LPRC - CrimeScience – The Weekly Review – Episode 138 with Dr. Read Hayes, Tom Meehan & Tony D’Onofrio

Episode Date: March 2, 2023

On today’s episode, our hosts recap last week’s LPRC Integrate event, discuss the US economy based on several retail reports, discuss AI and computer breakthroughs and how those might affect retail, and much more. Listen in to stay updated on hot topics in the industry and more! The post CrimeScience – The Weekly Review – Episode 138 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, and I'm joined as normal by Tony D'Onofrio and Tom Ian, our producer Diego Rodriguez, associate producer Wilson Gavrino. Today, we're going to visit a little bit and discuss some of the things that are going on around the world. I'm going to start off with LPRC and some of what's going on here. We were excited to carry off what we've been talking about with you all for quite a while now, and that's the LPRC Integrate event.

That summit was designed, again, to be one-part training exercise have heard before, but the scenario involved two what we call red actors, two bad guys, if you will, that were in a vehicle. They had hit one place. In other words, they conducted a theft event, and they piled into their vehicle, and they were going to head northbound on one of the roads in our UF Safer Places Lab complex. Those guys headed northbound, then turned and proceeded westbound, then turning north into the parking lot where the UF Innovate Hub is situated. And that's where our seven labs are situated as well, the six indoor and the outdoor complex. And went up into the engagement lab, the simulated store environment, conducted what started out as just a rough and ready theft, a very aggressive series of thefts of different types of items, proceeded to push one of the store employees, simulated store employees, to the ground in order to get to some more product instrumental violence. We've got now what we might call strong arm robbery.

Another one of the red actors displayed a handgun to another employee in order to get them to, that employee, to open a locked display case, again, exercising that type of instrumental violence. We now have an armed robbery because of the handgun. In the meantime, we had internal sensors that pick up on the loud noises, the aggressive behaviors, the handgun. And at the same time, multiple protected devices were sounding their alarms. Their APIs were being generated as multiple items were pulled or stripped from particular store fixtures, protective fixtures. In this case, we had our simulated store manager waiting on a customer, and she goes over to assist and finds out that one of her employees has been shoved to the ground. She starts to evacuate that employee and get the customers out. Another

customer, though, pulls out his iPhone and is now recording the situation and putting himself and others in a dangerous situation. The manager also evacuates the employee and the other customer, the non-cooperative customer. R2 red actors continue to steal multiple items, including a GPS tracker-protected device, an iPhone in this case, in a box, and leave the property and take off at a relatively high speed, actually in the parking lot, continue westbound, turn southbound, turn back east and then north into our second store site. But the police have been alerted. Information has been fed to them, to the store, in this case, the simulated store victim site too. to the store, in this case, the simulated store victim site two. And so the police were able to safely intervene and apprehend our two red actors. So the victim store site two was not affected.

Nothing was stolen. And more critically, nobody was injured or even traumatized, hopefully, in that case. So successfully and very well done. We have overhead drone footage of the whole event. We've got on-the-ground footage. We've got footage through multiple security cameras inside and outside the building, including also pedestrians, iPhone cameras in the parking lot of store site too. So a multitude of data collected as well as signals and signatures from the smart devices. Their facial features were matched up. The vehicle's tag number, state, and the actual number itself matched up. The vehicle appearance, make, model, color, customization, and damage matched up. So when they pulled into store site two, multiple different

features and emissions were matched up to say, hey, the individuals that victimized store site one, traumatizing the customers, employees there, and conducting that robbery, those two and that vehicle have just shown up. And that was as they were proceeding radio and communicated to law enforcement via Multitude Insights and through different platforms, Everbridge signaling to the other or just over 30 retail corporations were represented. About 45, 46 retail AP or LP executives were divided into three teams. We had the red, the white, and the blue teams. Each of the teams was facilitated by two AP or LP executives that helped us put the scenario and the exercises together. or LP executives that helped us put the scenario and the exercises together. They were also, each team had assigned a research scientist from our team to help discuss some of the underlying theory and concepts or frameworks that we use to describe how we detect and

how we document, but also how we try and deter and disrupt behavior throughout the journey to and from crime, the crime script that I just described. And we had technical experts in there to help describe and discuss with and serve as experts on the scene. We had also had evaluators that were also acting as scribes and documenting things, making suggestions. acting as scribes and documenting things, making suggestions. We had some faculty from the University of Florida, data scientists, industrial systems engineering faculty, and others also. We had eight law enforcement agencies represented at the federal and at the county and local level. We had from the Public Safety Institute here in Alachua County, Gamesville area that puts on the police and other first responder academies and retraining.

It has just world class facilities. They were all here to take part in the exercise, to provide critiques, describe opportunities and add realism to the scenario. So all in all, the feedback we got has been off the charts, amazing, positive, certainly always opportunities to improve the scenario. That's what we're trying to do. Improve the tech stack or what sensors and communications or connections and analytics and distribution and disbursement tools that we might have as well as the protective devices. How do we best integrate them? We found some opportunities and we'll continue to do so in what might be missing. What's the gap analysis here? What do we need to better

and earlier and more definitively know something or someone or someones are headed our way to victimize or harm? How do we get that information to the right people at the right time, the right way? How do we better shape the information that we're collecting, all the visual, oral, and digital signatures or emissions or features that need to be collected, get those to the right people, pull them all together forensically to create world-class criminal cases for prosecution and so on. So just an amazing day called LPRC Integrate with the inaugural or initial event. We did a debrief afterwards with all hands on deck, describing and going back through. We got other feedback that was inputted throughout the event. and going back through. We got other feedback that was inputted throughout the event.

And then after the event electronically or digitally, multiple surveys were given before and after. We had Dr. Hervé Boyon from the University College of London who flew over to help us. And he and one of his PhD students had worked with us extensively during the preparation phase. Dr. Boyan was also here to take notes and to record audio-wise with the permission of the participants, just for note-taking and for report purposes with no, of course, individual or corporate or organizational attribution and things like that. So we're excited to come out with an after action report. We'll have some briefs. We're going to have a 90-minute webinar, live webinar for all of our members to go through and discuss and debrief. In the meantime, we're peeling off and we'll work on upcoming scenarios and ways that we might deliver those digitally or remotely, as well as maybe on the road,

as well as what we might want to do here in Gainesville, because there's just no shortage of theft, fraud, or violent situations. We will be working on an active assailant tabletop for those that are wondering where we might be heading with some of these things, but just an amazing day and amazing event. The LPRC team was phenomenal. From the reception we had on the Monday and all the tours and things were happening, the engagements and opportunities for everybody to get together and talk, to meet and greet through everything that we did from the breakfast and lunch and the reception at the new Swamp restaurant as well. And then all the logistics. And they're very complex logistics.

All the laptops that need to be distributed. All the slides that had to be produced and checked and rechecked and triple checked. And all the people running around making sure that things were happening the way they're supposed to happen. It was a thing of beauty. And I want to congratulate each and every one of our LPRC team members for their extraordinary efforts, as well as all the LPRC members that really helped us put this thing together. And then everybody that participated. We also had our Board of Advisors meeting. It's normally we don't want to pull off this many things at once,

but we had multiple of our 40 board of advisor members come in from retail executives to industry executives to law enforcement executives and others that came in and met together with us and our team and helped us brief them up on what all we've been up to and where we think we should be heading to improve the outcomes and the process and everything that we deliver here to our membership and the industry at large at the LPRC, as well as, of course, get their critical feedback on everything that we're working on, how we can get better, get more focused, give them what they need in more usable formats. We then had our LPRC Innovate advisory panel meet that Innovate again.

The advisory panel is made up of 30 major retailers. They'll have one or two people assigned to meet with us monthly online, or in this case also at Ignite in the winter, and then at the end of the year in the fall at Impact Conference. We also have a lot of tech, several tech teams, excuse me, technical people or organizations that are members of that. we've got 11. Sponsors that provide some of the meaningful technologies, people like Axis and Axon, ever seen, for example, AT&T Business. We've got the National Retail Federation. We've got Lenovo.

We've got more. And what they do is they help us think these things through. And we've got more. And what they do is they help us think these things through. They also provide extra financial resources that we're able to translate into a larger and even more capable research team. And dollar for dollar, every bit of the sponsorships that come in from advisory panel members go directly into hiring and retaining top notch research scientists, research technologists, data scientists. So great set of meetings. I walked away after Integrate going into the BOA, the board of advisors, as well as the Innovate Advisory Panel meetings, where things were more crystallized in my mind personally than I think ever before in almost 23 years now with what we're trying to get done together.

So I want to thank again all of our participants there, our team again for putting on a fantastic BOA and Innovate, which we call the Ignite meeting. Here we go. We're getting ready to jet off into a series of things. We're going to be doing some training for REI at their annual meeting. We're going to be working with a multitude of other retailers that were being contacted to get online and weigh in. We'll be going to an AT&T business conference where they're going to have major retailers in here from around the world, down in Orlando, and talking about some of the things that are going on there. You know, the University of Florida, I just attended today. There was only, I think there was eight of us faculty that were requested to come in and work with the strategic marketing and communications team and understand how they could support and get get the word out on the valuable critical research that those of us that are working in different disciplines, myself and, of course, public safety and crime and loss prevention.

myself and, of course, public safety and crime and loss prevention. So a whole plethora of things happening here at the LPRC. A whole lot more to come as we move into our Supply Chain Protection Summit that will be hosted by Procter & Gamble, P&G, and Cincinnati at their world headquarters. We're excited about that. Dr. Loh, Corey, and the team will also be heading to Houston for the Violent Crime Working Group Summit. So more information on that. That's kind of a lot. I'm going to go ahead and turn it over to Tony D'Onofrio. And Tony, if you could take it away. And great seeing you in Gainesville. Thank you, Reid, for all those great updates. Let me start by first congratulating you and the entire Loss Prevention Research Council team on a great Ignite meeting this past week. Heard lots of positive comments from attendees on both Integrate and the progress being made with LPRC at the Board of Advisors meetings that I attended.

Let me start this week with an update on the nebulous state of the U.S. economy. This information is from CNBC, and they said if you think the economy is confusing right now, considering how baffling it must look to Home Depot and Walmart. Last week, the two big retailers sent cautious signals about the health of the U.S. consumer. In a nutshell, Walmart said U.S. consumer spending started the year strong, but it expects household to back off to the year producing weak. Physical year 2022, U.S. sales growth of just two to two and a half percent. Home Depot said consumer spending is holding up, but it expects a flat sales growth year overall with declining profits. Indeed, if you look at the latest inflation read from last Friday's core personal consumption expansion index, it was also hotter than expected.

Friday's numbers showed how consumer spending rose more than expected as prices increased, jumping 1.8% for the month compared to an estimate of 1.4 percent. From the big box retail earnings to declining hopes that disinflation would be a straight line down in 2023, the latest news from the market and the economy highlight Jared Hardiva's job Federal Reserve, has been cooling off without causing a recession. Predicting where rates will end in 2023 is no easy task. This year started with the bond market confident the Fed was nearing the end of the rate increases, and that is not the case, and maybe there will not be a soft landing. But after two straight higher than expected consumer inflation reads in recent weeks, there is talk that the Fed potentially raising now 50 basis points at the next meeting and

that the higher longer view that we're going to keep raising rates is suddenly back on the horizon. So I actually talked this in the prediction webinars that I did earlier this year in February. And basically, same thing. We do believe that the second half of the year will be tougher for the U.S. economy. Switching topics, and it's very appropriate. I'm actually in Europe and I just spent time with one of the world's largest retailers that has done the best job, I think, in terms of deploying RFID. Let me focus

on a new article that I just published titled The Ever-Growing Omnipresence of Retail RFID. If you think about it, the history of RFID is long and interesting. As I wrote in another article, which you can find on my website, the technology actually has its roots in World War II. For the retail industry, the adoption fuse, in my view, has been slow to burn. Multiple times, I've asked the same questions that the children always ask when going on a long trip. Are we there yet? In my view, however, we are closer than ever in making RFID one of the key standards to address inventory visibility, whose importance, in my view, also was accelerated by COVID-19. In 2022, the problem of inventory distortion worldwide totaled an outstanding $1.9 trillion. And inventory distortion is basically out-of-stocks and over-stocks combined. So think about it.

The problem is over $1.9 trillion. The same ISHL research confirms that the number one reasons why customers leave your store without buying are empty shelves or out of stocks. This occurred 62% of the time consumers didn't buy, and panic buying in 2020 was a significant driver for this reason. In 2022, this issue overall dropped to nearly 59% of the problem in the minds of consumers, but that's still a high percentage. By comparison, the next reason for leaving a store without buying is we can't find help, which is only at nearly 14%. So empty shelves is the reason why consumers leave stores. reason why consumers leave stores. The most dramatic insight from the ISL research, as I pointed out in the article, is that inventory distortion lowers consumer trust with the

particular retailer. And in fact, as you'll see in the article, if you read it on my website, in the last two years, trust in Amazon has been over Forex versus other retail industry sector. In other words, if a consumer is not happy with you, they're going to go to Amazon. In 2021, I actually wrote an article titled What's Driving the 93% Retail Adoption Rate in North America. In that article, I actually cited research from Accenture, which had basically 47% of responding North America retailers in full adoption of our FID, 37% in implementation stages, and 10% piloting. High adoption rates were also prevalent in that research in Europe and Asia. The number one application that was discussed as most important was accurate inventory visibility, and I fully agree with that. Fast forward another year to 2022, and new research confirms that inventory visibility is now the number one retailer technology priority.

Full disclosure, I should say, and I say this also in the article, FID is not the only technology that can address inventory visibility. I'm also a major proponent of computer vision and its evolution in addressing this challenge, especially in some hard goods sectors. this challenge, especially in some hard goods sectors. The latest study just published by IRS News, which is called the Store Experience Study, also lists RFID as the second most important emerging technology identified by retailers. As the study points out, RFID

gets retailers keen insight into inventory visibility, enabling store-based fulfillment. 54% of those that have RFID gets retailers keen insight into inventory visibility in April in store-based fulfillment. 54% of those that have RFID deployed are GMS retailers. Those that have deployed have a higher priority on inventory visibility and optimizing the digital journeys for store fulfillment. Also in the IHL research, retailers already using RFID in 2022 had 83% higher sales growth and 80% higher profits. The omnipresence of RFID is further exemplified by the latest NRF security survey, which LPRC had a hand in developing, of course. RFID systems are listed in that research as the number one technology where nearly 39% of retailers are implementing it or planning to implement it for loss prevention. Interesting that RFID is number one in my view.

This internet technology is just getting started in the potential it can deliver in terms of smarter security solutions to attack the changing crime patterns in retail. Incidentally, in that same research, the computer vision application was number two, which again stresses the importance of computer vision. So I've been lucky in this example of me being in here in Europe with a major retailer that has deployed RFID that I actually have been part and even influenced the direction of both computer vision and RFID. And I can confirm that the omnipresence and importance across all of retail will continue to increase in the future. And by the way, the LPRC is a place to spend time learning more about how to optimize both of these technologies. And with that, let me turn it over to Tom. Well, thank you, Tony, and thank you, Reid. Lots to discuss. A very exciting, funful last couple of weeks in the intelligence space and risk space. So I'll start with a couple kind of exciting announcements.

One, Google made an announcement last week. It was a relatively quiet announcement around a quantum computing milestone. While they didn't really speak to specific quantum computing, one thing they did mention or release is that a group of data scientists, researchers, and academic folks at Google have been able to solve complex math problems faster than before. And some of these math problems, essentially the computing power wasn't available up until this most recent successful test. So what does this mean? It means that it's a step closer for quantum computing.

And one of the benefits of quantum computing is the speed in which computers can do math. One of the disadvantages is essentially a lot of the protection protocols and encryptions that are in place today could be defeated. There are a lot of developed countries putting in some legislation around quantum computing, but as we see that growth in that sector, we definitely need to watch it closely, especially in the security field.

Because when quantum computing becomes available, even commercially available at scale, a lot of the security measures in place today will be deemed inefficient because of the power to process. So more to come, definitely a space to watch. I want to switch gears a little bit. We've been talking about AI and chatbot and Bing and all of these different open AI and artificial intelligence around large language model announcements in the past coming or a past few weeks uh i think there's just been a tremendous reception to chat gpt which is a parent company is open ai and for everybody listening if you've tried chat gpt you're using chat gpt 3.5 or pseudo 4 but it's really 3.5 and what it is is it's a large language model that essentially

holds the majority if not all of the data from available on the internet to search prior to 2021 so there have been just a slew of offerings, software packages taking advantage of this. And in some spaces, it's just remarkably intuitive. Basically, what it is, is it's not super sci-fi here. This is a large language model that is a predictive model. It actually looks at what you type in and predicts what it thinks you want to hear. And it's pretty accurate. One kind of thing that occurred is I think a couple weeks ago, we talked about Google's announcement of BARD, which is Google's answer to OpenAI's chat GPT. Microsoft owns 49% of OpenAI's chat GPT. So Microsoft has made a series of announcements, including the integration with Bing,

its search engine. And there was a really interesting story that came out of the New York Times after Valentine's Day. So a New York Times reporter on Valentine's Day, February 14th, and it's interesting because the story goes into great detail after having dinner with a significant other, went and tried to trick or

hack, or sometimes they call it an AI injection, to trick the AI into something else. Now Bing, there's been a whole bunch of news stories and information on the tech wire about Bing's codename being Sydney, and there being ways to talk to Sydney versus just answer straightforward questions. So very, very interesting article. Basically, what had happened is the reporter spent two hours talking to Sydney, got Sydney to come out and talk. There's a couple of different lines of commands that you could put in. Everybody could do it. And then it gives a pseudo personality to the chat GPT engine.

It's important to note that this is not set in AI. It's not smart. It's not logical. It's just predictive. not smart. It's not logical. It's just predictive. It's also important to note that this is one of the risks that we always hear about AI is that models can be biased because they're learning from input. And if humans give input, they could become biased. So I'm not going to get into the specifics here, but very, very interesting two-hour conversation, which led Sidney to appear to have emotion, basically tell this reporter to leave his wife and that she could make him happier and that he

wasn't happy in his marriage. Now, if you read the transcripts, and this is both a news article and it was also on a podcast, you would see that what was occurring is the AI was being, I wouldn't say tricked, but coached into answering the questions the way they were. Now, I'd like to say that I don't think that this reporter did anything wrong. Actually, quite the contrary, he was trying to prove a point of how the engine worked and really was successful. A couple times, there were safeguards that Microsoft initiated. So there's screenshots of these conversations, but a couple times during the conversation, it would error out and give a command that Bing was down. But what's important to note here is that all of this technology is new. It's all really exciting.

It's being heavily, heavily marketed in different type of commercial aspects, CRM management tools, email modification tools, content writing tools. But it's also important to know that it is still relatively new and error prone. So while this story was really exciting and very interesting for anybody that follows this space, it was kind of expected, if you will. Switching gears a little bit to Chinese surveillance balloons and unidentified flying objects. Last week when we were at Ignite and LPRC, I'd be remiss if I didn't say what a fantastic event that was. There was an active threat tabletop that went phenomenal and a board of advisor meeting and an innovate panel meeting. The Monday of last week, so President's Day, there was actually another unidentified flying object just off the coast of Hawaii. We were watching it fairly closely, kind of died out of the news. We're seeing on the intelligence chatter a handful of these balloons popping up

or these unidentified flying objects. I want to make one thing clear in the reports that surfaced around the one by Hawaii was it was identified as a balloon, not an identified object. There were surveillance planes watching it. And then most, if not all, of the public coverage, including the back-channel coverage, kind of died out. So certainly a space to watch, certainly a wild kind of experiment to watch, if you will. I think one thing when we were at the LPRC, I asked the question if anybody knows of any, you know, modern day or even on record time when something was shot down over the continental US and no one did. I think this, you know think with everything going on, I think we lose sight of just how significant it is to shoot anything down over the United States of America. So definitely,

definitely something to keep an eye on, and we will. And then last but certainly not least, the Department of Energy released a statement based on classified documents around COVID-19 and its origins. And then this classified report was not released because it is classified, but the Department of Energy did release their report around the fact that their statement is that there was a high likelihood that the COVID-19 or coronavirus was leaked from a lab in China. The Wuhan lab is what it stated. So I think it's important to note here that this isn't saying it was intentional, but it's saying that it was leaked.

And there were four or five different intelligence reports cited in this information that was gathered. um in this this information that was gathered uh and they're not all succinct some uh three or two of the four say it was inconclusive the other two now state that there's a high likelihood that the the virus was leaked from a lab or escaped the lab i think there's a couple key things here one you might be asking why the Department of Energy. The Department of Energy actually is responsible for a lot of the labs. And that is why they oversee some of it. So that's why they had it involved. The FBI did a report that was referenced here. But a lot of this, because it's classified, you don't know exactly what it was said. And I think the global community is somewhat mixed about what does this mean and what goes forward. I'm actually taping today in Germany and a couple of people I spoke to had just simply said that they had thought this all along.

But now what does this mean for the international community? What does this mean for a response? If anything, what do we do now? Kind of, it's almost the, the sentiment was almost at this point, what, what difference does it make is what one person said. Now I'm not, I'm not agreeing or disagreeing with that. I'm just sharing the sentiment of people that we talked to. So definitely, definitely a lot of different things going on uh there and i'll wrap up with this because i think um this was a question that came up when we were at ignite there were several train derailments in the past uh past several weeks and did it seem odd and i'm certainly not an expert on trains but

when we did a little bit of research there's's more than 1,000 train derailments a year. So this could just be that, unfortunately, these were more horrific events involving the East Palestine with the chemicals and then a couple of really serious derailments. I'm not going to speculate on that. I thought it was important to mention it because it came up a few times. speculate on that. I thought it was important to mention it because it came up a few times. And next week, hopefully, I'll have a report on Euroshop because I'm at Euroshop, which is by population or attendance, not population, is the largest retail trade fair. So about 135,000 people here. So I'm sure we'll have some updates from that. And with that, I'll turn it back over to Reid. All right. Well, thanks so much, Tom. And also great seeing you in Gainesville for Ignite and for Integrate and for all you do. And thanks again, Tony, to you. Thanks also again to Wilson

and thanks to Diego. And of course, thank you to each and every one of you. Stay safe out there. Thanks for listening to the Crime Science Podcast presented by the Loss Prevention Research Thank you to each and every one of you. Stay safe out there. for legal, financial, 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 Loss Prevention Research Council.