LPRC - CrimeScience – The Weekly Review – Episode 143 with Dr. Read Hayes, Tom Meehan & Tony D’Onofrio

Episode Date: April 6, 2023

Welcome back to CrimeScience! This week, our hosts discuss inflation in the UK, latest retailer returns in 2022, and Former President Trump’s arrest. Monitor these developments on the coming episodes! Listen in to stay updated on hot topics in the industry and more! The post CrimeScience – The Weekly Review – Episode 143 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, as per normal, by our co- co-host Tom Meehan and Tony D'Onofrio, our producer Diego Rodriguez, our executive, excuse me, our assistant producer, Wilson Gavirino, and hopefully a whole lot of you all out there. And today we're just going to touch on a host of things. I just got back from a couple of events. One was the LP Foundation's annual – it's not a family day – the LP Foundation's town hall meeting and pretty well attended by some number ones, twos, and threes in our industry.

Fantastic content and engagement interaction. uh fantastic content and engagement interaction we got to talk a little bit about strategy in the industry and coordination and integration so overall a great event and a good way to keep momentum going i was able to huddle with quite a few of our lprc members the leaders from some major retail organizations also able to meet up with some of our key solution partners as well, and the retail associations with Lisa Labruno of Rila. I got to spend some quality time also with David from the National Retail Federation, also with Rich Rossman of CLEAR, Coalition of Law Enforcement and Retail, and we were able to think about the strategy, talk about ways we can get better range estimates, estimates of annual ORC or other high theft impact type loss

areas. So that was some pretty critical meeting information and setting some upcoming calls and so on. So I was excited to participate and very, very grateful for the LP Foundation's invitation. We got to meet their new president and spend time with her and start to work on that relationship as well, which has always been so strong since the beginning of LP Magazine, of LPRC, of LP Foundation, all really within about three years of each other. of gulp foundation all really within about three years of each other um and then uh this week i just got back from cincinnati ohio fantastic fantastic supply chain protection working group summit uh hosted by png procter and gamble largest consumer products country excuse me largest consumer products company in the history of the world. And just in the neatest innovation lab facilities, we were able to meet in there,

to go through innovation briefings, to do tours, as well as have the group get together, brainstorm. And then the next day, break out into some exercises into teams. And there were a couple of exercises that were just fantastic. Everybody was heads down, heads up, planning, analyzing, brainstorming, and then presenting what they are, the improvements for everybody. You'll see a nice report brief coming out of there. Very grateful to DHS Homeland Security Investigations for discussing, you know, some of their current operations or their planned operations, pending federal legislation that would establish an ORC fusion center at the federal level. So a great event.

We're now – here we go. We're pivoting. We're getting ready for the upcoming RELA asset protection event this year in the Denver area. And then on the heels of that, we'll be looking at the National Retail Federation's, the NRF Protect in the Dallas area, Grapevine, Texas. We'll, of course, be having our product protection working group summit. The summit this year, of course, will be online. Again, we're going to have a heated competition between some fantastic solutions across all five zones of influence that we use, the five zones. You'll see the

Violent Crime Working Group Summit. That'll be in May coming up this year in Houston, and exciting things there. You'll also see some exercises or tabletops. You're going to now see at all LPRC events, hands-on exercises, tabletops, breakout exercises. We've incorporated some of these things through the years, but not every time, everywhere, like you're going to see going forward. And the Integrate Summit that we did here just continues to bear fruit. We had an innovate call today with our innovate advisory panel, 11 solution partners plus the NRF that contributes and resources us at a higher financial level and sponsors us so that we can get an additional three research scientists on our team, as well as 30 major retailers. They're innovators on there today going through virtual and slash digital go bags, how we implement that before or during natural disasters, during other critical incidents like

active assailants and so on, where us and our law enforcement partners can work together. And I wanted to segue over there because what we're doing with UF Safer Places Lab, the four square block area we're situated on with the Safer Places Lab, the four-square-block area we're situated on, with the Safer Places Lab east side, the eight stores in the local area here that are co-located that we're going to try and fuse together. But that's talk about mass and dispersion. We talked about the supply chain summit. We're talking about it on the Innovate Advisory Panel, and we're working on it, though,

in bringing these things to life through our six interior labs here at LPRC, as well as across the Safer Places Lab Network. And so that means that, like in the military, there's mass and there's dispersion. Normally, for a military to make headway, they've got to mass pull their troops and artillery barrages and everything together, concentrate those so that they can exploit a weak area, breach it, move through, consolidate their gains and move out. terrorist or any troops or anybody, masses, you're also more vulnerable. And we see that with crime as well, where there are masses of people, there's more likely to be desirable targets in that area and more of them as well as likely offenders in that group. But in our case, what we're talking about with mass and dispersion is think about a retail enterprise. The retailer, whether they've got hundreds or thousands of stores, whether they've got hundreds or thousands of stores, whether they've got one or they've got dozens of fulfillment or distribution centers,

and of course a corporate office and maybe regional offices as well, but these things are dispersed, very, very widely dispersed, maybe one per few square blocks or maybe even a city or market area. And so you're on your own. That store, that DC, that office is on its own trying to protect itself against all types of theft, fraud, and violence, as well as online attacks. And so how do we gain mass? And the way that we're going to probably try to do that and what we're trying to do here

at the LPRC and the Safer Places Lab environments, for example, where there's the west side where we've got a mall, individual retailers, but they are clustered together in an enclosed or an open lifestyle type mall. Or in the case of our east side, Safer Places Lab, where we've got eight chain stores that happen to have a store in that area as members of the LPRC, but also some of the local stores there, they are dispersed from the headquarters. They're not co-located with others in their brand or their enterprise or company. They're on their own. But guess what?

There are other stores and retailers around them as well as having law enforcement partners available. So how do we create mass with those strong virtual and physical partnerships? And so that's what LPRC is all about, collaborative protection, in addition to and to enhance individual place protection, right, self-protection. So that's just the big theme with everything we do here, and why you're here is talking a lot about it. And how do we leverage connecting apps, high-speed connections, 5G or NextG, whatever that's going to end up being, right, with some of these online systems and so forth. There are a lot of ways that we want to try and connect people. And so that's what's happening here. That's the underlying way that we're trying to work together to pull together. Everybody might have a sensor or dozens of sensors out there, cameras, from people's cameras across the public space,

as well as the private or commercial space, not to have big brother, but to have big protection, right? To protect the vulnerable people, the vulnerable assets, but protect these lone stores by collaborating and connecting with each other. So what are the frameworks? How do we do this? How do we leverage protocols or process or procedures to do that? What are ways we might do it? How do we do that with technology and integration of all the above with third-party security officers, with off-duty law enforcement, of course, with on-duty law enforcement, and so on? How do we fuse these things together? That's what we're working on in our four-square blocks for the main Saver Places Lab, as well as on the east side and west

side ecosystems and then beyond. So we're interested in getting everybody's input and feedback. We're excited about it. It's what keeps us going every day as a way to safeguard the vulnerable. And we think that's going to be through individual and collaborative protection. So with no further ado, let me turn it over to Tony. And Tom, Tony, if you would, take it away. Thank you, Reid, for all those great updates. And I'm looking forward to hearing more about the Supply Chain Summit taking place this week. Let me start my update with one of my favorite inflation indicators,

which is from the UK, and it's called the UK English Breakfast. And this data was published in Statista. For February 2023, UK registered one of the highest inflation rates for Western countries at 10.4%, and it was an increase actually from the previous month. The UK English breakfast was up an outstanding 22%, making up the largest increases were milk, which was up 43%, white bread, which was up 33%, eggs were also up nearly 33%, and butter was up 29%. The two lowest increases were instant coffee up just over 7%, and mushrooms up nearly 7%. I do enjoy an English breakfast every time that I visited the UK to visit retailers, so it's interesting how expensive the UK is getting in terms of inflation.

Switching topics, let me now summarize some new research just published by the IHL group on retailer returns. Worldwide, retailer returns have grown from $643 billion to an amazing $1.8 trillion in 2022. For North America, total returns were nearly a trillion dollars for the year. 91% of retailers report that return rates are up pacing revenue growth. return rates are up pacing revenue growth. Online apparel sales generally see more than a 50% return rate, and women's dresses is a good example of that, which in some cases are seen as high as a 90% return rate. Over $52 billion in apparel is returned annually. This is more than the combined revenue of Kohl's and Macy's. And a lot of this has to do with sizing and also trying to do different, looking at a whole bunch of different dresses, for example, and then returning the ones you don't like. So apparel still has a challenge online in terms of return rates.

still has a challenge online in terms of return rates. Return fraud ranges from 8% to 11% of total returns depending on the retailer and hospitality segment. 76% of consumers indicate they'll be more inclined to shop a retailer that has more sustainable practices. Up to 75% of margin loss from returns can be recaptured to optimize processes and complete reverse logistics. 86% of consumers look for easy returns, and this is my favorite stats from this report. 81% of consumers will switch to competitors if they have had a bad return experience. Finally, on returns, self-service return kiosks can cut in-store

returns-related labor costs by up to 94%. Continuing with more data from the IHL group in a recently conducted webinar, in February 2023, while inflation in the UK, as I said, was up 10.4%, for the rest of Europe, it was actually starting to decline. And overall, for the European Union, it was at 8.5%. In Europe, food, alcohol, and tobacco had the highest inflation percentage up at 15%, followed by energy up nearly 14%.

For the United States, the top three products with highest inflation are still eggs, which are up 55%, butter and margin, which are up 27%, and airfare, which I'm seeing because I've been booking travel, they're up 26.5%. And by the way, those first two, eggs and butter and margin, do remind me of that expensive English breakfast. Remind me of that expensive English breakfast. The good news, as I explained by the AHL group, shipping products from China is now dramatically cheaper from the peak cost high, which happened in April 2022. For the United States, when you factor in inflation, for the month of February, retail sales for the food sector, which includes supermarkets, are down over 5 percent.

And especially hard goods are down nearly 3 percent. The good news is all the other sectors, even when you factor inflation, are up with restaurants leading. Their sales are up 11 percent, followed by convenience and gas, which is up, with restaurants leading. Their sales are up 11%, followed by convenience and gas, which is up 3.5%, and online sales, which are up 3%. And then finally, some of my favorite information from IHL. These are the strategies that retailers should focus on right now to address the challenges that we're facing. Number one, reducing labor and improving store operations. Number two, improving margins on digital journeys.

Then improving inventory visibility and accuracy. Reducing returns. Loss prevention in all aspects, which should be good news to this audience. It makes the list of this group that follows general retail. Monetizing customer insights and then artificial intelligence and machine learning, which chat GDP, what they called having a Gutenberg moment in a race to be added to a lot of different products.

And then finally, let me close this week with an article published in Retail Brew on loss prevention. And again, it reinforces the idea that loss prevention is being elevated a lot more in the media. And it's important because we're getting a lot of visibility. And so this is what some of the key things that are stated in this article. While some companies like Target and Walmart have closed stores because of shoplifting, others are meeting the problem head-on by integrating technology-based preventive measures. But while tech across the board, from license plate recognition systems and perimeter surveillance to facial recognition and multi-sensor parking lot surveillance tower units, slowly becomes more commonplace in stores. In some instances, it's also raising concerns regarding consumer privacy. consumer privacy. And this is a quote actually from David Johnston, who's the vice president of loss prevention and retail operation for the NRF. Quote, I would assume that at the top of

every retailer's mind is a positive customer experience that is safe, that is secure, and that is unobtrusive as much as possible and easy for the consumer. But if there are no preventive methods being used, it allows the thieves to walk right in and take what they want. Johnston said retailers must weigh loss prevention measures against customer experiences as they experiment with new technologies. Retailers need to make sure products are readily available to purchase, but stores also don't want to continue losing dollars to theft.

Moving on to some other interesting information that was published by Retail Brew, Lowe's is one of the companies at the forefront of integrating loss prevention technology. At the end of last year, the company introduced Project Unlock, which uses RFID and the Internet Attain Centers to activate power tools after their purchase. And a lot of us saw this at the kickoff LPRC at Bloomingdale's in January this year. Home Depot has been locking up more of its product over the past year as it's searching for more consumer-friendly solutions to preventing theft, according to the Wall Street Journal.

And as Scott Glenn said to the Wall Street Journal, it's a triage-type scenario. It's to stop the bleeding and give yourself some time. So summarizing what I talked about this week, inflation, except in the UK, is getting better, but it is still too high, far away from the 2% target that the Fed sets. That English breakfast is way too expensive now. Retail continues to recover nicely in the United States. And loss prevention has been in the news a lot lately. And the good news, that is a key focus, of course, of the LPRC. And this is a place to work on the solutions to address some of

the problems that I discussed. And with that, let me turn it over to Tom. Well, thank you, Tony, and thank you, Reid. And I apologize about the background noise. We're all out and about taping today, moving around. So I do apologize about that noise. Wow, very, very interesting day in current events and news. Wow. Very, very interesting day in current events and news. Former President Donald Trump was indicted and is actually, as I'm reporting, at his arraignment hearing, he has pleaded not guilty. And as expected, there are several protests throughout New York City. Right now,

protests throughout New York City. Right now, all are relatively calm. There are really no reports of any violence or vandalism at this point. And most, if not all of the organizers that are formally organizing are encouraging people to be peaceful in this. It's hard to assess the size of the group. I think there's roughly about 1,000 people outside of the courthouse today in Manhattan and also in pockets around Trump Towers. The NYPD has done a really good job of managing it, NYPD has done a really good job of managing it as well as having all police officers in uniform on duty in New York City. So we will continue to monitor this situation.

We're not going to get into falsification of business record charges. That's what the indictment holds. And right now, former President Trump has pleaded not guilty. We will continue to monitor the potential for civil unrest and will obviously activate the Fusion Center as needed, if needed. And for those of you that are newer listeners, the Fusion Center is part of the Loss Prevention Research Council, which allows retailers, law enforcement, members of the LPRC, both from the academic center, public and private sector, academic center, public and private sector, to share information on current threats or active threat situations, as well as weather events, civil disturbance.

And what it is, is it's a forum where people can share and help validate information. As we all know, active intelligence gathering and open source intelligence gathering or social media monitoring, depending on how you approach this, all have challenges with data. And what ends up happening is the data has to be validated. So this is a place where all of us can share some of that data and information in real time. Just wanted to briefly cover some cybersecurity and additional geopolitical risks. A recent report, which was based on reported instances, shows that malware through phishing attacks is up 529% in 2022, and we see no end in sight in 2023. We often cover this here on the podcast and remind people of how this is ever so growing and not going away. One of the, excuse me, one of the things in 2023 that is driving that is the continued or accelerated use of AI.

We talk about chat GPT, and we talk about all the positive benefits of AI and how commercially and consumer-available it is. Well, as consumers and commercial applications grow, unfortunately, the bad guys grow as well. So something to really keep our eyes on. We don't see this problem tampering down anytime soon, Unfortunately, the bad guys grow as well. So something to really, really keep our eyes on. We don't see this problem tampering down anytime soon. So I think it's something that we all have to be extremely aware of and what it means for us as we continue to covered earlier with the geopolitical state, Donald Trump, and some of the things that are occurring in here domestically in the United States, it's also really important to remember that we have a conflict going on outside the U.S. with Russia and Ukraine.

That conflict is over a year old. And quite honestly, in that that region there's escalation with Finland joining NATO there really are some global impacts here from a standpoint of what Russia is saying Russia's basically said that in plain in plain language that or that this is considered an act of war so what does that mean? We don't know. We'll continue to monitor that.

Why are we talking about it here? Because of the potential spillover or challenges it could cause with supply chain. So if you are in the business of selling items, there's a high likelihood that you're buying them from all over the world. items, there's a high likelihood that you're buying them from all over the world. And this conflict in the region that has already affected rail traffic from Asia to places in Europe, it's also affecting oceanic traffic when you look at where the maneuvers are being done, what naval vessels are being moved around, not to mention some of the potential impacts from a conflict related to China and Taiwan that while nothing is occurring right now, there is a potential for it to occur. So I think all very, very important things to monitor. And I think we'll continue

here to monitor as needed and continue to communicate. And this is a short one today. And with that, I will turn it back continue to communicate. And this is a short one today. And with that, I will turn it back over to Reid. Okay, that was excellent. I really appreciate all the information. I appreciate that, Tom. Good stuff. Tony, excellent again.

So I want to thank you all out there. I want to thank Wilson. Thank Diego. Everybody stay safe, stay connected. Thanks for listening to the Crime Science Podcast presented by the Loss Prevention Research Council. If you enjoyed today's episode, you can find more crime science episodes and valuable information at lpresearch.org.

The content provided in the Crime Science Podcast is for informational purposes only and is not a substitute 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.