Loss Prevention and a Whole Lot More
etailers have excelled at capturing and storing vast Equipped with advanced analytics, video security systems
amounts of data in financial reporting, inventory can alert managers to abnormal behavior and negative trends,
management, operations, and security systems, but enabling them to move from simple detection to prevention
until now, most have overlooked the opportunity to integrate and beyond. Video analytics provide a range of visual processing
their multiple data streams into an enterprise-wide business functions, from automatically checking camera views and
intelligence solution. providing early indication of possible criminal activity, to
Shifting to a fully integrated platform for business intelligence counting people entering a store, tracking the movement of
is easy. Many of the required database systems, as well as the shoppers through the aisles and monitoring lineups at cash
legacy CCTV infrastructure, are frequently in place. The only registers.
missing links are an umbrella architecture and the applications
“By using our technology to deliver in-store
allowing users to extract and manage data from various
digital signage, retailers are able to both
sources—March Networks’ precise competencies.
reduce shrinkage and increase revenue per
Integration of Video and POS
sale. This is how we leverage video and
The integration of video and point-of-sale (POS) data has
data for multiple applications and deliver on
given loss prevention executives in the retail sector powerful
new tools to manage risks. Sophisticated data analysis and
our mandate for business optimization.”
monitoring systems are now able to detect events and alert staff
to potential threats without requiring security staff to sift through Peter Strom, President and COO, March Networks
hours of video. Using March Networks advanced video-recording
technology and LP Data Mining software, for example, retailers The synergy of video and business intelligence streamlines
are automatically alerted to POS transaction anomalies and can staff scheduling and allows for more effective merchandising.
instantly review corresponding video from within the same user Retailers operating in a highly competitive environment are
interface. able to leverage the video and data they already have to optimize
The integration of previously segregated video and data efficiency, increase sales, and manage customer wait times at
repositories is revolutionizing loss prevention by dramatically cash checkouts.
improving efficiency and reducing POS-related shrinkage. But Video recording systems monitoring customer lineups can
the same data and the infrastructure associated with it can also be programmed to alert store management to open additional
be leveraged in support of marketing, operations, and customer checkout aisles when wait times exceed a preset threshold,
service. minimizing the risk that frustrated shoppers will abandon their
“The data is already being collected and the investment in carts and head for the exit.
video recording and transaction capture software has already “This is an example of how we can leverage our technology
been made,” says March Networks President and COO Peter to solve a business problem,” said Strom.
Strom. “We’re bringing it all together to optimize the business.” By correlating POS data with video intelligence relating
to customer dwell time and traffic at end-cap displays,
merchandisers are able to calculate conversion rates, and
Optimization accurately assess the value of premium display space.
Risk and Performance
The use of video surveillance systems to archive and deliver
in-store digital signage represents yet another opportunity to
leverage existing infrastructure. Here, too, an integrated POS
system can be used to correlate advertising impressions with
actual sales and calculate conversion rates.
Video and Data
Maximizing Your Return on Investment
Loss prevention executives competing for capital budgets
in a flat market can make a strong case for integrated video
surveillance and exception-reporting solutions as a sure way to
May – June 2007
maintain or increase profits. When the same infrastructure is also “As more and more security systems move to the network, it’s
able to address marketing, operational, and customer service important for loss prevention executives to have a close working
challenges, the value proposition is even more compelling. relationship with their colleagues in IT,” says Strom. A recent
Dropping shrink from 2 to 1 percent of sales has been survey of CIOs in the retail industry suggests retailers are poised
estimated to have the same net effect on profit as a 40 percent to more than double spending on IT from 2 to 5 percent of sales,
increase in sales, and “When you figure in the impact of more so the timing is right for loss prevention executives to play a role
effective merchandising, more efficient staffing levels, and in deciding how to optimize the impact of technology on the
improved customer service, I can’t think of a better return on retailer’s bottom line.
investment,” says Strom. With close to 50,000 recorders in the field, a track
Statistics produced by the National Retail Research Group record for technology leadership and reliability and
showed shrinkage decreasing from 2.48 percent to 2.26 percent comprehensive solutions tailored to the specific needs of
from 1998 to 2000. However, by 2005 shrink had increased once the retail, financial, and transportation sectors, March Networks
again to 2.76 percent of sales, 56 percent of which is attributed is ideally positioned to maximize the value of loss prevention
to employee theft and cashier-related fraud. technology investments.
Niemann Foods Trims Shrink
Keith Beckett, loss prevention manager for Niemann our reaction time, so if there is a problem, we’ll be able to
Foods Inc., is successfully combating shrink at more than sixty correct it a lot quicker.”
supermarkets and convenience stores in Illinois, Missouri, When LP Data Mining is integrated with a retailer’s video
and Iowa. surveillance system, loss prevention staff can review exception
His secret? March Networks LP Data Mining, an reports and point-and-click their way to the relevant video in a
exception-reporting solution that alerts him to point-of-sale matter of seconds.
(POS) anomalies and potential instances of criminal activity. Niemann Foods has also taken advantage of March
Known as ShrinkTrax prior to March Networks’ acquisition Networks’ professional services to proactively address
of Trax Retail Solutions in July, 2006, LP Data Mining is cashier-related shrink through training and employee
deployed in more than 22,000 stores in the U.S. and recognition programs. Metrics produced by LP Data Mining
around the world as a primary means of defense against are used along with scorecards provided by the company’s
cashier-related shrink. secret-shopper program to recognize star performers and
The powerful application sifts through POS data from promote a culture of performance excellence.
hundreds of cashier stations and delivers succinct reports “The front end is a very important part of the store,”
detailing abnormalities for follow-up investigation. explains Beckett. “Not only is it vulnerable to fraud, but it is
Last year, Niemann Foods upgraded to the newest version also a principal point of customer contact, so friendliness,
of LP Data Mining customer service, and
to enhance its loss accuracy are qualities
prevention capabilities. we work hard to
“With the new promote.
version of LP Data “LP Data Mining
Mining, we can set has helped us reduce
up certain queries shrink, so much so
or scenarios and, that we figure we paid
if something gets for the solution after
flagged, it will get only four months,”
kicked out to the he adds. “But, best
stores on a daily of all, it has also
basis,” says Beckett. made us better store
“It’s going to improve operators.”
May – June 2007 LPportal.com