Understanding trends to keep your retail business safe

Understanding trends to keep your business safe

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Philip Ingram MBE takes a closer look at the world of retail security and provides a comprehensive analysis of the current landscape.

ISJ May Edition Exclusive

“Retailers need to be proactive, not reactive, when it comes to security. That means taking steps to prevent breaches before they happen, rather than just responding to them after the fact,” says Brian Kilcourse, Managing Partner, RSR Research.

Retail businesses are a prime target for criminals, with theft, fraud and other security breaches costing retailers billions of dollars every year. In order to keep businesses safe and secure, it’s important to understand the risks and take steps to mitigate them.

The retail landscape

Retail crime is growing across the globe. According to the National Retail Federation’s (NRF) 2021 National Retail Security Survey, retail shrinkage – which includes losses from theft, fraud and administrative error – totalled $61.7b in 2020, up from $50.6b in 2019. The NRF survey also found that organised retail crime (ORC) continues to be a significant problem for retailers, with 60% of respondents reporting that they had been the victim of ORC in the past year.

In a 2021 survey by the British Retail Consortium, UK retailers reported that the cost of retail crime had risen by 7.1% compared to the previous year, with the average cost of a theft increasing from £177 ($245) to £209 ($289). The same survey found that violence and abuse against retail workers had also increased, with 455 incidents per 1,000 workers reported in 2020, up from 424 incidents per 1,000 workers in 2019.

A 2020 survey by the US-based National Association for Shoplifting Prevention (NASP) found that shoplifting incidents had increased by 60% in some US stores since the start of the COVID-19 pandemic. The security landscape is developing but people remain at the fore.

“Retail employees can be an important line of defence against security breaches. By training employees in security best practices, such as how to spot fraudulent activity or how to respond to a security threat, retailers can help to reduce the risk of a security breach,” commented Mark Anderson, a Retail Consultant.

However, staffing levels are coming under increasing pressure, so the use of technology is critical to maintaining a secure environment. Technology is playing an increasingly important role in mitigating this risk and helping to maintain a high level of security in retail environments. Video surveillance systems are at the front end as, whilst monitoring store activity in real time, advanced video analytics can be used to detect suspicious behaviour and alert security personnel accordingly.

Technology is also being used to improve the efficiency and effectiveness of retail security operations. Part of that is the use of AI, which is being used in retail security to detect and prevent fraudulent activities as well as to monitor and analyse customer behaviour to identify potential security risks.

The COVID-19 pandemic accelerated the shift from traditional brick-and-mortar retail to online shopping, according to data from Digital Commerce 360, “e-commerce sales in the US growing by 44% in 2020.”

In a survey conducted by the NRF in June 2021, 63% of US consumers reported that they had shopped online more frequently during the pandemic. The same NRF survey found that 38% of consumers planned to continue shopping online more frequently even after the pandemic is over. A report by eMarketer projects that US e-commerce sales will reach $908.73b in 2021, up from $794.50b in 2020.

This move online has unsurprisingly seen an increasing focus on cybersecurity: Retailers are placing greater emphasis on cybersecurity measures, with the increased risk of data breaches and cyber-attacks. This has led to the use of cloud-based security solutions, which are becoming increasingly popular in retail as they offer greater scalability and flexibility as well as the ability to integrate with other business systems.

According to Marcus Fowler, the CEO of Darktrace Federal: “Global security revenues in retail are headed for strong growth in the next few years, from $7b in 2019 to $12b by 2025. A key threat to this potential is the ever-present possibility of cyber disruption.

“The retail sector’s goldmine of consumer personal and financial information remains an attractive target for cyber-criminals, along with the sector’s widespread digitisation in response to changes in consumer buying habits. The proliferation of complex digital supply chains across retail continues to drive retailers’ efficiency, but it also gives attackers more places to hide.”

Of course, cyber is an essential component when retail is seeing a greater integration of physical and digital security. Bob Moraca, former Vice President of Loss Prevention at the National Retail Federation said: “In today’s retail environment, cybersecurity is no longer an afterthought. It’s a critical component of any successful retail operation.”

Retailers are integrating physical and digital security measures to provide a more comprehensive approach to security, including video surveillance, biometric authentication and real time monitoring of transactions. Again, the widespread adoption of mobile payment technology has led to increased focus on mobile security, including the use of biometric authentication and tokenisation to protect against fraud and identity theft.

Creating secure environments

Finally, looking to the importance of security culture, Karla Perrodin, a Retail Security Consultant said: “Security should be an integral part of a retailer’s culture, with all employees and stakeholders encouraged to be vigilant and proactive in identifying and mitigating security risks. This can help to create a safe and secure environment for customers and employees alike.”

Part of that culture is seeing greater cooperation between retailers – and retailers are collaborating and sharing security intelligence with each other to identify and prevent security threats. This allows them to develop and share best practices for improving security across the industry.

James Martin, Crime and Security Advisor for the British Retail Consortium until May 2020 commented: “We all know that prevention is better than cure and it’s certainly cheaper. If we can start to design in the crime prevention now, we don’t have to think about spending fortunes to try and design it out in the future.”

Retail remains a dynamic and challenging security environment and, if anything, will become more challenging as profit margins become increasingly tight.

This article was originally published in the May edition of ISJ. To read your FREE digital edition, click here.

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