. 29. Innovating to Zero • IP Video surveillance • Mobile connectivity with biometric facial providing real time recognition to identify information on inventory previous shoplifters stocks allowing retailers to allowing the store to have zero inventory wastage have an extra vigil on costs and storage costs. suspects. Innovating to Zero• Instant information transfer of • Wireless surveillance new products, offers, deals to connecting fire and police customers through mobile forces to Central Server for communication and use of monitoring, control and smart posters. command communications 29
  30. 30. Porter’s Five Forces New Entrants Medium Threat Supplier Degree of Competition Buyers Low Bargaining Power High Bargaining Power High Intensity Substitutes Medium Threat Source: Frost & Sullivan 30
  31. 31. Future Outlook 31
  32. 32. Future Outlook for Retail Security • Well established security vendors in European and American markets, need to start focusing more on emerging markets where there is a lot of potential.Current Scenario Future Scenario • Security vendors need to create more awareness among retailers so that retailers stop viewing security as a commodity and start looking at security solutions. • The Asian retail security market has considerably more competition from low-cost manufacturers and the grey market. • Security vendors could possibly have a promotional team with products and offers especially for the smaller retailers. • Future trend towards integration of key security systems for retail security. 32
  33. 33. Follow Frost & Sullivan onFacebook, LinkedIn, SlideShare, and Twitter 33
  34. 34. For Additional InformationDonna Jeramiah Jessie LohCorporate Communications Corporate CommunicationsAsia Pacific Asia Pacific(603) 6204 5832 (65) 6890 Jessie.loh@frost.comParul Oswal Satish LeleResearch Manager Vice PresidentAutomation and Electronics Industrial Practice(65) 6890 0974 (65) 6890 34