LPRC - CrimeScience – The Weekly Review – Episode 162 with Dr. Read Hayes, Tom Meehan & Tony D’Onofrio

Episode Date: September 28, 2023

Less than a week from IMPACT 2023, this week our hosts discuss some upcoming sessions for the event and what you can look forward to! Also this week, a recent article featuring top retail CEOs and their response to shrink, as well as their results. Some key takeaways, store location, design, layout, and types of merchandise are large determinants of shrink. Listen in to learn more! Listen in to stay updated on hot topics in the industry and more! The post CrimeScience – The Weekly Review – Episode 162 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 coming to you from Gainesville, Florida, home of the University of Florida. And we're going to talk a little bit today with Tony D'Onofrio and Tom Meehan and work a little bit with our producers, Diego Rodriguez and Wilson Gabarino and go into a little bit about crime and loss control, what's going on in retailing around the world. Here we are. It's now Tuesday, 26th of September, 2023, and we're now less than a week away from the 2023 version of the LPRC Impact Conference.

We believe this is our 19th Impact Conference, and again, prior to that, we had 95, 6, and 7 brainstorm conferences. So tough to believe it's gone this rapidly, but there you go. That's life. We're excited. We've got more content than ever. Everybody has gotten their slides in, but everybody, including me, continues to, of course, tweak our slides a little bit, a little more imagery, a little more tie-in to what's going on in the future. A mandated LPRC is, again, I've mentioned this in past podcast episodes,

of course, is that the LPRC was set up by 10 retailers, now engages with over 88 retail corporations and 125 solution partner members, associations, and beyond year-round. We work on research and development year-round at our six different research venues that we are working in. We operate, of course, our six working groups. We operate the Innovate Advisory Panel. All of these things happen year-round. Crime, loss, the opportunities to control both, to enable safer and better commerce, those are always, always our goals. And that means a whole lot of work to combat theft, fraud, and violence against our people and our places. So with Impact,

each and every session of the event, like our other events, is designed to not only gather what we've learned through research and development with retailers in the field, in the labs, what are the implications, but also plan together with that group and put out there where are we going next with this particular research effort and this specific topic so that it's not a one-off talk and then walk, but rather an ongoing year-round iterative building process so that we are checking in, we're updating, we're gathering new information, new direction, we're tweaking what we're learning and doing because of all the influx of new information, new data on each and every type of crime event that the retailers that we work with are confronted. So with that, we're going in with eyes wide open. We've got a record enrollment. I've seen it as high as 470 enrollees. blowing away, I believe, the best estimate probably is we had about 370 to 85 participants last year. So we should be well beyond that, maybe 100 or more professionals in here in Gainesville.

More interaction than ever with our Gainesville Police Department, our University of Florida Police Department, Gainesville Fire Rescue, our local model operators like Butler Enterprises and Brookfield Properties and so on, much tighter community. And we're going to spend some really neat quality time together. I know my sessions are about LPRC now and next, what we're doing, how we're doing it, where we're doing it, when we're doing it, what we need to get it done. And I'm pretty excited about that content. Working away, too, with Mike Lamb, the VP, of course, of Asset Protection at Kroger Company, and Chad McIntosh, the interim, or anyway, regardless, the current vice president of asset protection for Rite Aid Corporation. They're going to be talking about what they experienced in the

past. They both went into what I would call early retirement, but in the retirement, they were both called back to active duty, if you will. And we're going to talk about what they did in the past, what they confronted when they came back, the dynamic changes that they experienced, and then how they had to take a deep breath, rally the troops, and figure out not just how to get better in the environment they used to operate in, but how to start to tackle, suppress, get some control over the explosion across places and time of types and intensity of the problems out there, the crimes, and then start to prioritize, look at integrating different systems and protocols and things like that to try and get a better handle on what's going on, as well as having better insight to

get better and better. We're going to talk about their partnerships and how they're learning to partner better or others want to partner with them more in these organizations than ever before. I think that these companies are energized. And I would bet that most of our retail organizations, and again, we're closing in on 100 of those, probably none of them are immune to some of the theft, fraud, and violence. It may come in different forms, frequency frequency and intensity for them but this has risen to beyond just the c-suite this is board of directors uh level for many many many of these retail companies and that means that everybody in the organization is uh expected and is probably uh pulling together to help across the board with the issue. So very excited about that.

I've got a session called Digital Virtual Go Bags. This is a very, very hot topic, how do retail stores, retail enterprises, but at the store level particularly, better coordinate with local first responders before or at latest during a very critical event, barricaded subject, arm robbery, active shooter, or some other mass casualty event from a natural disaster, and so on, so that their partners, their first responders, know a lot more about that place than they normally would, and they need to know it, and they need to know it now. How do we accomplish that with digital links as well as physical go-backs? So,

you're going to see Mike Currier, one of the top executives at Verizon Wireless in this space. We're going to have University of Florida PD, and I believe Gainesville PD experts from their real-time intelligence or crime centers talking about what it is that they could best use at the street level, that patrol deputy or officer level. What would that first-line supervisor best need? What would their command staff or their crime centers need, and how could they get that? What's the best format to provide that to them so they have better insight? They can see visibly blueprints, maybe imagery of all types, understand rosters and where people might be and are and all the types of things. We've got several domains to talk about getting that information there before and during emergent situations. I'm excited, really excited about

that one as well. And working on the Gainesville Safer Places Lab Eastside Initiative. We're going to go through that and describe in depth what in the world we're trying to do there, how are we trying to do it, how is this Eastside Gainesville leading to and being informed by the Port St. Lucie Initiative, by the upcoming Westside Initiative, by the current UF Innovation Square Safer Places Lab Initiative. How are these all fueling and feeding each other? And then again, the upcoming Atlanta and finally Albuquerque Initiative. So how all these will be working together in a learning lab, learning loop type of ecosystem. So a lot of excitement there by our team in getting the word out.

We've got, again, eight major retailers who have stores in this Eastside Initiative participating, plus Gainesville Police Department, Gainesville Fire Rescue, the mayor's office, the city commission, some of the faith leaders, the chamber of commerce, and beyond, all trying to work together and create this learning ecosystem here at Eastside Gainesville. So very excited to talk and brainstorm with the group and see and let them know and get information from each and every one, suggestions, comments, critiques, how do we improve what we're doing and how we do it, but also how do we get instant and ongoing learnings? What are some of the things we're learning? What are the implications from that? How can that retailer, how can that store, that district, that region, that corporation, that first responder organization go to work with that? What are the things we can almost tear off the pad and give it to them organization go to work with that? What are the things we can

almost tear off the pad and give it to them to go to work with? So we really want to get better and better than that. We have, including me, we have seven research scientists now at the LPRC, a research associate, a research assistant, a research technologist. we are now generating a ton of research going on on theft, fraud, and violence at the departmental or category area, that area of the store, the store level, of course, parking lot level, the community, the district region, and the enterprise. So with our research and action briefs, you're now seeing between five and 10 of those coming out of the LPRC a month. We're trying to make sure that they are very concise, easy to read, and easy to go to work with. There may be fuller reports behind those, but that's a key part and another thing that we

want to do. Impact was and continues to be a place for us to annually interact, engage with, and learn from and work with all of our members now approaching 250 corporations, plus all the other members that we have, retail associations and law enforcement agencies and so on. So excited to see each and every one of you that can get into Gainesville, Florida. We will, on Sunday evening, some folks are coming in to go to dinner. Monday, we've got a golf event. There's the Board of Advisors meeting. There's the LPRC's Strategy At program for most senior LPAP decision makers. We've got, of course, the LPRC Innovate advisory panel meeting.

And then we've got an amazing two- a half hour reception outside in tents with music and great food and beverages. We've got the ongoing lab tours to our six interior labs, as well as going through the four square block area that the tents are set up in and the beautiful UF Innovate Hub area. So we are excited about getting rolling all day Monday, Tuesday, all day over at the UF Student Union called the Rights Union, which had been remodeled just a handful of years ago. It's a massive but very, very uber modern and actually even recently redecorated yet again grand ballroom, the Rion Ballroom, which is almost as big, one floor up we use for our solution partner experience area. We've got multiple really nice breakout rooms. You see students and lab coach showing everybody around, posters put up everywhere with key learnings on top of all the great events and breakouts. And then, of course, the social event that Tuesday evening over at the UF Swamp, the football stadium on the Champions Club level,

where you'll see hundreds of participants playing all types of games and with the Gator cheerleaders and Albert, live music, all kind of great food and drinks. You can go out and outside in the stadium at the top part, but it's just a great, fun, really unique venue that we'd like to show off here in addition to the beautiful campus that we've got here in a southern college town, if you will, of Gainesville, Florida. Wednesday, we go just over half a day, some more fantastic content. We'll also have some VR things going on, virtual reality. One of our faculty professors here, Dr. Kong, demonstrating some of the VR she's using to collect data and work on virtual reality training for active assailant, active shooter. We've also got another VR setup with the University of Florida Police Department

where they're demonstrating the Axon VR training program. They've got 22 downloaded scenarios. You can put the headsets on and either be a criminal offender or somebody under the influence or somebody that might be suffering some type of psychosis or event. You could also be the officer or first responder handling the situation and go back and forth to get a real feel for what it's like in both different situations on both sides so just just too much to talk about but this is the place to be in Gainesville Florida first week of October every year and we appreciate everybody's support and look forward to seeing you all. So with no further ado, let me turn it over to Tony D'Onofrio.

Tony, sorry for the long winded, but here we go. Take it away. Thank you, Reid. Let me start this week with a brand new article from Business Insider on how four major retailers are fighting retail shrink. The article is titled, Costco, Lowe's, Best Buy, and Tractor Supply are winning the battle against retail theft in a strikingly similar way. As some of the CEOs mentioned in the article, the issue of retail shrink is top of their mind. Organized retail crime is worse now than I've ever seen it, said Tractor Supply CEO Hal Lawton.

I've never seen anything like it, said Lowe's CEO Marvin Allison. Best Buy CEO Kyrie Berry told analysts that her company has definitely seen an increase in theft at certain stores. definitely seen an increase in theft at certain stores. Taking a closer look, it's clear that Costco, Lowe's, Best Buy, and Tractor Supply have similar striking similarities and qualities that is helping them win the war on retail theft. The actual article lists five of these. the actual article lists five of these. Number one, store locations and layout. With the exception of Best Buy, three out of the four chains tend to have their stores in more suburban and rural locations that see fewer people. Both Lowe's, Marvin Allison, and Tractor Supply, had lawton said a low population density contributes to the lower incidence of theft compared with busier location and with the exception of Lowe's, three out of the four companies use a similar entrance

and exit strategy that funnels every shopper past employees or cash registers or security checkpoints. Number two, big heavy merchandise. A lot of the merchandise in these Ford retailers sell is too unwieldy to be conveniently stolen. Most people are unable to walk or throw a couple of those 50 pound bags over their shoulder and walk out, said Lawton. Even if you do, out," said Lawton. Even if you do, you're stealing only $80 to $100. Number three, secure displays. For smaller or more expensive items, all four retailers aren't afraid of requiring customers to get help.

Electronics and office sold at Costco with a pay and collect feature before they're placed on the cart, much like Best Buy keeps certain inventory off the sales floor until a customer requests it. And power tools and loads and tractor supply are often kept in locked shelves with loads taking the extra step of selling some products that won't work unless activated after purchase. Number four, less self-checkout. Another big theme in the way each retailer handles self-checkout, which has been blamed for a spike in theft rates when it introduces stores.

Self-checkout is minimal to nonexistent at Best Buy and Tractor Supply, while Lowe's has invested big bucks in accessory protection technology to keep a sharp digital eye on the store. Costco saw a slight increase in inventory shrink after it rolled out self-checkout three years ago, but those rates have since reverted to the longer-term trend as the company has taken a more hands-on approach to monitoring what goes on in their lanes. And number five, and probably the most important, more staff per square foot. All four retailers prioritize having knowledgeable, helpful staff and have a high level of customer engagement.

We just have more employees in our stores and they are just doing an exceptional job of watching out over our stores, Barry said of Best Buy. Meanwhile, a typical track to supply location may have as many as eight people working in a relatively small 20,000 square foot store. For Ellison and Lowell, the best investment was simple. Having spent my entire adult life in retail at every level, the only thing that I understand clearly is that the greatest deterrent to any type of theft activity is effective customer service. And these are really great lessons from these retailers in terms of combating theft. And that's why I wanted to share them in detail. compacting theft, and that's why I wanted to share them in detail. Switching to my second topic for this week, let me go to the RIS News on their latest holiday retail forecast and predictions

for 2023. As they state, holiday retail sales are likely to increase between 3.5% to 4.6% in 2023 for November to generate a timeframe according to Deloitte's annual retail holiday forecast. Last year, the company predicted an increase of 4% to 6% for comparison. Deloitte also forecasts e-commerce sales will grow between 10.3 and 12.8 year-over-year during the 23-24 holiday season. This will result in e-commerce holiday sales reaching between $268 billion to $284 billion this season. Salesforce.com forecasts sales of 4% global and 1% U.S. year-over-year online sales growth across November and December, reaching $1.19 trillion and $714 billion globally, will be influenced by frontline workers in the store by a combination of creating demand and fulfilling online orders at retail locations. Bain & Company forecasts nominal U.S. retail sales to slow the start of the season with the lowest growth since 2018. Unadjusted seasonal sales are expected to grow 3% over year-on-year in November and December, reaching nearly $915 billion with 90% of that growth coming from e-commerce. However, adjusting for inflation, real U.S. holiday retail sales

will glow a sluggish of just 1%, the company said, well below the 10-year average and the lowest real sales growth since the financial crisis. Celico, which conducted an independent survey in July with 1,000 consumers nationwide, found that this holiday season, an overwhelming majority of U.S. consumers are setting some budget limitations on their holiday spending. Nearly 80% of survey respondents indicate they are determined to spend less than $5,000 on holiday shopping. determined to spend less than $5,000 on holiday shopping. Approximately half of the respondents said they plan to spend less than $1,000 on holiday shopping, while 30% said they budgeted between $2,000 and $5,000 for gifts each year. According to Salesforce, 17% of shoppers reported already have used generative AI for purchase inspiration.

The company predicts the technology will influence $194 billion in global online holiday spending as retailers use predictive and generative AI for operational efficiencies and personalized shopping experience. and personalized shopping experience. Blue Yonder's 2023 return survey, which polled 1,000 U.S. consumers, found 59% said title return restrictions have deterred them from making a purchase, while 71% said lean in returns policy significantly or moderately influence their decision to purchase. Salesforce found 88% of retailers said they will make the return policy stricter ahead of the holidays, which presents a risk. Retailers who are reigning and their returns policy could see a slower start to the holidays, Salesforce said. slower start to the holidays, Salesforce said. Based on the previous year's data, it predicts that retailers will return windows for 30 days or less. We'll see 7% fewer online sales in October and November. So that's a little bit in terms of what's going on with holiday sales and also

retail shrink. I'm really looking forward to seeing many of you at the Loss Prevention Research Council Impact Conference next week. I will be there for a short time, but I'm looking forward to seeing many of you. And with that, let me turn it over to Tom. Thank you, Tony, and thank you, Reid. Exciting times right now. So you'll be listening to this podcast the week before Impact, LPRC Impact is coming up, my favorite event of the year. This podcast will be published September 28th, and then literally a couple days later we'll be in Gainesville, Florida for IMPACT. And IMPACT is the Laws Prevention Research Conference, where we can talk about all the things we did this year, collaborate and spend time together. So very exciting. I hope to see a lot of you listeners there, as I know that a lot of the listener base is part of the membership community. So excited and hopefully we'll have good weather. I mean, every couple of years we have a weather scare. This year, I think we're in line for really

good weather and really, really good content. I wanted to just kind of address a whole bunch of things in the news, similar to how we do every week. starting with there's been rumbling about T-Mobile and another data breach. Well, currently T-Mobile has come out publicly and said that they're denying that there is a data breach and that it points to a potential authorized reseller. So this news is fairly new. This news is fairly new. So September 21st, there was a bad actor with the name Emo who shared 89 gigabytes worth of archived data, including some T-Mobile information in a breach form for hackers. And actually for free. So this is an interesting one because usually what you would see is some sort of paid per

option. So this is still relatively new. I actually saw the data. So I think it's somewhat interesting that it does appear to be legitimate. Now, there's no way for us to validate that there, but it's definitely a space to watch. And this is one of the things that's really interesting today. When you're working with third parties, how do you manage your third party risk when someone that you're working with leaks data that appears that it's yours? I think it's important to note that,

I think last week or the week before we talked about the breach of the cybersecurity incidents, excuse me, for MGM and Caesars, and that there was an incident that was a mix, potentially of ransomware and intrusion, and this was all listed throughout, you know, a whole bunch of both public forums and media. And then what does it mean for your brand? What does it mean for your reputation? And so definitely a space to watch. I think these breaches or cyber incidents are going to continue to plague us for the foreseeable future.

And I think it's just something that we need to be very, very aware of. On another note, just related to kind of cybersecurity and risk, there was some researchers that found, and we talked about this, IoT devices, specifically light bulbs, that there were vulnerabilities that allowed them to get your Wi-Fi password. So one of the comments here is, okay, what's the risk if someone gets my Wi-Fi password through a smart light bulb? It's not really, for me, so much about that. It's with all of these connected devices, when we're purchasing connected devices, whether it be smart speakers, cameras, plugs, lights, which is any of these connected devices in our homes for consumer use.

What protection do we have to keep people off of our networks, to keep people out of our information? Oftentimes, these devices have end-of-life periods where where the device is there's nothing physically wrong with it. It's just not patchable anymore, not supportable. And then additionally, especially today with blocking of traffic, some of these devices can auto update. But by design, you don't necessarily want people to be able to access them. You know, I think this is a challenge if you have connected devices. So anybody who remembers the Nest Cam, before it was the Nest Cam with Google,

it used to be referred to as a Drop Cam, you would probably remember when that device went end of life. And then when that device went end of life just recently, you that device went end of life, just recently, not using it anymore, that was actually disabled. There are some other devices or softwares out there that once they're not supported anymore, the thought process is the manufacturer goes, hey, we told you this wasn't supported anymore. That's on you. A lot of older cell phones have similar challenges. Not that most people have cell phones that are 10 or 15 years old, but if you did, you would surely find that they're not patchable or upgradable. So what this means for every

listener, whether you're in a consumer setting or a business setting, is to make sure that when you're buying devices that have connectivity, IoT devices, that you're trying to buy them from reputable, well-known companies and understand what their patching and upgrading protocol is. I'm a photographer. I take a lot of pictures, and most of my cameras require a manual firmware flash if there's a challenge. There are a lot of devices that we purchase that require that. Now, our IT departments are usually on top of this but anything that's connected at some point could need to be updated so something to

definitely keep an eye on and as for this particular research that was done the bottom line here is that the cryptographic vulnerability in these light bulbs and this popular OTP link is that someone could easily get in and steal your Wi-Fi password. Now, think about this. If you are using these in a commercial setting, what the risk would be if someone could get onto your network. Once someone's in your network, they've really beat the first layer of protection. And what I often say is if someone has direct access to your devices, then there's not a lot of measures you can take. So just something to certainly watch and stay on top of. Lots of news around AI. And I'll start with OpenAI's chat GPT. lots of news around AI. And I'll start with OpenAI's chat GPT. For paid users, this will be coming probably in the next 10 days. And then for free users, it'll be a little longer. But they're

now rolling out a new text-to-speech model in iOS and Android apps, which allow you to have really human-like audio conversations. I was able to test this. The audio is uncanny. I think if you're someone that uses tech to speech engines, you might catch some things, but they're using the whisper protocol, which is a very, very good human-like engine. So this is bringing the next level to the chat GPT functionality where you can have a conversation-like experience where you're actually asking a question and it's conversational. So I don't necessarily think that this will change the functionality, but it definitely will make things work differently in the future. Additionally, another new feature is chat GBT allowing

you to take an image of something and ask a question. So the example that was given in the article by The Verge is if you had a broken faucet you could take a picture of it and ask it what you know what what are ways I could fix this if you had food ingredients and you took a picture of them, what could I make with it? So really adding the visual capability to it. And what OpenAI is saying is now you have chat GPT who can see, hear, and speak. So you're starting to really take the next step in generative AI and making it more human-like. of AI and making it more human-like. On the flip side, Anthropod or Anthropik, which is the competitor of OpenAI, their engine is called Claude, as opposed to ChatGPT, has just signed

a deal with Amazon where they'll be using that engine with AWS. And I suspect we'll see more of that integration into some of the Amazon products. And basically what, what you'll see there is you'll have a competitive, a competitive body. And the folks that started Anthropod were, were open AI people that left and moved over. I wouldn't say,

you know, I wouldn't say it's remarkably different. I think ChatGPT has much more adoption because of the consumer piece, but Cloud is a really interesting engine. I use both. I think both are very, very valuable, and I think that I would recommend folks going out and seeing what's out there for AI. I say it all the time and will continue to say it. If you're not using this both in your business and your home life,

you're missing out and you could be behind on the times of what's occurring. I also will give my caveat warning of that generative AI is not always correct. So when you're using this to take a very, very strong approach to make sure that you are looking at what's occurring and making sure that you are not inadvertently taking misinformation. One of the things that we're starting to see, and I mentioned this once before in a podcast, is something called drift, where the AI starts to make mistakes based on the input. I think that that's part of course, and I think we're going to continue to see improvement around that. And I think that this is going to be the future for all of us. I think it's a part of what we'll be doing,

and I think you will start to see incorporation into business use cases. Google has already put it into their Google WorkSuite, and Microsoft Office has it. And then last, but certainly not least, related to AI is Getty Images has also made a release that they'll start to have generative AI functionality where they're training on their images they own the rights to. So you could actually create an image based on that. The general feedback is that it's very good for stock photos. There hasn't been pricing released yet, but again, this really kind of transitions the way

marketers will work. And when you're going to get to a point where images are not easy to identify what's AI and what's not, some folks are taking safeguards to watermark these images and put some backend controls in so that you will always know it's AI. But the reality is that some of the things I've seen have been just remarkable in the sense of what they look like. Last but certainly not least, we continue to see a tremendous amount of media around retail shrink, which is fantastic. And I would say that anecdotally, And I would say that anecdotally, some of the narratives are changing to the more positive note from our perspective. And what I mean by that is I want to be careful what I mean by positive is in the past, we've at times had challenges with the media using a more derogatory impact and saying that the data isn't correct and shrink isn't as big as a problem and so on and so forth.

But we're starting to see this trend where there's a general and genuine acknowledgement of the problem, which I think is great because it really helps the general population understand what's going on. It also adds a layer to the human element of what happens to our frontline workers when these things occur. So kudos to all the media partners that are talking about it. I know that the LPRC and myself and Tony are often sharing articles and talking about what we're seeing. So this is a very positive result of a lot of the work that's been done by the listeners here, not only to lobby, but to share information with local and federal law enforcement, DAs. And it shows that we're making progress in a place where arguably we struggled before.

With that being said, we are, for lack of better words, not out of the woods. We still have a pretty substantial problem at play. And I think that we'll continue to see the media attention as well as the media, not the media attention, but big companies mentioning shrink in their earnings calls. I think this is great for resource allocation. I think it's challenging if you own this as an LP leader that you now have a different lens with not necessarily all of the insight to what occurs. With that, I'm going to turn it over to Tony and Reid. But before I do turn it back to Reid, if you want to be a guest on the podcast, reach out to myself, Tony and Reed, but before I do turn it back to Reed, if you want to be a guest on the podcast, reach out to myself, Tony, Reed, or anybody at the Loss Prevention Research Council.

We really are looking for guests, and guests can be members or non-members, but if you're interested in joining the podcast, talking about some of the things we talk about, we're obviously focused on criminology with a high degree of focus around retail. Please reach out to us. We would love to have you on as a guest. Over to you, Reed. All right. Thanks so much, Tom.

Fantastic information. Thank you, Tony, for all that. I want to thank Wilson, and I want to thank Diego for their production of these podcast episodes. And of course, most of all, I want to thank you all. So please stay safe. Stay in touch. 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.