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IP is a retail standard

One of the key reasons for recent evidence of an increased investment in open standards and IP-based video management systems by the retail sector in EMEA has been the fact that technology providers are now able to demonstrate rapid return on investment (ROI).

Henrik Høj Pedersen, business development manager, Retail, EMEA & APAC, Milestone Systems.

Put simply, a new breed of video management software (VMS) offerings (including the XProtect product line by Milestone Systems) can integrate very effectively with retail point-of-sale (POS) systems to deliver high resolution video recordings on-screen, alongside known high risk transactional events. This makes discovery and analysis of irrefutable evidence much easier than it used to be.

Rapid ROI can be achieved in this market because, frankly, there are a lot of losses to prevent. On average 1.49% of retailers’ sales turnover is lost in retail shrinkage, or $119 billion globally, according to Global Retail Theft Barometer 2011. The largest source of loss, 43% of total shrinkage, comes from theft by shoplifters. However, employee theft is not very far behind at 35% and yet, until recently, it has received a much smaller share of loss prevention resources and attention. It is worth noting that if you look at the number of thieves apprehended, according to this same study, 85% of them were shoplifters, while only 15% were employees. Is retailers’ lack of focus on catching employees with their fingers in the till, the main reason why retail shrinkage remains stubbornly high around the world?

We now know our software can reduce employee theft considerably. Milestone has helped one of our customers to reduce its shrinkage from 0.81% to just 0.44% within the first two years after installing the system and in so doing, the number of employees caught in the act improved fivefold. Global fashion retailers such as Paul Smith and Prada have invested in Milestone VMS in their stores around the world to help reduce shrinkage and provide a platform for tapping into additional operational efficiencies in the future. So how is this accomplished?

Tight POS and VMS integration

The starting point is to enable seamless integration between POS systems and Milestone XProtect Transact or XProtect Retail. The second key to our success stems from our open architecture that allows for our partners to integrate their own software solutions. The combined solutions make it possible to tackle retail shrinkage head on, while future proofing the investment as new issues emerge. We’ve been working closely with our partners to garner a detailed understanding of how specific retail scams operate. We now have eco-partners that can analyse various modes of behaviour which are often early indicators, hot spots if you will, of employee theft.

An example is zero transaction or voids. The majority of retail theft today is still out of the till or cash drawer. So if tills are opened without an associated transaction, it is important for retailers to be able to isolate these events and if till rolls do not reconcile with actual cash (or vouchers, cheques, etc.) in the till; then managers need to be able to investigate these events more closely.

It is possible to pull up each such event in Milestone XProtect Retail and run sequences of video recordings associated with them. There are also examples of loyalty card abuse by employees. A common scenario in recent years has seen cashiers collecting the bonus points of customers that fail to bring their loyalty cards with them into the store. In some cases this has led to points from hundreds of transactions being assigned to employees or friends’ loyalty cards in a single week. Again, systems can be set up to recover and view events associated with specific loyalty cards. By viewing video recordings alongside these suspect transactions, it becomes clear very quickly if an employee is pulling out their own loyalty card if the customer does not produce one.

With this in mind, it’s clearly worth taking a closer look at the benefits of gaining access to easily searchable, time-stamped video evidence, alongside specific transactions and till receipts with Milestone VMS. We know that this capability reduces loss prevention as we have seen it in action across many high profile customers around the world.

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