LPRC - CrimeScience – The Weekly Review – Episode 126 with Dr. Read Hayes, Tom Meehan & Tony D’Onofrio

Episode Date: November 17, 2022

2023 LPRC CrimeScience Podcast getting upgrades! LPRC Ignite and Integrate planning going strong! In this week’s episode, our co-hosts discuss the crash of the cryptocurrency market, what Elon Musk means for social media, the global top ten risks for 2023 for both consumers and retailers, the holiday season means more phishing scams, and a look at whether TikTok is safe to use! Listen in to stay updated on hot topics in the industry and more! The post CrimeScience – The Weekly Review – Episode 126 with Dr. Read Hayes, Tom Meehan & Tony D’Onofrio appeared first on Loss Prevention Research Council.

Hi, everyone, and welcome to Crime Science. In this podcast, we explore the science of crime and the practical application of this science for loss prevention and asset protection practitioners as well as other professionals. Welcome, everybody, to another episode of Crime Science, the podcast. This is the latest in our weekly update series. I'm joined by co-host Tom Meehan and Tony D'Onofrio and our producer, Diego Rodriguez. And what we're doing is we just had a meeting last week, a planning meeting. We're going to make a couple changes. You'll hear in the intro, outro to the podcast itself. And we're going to spice up a couple of things. We're also going to have invited guests for very short interviews on anywhere from one to four of the episodes monthly, depending on what's going on and who wants to talk and who you all want to listen to.

But we're really moving out on leveraging all the types of expertise that are here at the LPRC, at the University of Florida, and of course, of course, with our membership of just about 200 corporations now that make up the Loss Prevention Research Council's community, and more coming on board. We're excited. We'll be announcing more new retailers, more new high-tech members, more solution partners on the LPAP side. So, the community is coming together, maybe some industry associations as well coming up here. So, let me go with no further ado and start to move forward, talk a little bit about LPRC. As people know, what we do is not just research and development, hopefully some innovation, some rigorous field evaluation, but also spend a lot of time. And really, I think our hallmark is the year round engagement opportunities here.

with seven working groups where our members can engage with each other, engage with our research scientists, help us move the needle, move forward on getting better and better. And again, if we take a quick look at the working groups that we've got, you know, really probably the oldest existing one is our product protection working group. And that is one we're working primarily on anti-theft and of course, mostly shoplifting, whether it's individual opportunistic thefts or, of course, something more organized to very organized. And with partners like Procter & Gamble, we've been able to push the limits of product protection really through the entire supply chain as well. product protection really through the entire supply chain as well. But looking at what do we do to understand a potential or a known booster or frequent offender is approaching and entering the building? What do we do? What can we do to better understand who these people are and how they're operating?

What are the things we might do with the design and layout of that interior location? If we're talking about anti-shoplifting? Can we move fixtures around? What about height, visibility, sight lines, obstructions by signage, other fixtures, things like that. So that's part of what we look at, part of the calculus there. Of course, another part is our team. There are not a lot of associates or employees, team members in stores now for a lot of reason because of technology, because of funding, and because it's difficult to recruit, train, and retain people and recruiting at the front end. So more and more technology that we're relying on. But with the team members we got, how do we better select and train and mentor? How do we better lead and manage so that we're getting the right kind of engagement with our customers and with others? That we're also, though, increasing the

risk calculus, making it more difficult, riskier that you're more likely to be caught or reducing the benefit by good service and engagement. And that way, we then turn, of course, to looking at the products themselves in that zone one. You know, of course, to looking at the products themselves in that zone one. You know, what are other things that we can do so that that product's less desirable to steal through benefit denial, whether it's ink and dye tags, whether it's something that's implanted in the firmware, if it's a digital or electronic product, like we're seeing with cordless drills and some other items. Sometimes now it looks like ink cartridges may come up in that area. Of course, software, gift cards, or other products

that have that benefit denial device, that mode and mechanism of action going on so that thief is not going to be able to convert it to cash, or at least very readily. So why even bother stealing it? And then we're looking at next, we're looking at other things that we can do with electronic tagging, of course, EAS and sometimes RFID now that can act as EAS. And that makes it riskier that somebody is going to be that they're going to be caught because of the amount of items they've got that they've not paid for the items, of course, and so on. They've removed them without payment. So some of those kind of things. We're looking at Zone 2, of course, with public view monitors to try and instill some of that risk into the equation a little more in that category area.

The other one's that Zone 1, the item, the product, the target of theft. One, the item, the product, the target of theft, how do we make it less beneficial, as we talked about, benefit denial, riskier for them to take it, that more likely they'll be caught, and or more difficult for them to remove, or it's not even on the shelf. You've got to go ask for it, or may not even be in the store. We might have locking fixtures, of course, that make it difficult to remove any or many. They also might make a lot of noise, increasing their perceived risk and things like that. So a lot of what we work on is what are these modes of action, you know, increase effort, increase potential feelings, perceptions of risk so they don't want to commence or progress, and of course, benefit denial. So those are some of the things that we're doing, just a few. And with 100 solution partner members, the LPRC, we have an amazing, amazing array of technology. You can see these online in our solutions directory at LPResearch.org.

And we're adding to them all the time in there. Each of our solution members can post five of their solutions in there. our solution members can post five of their solutions in there. We can link that into the engagement lab. Now we're well over 200 technologies installed in that lab, in that zone one, that target area, zone two, the immediate area around it, the proximate area, like enhanced public view monitors, signage, things like that that can affect risk, reward, and effort. You'll see, again, the layout design of those fixtures. We've got, I think, over 26 cameras now that are from Axis. They're from Bosch. They're from Hanwha. They're all types of cameras. They're in different angles, different resolutions, focal points, lens types that are, of course, 360, pinpoint, all types of different arrays here. We're leveraging those cameras too, by the way, the high-def ones for some of our

working with big organizations on working on them building AI camera vision or computer vision models. In that zone three area, which is the entire interior, we've got Bulldog's gates. We've got a front end POS solutions in there. AI, for instance, from Eversine, what's going on there. Of course, somebody's not ringing up items. They're not completing a transaction. They're ringing up the wrong items and a dozen or maybe two dozen other ways that people try or inadvertently commit fraud or theft or unintentional removal. So a lot happening at that point of sale area with EPVMs and so forth in that transaction area. We've got a whole lot of analytics running in the background. We've got probably a dozen now of our members that have developed world-class technologies. These things, again, these technologies, these solutions can be viewed

in our solutions directory online. You can come into the labs and view them. And I think a really neat part of our LPRC lab complex is the ability to compare and contrast what might work or work best in your particular environment with your particular situation or work particularly well integrated with some of the other solutions you've got to build solution sets, which to us is those poly treatments as opposed to, say, a monotreatment sometimes can escalate, obviously, the impact, the effectiveness of what you're trying to do, as long as it's cost effective and so forth. So, a big part of our labs and our team in that working group are working on how do we look at, put together solution sets, how do we test them,

how do we break them, if you will, metaphorically, so that we can strengthen them and enhance those things. We've got coming up, upcoming will be some 5G, I mean real 5G, not 4G LTE cores running and emulating 5G and speeding up a little bit, but real 5G cores with an amazing uplift in the bandwidth and obviously a dramatic drop in the latency, or in other words, they provide a lot more lightning-fast speed. So, how do we integrate some of these technologies? Can some of them take SIM cards and be linked into cellular networks for also allowing for more mobility and movement? As the layout and design of the interiors change or as problem sets change, we can more readily adapt. Maybe not as tethered to Ethernet cable, PoE, and things like that.

There's still a huge leap forward. Or switches in fiber, which, by the way, our labs are getting ready to upgrade. And it looks like the first, maybe second, but probably first quarter of 23, with some really neat organizations like tele leading the charge here but with axis and serverly and bosch and johnson controls international centromatic and others they're tech people that are just world-class people coming in there and helping us figure out how to do this i think hanwha is involved as well and sorry if i'm missing anybody that's not there but we have to now we're going to have over 400 technologies in the six interior labs that we've got. And so those need to be connected, whether wirelessly or through fiber, in addition to some Ethernet.

But we need more speed, flexibility, just like is needed in the stores, particularly running things into our SOC lab, our command center, where that is one of the most capable, I think, now in the nation and dramatically increasing in capability. So that's just a little bit about what we're doing in the product protection working group. In addition to field testing products, our team has been out interviewing and seeing what the impact of new display fixtures, new tagging and other cabling and other types of tethering technologies. What's the impact? How well are they working? Getting feedback from customers. How is that affecting their user experience and their outcomes that they're looking for? How does it affect employees, their workday, their impact?

What's their feedback on how well they think things are working? What improvements could we make in the tech or in the deployment or execution of that tech or the integration of that tech with other items or tactics and solutions that we've got out there. We've also, because we've got a couple, three, four now, I think, security officer solution members, we're excited about those members and looking as they continue to upgrade and enhance what those people are able to do to support the normal operations of a store, as well as obviously provide deterrence and disruption documentation to reduce theft, fraud and violence. And how do we weave, uh, those solutions in. Uh, so some of that field testing, of course, always we're working with active criminal

offenders, bringing them now into our simulated store lab, the engagement lab, as well as working with them in the wild, uh, working with them in stores, uh, talking to them in the parking lot, having them, uh, demonstrate things, getting good information from, you know, larger and larger sample sizes of actual offenders. So, with no further ado, I'm going to turn it over to Tony D'Onofrio, but stay tuned. What we'll do is each episode, I'm going to kind of go through some of what's going on in working groups, who's involved in those groups, where those groups are headed, what kind of playbooks that they're putting together for theft, for anti-fraud, and for anti-violence. What are some playbooks that the groups can put together? Our researchers working with

dozens and dozens now, we're over 70 major retail corporations and all their divisions. So we've got the experts, we've got the practitioners at every level in the organization that we're working with on top of now having a seven-person research team, double what we've had in the past. So stay tuned. Tony, let me head over to you. Thank you, Reid, for those great updates. Let me start this week and focus on a new article that I just published, and it's available on my website, TonyDonofrio.com, and also on LinkedIn, on my profile. The article is titled, The Worst is Yet to Come, and for many, 2023 will feel like a recession. I opened the article with a quote from Robert F. Kennedy, who in June back in 1966 said, quote, there's a Chinese curse which says, may he live in interesting times. Like it or not, we live in interesting times. They are times of danger and uncertainty, but they are also the most creative of any time in the history of mankind."

Again, the title of my article was the worst is yet to come and for many 2023 will feel like a recession is actually derived from the latest international monetary Fund report on the state of the economic world in the fall of 2022. So we just issued. The IMF now forecasts global GDP growth to slow dramatically from the 6% in 2021 to 3.2% in 2022 to an even lower 2.7% in 2023. The news, if you look at the report, and again, you can see the chart in my article, is especially bleak for advanced economies such as the United States. According to the IMF, a third of the world faces two consecutive quarters of negative growth, which, as we heard a few

times is a technical definition of a recession. Global inflation is forecast to rise from 4.7% in 2021 to 8.8% in 2022, only dropping to 6.5% in 2023, and again, only dropping to 4.1% in 2024. And in the article, again, I show a chart from Euromonitor, a different publication, which again shows similar high inflation rates into 2023. Also in the article, I list all the other risks in addition to the economic ones that I just spoke about. And these are actually from the Economist Intelligence Unit.

And these are the potential risk scenarios, and there's 10 of them, that they see for the global economy that could reshape it in 2023. Number one, a cold winter makes the European energy crisis worse. There's a high probability this one will happen and it would have a very high impact. Number two, extreme weather adds to the commodity price spikes fueling global food insecurity. Again, high probability, very high impact. Number three, direct conflict erupts between China and Taiwan, forcing the U.S. to intervene. Moderate probability with a high, very high impact. Number four, high global inflation, fuel social unrest. Very high probability, moderate impact. Number five, new variant of coronavirus or another infectious disease sends the global economy back into recession. Moderate probability, very high impact.

Number six, interstate cyber war cripples state infrastructure in major economies. Moderate probability, very high impact. Number seven, further deterioration in the West and China ties, which will force a further decoupling of the global economy. Moderate probability, high impact. Number eight, aggressive monetary tightening leads to global recession. Moderate probability, high impact. Number eight, aggressive monetary tightening leads to global recession, moderate probability, moderate impact. Number nine, China's zero COVID leads to severe recession,

low probability, high impact. And number 10, Russia-Ukraine conflict turns into a global war. Very low probability, very high impact. And this is a big one, as we just heard this week on the strike in Poland that was trying to assess what that actually means in terms of this becoming a true risk. Over a half a billion people live in countries that rely on Russian and Ukrainian wheat, so it's a major food supplier. Two-thirds of the world population also lives in countries that are neutral or Russian-leaning as it relates to the Russian wars. In other words, we're not

united in supporting Ukraine around the globe. And finally, China remains a wildcard for the global economy due to its size, manufacturing importance, and its continued zero-COVID policy. So what does this mean for the shopper or the consumer, which is important to this audience? So in the article, I share new research from First Insight that shows that inflation is lowering consumer confidence across multiple major economies. As JP Morgan summarized, here is how inflation will impact consumer confidence and spending. Rising inflation

will mean consumers will spend less overall. Consumers will trade down to private label brands, and the effects of inflation on cost of living will be uneven across regions, with Europe having the biggest impact. And in the article, I provide very detailed data on this. U.S. consumers are already spending an additional $445 per month buying the same items as the day before, and the price is going up because of inflation. 31% of U.S. parents said they are struggling to cover day-to-day expenses. 56% do not consider themselves to be financially healthy, and 46% of 55 to 64-year-olds are worried about their retirement savings.

Inflation concerns are also expected to spill into the holiday season, and again, read the article to see what that impact actually looks like. what that impact actually looks like. As Deloitte points out, the legitimacy of the current spell of inflation raises important questions. Short-term spending shifts that consumers may use to weather inflation storms run the risk of cementing into longer-term habits. While consumers have demonstrated that inflation perception can quickly change, it remains to be seen how quickly the spending compasses can recover. The article also covers some very important details of what this new world of risk and inflation and a concerned consumer means for retailers. It also goes through a lot of disconnects in terms of what retailer things is happening and what is actually happening in the world. For example, 58% of retail executives

think that consumers are shopping more for deals, but this is only true for 40% of consumers. 43% of retailers think consumers are buying less overall, yet only 29% admit that is the case. And again, a lot more stats in the article that point to that. Summarizing, many retailers are already dealing with excess inventory issues after overordering during the peak of the supply chain shortage, the peak of the supply chain shortage, having seasonal items delivering late or really not meeting the consumer preferences, strapped consumer spending less for retailers to heavily discount items, leaving to lower profitability, especially in the second half of 2022 and into 2023 due to inflationary micro economic headwinds the most vulnerable retailers are expected to be those that sell to the middle and low-income consumers selling primarily primarily discretionary goods that have a weak

discretionary goods that have a weak balance sheet. A slow economy in the latter half of 2022 and into 2023 may result in a wave of store closings and back-crumbs, especially for those with a high debt. But it's not likely to get to the same level as we were talking pre-pandemic with the retail apocalypse. So if I had to summarize where we're at in the fall of 2022 going into 2023, we are indeed living in interesting times. Both consumers and retailers are facing substantial challenges ahead. But as the opening quote reminds us, history is filled with difficult moments. And if you think about it, the smartphone, the internet,

e-commerce, and all the great innovation that's around us, including a lot of it that's here at the Loss Prevention Research Council, are really a great reminder that we are living in a very creative time in history where we can do something about it. So in my view, keep the faith because the best is yet to come. And with that, let me turn it over to Tom. Well, thank you, Reid. And thank you, Tony, as always. Very excited to be back on the podcast. I think we're all out and about traveling today. So I'm out in the West Coast and taping this early in the morning. But I wanted to talk about crypto, the FTX debacle.

And I don't know if you're following any of the news, you would see this. But basically, you know, a few months back, we had Celsius and a couple of the crypto lending platforms or crypto markets basically filed for bankruptcy and brings bankruptcy and billions of dollars were lost. And FTX was one of the bigger players, 30 year old CEO, you know, something like $8 billion lost in one day. I mean, massive impact on the crypto market. Byance, who would be FTX's biggest competitor, actually was going to buy them and bail them out and then looked at some of their paperwork. And literally in a week's time, it went from the most unexpected merger to FTX falling

from bankruptcy and closing down. And what this caused in the crypto market was what you went from is a crypto winter. So a crypto winter where the Bitcoin and cryptocurrency kept going down to a crypto avalanche. I mean, it was a massive impact. And all of the major exchanges were affected. And actually, myself personally, and some other people I know got notices, you know, basically in the middle of night from other cryptos saying based on circumstances that are outside of our control and regulatory filings that came up, we are freezing all of the assets and not allowing withdrawals or lending anymore in crypto. is a really interesting story because while at one side it's a very muddy, if you will, situation because you have crypto, which in some cases is very similar to a Ponzi scheme with some of these companies. And I'm not saying they're doing Ponzi schemes, I'm just using that as a

kind of baseline to compare it to where you're being loaned, you're taking loans out on cryptocurrency. And then what ends up happening is they'll, as these companies or these exchanges continue to invest in crypto and crypto rises, the money rises more and more. So you take a loan out and they give you a loan based on crypto and they keep investing in crypto. And when they're investing in crypto

and there's these huge gains,