Analyst Corner

Benefits of Intelligent Video Not Lost on the Wise

Categories: Uncategorized

I love technology. I guess it is fair to say that it runs in my blood. As someone that formerly worked in the jet engine and rocket propulsion industry it is a natural affection. Within retail, technology can take various forms from the simplest of applications used by retailers for the last 30+ years to the highly advanced. I think Intelligent Video fits into the latter, and rates highly on the technical wow factor.

While many readers of this article will understand the concept of Intelligent Video, a brief definition is in order. Intelligent Video is a technology that analyzes the video fed from store surveillance cameras. Using varying degrees of analytical sophistication results in software that is able to discern patterns of behavior and specific activities much like a human being would. The key advantage being that it doesnt require a lunch break and can operate with the same degree of accuracy and attentiveness at the beginning of the shift as it does at the end.

Beyond the high level of sophistication that it takes to pull this off, the really impressive thing that anyone can appreciate is the return opportunity. Based on our research, we have found that the returns can easily range from 0.8% for smaller retailers to 1.4% of sales for retailers with over 1,000 locations. With $115 billion of retail shrinkage estimated for 2009, these percentages translate into serious dollars.

By breaking down some of the loss prevention and out of stock issues that Intelligent Video addresses, we can begin to understand the basis for this significant return. While opportunities exist beyond these areas well try to highlight the far reaching impact:

  • Detect return fraud and void fraud by internal employees
  • Detect and reduce cashier assisted theft
  • People counting to track customer traffic
  • Reducing length of line at checkout/Service areas
  • Reduce out of stock through better merchandising
  • Detecting organized retail crime schemes
  • Evaluate marketing displays for traffic and behavior
  • Detecting Shoplifting behavior at the shelf
  • Slip and fall detection
  • Improve staffing levels at store level

As you can see, the impact is multi-faceted and extends well beyond the boundaries of loss prevention. Additionally, there are labor savings associated with those that are currently monitoring their video real time. Our research found those strongly considering purchasing Intelligent Video systems are 122% more likely to currently be reviewing their video real time, a major labor cost.

Intelligent Video may not be for everyone, as only 53% of retailers currently have video cameras in the store though 12% plan to install it within the next 24 months. For those with video cameras, but not ready to bite off the potential complexity of an Intelligence Video implementation, there are many options out there that bridge the gap.

One such example was Epicors recent introduction of their next generation Retail Loss Prevention module. It is an extension of their popular exception reporting/tracking tool. The basic function of this tool allows the user to easily sync the flagged transaction to the video footage of the event, thus significantly simplifying the review process and allowing greater throughput. In discussions with an executive from a major retail drug chain they found the technology highly intriguing. This is not surprising considering drug stores tend to be a major focus for shoplifting as well as organized retail crime given the large density of small, but high priced items.

Additionally, I recently demoed the Hawkeye operational intelligence solution from Agilence at NRF. While their concept is somewhat akin to interfacing advanced exception reporting to in-store video, their take on savings includes recognition of operational shrink which includes training issues, policy violations, voids and manual keying during transactions. Their research indicates that these issues account for 38% of shrink at the POS.

Though weve done just a cursory review of some of the emerging loss prevention technologies based around in-store cameras, options abound. The key thing to remember as you make your selection to consider those that help you do more with less, and those with the highest likelihood of moving you beyond the status quo, because those are the ones that will have the greatest chance of achieving their ROI.

Jerry Sheldon is VP of Technology at IHL Group, a global research and advisory firm for technologies deployed in the retail and hospitality industries.