LPRC - CrimeScience – The Weekly Review – Episode 150 with Dr. Read Hayes, Tom Meehan & Tony D’Onofrio

Episode Date: June 2, 2023

This week on the 150th episode of CrimeScience, our hosts discuss new AI development and industry related strategy to help enhance safety for people and places in our communities. Stay tuned to hear from special guests in the next few weeks and more updates on the LPRC. Listen in to stay updated on hot topics in the industry and more! The post CrimeScience – The Weekly Review – Episode 150 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, and I'm joined by Tom Meehan and Tony D'Onofrio. And what we'll do is go through what we're up, what we're working on, what's going on around the world. And this is all made possible by our producers, Diego Rodriguez and Wilson Gavirino. And of course, you all the listener. And so what I'll do first is just talk a little bit about where we are and where we're going.

first is just talk a little bit about where we are and where we're going. And physically, where we've been is, first of all, last week, Dr. Corey Lowe, our research team leader, Chad McIntosh, our COO. We're out in Texas in the Houston area and working and hosted by Access Communications in their world-class center that they've got there, their Customer Experience Center, And they're a world-class center that they've got there, their customer experience center, and had a great crowd of retailers and some solution partners, law enforcement agencies all came in. We had Walgreens and others participating and describing what all they're experiencing from a violent or aggressive crime situation. And what was covered was aggressive shoplifting and theft, could be called strong arm robbery, arm robberies in three types,

front end or cash rob robberies. We called that, you know, cash and dash, hit and run type robberies. The pharmacy robberies for those that have pharmacies that could be either for an individual drug or an actual total takedown where they take over and start to take multiple items and assets. And of course, the overall cash office or total store takedown as well. And the fact that some of these retailers individually are experiencing dozens of these robberies in one chain in one year in the seriousness and danger that's created

by any time somebody comes in, they're armed, they're desperate, they want drugs or money or both. And it's just a very dangerous situation. They're trying to get a handle on, talked about active assailants and other types of robbery aggression, the fact that the LPRC, headed by Chasey Atkinson, one of our research scientists working on Voice of the Victim, to talk to store workers, managers, and others that are involved or exposed to this type of aggression and violence, what that looks like for them personally, vicariously, what have been their responses, and so on. And we've highlighted that a little bit before, and we'll get much more into that.

Following that, we had Dr. Justin Smith. Justin, one of our research scientists, going through and facilitating with the LPRC team, particularly Diego and others that were working on the product protection summit, in this case for the product protection working group, which is primarily anti-theft, or in this case, primarily in-store anti-theft protection prevention, mitigation, and recovery. A great summit. This went online every year to allow us to get our retailers involved early, let the solution partners, our SP members, submit solutions in zone one, which is the on-item protection or the packaging, or it's embedded in the actual merchandise. The zone two protections, which are that proximate area,

think public view monitors and things that might be in that aisle. So think category versus point protection, area protection. And then in zone three, the overall store environment and zone four, the parking area from the edge of the property perimeter up to the wall, up to the entry point. And then of course, zone five is beyond the parking area. So how do we better earlier detect and how do we better affect offender behavior throughout those five zones is the idea here, right? So that all took place last week, very busy week. And on top of visitors in our labs, a lot of research projects onboarding two new research team members. A third actually starts today. This week on our team, so we're growing just as the crime problems and our membership are growing as well. We also

had team members that we talked about before had gone out to the Retail Industry Leaders Association RELA Annual Outdoor Protection Conference. a lot of positive engagement, a great conference. They took away a whole lot for our team and our membership to go to work on, including collecting data. And now we're pivoting and turning and preparing right now and have been, of course, for the last two or three weeks as well, in parallel with everything else for the annual national retail federation or nrf protect conference this one is sort of the largest in our industry in the united states probably in the world and um it's another opportunity as is rela or fmi or nacds and of course impact and so on to get together build relationships discuss what's going on uh And so in this case, we are also offered a nice booth area,

as we are at RELA and FMI, since they are LPRC members. So you'll see a handful of us all be there. We'll have Chad. We will have Brian. We'll have Kim and so on. So we'll have a handful of our team members there. We'll be collecting some data. We'll be interacting and engaging at our booth and beyond.

We're involved in a handful of sessions as well. So look up some of those. We're working with AT&T Business on one. We're working with Avery Dennison on another. In both cases, we're working with world-class LPAP decision makers like Joel Cole, the VP at Macy's, and so on. So, we're excited for this upcoming NRF Protect conference. Meanwhile, back here in the labs, before we go, in addition to that preparation with the shortened four-day work week this week, we'll be working on continually integrating. We're looking at what

AI solutions are offered currently or just about to be offered by our 104 solution partner members here, what's going on with natural language processing, with audio or aural detection, as well as visual detection, both recognizing and classifying objects, as well as action, movement, behavior itself, or combinations of those as we continue to integrate on anti-theft, anti-fraud, and violence scenarios or use cases across that offender journey. So, a whole lot happening here. We'll also have the Gainesville Police Department's real-time crime center leader in our labs. We'll then be going over to the University of Florida's brand-new, world-class real-time crime center.

Take a look there as we're doing home-and-home-and-home lab visits or place visits between those two real-time crime centers. And GPDs is just now being put together, Gainesville PDs. We've got our SOC lab. So what we're going to do is be working with a memorandum of understanding, MOU, to work on world-class integration and understanding, because we talked about we want to better affect offender decisions throughout their journey to and from harming a place or victimizing people, getting better at that. We want to get better, though, at that early detection, as we've mentioned across that journey, earlier and better definition about what might be coming

our way or has just left and where it's going next, that threat, as well as connection, right? So we're talking about affect, detect, and connect. And so how do we better connect between stores or places within a retail and enterprise? How do we better protect between stores and enterprises? How do we better connect between those enterprises and enterprise and our public partners, law enforcement in this case? So there's a whole lot to be done. This is one more puzzle piece that's going in place.

It's going to allow us to turn Gainesville and the University of Florida campus, as well as our four-square block Safer Places Lab, into one big Safer Community Lab to understand how to better improve safety, security, stability at an individual place, as well as co-located or connected places across intersections, maybe, or in a shopping or strip center, as well as even an enclosed mall. So with no further ado, I'm going to go ahead and turn it over to Tony D'Onofrio. Tony, if you could take it away.

Thank you very much, Reid, for those great updates. A lot going on at LPRC, and it's great to hear all the progress that's being made. June is looking, shaping up to be a very, very busy day in retail in general. I'm also attending NRF Protect, and I got a whole bunch of meetings with both retailers and technology companies. In June, actually, I'm also attending the Center of Retail Operational Excellence at Wharton. They have a two-day session of downloads of some of the things that they're doing, and they actually have retailers coming in as part of that. It's a co-sponsor with Harvard.

They rotate between Harvard and Wharton. I recently joined a board in Silicon Valley with some touchless technology. And I'm going to get them involved in LPRC because I think there is value there in terms of some of the things that I'm doing. And finally, I'm starting to work with some Israeli-based technology companies to a new group that I've joined called the Retail Transformation Group, which is a bunch of senior technology executives that help new companies grow. But on the news front, and there's a lot of news this week, let me start this week with more news on retail theft from major retailers in the United States. And this past week, Dollar Tree executives cited increased shrink as one of the reasons for the chain's lower than expected profit in the earnings call.

Shrink accounting, and this is a big number, for a 14 cent hit to the company's earnings in the quarter, according to the Wall Street Journal. And as reported by Business Insider, one of the steps Dollar Tree is considering is defensive merchandising, which is really a retail term for locking up merchandise and recording customers through the tree, but only with employees' help. Other solutions that they're looking at are store closures and getting some government and local help. Later in the call, Dollar Tree CFO Jeffrey Davis further outlined the company's

multi-faceted approach to shrink, including working with law enforcement, hiring for key roles, and restricting customer access to items. But he admitted that such restrictions can negatively impact sales. And unfortunately, Dollar Tree was not alone. Forbes, according to Forbes, Dave Kimball, the CEO of Ulta Beauty, on their earnings call said the rise in violence and aggressive behavior during organized retail crime theft is concerning. He went on to say that protecting our associates and keeping our employees safe is our main concern. The company plans to work with law enforcement, government agencies, and retail communities

to help reduce the number of incidents through drive-down theft across the country. The CEO added that large-scale thefts impact our associates and our guests, and despite our investment, it's getting worse, not better. And the CFO of Ulta Beauty said, ORC is a macro problem, and it needs a macro answer, and I am personally involved in this issue. So as you can see, the team of retailers being extremely concerned with shrink and retail shrink and theft and violence is a major problem. And I think it's an opportunity for all of us here at the LPRC to help them find solution and drive to solutions to actually help address and make the problem better going forward.

But let me end this week with also a very important topic that was mentioned by Reid in terms of artificial intelligence. There was a new search published this week from the IHL group where artificial intelligence is going in retail. Artificial intelligence is going to retail. Worldwide, IHL is forecasting that the overall economic impact in retail from artificial intelligence through 2029 is an astounding number. It's $9.2 trillion. That's a lot of AI coming into retail.

They break it down by region. Asia-Pacific will have the biggest economic impact with AI over the next seven years, with the overall impact of 3.8 trillion, or 42% of the total. This is due to the overall size of the population, size of the retail market, and long-term growth rates. And they expect regulation to slow it down is not going to be as aggressive as it is in other parts of the world the next largest regions where they are have a major impact on retail it's north america 2.7 trillion dollars or 29 of the total will be spent there on ai north america's higher concentration or larger retailers will enjoy the benefits of scales. Many of these retailers will also have a substantial head start in traditional AI and machine learning deployments,

and they will already have some of these applications underway, including in forecasting, computer-aided ordering, and other areas. The third largest is Europe, where they'll have 24% or 2.2 trillion, but the IHL expects that regulation will not allow them to get to the full potential because they will be the regions with the most aggressive regulation. And the last region will be Latin America. They're small.

A lot of the retail is still unorganized. They're only going to get up $520 billion in economic impact from AI. The biggest impact will be in the largest retailers, and the reason for that is that they were deemed essential during the pandemic, and they were already investing in some of these technology, and those investments will increase. And they're actually going to be directly involved. In fact, many of them are hiring data scientists, and smaller retailers really are not able to make that size of an investment. Four retail segments will get the most out of AI. The first segment is actually online because they have a ton of data. They're going to get $2.6 trillion of benefit of 28%. And the rationale is that they possess a superior customer data, which is much cleaner compared to many of the other retailers. The second biggest segment is food and grocery,

with a potential benefit of $1.9 trillion, or 21%. And again, they are some of the biggest segments, plus they expanded aggressively during the pandemic because of the essential labor. And so they have substantial growth and funds to actually fund artificial intelligence. Next is warehouse clubs, hypermarkets, and mass merchants. They're going to get $1.5 trillion. And the final very important segment is some improvement, and they'll get about 10%. Interesting, they also isolated the solutions that will get a lot of AI investments,

and they include store performance, merchandise and category management, promotion and pricing, and the good news for a lot of this audience loss prevention is going to get a lot of ai investment going forward it's actually one of the top four you can find a full report on the ihl they have a white papers sections you can also i'm going to provide a link later this week on my website in the research section you you can see it there. In my view, we need AI faster based on all the problems that are taking place out there, especially as I started this week in terms of more retailers chiming in with their challenges of increased shrink and violence. Thank you so much. Tom wasn't able to make it this week due to travel. Thanks, Tony, for so much insight on leveraging AI.

And I think for our listeners, we wanted to let you all know two things in building on what Tony was just briefing us on about AI and the use in retail, particularly in our case, of course, safeguard, people, us, and we have our team members, but others, particularly here at the University of Florida campus, but elsewhere on ways to continue to have guardrails. We are working from vulnerable victim outward. We've mentioned that before. That's our primary mission here is to safeguard the vulnerable in these places and spaces, but we also are very cognizant and very respectful of individual personal privacy or those concerns around that, even though with value exchange, in other words, all day, every day, most of us humans exchange a little bit of privacy to buy online for that convenience to go through toll booths with RFID tags. And in many, many, many other examples, we also know that cameras and other sensors are

everywhere to safeguard vulnerable people, to prevent crime, to record and document crime, to serve as evidence to take high-impact or high-rate criminal offenders out of circulation so they can't continue to harm others. But are there better ways to pixelate or take personally identifiable information out of audio, video, or other sensor information and only use it in the cases that we need to identify an imminent threat, a tool, a person, a vehicle, something that's coming our way or has now arrived to better safeguard to give that manager, to give those people in that place critical seconds to survive. So that's important, but are there ways that we again can extract some of that personally identifiable information, that PII out so it's only used for that? That's being worked on by multiple places and people and institutions. So we want to make sure that everybody understands it's very critical to get more AI usage,

but every time that we use it, it's to give a better heads up and better information so that the leaders, the protectors, the guardians can act from a more informed position, not a less informed position or to trample over anything or anybody. So thanks, Tony, for everything. Thanks to Diego. Thanks to Wilson for all your production and patience with us three.

They're all over the place. And we want to thank you all out there, the listener. 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.