Each January the British Retail Consortium (BRC) publishes its Annual Crime Survey which collates and summarises feedback from large multiples to smaller retailers, representing around half of the retail sector by turnover.
This January, the results showed that the volume of shop theft offences declined by 4 per cent, but the average value of each incident increased from £177 to £241, which was the highest average value recorded for a decade.
This trend is thought by the BRC to be a consequence of retailers being targeted by more organised, sophisticated criminal activity as opposed to individual opportunists. Financial pressures being faced by the retail sector generally highlights the need to contain the cost of crime. In addition to working more closely with police and security firms, more and more companies in the retail sector are looking at implementing new IT systems to try and tackle these problems. Set out below are some examples.
In stores, the trend towards allowing customers to try-before-you-buy which is particularly prevalent in the technology space, means that more retailers are investing in updating their security surveillance cameras and systems, so that they reflect the ways that customers now move around the stores and engage actively with products.
Mobile point of sale technology, which allows employees to move around the shop floor facilitates further surveillance and a roaming physical presence can also act as a powerful crime deterrent.
There is a trend too, towards pairing video analytics with security cameras, allowing real-time analysis of the way in which customers move around the shop floor, identifying suspicious activity. This can also be integrated with point-of-sale technology to allow for identifying loss patterns in relation to employees which may also be engaging in theft from the retailer.
Another key trend that we have observed, is a movement towards implementing Radio Frequency Identification (RFID) stock control systems, which allows a business to track individual products and components throughout the supply chain from production to point-of-sale. These systems allow retailers to monitor issues within the supply chain, for example, at distribution centres and warehouses, and when used in-store, improve stock security, by positioning tag-readers at points of high risk and causing them to trigger alarms. They also allow a retailer to more accurately identify high-risk outlets and ranges. The costs associated with RFID tagging have recently fallen making it particularly attractive to retailers.
Changes to retailers routes to market, for example, the increasing consumer trend towards multi-play interaction, has also lead to more emphasis on cyber security. Online, compliance with PCI DSS remains a key concern for retailers, which needs to be flowed down the supply chain.
Full penetration and vulnerability testing on systems to identify any issues and weaknesses is also key.
Minimising the cost of crime is a constant battle for even the most sophisticated of retailers and, in our experience, those that are best placed to combat it are those that embrace new technology. It is therefore increasingly important to ensure that retailers have robust legal agreements in place with their technology providers, ensuring compliance with regimes such as PCI DSS and data protection, as well as appropriate allocations of risk and reward, service levels in respect of downtime and incident resolution and the ability for retailers to seek to recover losses incurred as a result of third party IT failures.
Chloe Hersee is a senior associate at DLA Piper