LPRC - CrimeScience – The Weekly Review – Episode 141 with Dr. Read Hayes, Tom Meehan & Tony D’Onofrio

Episode Date: March 24, 2023

Just how bad is the retail crime epidemic? Find out this week along with hottest technologies in 2023 for operations and IT points of view, the potential indictment of former president Donald Trump, new Chat GPT 4 and its capabilities, and more. Listen in to stay updated on hot topics in the industry and more! The post CrimeScience – The Weekly Review – Episode 141 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 from the LPRC. This is the latest in our weekly update series. I'm joined by co-hosts Tony D'Onofrio and Tom Vient, our producer Diego Rodriguez and our associate producer Wilson Gabarino. And we're joining you to talk a little bit about the LPRC, talk a little bit about crime and what's going on in the world of retailing and how to make sense of it all and make the world a little better and safer. safer. So I'll start off and I wanted to talk a little bit about what we're working on with centers and why it's just so important in our opinion to understand what's going on. So we need that situational understanding and awareness. And how do we do that? What are we

looking for? We've talked a little bit before about detection. And so I wanted to kind of expand on that just a little bit today before I head over to my cohorts. But we're, of course, trying to detect an offender's presence or their intentions and so on. Where are they? What are they thinking and doing? And how might that harm us, our places, our people, and so on? So detecting the offender's presence, their quantity, their co-offenders, and things like that are important. So let's talk a little bit about some of that. You know, how many are present or on their way or connected? So we're looking at who are the offenders, co-offenders?

What's that network look like if we can? So what sensors do we need to do that? We're talking about also what locations are they using? What connected places? We've talked about crime and place is paramount. Crime events, attempts, and so on take place at certain locations more than others. And they're highly clustered. And this clustering is explained by a lot of variables.

It's what's going on there, what kind of targets are available, how desirable are they, and also how well protected are they, at least how vulnerable they look to be to a would-be offender or offending crew. Those things are all important in trying to understand that. And the connected places we know from work by Madsen, Eck, and others on these connected places are where they plan, where they meet each other, where they might hang out and relax, where they hit, where they go to convert stolen goods to cash, for example, hide out, and so on. So there are connected places just like connected people and those sensors and the detection. There's a whole lot about what we're trying to do there. And we try to do that again with partnerships on the analog side. That's so important. Law enforcement contacts,

other retailers and others that are in asset protection or loss prevention or security. We're trying to do set up all those infrastructures and so on. So we're trying to look at intentions, right? Intentions are important. Motives and motivations are, but they're much more difficult, of course, to divine that, to confirm that. We just don't know always what's in people's heads, but we do know that they're trying to intentionally harm in some way, whether it's theft, fraud, or violence. So that's what we want to understand. Are there intentions?

And so on. But the next part of that, after we understand who they are and maybe what they're up to, is do they have the capability? So we're always trying to assess, are they capable? Do they have the tools they need? Do they have transportation? Do they have the information, the knowledge, the passwords, the codes, the keys, things that they might need to be successful in their crime attempt? And so capability is just as important sometimes in assessing their intentions and their presence, their networks, the networks of the places that they use and frequent and so on.

We want to understand when they initiate. So initiation is important, whether initiate at the beginning point beyond ideation to where they go kinetic or they're starting to move, initiating at the point of the target, right, at that target location where that individual is or that place that they're trying to victimize. That's very, very important. So as you put together your program, and as we're putting together our programs and our sensor arrays and the connections we need and the compute and inferencing that we need, the dissemination of that information, all this is very important. And so we have a very purposeful thing we're trying to look at. We want to detect there's one or more people that are wanting to head our way and harm us or a place or people. We want to understand, again, their intentions. We want to understand their capabilities, who they are connected to, what places they are connected to, what vehicles or other tools they might be using. We want to understand all those types of

things. And so we also, we want to be able to detect and understand any responses to the protection character interventions that we might put in place. So just want to talk a little bit about crime control, how we look at the world at the LPRC and at the University of Florida, crime control, how we look at the world at the LPRC and at the University of Florida, and so that there's a very purposeful deployment of sensors online, physical sensors that, again, pick up digital, aural, and visual emissions and features of people, technologies, vehicles, and other things that might be used so that we can better detect and understand to affect people who want to and help them make better choices not to offend. So with that, and no further ado, I'm going to turn it over to Tony D'Onofrio with one

last caveat. We'll see a lot of you in Cincinnati for the LPRC's upcoming Supply Chain Protection Working Group Summit, hosted by P&G, Procter & Gamble. And then look forward to seeing you all in Houston at the Violent Crime Working Group Summit coming up in April. So stay tuned and stay posted and stay safe. Let me head over to you, Tony.

Take it away. Thank you, Reid, for that great update. Let me start this week with a summary from one of my favorite annual reports from RIS News. This annual study focuses on technology going into stores from an IT and operations point of view. This week, when I attended the Retail Council of Canada, understanding what Ops and IT is focusing on is important, as the same technologies have application and can actually be leveraged in loss prevention. The 2023 edition of the Store Experience Study from RIS News is titled Remodeling Retail, and here are a few highlights. The forecast for sales growth for 2023 from this study is just shy of 7% or 6.9%. Store IT spend is expected to increase by 4% over 2022. Retailers expect to continue to expand their store counts by 3.5% overall in 2023,

and they expect to conduct 3.7% more store remodels than they did in 2022. Top priorities for retailers for 2023, from a technology point of view, look like much like years gone by. So the number one is customer relationship management or loyalty upgrades, personalized in-store experience, inventory visibility, and empowering associates at the top. When it comes to the non-traditional fulfillment choices such as buy online, pick up in store or bullpits, click and collect, ship from store and dark stores, retailers that don't already have them are planning to adopt and those that already have them are looking to optimize their journey to recover lost margin. cover lost margin. Confirming the importance of physical stores, a study summarized that total revenue by customer journey is taking place 70% of the time inside physical stores, 13% of the time it's buy online and deliver from warehouse, 4% is buy online, pick up a store. 5% is local store delivery. 4% is ship from store and 4% is from other. Retailers continue to close

the gap between the consumer's online experience versus that at the found stores. Topping the list of IT priorities is personalizing the customer experience. This one, by the way, finished first in five of the last six years with 54% this year saying it. Inventory visibility was second at 52% of respondents and has averaged 49% over the last six years. The additional customer journeys and the current supply chain issues make inventory

visibility all the more important. General merchandise retailer whose inventory was inaccessible during COVID clocked in and above 60%, while leaders, and those leaders are defined, those with sales growth of more than 15% the previous years were at 61%. Empowering store associates moved into third place at 43.7%, doing part to its relationship to the customer experience. Perennial top three furniture upgrading customer CRM and loyalty programs dropped to the fourth place this year at 43%,

and completing the top five was refreshing the point of sale at 42%, up slightly on last year. The top three emerging technologies from an IT point of view were SD-WAN, and SD-WAN is really the data pipe that allows for data to come out of the store. And this one is very critical, especially to loss prevention, because a lot of retailers want to centralize video, for example, and that requires a large pipe. The number two after SD-WAN is RFID, and number three is voice, walkie-talkie, in-store, and parking lots coming in third. Specifically to RFID, the authors state that RFID gives retailers keen insights into inventory visibility, enabling store-based fulfillment.

54% of those that have RFID deployed are general merchandise retailers. Those that have deployed RFID place a higher priority on inventory visibility at nearly 8% and optimizing those digital journeys for stock fulfillment at nearly 17%. Again, this is an important study that I urge everybody to look at the website of RIS News and study it. I also actually have it posted under research on my personal website because these technologies are very, very important to retail and they do have a spillover into loss prevention.

Switching topics, let me close this week with an article from CNBC on retail crime that they titled, America's Biggest Company Said Retail Crime is an Epidemic, But Just How Big a Problem Is It? As the article states, America's biggest retailers say organized retail crime has grown into a multi-billion dollar problem, but the effectiveness of the strategy to solve it and the validity of the data overall has come into question. Over the last several years, companies such as Home Depot, Lowe's, Walmart, Best Buy, Walgreens, and CVS have been sounding the alarm about organized bans of thieves who ransack stores and resell goods to online marketplaces. They pour money into theft prevention strategies such as plastic cases, metal detectors,

motion sensor monitors, and AI power cameras, detectors, motion sensor monitors, and AI power cameras, and have warned that if the problem doesn't improve, consumers could end up paying the price. Theft is an issue. It's higher than what it's historically been, said Walmart CEO Doc McMillan, and that's what he said in December to CNBC, and if that's not corrected over time, prices will be higher and our stores will close. However, as the article states, the problem isn't as clear-cut as retailer and trade groups will make it seem. Studies from the National Retail Federation show retail shrink cost retailers $94.5 billion in 2021,

up from $90.8 in 2020. But the data is largely qualitative and cannot be fact-checked because it's gathered from an anonymized set of retailers. Plus, the $94. billion in losses refers to shrink overall, meaning that the differences between the inventory and a company's records on its balance sheet and what they actually sell. That difference accounts for items that were shoplifted, but also includes inventory that was damaged, lost, or stolen by employees. External crime accounts for only 37% of those losses, or $35 billion, the NRF data shows. At least one major retailer recently conceded that it may have overblown the problem.

overblown the problem. Maybe we cried too much last year, said Walgreens chief financial officer on an investor call in January. We've stabilized, he added, saying the company's quite happy with where they are. Still, law enforcement agency and retailers insist that organized retail crime is an issue and they stand behind the data. I can tell you that in our world, we know that crime is increasing. We see it every day in our stores, said Scott Glenn, the Home Depot Vice President of Health Protection, and he said this to CNBC. Our internal information shows that on a year-on-year-over basis, it's growing at double-digit rates. So the problem of crimes continues. We got to get better at the data and we also got to get better at solution. And again, the perfect place is here at the Loss Prevention Council for us to all partner together to a better result. And with that, let me turn it over to Tom.

Well, thank you, Tony, and thank you, Reid. And much like the last few months, it feels like a few years, the news cycle and the geopolitical state has been just off the charts. The news cycle and the geopolitical state has been just off the charts. So in the last week, we have strikes and protests in the UK, Germany, and France. We also have protests in Georgia, among other Western European countries. And they're not all for the same thing, but I think the civil unrest is important to monitor because as we can see, there is somewhat of a human contagion here

in the European countries while they're all not aligned. So in Germany, you've had strikes or small demonstrations since January of 2023 around workers' wages, specifically in the public sector. This has been an on and off activities literally since the beginning of the year and rounding out in the last couple of weeks around workers' pay, predominantly with transportation and sanitation. But we don't see any end in sight here. We see this continuing.

Additionally, you have some wage strikes in the United Kingdom. In France, the protests are largely based around the governmental policy in changing the retirement age from 62 to 64. Georgia, the insidious protests under some legal changes. And this is something that, you know, in the past couple weeks we have seen. Throughout the United States, we've seen some civil unrest in the last couple of weeks and probably the most important thing to focus on for the folks to hear the potential indictment of the former president of the United States, Donald Trump, and that would

be in the New York City region. The news chatter for the protests and their potential protests for someone arrested in the United States are largely based on a call from the former president to protest if, in fact, he does get indicted. It's not clear at the time of this taping what the outcome will be. I can say from several credible sources that there has been information shared with a lot of state and local law enforcement around the potential preparation of civil unrest in certain cities if that indictment did happen. So we'll continue to monitor this here at the Law Firm and Research Council and activate the fusion net as needed, encourage all of the listeners to monitor their local and national news channels to kind of see

what's occurring and using some of the open source intelligence tactics that we talk about here all the time, monitoring social media, monitoring all those channels to try to identify what's occurring. One thing I would say around the Donald Trump potential civil unrest is that there's actually quite a bit of planned events occurring, relatively small at this stage, but at any time could transition into larger events. I know that when you think about remembering the January 6th incident, what looked like it would be a rather small event snowballed into a much larger event. So we need to stay vigilant and look at that, certainly in the New York City market where

this indictment potentially could occur. One thing that is certain is that we will have some lead time and information here because of if this indictment did happen, it would not only be historical, but there are a lot of logistics between the Secret Service and local and federal law enforcement. You cannot just arrest a sitting or a former president. There are a whole bunch of rules and this is why some of this information was leaked earlier because the Secret Service has to be notified.

And basically, in this case, the Secret Service sets the tone of what and won't happen. So certainly something to keep our eyes on. And we will continue to monitor it here. Switching gears a little bit into the AI space. I think we've been talking about this a lot, but I think it's hard to not talk about chat GPT-4. The new version is out along with Google has officially announced a small beta trial for BARD, their AI engine. They've actually put out invites to any Google

One members, so that's coming, as well as Microsoft and Adobe mentioned AI one member so that's coming as well as microsoft and adobe i mentioned um ai using chat gpd for and imagery um coming very very soon where this uh using some of this information i'll use the microsoft announcement as an example using microsoft bing you can put in certain terms and or request a certain type of image. In general, if I would make an image and actually put a Bing watermark on it, because in the Microsoft release, what they had said is they want to show that that's coming from Bing. Also, Adobe has announced a limited release to start web-based platform only to also do generative AI for images and text.

So one of the things that we've mentioned multiple times in the podcast is that as this type of AI becomes largely commercially available and consumer availability becomes widespread as it is today, we'll continue to see what I would say is an onslaught of activities. This is good in one sense because the competitive landscape is changing. You'll see Google and Microsoft at the forefront, but then there are four or five other companies. Orthopod is one of them who uses their own version, similar to chat GPT actually the there were supposed that left open AI did from from open AI to create ortho pod so you're seeing a chat GPT rival called claw GPT all in the similar princess sorry all under the similar preferences or of a large language model and a multi um multi-model approach so similar but different and in some cases whoever can process

the most here wins so definitely a space to talk about i would uh would say that this will continue to come up but i think it's it's important for us to stay tuned to it. It's certainly very exciting to see what will come in the space here with computer vision, advanced analytics, exception-based reporting. I think for all of our listeners, in the next six to eight months, we're going to see a wide offering of things that will make life easier. That will make life easier. In the news around social media, TikTok has been in the forefront of news where basically it has been banned by the Canadian government, this to, again, resurface the banning of TikTok if there is not a change in ownership hands to a U.S. company. TikTok has really done a wide campaign explaining what they're doing to address some of these concerns. to address some of these concerns.

One of the things that is kind of widely unknown is how the U.S. government will respond to some of these changes. It's clear that TikTok is reacting to this and showing that all the information would be stored in Singapore, in the United States, and some of the guide rails around the Chinese government having access to this information. Although we know that a Chinese company by law has to be able to disclose information to the Chinese government. So they're putting safeguards in place. But will it be enough?

It's important because you have a huge user base, huge user base of TikTok out there. a huge user base, huge user base of TikTok out there. So there are long-term ramifications here for government officials that are pushing this. So I think we'll continue to watch this. But I also think that we'll see a resurgence of the trying to ban this. And just for those of you that aren't really reading on this, trying to ban this. And just for those of you that aren't really reading on this, because it is news that's often misunderstood or miscommunicated by certain agencies, the basic premise here is that the Chinese government has legally, by Chinese law, access to this data at any time, which could, not does today, but could allow for the Chinese

government to have location tracking for anybody that uses TikTok, as well as be able to potentially spread misinformation through the platform because of the powerful algorithm that backs it. So we'll continue to monitor this story. I think it's certainly something that could affect other social media companies, but I think it's out there for everyone to look at. In other news around apps and cell phones and cybersecurity, Google's App Store has flagged several apps from Chinese developers and economies for potentially spreading malware. Some of these companies have outwardly denied this, but this is just a continuous reminder

for all of us to make sure we know what we're downloading before we go ahead and download it. Taking a longer look at what we're downloading, what it has access to, and making sure that we're doing it from a reputable source. In this case, you were using a reputable source, but I think it's important to note that making sure that you were doing it for reputable sources. In this case, you were using reputable sources, but I think it's important to note that we still need to take a very close look at what these apps are doing, what they have access to, what file locations they have access to.

So, for instance, if you're downloading an app that doesn't need access to your photos, why would you give it access to your photos? It doesn't need access to a file folder on an android phone it's just those things that come up if you're downloading an ios app and ask for access something that doesn't logically make sense not only deny it but then really look into um into it more uh before making that that download last but certainly not least and this is again all on the global front but over the the weekend, the Indian authorities, the Indian government, cut off internet access and text messaging across the state of Punjabi, which has around 27 million people. the first time it's happened. The reason that they did this is because they were looking to capture an opposer to their government, which was against the law. I think this is definitely a sentiment that I always say in the past several years,

India and Punjabi part of it has actually been one of the countries that did an internet blackout more than anybody else. But Turkey has and some other countries as well. And what I often say here is when a country is shutting down communication, there's obviously some level of concern that needs to be out there. In this particular story, I read it in the Washington Post, and they did talk about how the government did allow certain tax messages to go through from emergency officials or bank verification. But it really talks to two things.

One, the power of government, but also the reliance that we have on Internet today and how very challenging it is for us to operate without it. Now, I don't think that we would see this here in the United States, but we are seeing this throughout the globe. And it's definitely something to keep an eye on. The other thing is it serves as a reminder of the importance of just making sure that you have reliable backup communication sources in a business environment if, in fact, something did occur here where you had a significant outage. A lot of different stories this week.

We'll continue to monitor all of them. I think a lot more on the global front than the U.S. front, but we'll continue to monitor it here. And with that, I will turn it back over to Reid. All right. Well, thank you so much for all that, Tom and Tony. Great information. Always appreciate working with you. And I want to thank Diego and Wilson again. I want to thank each and every one of you all. Please let us know what you're thinking, how we can get better, what we need to be talking about, who we need to be talking to, what's going to help you get better at protecting the people and places that need it. So stay safe, stay in touch. Thank you.