Latin America. Retailers, after using the IT budget to protect against data breaches and cater to Payment Card Industry (PCI) certifications, still have on average 6.4% of that budget to spend on other loss prevention (LP) priorities.
This is one of the results of the study "The Great Disconnect between LP and IT", conducted with North American retailers by IHL Group, a research and advisory firm specialized in technologies for the Retail industry, and released by Axis Communications, a global specialist in network video surveillance.
With the increase in retailers' revenues, the proportion of costs against data breach and PCI is maintained, but IT budgets grow linearly, and equally IT budgets grow linearly. For this reason, larger retailers end up with two and up to three times more funds than smaller retailers for additional LP actions, such as combating organized crime, video surveillance systems and video analytics, among others.
Greg Buzek, Founder and Chairman of IHL Group, said: "In the retail sector, we all have a general understanding that there is a great deal of effort and money devoted to EMV (Europay MasterCard Visa) compliance, data breach protection and PCI. In conducting this research, we were struck by how much that resource prioritization draws from other loss prevention efforts, specifically in IT. Certainly, there is a disconnect in focus between existing budgets and resources. However, our results indicate that there are real opportunities for other business units to generate revenue from these technologies with new applications, such as customer flow analysis and video analytics for use in marketing."
The Great Division
IT budgets for loss prevention experience economies of scale, and the same can be said for the availability of IT staff for other business units. When ranking retailers in terms of spending with loss prevention technology (Tier 1 retailers spending more), the research found that Tier 1 retailers with more than $1 billion in sales spend only 4.5% of their IT staff on LP efforts. In contrast, Tier 3 and 4 retailers spend nearly 8%, clearly demonstrating that the percentage of IT staff for LP decreases as revenue and access to efficient systems and technology increases. As retailers invest more in network-based video technologies, LP functions demand less attention from staff, freeing up resources for other areas of the business.
Future opportunities with CCTV
Advancements, flexibility and access to 24/7 images place surveillance technology in high demand in many of the business units, especially when considering the power of video to monitor customer behavior and meet industry standards. According to the research, 86% of respondents today own a closed circuit television, which represents a large component for loss prevention. Of those same respondents, 64% use digital or IP technology.
Although retailers plan to further leverage the benefits of smart cameras for video analytics, in the short term, the predominant use of CCTV cameras will still have the traditional goal of loss forecasting. Below is how respondents plan to use the cameras in the next 18 months:
• Theft by store employees – While 89% of IT and 90% of LPs find the prevention and discovery of employee theft within stores highly important, only 71% of other business units consider this to be the number one priority.
• Theft by the consumer - In a near 2nd place, 79% of IT and 90% of LP respondents prioritize the use of CCTV to mitigate theft by consumers in the store, while only 57% of other business units say they find this a major focus on technology.
• Cashier Monitoring - Unsurprisingly, 100% of LP professionals surveyed state that CASHier monitoring is a priority use for CCTV, while in IT and other business units this priority is 56% and 57%, respectively.
"Our team has noticed a clear disconnect in retail between IT and LP departments when it comes to budget, focus and staffing," said Hedgie Bartol, Business Development Manager at Axis Communications. "The IHL Group's research has highlighted opportunities that arise thanks to the technological advances of IP video surveillance and that could be launched throughout the organization to create stronger relationships and, ultimately, increase revenue through a department known as a cost generator."
