LPRC - CrimeScience – COVID-19 Series: Episode 4 with Dr. Read Hayes, Tony D’onofrio, and Tom Meehan

Episode Date: April 30, 2020

On this LPRC CrimeScience #COVID19 Series episode, our new weekly podcast covering the current pandemic, co-hosts Dr. Read, Tony D’onofrio, and Tom Meehan discuss LPRC initiatives, this week’s global economy according to the data, online fraud trends and risks, and remote security infrastructures. The post CrimeScience – COVID-19 Series: Episode 4 with Dr. Read Hayes, Tony D’onofrio, and Tom Meehan appeared first on Loss Prevention Research Council.

Hi everyone, welcome to Crime Science. In this podcast, we aim to explore the science of crime and the practical application of the science for loss prevention and asset protection practitioners, as well as other professionals. Co-host Dr. Reid Hayes of the Loss Prevention Research Council and Tom Meehan of ControlTech discuss a wide range of topics with industry experts, thought leaders, solution providers, and many more. We would like to thank Bosch for making this episode possible. Be a leader in loss prevention by implementing integrated solutions that enhance safety, reduce shrink, and help to improve merchandising, operations, and customer service. Bosch integrated security and communication solutions span zones one through four in the LPRC's zones of influence, while enriching the customer experience and delivering valuable data to help increase retail profitability. Learn more by visiting Bosch online at BoschSecurity.com. So welcome everybody to another episode of Crime Science the Podcast. This is another in our series of COVID-19 special episodes. I'm joined today as always by my cohorts here on these special COVID-19 updates, Tom Meehan and, of course, Tony D'Onofrio

with our producer, Kevin Tran, in the studio. And what we'll do is I'll start out with a quick briefing here, go to Tony. He'll give us sort of a global perspective, and then we'll go to Tom Meehan. He'll help us look at risk and special issues during this very unique time. I want to start out first again. My role here is to just let our membership and the public at large get a feel for what the LPRC and what the team I'm at, excuse me, and the team that I'm on at the University of Florida are up to, what we're trying to do both for the crisis, but also overall for reducing theft, fraud, and violence. So right now, our emphasis is, as always, actually on the green and red shopper. Again, the green shopper is the person we'd like to come into our stores working or shopping or delivering there.

The red shopper is the opposite. The individuals we do not want to come, or if they are on the way or there, we want to disrupt and get them to do a U-turn. So we work on impression control. Um, so we work on impression control. We've sort of extended that a little bit, uh, as part of the crisis that we're in right now, impressive, excuse me, impression of control and safety. Um, and so in this case, we're talking about, uh, attracting the green shopper online or in person, uh, right now, primarily buy online, pick up and so forth, but we want to get them to come there, and we want them to come back. Again, the red shopper is always we don't want them to come there, or if they do, we don't want them to come there, or they can't because they've been detained by the authorities. And so it's vitally important to think this way, we believe, at all times, but in particular now.

So we've been looking at some things and doing some testing. And what we're trying to do is simulate things. And I'm going to put out a call for action to some of our retailer members out there and other listeners. But in this case, we want to create the impression of control and safety. We know that the big key now is the pathway back to some semblance of normalcy. And we've got to re-engage. We don't want to just talk about the economy. We need to talk about, as everybody knows at the individual level, the individual's ability to feed themselves and their families, to take care of themselves.

And that's because they're employed and productive. And so we've got to get people back to work. We know that. We've got to do it in a very safe manner in a way that doesn't expose them and their loved ones or us and our loved ones to greater risk, particularly because we know the virus is more readily spread, and we know it's a little more dangerous, if not a lot more to certain people. And so we're all cognizant of that. So looking at how do we get people to come back into stores in a safe way, the first thing we're looking at just like in CPTED or Crime Prevention to Environmental Design is looking at does the parking lot, does the store look organized? Does it feel organized? That it's not chaotic, that there's an impression of control of organization here. And so what does that

look like? So we can simulate that with different imagery and then get perspective from shoppers and offenders, the green and the red shoppers, from employees and so on in a sample. offenders, the green and the red shoppers, from employees and so on in a sample. The next thing we're looking at is clear visual and aural messaging, particularly around spacing. We know from the science that's continuing to evolve, but overwhelmingly tells us that the virus is spread because it's aerialized. It's in water droplets that come from one human and are spread to another human. The primary vector is through the air. And so we need to maintain some spacing. We know that that can also, we can be greatly assisted by masking so that the person that's infected doesn't spread it to another. And it also makes it more difficult to be infected or infected by a large load or dose. We have a podcast coming up with Dr. Southwick of the University of Florida's

Emerging Pathogens Institute. He is a career scientist, physician in infectious disease. In fact, just retired as the chair of infectious disease department at the University of Florida's UF Health and Medicine. So he's talking a lot about that with me offline, and we're going to be going online with a crime science episode. But it's the load, the amount of virus that gets into the nasal passageways, and then the load that goes from the nasal down into the lungs. And so that's why there's a logic model here, and now we're looking at what's the evidence we have. Well, spacing and masking are two key things. So how do we clearly, visually and aurally, using sight and sound message to people

in a professional way that makes it very understandable? sound message to people in a professional way that makes it very understandable. The third thing we're looking at is the comfort that they feel there's impression control, but maybe that it's professional discipline. If I work at one retailer, I wear color-coded red mask or have my logo. If I work at another one, I wear yellow ones or I wear green or I wear blue, gray, whatever's appropriate. So we're doing some research around masking that you'll see come out. Another area is the obvious cleaning, that there's not only it's organized and neat, but it's clean. Maybe there's somebody that we can see very readily is moving around cleaning. A robot is moving around cleaning.

We smell this. We also sense through our sense of smell that there's some cleaning going on. And then next we go to the use of technology that can help us meter people in, that can maybe entertain them with sight and sound while they're in queues so they feel more comfortable, more relaxed. It doesn't seem like an eternity during their wait. So what can we do with EPVMs that they're not just to deter shoplifters? Maybe we can use them, leverage them to better shop, to summon service. The next area we're looking at a lot is low or no contact or touch transactions. What can we do with biorecognition so we're not having to touch

or be too close to people or touch surfaces? The second way we know that virus can be transmitted is by surfaces. It can stay viable for a long time. We know now through a lot of research from MIT and Department of Homeland Security that isopropyl alcohol at high concentration seems to be very effective at breaking the virus down, but everything's not isopropyl rubbed down every few minutes, but we go back to that impression of control and safety. So looking at low-no contact or touch transactions through biorecognition, through gesturing, through digital watermarks, and things like that so that the transaction can be completed with a little more spacing and a little less surface touching. So those are some of the key areas we think we're going to help people come back and want to come

back into stores, but also do it in a safe manner. So that's the logic. What we've got to do now is look at the mechanisms and then collect evidence or data or observations around that. So the call to action for retailers, we've got one that's underway. They are getting permissions for us to get into a store that's currently closed to work on organization messaging and color coding, cleaning, and things like obvious cleaning, and use of technology, and things like that. So, if you've got a store in the Gainesville, Florida area, we're going to ask you to contact us if you have interest in discussing, just at this point, discussing the idea that we might use your place of business to work with you on some of those and maybe a couple other critical issues. So that's my number one plea for those that are interested

in working with us in that way. We also are generating imagery using our Matterport technology, our 360 video camera that we can put in store, and the other things so we can do some remote study and quickly change options in LPRC Innovate Labs, particularly in the Sim Lab and then in the Engagement Lab. So the next point real quickly is we've got Cluster Calls 2 coming up. We're looking at mid to late next week. For those who are listening, today's the 28th of April. Tuesday morning, we're recording this. So we're talking about the first week in May. The first calls we've talked about before were very successful, a ton of engagement with executives from way over 50 retail chains, very engaged with each other. There's a survey that's underway right

now. We're collecting data that's come out of those calls, asking each and every retailer, and if you have data around this, you want to participate, please also, like volunteering your store, reach out to operations at lpresearch.org, operations at lpresearch.org. lpresearch.org, operations at lpresearch.org. In this case, the survey is about what are you repurposing? What technologies, cameras, EAS pedestals, EPVMs, any type of physical or technological or even tactical things that you're doing, how are you repurposing, including your people? We're getting some great response. We want to hear more. We're trying to spread good ideas out there to your colleagues and cohorts. So think about that if you're repurposing an existing tactic or technology to help you facilitate better operations, more security, and of course,

help you facilitate better operations, more security, and of course, more safety during this time. So that's an update from the LPRC. Look for more webinars coming up. Impact 2020 and Strategy at 2020 are under heavy planning right now. We'll still have 12 impact sessions. We just don't know if it's going to be all digital or just partly digital, but it will be a 2020 impact. We've got a lot of interest and energy around that. So I'm going to go to my colleague and friend, Tony D'Onofrio. Tony, if you can give us a scoop on what is going on around the world. Thank you very much, Reid. So what I'm going to focus on, and I actually have a lot of data this morning on the new normal and what's going on around the world in some of the countries. So I'm going to start in China because, again, they came out first out of the pandemic and give you a state of what's happening in China. The Chinese economy shrank 6.8 percent in the first quarter.

And IMF, the International Monetary Fund, estimates that it was only going to grow 1.2% this year, which is the lowest since 1976. 70% of the closed restaurants have reopened, but they're running at 50% to 70% of capacity because of social distancing. The operating rate of supermarkets is at 95%. Department stores are at 85%, but traffic and sales are slower, and they're running at about 30% to 40% of normal as of April 2020. So that's a little bit about where China is. They're reopening, but they're reopening with consumers going back into stores cautiously. into stores cautiously. Let's look at apparel because it's a very important sector for the world. Total clothing and accessory sales both in stores and online in March were down 50.5% from the previous month and 50.7% from 2019. McKinsey estimates a 67% of consumers expect to buy less clothes in the near future.

And post-pandemic, most apparel executives, in fact, expect a 13% increase in online penetration, so a lot more focus online. In New York, some of us went through, during NRF, the Hudson Yards, the new mall. Seventy-five percent of the Hudson Yards tenants refused to pay their rent in April. There's also a new wing that was planned that was going to have a much bigger split between stores and entertainment. And they switched now to add a lot more entertainment to that wing. So that wing now will have, the new wing will have 70% entertainment and 30% stores. Even in the U.S., consumers are cautious about going in the malls. In fact, they report that only 33% feel malls will be safe when stores reopen.

There are new experiments going on, starting in Texas, where they've opened up with retail to go. And in fact, JCPenney, Macy's, Neiman Marcus, and Saks are offering curbside pickup, again, starting in Texas. And even in Texas, again, jewelry is testing pickup for goods at the curb. And in fact, I just saw a stat this morning that curbside pickup was up 208% percent during the pandemic. And one final stat on apparel, it could be 18 months before apparel cleans up the supply chain. UBS reported a very disturbing number this week. They predicted that 100,000 stores will close by 2025. The clothing, accessories, and home furnishing will be the most affected, especially if, and they expect that online shopping would potentially increase to 25%

of total sales from the current 15%. In closed malls, we're also feel the pressure and UBS estimated that as many as 100 malls could close because of this by 2025. So that's a little bit of apparel and the malls. Let's look at essential retail next, which is the one that continues to be vibrant. LinkedIn reported in March that job application in essential retail soared 88%. Kroger currently has 19,000 open jobs. open jobs. Prater and Gamble, as part of their statements in terms of how they're doing, said that we are washing garments a lot more often, and they expect, the CEO, CFO expect that forever, we're going to see a forever altered health, hygiene, and cleaning focus. They see an increased focus on home, more time at home, more meals at home, and more cleaning at home.

Unilever, in a similar kind of fashion, says they're worth actually shampooing and using deodorants or personal products less. In fact, they're estimating 11 fewer uses cases in a typical week. L'Oreal said last week that the global cosmetic market was down 8%. And Unilever said online sales, which prior to the pandemic were running 6% to 7% grew 36%. And I think one of the interesting things that's going to come out of this, one of the things that Unilever is planning is to go directly to consumer with their products as a focus areas in the new normal. Fully expect, and in fact, the trend are telling us there's going to be a lot more dark stores. And dark stores are really stores that were initially were open for consumers, but they're now becoming really more distribution centers with no consumers.

but they're now becoming really more distribution centers with no consumers. So Whole Foods already has converted some stores in Los Angeles and New York to dark stores. Kroger and Giant Eagles has also done the same. Best Best and Beyond has actually stated that they plan to move 25% of their stores to be dark stores for fulfillment for online orders. And the idea is to actually make that do faster fulfillment. And the buy online, pick up and store orders increased 62% again during the peak of the pandemic between February 24th and March 24th. And then a couple of tech updates. Zoom, which we're using here and it's being used extensively, they reach 300 million users after 50% from the 200 million users reported earlier in the month. And in fact,

now you can actually find Zoom consultants online for best lighting, makeup, and background for your Zoom meeting. And no, I did not use one for the folks that I saw my image. I did not use a Zoom consultant to get my lighting set up. And also I saw an interesting thing that Ring is doing with Amazon. They're actually surveying their user base on potentially adding facial recognition and package detection to the Ring app so they can track better those home delivered goods.

And one key thing that I like as I start to wrap up is there was an article that pointed to the businesses that are doing best right now. What did they have going into the crisis? And this is what the six things that they had going into the crisis. Number one, they had a cloud-based business functions where workers basically can work from anywhere. Products are always in demand. They sold products always in demand, especially in uncertain times. So they follow almost like the Maslow theory of food, shelter, and then you add entertainment to that. Number three, they were easily discoverable online.

Number four, they had efficient ways to distribute products to consumers in a contactless way. Number five, products that make business more digitally efficient. So they focused on products that made business more digitally efficient so they focused on products that were made business more digitally efficient and number six they had a broad and or emerging social media presence and again i like to close with good news a lot of the world is starting to reopen so in the united states of about 10 states that have started to reopen retail in different phases. And that's good news. Italy, Spain, France, and Germany is also starting to reopen physical retail. And everybody's watching. In fact, it was a very good 60-minute piece last night and also

some information in the USA Today. Everybody's watching Sweden as they do this herd immunity test, where they basically never shut down, although they did make some changes. And everybody's watching to see what are their experiment and how it works. So that's a little bit in terms of what's going around the world. Now, let me turn over to Tom. Well, thank you, Tony. Thank you, Reid. And there'll be a little bit of repetition, but from a different angle, just on what Reid and Tony spoke about. I want to first talk about kind of the concept of dark store, buy online, pick up and store in curbside. I've spoken to many retailers in the last 10 days, and some of these calls will be in the mini series of podcasts for the cluster calls. And one of the inherent risks

is the impact that a store that pre-COVID had a 10% online footprint now is a 90% online footprint and never had the infrastructure in place to support that. And we'll start with the fraud infrastructure. So if you take an example of a retailer that did 6% to 10% of their business online, their screening tools, the way they screened online purchases automatically, the services they used are very different than what you would need if you had a 90% online business. So the unknown question is, with chargebacks that generally take 60 to 75 days to appear, what does next month look like for some of these retailers who have never, ever been in that position? Additionally, the infrastructure wasn't in place. And adding a new screening tool is not an overnight process. It's also a very costly process. And in some cases, requires infrastructure that doesn't exist in some of these retailers.

So you have this unknown of what is my fraud number going to look like? And the balance of do I use my gut instinct and cancel some of these sales and potentially leave that money on the table for someone else to pick up? Or do I take the risk in putting that in? So that's a big unknown question and it's somewhat hypothetical. But one would believe that in environments that sell athletic shoes and high fraud goods that before had a very small online footprint, that the fraud number will increase dramatically. The same thing applies to curbside pickup or buy online pickup in store where you have some retailers who were in a very small way doing this and really overnight turned it into a major portion of their business. And they allow things like proxy pickup. overnight turned it into a major portion of their business. And they allow things like proxy pickup.

Additionally, when you have curbside today, some of the verification methods, whether they were actual or under pressure of control are non-existent because of the lack of contact. So in the past, you may have had a retailer that required identification and a credit card being posed. While this offers no actual protection in some cases, it does offer a deterrence that's non-existent now. As a matter of fact, there are some retailers that you literally go up and you call your number out and you walk up and you give it. The verification just can't be there because of social distancing, as well as just the infrastructure and the change from working inside to outside.

So I was at a retailer that was taking pictures of people's credit cards on a mobile device to validate that that was the credit card. Think of the risk there that occurs and think of the PCI and the PII compliance issues there. These are all happening in the moment. So retailers are doing the best they can. But I think one of the predictions I'm going to make here, and I don't think it's a bold one, is that we're going to see an increase in credit card fraud and it's going to change the way we think. To Tony's point, a lot of these companies are now moving their business and trying to establish what the new normal will be. In that process, it's so important to make a proper investment in screening tools that they may not have before or in the long term, it could really affect them negatively. that they may not have before, or in the long term, it could really affect them negatively. The other thing with credit card fraud or actually delivery type fraud is the last mile becomes a totally different realm today because delivery services are now so overwhelmed that they are consistently adding subcontractors to their networks. And with that subcontractors,

you have new drivers, you have more access and opportunity to packages being lost, stolen or mishandled. So this is another unknown that is happening in real time where I had a U-Haul truck pull up yesterday and drop off an Amazon package. And I spoke to the driver at a social distance and he basically applied for an ad online. He's never delivered before and literally is renting a truck and filling it up. I ordered some goods from Home Depot and someone in a regular car delivered them. And there were two pieces missing, very inexpensive pieces. But when I called Home Depot, I spoke to the person and they said, when we put things in the trunk of people's cars, we just have challenges. So these are all things that are really happening right now without a lot of time to really play for it. And it also shows the inherent openings in some of our infrastructures and the way we had to operate it before. This leads me to the next

step of what is the new normal for remote work? What will be the mix in the future in all of our worlds? Because as we reopen things, we obviously have to take a different approach of reopening. In one sense, this opens the idea to remote work to companies that haven't done it before. In the retail world, a lot of retailers operate in a zero-trust information security environment where they don't trust any devices, they don't trust anything to protect their POS data, and they actually lock it down quite a bit. If you think of this phenomenon in COVID-19, it wasn't too long ago that on a Monday, companies were told that they were going to go to remote work on a Tuesday or Wednesday. It doesn't take a cybersecurity expert to really think through the fact that no matter what, there are inherent and open challenges there that could not be addressed in real time, even if they had the resources or money. It's just nearly impossible to switch your workforce overnight and think that you'd have the right protection in place. So this is a major challenge for everybody, not just retail and everybody,

all of us on the phone where we're taking what in some cases was a very closed loop, strong security infrastructure, regardless of the age, and opening it up overnight. And we don't really know the full impact of what that will be long term. We also have to take a balanced approach as when we're addressing these items that we have a resource and a financial strain because this stuff is not inexpensive to address. That leads me to some other infrastructure things that were opened up. And I think we've talked about it a few times is the need to be able to remotely work with proper security will change in the future. And I think you'll see retailers and other businesses alike really focusing more on pivoting and being able to change their business if they needed to. That also leads me to remote video. I can tell you that for many, many, many years, that was always one of those things that was, we all want remote video, we all understand the impact of it. But it's a very expensive proposition if you have even just 100 stores to overnight change your infrastructure, allow for the bandwidth out, and properly folks that closed hundreds of stores overnight and have little to no visibility to these stores. So this will absolutely open that up in the future.

The bad guys know this as well. If you're using any type of open source intelligence to monitor chatter on the dark web or telegram or some of these areas that are off the beaten path, you'll see forums talking about robbery and burglary and actually calling out retailers saying, this retailer has no infrastructure. They're still using old alarm systems. They have no video. They're an easy target. They use different methods. The bad guys use different methods to communicate. But as I'm starting to fish through and look at things, there is a whole bunch of chatter about what I would say is just physical security hygiene is that they're identifying places that they know are vulnerable and attacking them. And I would

argue that they were the places that were attacked before, but in this case, they're actually specific to markets where they know law enforcement doesn't respond to burglar alarms and basically shopping the way that you and I would shop online. They're looking at markets and going, that market's more vulnerable. Let's attack that. I think that the LPRC is working on some things to address that, but it shows the importance of having a really strong open source intelligence or intelligence gathering process. And I'll kind of wrap it up with two points. One is phishing, phishing, phishing. Now is the time to really pay that extra special attention to those emails. DocuSign puts out quite a bit of stuff. And every day, they have different phishing scams that the reality is look very, very real. on this side or a retailer that is expecting an agreement to be signed, it is a common place to click on that link and sign it.

But today, people are taking advantage of that at a high rate, and it's coming up quite a bit. And then Tony mentioned Zoom. I talked about Zoom a couple weeks ago. I'll skip that one and go to Microsoft Teams and Google Meet. These services are growing at droves that are almost unimaginable. So great for the service, but really allows vulnerabilities to come out and play. And I think we'll continue to see the conference call kind of drama where there will be holes

exposed because they're easy targets. And then the last thing which applies to everything that we talked about today is the new normal in management and communication methods. What worked before doesn't work now because you have a population remotely. So the way we communicate, the way we push out best demonstrated practices has to change. We all have very short attention spans these days. So the utilization of video in communication, education, and awareness, the use of short bursts of information will probably be the new normal and we'll most likely have to. And then I think all of us will have to remember that there could be a second wave as we open to not have the

short-term memory of the inherent cybersecurity risk. My last prediction is I think in the next 90 days or so, we're going to unfortunately open Pandora's box and kind of see what the fraud impact was, what the cybersecurity risk was. Because if you think about all of the hackers that, and I don't usually use the word hacker because I think hacker is a misused word. So let's say all of the scammers that before were out and about in between their scamming, they're now sitting at home.

So you now took someone that would spend three or four hours a day on it and you've given them 24 hours a day to develop and critique and improve their skills. So we just have to be mindful of doing the same. Back to you, Reid. cheesed out an important strategic consideration, Tom, and that is looking for a second or third wave in the virus that that is built into the federal, state, local plans, but in this case, also everybody's corporate plan at the corporate office, obviously the logistics of supply chain, and then, of course, the stores. How do we do that that? And so again, if we're using good cleaning, good spacing, potentially masking, one thing I'm left off to is having more hand washing and hand cleaning stations with sanitary and so forth. So I think all those combined, that can help us. And we were just listening to a podcast in the last 24 hours around the 1968

flu that we had in the United States that killed over 100,000 Americans in a much smaller population level, but that they developed the vaccine in less than a year, which seems pretty incredible. They normally take multi-years to develop, but they didn't use the distancing and spacing, and it was just kind of surprising. Now, again, it was a flu, an influenza rather than a coronavirus, so we'll leave that to the public and health officials, the physicians and scientists to help us figure that out, but again, building that into our strategy. So I want to thank everybody today for participating from our team and for you all, the listener. We're always here at LPRC to help support you all. That's why we exist. We encourage you all to inwardly and outwardly

building your partnerships, building your plan, having contingency plans, and looking forward. So everybody stay safe out there. And for Kevin Tran, for Tony D'Onofrio, and for Tom Ian and myself, we wish you a safe and productive time period. We're always here at Crime Science. LPRC, signing off from Gainesville, Florida. Thank you, everybody. Thanks for listening to the Crime Science Podcast presented by the Loss Prevention Research Council Gainesville, Florida. Thank you, everybody. or other advice. Views expressed by guests of the Crime Science Podcast are those of the authors and do not reflect the opinions or positions of the Office of Prevention Research Council.