LPRC - CrimeScience – The Weekly Review – Episode 172

Episode Date: January 11, 2024

LPRC Podcast Rebrands, this week our hosts discuss the amazing things the LPRC is doing! On this episode, our hosts discuss LPRC Kickoff's Record Registration, the FusionNet is active and ready, LPRC ...Integrate is shaping up to be a unique and engaging event, Retail return rates and fraud rates have been compiled for 2023, and they take a look at the store closures and opening rates for USA retail for 2023. The hosts also go into a recap of the store closure in the UK and other cyber threats. Listen in to stay updated on hot topics in the industry and more!

Transcript
Discussion (0)
Starting point is 00:00:00 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. Here we are in the new year, 2024. This is from the weekly update series from the LPRC. And I'll start off real quickly as I'm joined by Tony D'Onofrio and Tom Meehan and our producer Diego Rodriguez. And there's a new brand, a new look for the LPRC. We've updated, upgraded, hopefully, our logo, our website, all the branding to really pop, hopefully better represent the team, the capability, and the results that have been provided to the community at large
Starting point is 00:00:55 and represent where we're headed going forward using innovation, research, and partnerships. And we're pretty excited about it. You'll see the new logo for this podcast and just about everything else. So we're also excited. We'll be up next week at this time in New York City, of course, at the National Retail Federation or NRF's big show in Manhattan at the Javits Center. There'll be multiple panels our team will be on. Please check it out on LinkedIn, our website, Twitter. And we're on four different panels up there and excited to visit with everybody. Of course, the LPRC kickoff over 200 executives now registered for that for Wednesday, the 17th.
Starting point is 00:01:44 Executive is now registered for that for Wednesday, the 17th. So at the Hudson Yards complex. And this will literally be twice what we've had the last five years in a row. So, again, like impact in some of these other events, and do some of the things that are happening here on top of talking with each other. So we're excited to meet and greet with everybody and up in that environment. lot of planning this week for the integrate active shooter exercise and in close coordination with, again, the local law enforcement agencies, FBI, DHS, fire rescue, and others to put on something that will be unprecedented and learning together how to innovate to save lives. And so, please let us know if you have interest in that, if you're an LPRC member as a retailer or you're an Innovate partner or interested in being an Innovate partner,
Starting point is 00:02:51 then we can help accommodate that participation on the University of Florida campus. So we're also working on concepts with our new team, an existing team as we grow to take on more field initiatives. The Eastside initiative, for example, we had a call yesterday with several of the retailers that are participating going through that. The day prior on this Monday, we had a call with the retailers that were participating in the Gainesville Westside Initiative. And so stay tuned on that. But that's going to be all about serial offenders again, tracking and understanding between stores within a chain, between stores from different chains, and between stores and local law enforcement, how to better sense and affect, and affect of course connect uh with each other
Starting point is 00:03:47 to reduce serial offending and what's happening with these wider range individuals we're also working on mass attacks so with the active assailant active killer exercise integrate on february 29th that's that somewhat lone actor typically a single active or mass shooter the mass attack is a different aspect that's probably on the other end of the spectrum and this is where we're talking about philadelphia looting recently all the 20 2020 and 21 looting what we saw with nordstrom one two 2, and other mass robs. So we have initiative underway. We've already got partners lined up.
Starting point is 00:04:29 We're collecting data and video and aligning and working with some really cutting-edge new sensors and technology to see if there are ways that we can earlier detect a massing and then before, during, and after an attack. So more to come on that. One thing that our team's been thinking a lot about is operational people focus, operational focus versus, say, strategic people in that focus. And the reality on the ground, wisdom is sort of the key here. How do we achieve wisdom? achieve wisdom and wisdom I think is a hallmark whether you have faith or don't have faith but that's really kind of the baseline and so the idea is that wisdom pretty much means if you meet an individual that seems to be relaxed and understand
Starting point is 00:05:22 how things really work not how people think or what popular media or other narratives are about, but how the world really works. What are these dominoes or mechanisms? How does that work? And so that's really what our team's grounded in, is trying to understand how the real world works. How do individuals or groups decide to go one place or another and harm somebody and victimize them? What does that look like step by step, stage by stage? And how do we leverage that information to, again, earlier and better detect, more effectively affect them, but also connect to do the first two? And so that's really what we're talking about. I think operational orientation is sort of a checklist. Optimism, we can cure this. We can eliminate
Starting point is 00:06:13 crime. We can eliminate disease. We can eliminate war. We can eliminate things. We can cure this. We can fix this. And I think the real world orientation is while we want to be optimistic, always optimistic that the reality on the ground is sometimes it's going to be more like we've got to better reduce or manage and things like that. And again, coming from a family of physicians, you know, they manage high blood pressure, manage diabetes or metabolic disease or other things like that. Sometimes you can't cure them. We're not engineers. We're not even orthopedic surgeons where you're trying to fix something.
Starting point is 00:06:54 We would love to do that. We're going to work at every single level and at every step and stage offenders take in their development and their progression. in their development and their progression. The same thing with the protective measures out of place, a victim site or a potential victim site. That's what we're going to be doing. But just, I think as 2024 now is here, I know with my team, I'm making sure that we're talking a lot
Starting point is 00:07:19 and thinking a lot about what we really can do, how we rigorously and innovatively do it. But the fact that if we're if we're we're not now we want to articulate a vision not a fantasy and i think that's something that may or may not make sense to some of you all out there but it's how uh i'm hoping that we're oriented and working on the world working here in the world to make things change for the better um and so we'll go forward. But at the end of the day, we're dealing with humans.
Starting point is 00:07:46 So we're going to make sure that we do that. But that's where you're seeing us talk about strategy, operational art and design of carrying out a strategy, and then testing and validating and improving and adapting and adjusting the actual tactics and technologies that we use to accomplish the strategy or strategic goals that we've got and operationally how we deliver that consistently and, again, can adjust because we know everything else in the world is constantly adjusting. So enough of all that. We're excited to talk to you. I'd like to turn it over now.
Starting point is 00:08:21 Next, let's go to Tony D'Onofrio. And, Tony, if you can tell us a little bit about what's going on in the world. Well, thank you, Reed. And first of all, really nice job with the new logo and the new site and really bright. And I think it sets well for 2024. I think I talked about last week about I think why 2024 is going to be a lucky year. So I'm looking forward to a very lucky year with the Loss Prevention Research Council. This week, I'm going to report on some news that's around the holidays on key topics. So let me start the new year with the latest report from the NRF and Apples Retail on the 2023 U.S. consumer returns for the USA retail industry.
Starting point is 00:09:05 So total returns for the retail industry amounted to $743 billion in merchandise in 2023. The total return rate as a percentage of sales of 2023 was 14.5%. The percentage of abuse and fraud impacting total returns in 2023 is 13.7%. And the total amount of dollars lost to returns abuse and fraud in 2023 the security survey that was done by NRF in cooperation with the Loss Prevention Research Council. We showed retail shrink at $112 billion. So numbers are almost equivalent. And again, they're big numbers. For the holiday season, so what happened with returns during the holidays?
Starting point is 00:10:04 numbers. For the holiday season, so what happened with returns during the holidays, retailers expect fewer returns this year with an expected return rate of 15.4%. Retailers expect fraudulent and abusive return to increase to 16.5% of returns in 2023. And the trend in fraud and abuse are magnified, of course, during the holiday season as increased traffic put pressure on staff to prioritize transaction speed, process and procedures. In 2022, retailers allowed 22, just over 22 percent of return to be accepted without a receipt. And in just a year, that number has been dropped by half. So you now must have a receipt. Survey data also estimate the 17% of non-receipt returns are fraudulent, an increase from 14% in 2022. So non-receipt returns, they've been a significant problem for retailers because of fraud and abuse rates.
Starting point is 00:11:06 And again, they're expected to be higher in this category. And this is an area that, again, retailers are cracking down. You must have your receipt. So switching topics, again, looking at the holiday season, some additional interesting data published by D&D Daily, some additional interesting data published by D&D Daily on organized retail crime and retail fatalities for the holiday season. And they analyzed published reports between December 23rd and December 31st in the United States. So interesting, there were 28 retail fatalities in U.S. retail,
Starting point is 00:11:44 which were up an amazing and astounding 87%. There were 25 organized retail crime cases, which were up 67%. And finally, there were 104 reported robberies and burglaries, which were down 15%. Alarming, really, the increase in both the retail fatalities and organized retail crime. And I know we talk a lot about that, about the Lost Prevention Research Council, in terms of getting engaged to address that. But let me switch topics again and go across the pond and report again in terms of what's going on in the UK in terms of retail. So according to a report just published in the Retail Gazette, more than 10,000 stores or shops closed in 2023 with almost 120,000 retail jobs lost, according to figures from the Center for Retail Research. The figure showed a total of 119,405 retail jobs lost and 10,494 stores shuttered during 2023. Store closures, the good news was they were down 38.8% compared to 2022, and 2022 was the Retail UK's worst year for store closings since 2008.
Starting point is 00:13:11 While the number of redundancies, so the number of retail jobs lost in 2023 fell by 21.3%. However, said the professor, Joshua Benfield, the professor of the Center of Retail Research, this improvement is probably best viewed as a trend that is less bad than good. It doesn't reflect any real strength in the sector. Foundation said 2023 saw a continuation of the trend started in 2022, where most of the store closure and retail jobs lost were caused by company reorganizations and cost-cutting programs rather than business failures. And let me come back to the U.S. and look at store openings and closings in the U.S. as reported by CBS News. And again, this is a way of how these articles actually get written. The way they put it, this year was a rough one for some retailers as illustrated by the 80% surge in store closures in 2023 from the year
Starting point is 00:14:22 before according to CoreSight research. The reason for this year, more than 4,600 stores were closed are varied, ranging from the bankruptcy of some major retailers to some operators closing under a performing location. In some cases, retailers blamed theft for their rationale in closing store locations. Among the backdrop of the closure are several trends weighing on the brick and mortar businesses. One is the continuing growth of online shopping, and secondly,
Starting point is 00:14:54 inflation-weary shoppers are cutting back on some type of purchases, such as electronics and jewelry. But it's not all gloom and doom in the retail sector, given that retailers actually opened almost 5,500 stores in 2023 in the United States, more than offsetting the number of closures, of course, that data shows. In some cases, retailers moved into locations vacated by other businesses. Some of our best stores were created from Cardaces, store locations, and turned them into burners. So overall, not as bad a news as the article portrays it. Indeed, in 2023, we actually had more store openings than closings. So it's interesting how they take a negative and focus on the negative
Starting point is 00:16:07 versus a positive in terms of the more store opening. So in my view, stores are here to stay. They're going to remain vibrant and they're going to be a very important and valuable part of the retail mix. So talking about stores, I'm looking forward to like three to the NRF 2024. I'm looking forward to seeing many of you up there. It should be an exciting time with over 40,000 plus planned attendees. So see you there. So and with that, let me turn it over to Tom. Thank you, Tony. And thank you, Reid. And hello to everybody. And I wanted to start off the episode today with my part in just saying congratulations to Reed and Hayes for being recognized as top experts in retail from Rethink Retail. I'm honored as well to be on the list. This is the first year for me.
Starting point is 00:16:55 I know Reed has been on for a couple of years and Tony has been on for several. But we put this podcast together to help folks. put this podcast together to help folks. And when we started this podcast is really how do we disseminate information that the LPRC is working on in a different form and some current events and topics and trends that we know will affect the folks that are listening to the podcast. So again, congratulations. I'm super excited and honored and humbled to be a part of that group of experts. It is a full group of experts and they really didn't miss anyone. I think they really got everybody on there. So if you don't know about Rethink Retail, I would encourage you to take a look at it.
Starting point is 00:17:40 Next week is NRF Big Show. So the largest retail trade show in the world. I always laugh when I hear those. It's called the Big Show. They don't call it the Big Show for no reason. And I think more than 100,000 people will descend on New York City to go to that show. And part of the event, there will be a LPRC kickoff. I think we have a packed house right now with folks going.
Starting point is 00:18:09 I unfortunately will not be at this year's event. It'll be the first event in probably 20 years that I've missed at the big show because I live just outside of New York City. But I will not be there, so I will certainly miss everyone and have been exchanging text messages. But I will be be there, so I will certainly miss everyone and have been exchanging text messages. But I will be there next year. I needed to get something taken care of, and that was the only time I could. So I think very excited about that show, and I know that there's going to be a tremendous amount of great technology there.
Starting point is 00:18:39 I believe Reed is doing a presentation on RFID and retail and some technology pieces there. So very, very exciting stuff. This week, the inflation numbers were released and we are up a little bit in December. It's a little concerning. I wouldn't say that it's earth shattering because it's up just a little bit, but one of the things that 0.3%, so 0.03%, I should say. And, you know, throughout most of 2023, it was declining. It's funny, the Wall Street Journal said that rapidly cooling in most of 2023. And I always say with media as someone that writes articles, sometimes key
Starting point is 00:19:23 choice words can imply things that are different. Here, this is just a slight increase. And we do need to monitor that. That is a sign that inflation is growing, that the economy could be strong. It could be it is tied to a stronger December than folks thought. So I think there is a whole bunch of things there that we need to watch. But most importantly, as of last month, you heard, excuse me, that the Fed would most likely be lowering rates. That's what they hinted to, which again, strengthens the economy. This puts that back in what I would say, kind of a limbo situation where you're not a hundred percent sure the limbo is, does it go
Starting point is 00:20:06 left or right? And, uh, do we raise it or, or lower it? So I think that's definitely something to, um, to keep an eye on and we will hear, uh, wanted to just change a little bit to, to AI. And, um, I'm going to be brief today. Uh, I'm starting to lose my voice again. So I apologize about the nasalliness. But Walmart executives gave a keynote at CES, so the Consumer Electronics Show, and they talked about their plans to have augmented reality, drones, generative AI, and other technology on both the Walmart app and more ingrained with the Walmart website. So we're continuing to hear this type of engagement on the app basis. One thing that they mentioned that I thought was interesting is on the augmented reality side, something called Shop With Friends, and it will let you virtually try on outfits and share the results. So I thought that was interesting. I know that there have been things like that before, but it was something very interesting. It also talked about expanding its drone delivery to
Starting point is 00:21:17 cover 75% of the Dallas-Fort Worth area. So really interesting stuff coming from CES and the Walmart front. We do know that Walmart is often on the forefront and tries things, and sometimes they don't actually do them again. I got that information just for everybody's reference from a TechCrunch article that I'll share on my LinkedIn later. But in order to really become innovative as a retailer, you've got to try things. You've got to try things that you don't necessarily know how it will work and you have to make investments. I always equate it to Tony and I were at an international supply chain association conference a few years back. I think it was right before COVID and then 7-Eleven had the store of the future. And Tony and I were in that store and it was a completely manless store. And there was an individual from their innovation department that said, you know, this is not what we would deliver, but we have to start somewhere.
Starting point is 00:22:10 And mainly what I took out of that is you had this extremely high-tech store that wouldn't necessarily be feasible to put in the real world everywhere due to costs and constraints. But if you don't start here, you won't get to the next step. to cost and constraints. But if you don't start here, you won't get to the next step. So I think we're going to see a lot of AI and augmented reality coming into the retail space. We're already seeing a lot of generative AI and reviews and people are mixed about that. And what I mean by generative AI reviews is you start the review and you hit the button and it kind of finishes it. I personally think that with generative AI and reviews and generative AI and any type of commenting, as long as there's a human driving the message, it's the next step of autocorrect or spell check or grammar check. Yes, it's on
Starting point is 00:22:58 steroids, but I think if anybody's older than 40 listening to the podcast, you remember when there wasn't spell check. You remember when spell check podcast, you remember when there wasn't spellcheck. You remember when spellcheck came and you remember when grammar check came that there were a lot of folks saying, hey, by doing this, people are going to not learn how to read and write. And it really was about enhancing what was going on. So I think it's a very, very interesting time for all of us in the AI space, good, bad or indifferent. I think there's definitely something that is occurring there. A lot of news out of CES, but I think the reality is a lot of it is consumer electronics facing. And while some of it is definitely, excuse me, in the retail space, a lot of it was more on the consumer electronics space. So
Starting point is 00:23:47 I think it's probably, um, not necessarily as things that will really resonate with this audience. I thought the Walmart thing did definitely, um, about a month ago, there was an AI, uh, pin released and, and what this pin is. And I'm not, I, you know, I'm not, I don't particularly have the pin, so I don't necessarily want to say that I know whether it's good or bad, but it's a pin that you wear on your lapel. And it is an AI pin that can project things onto a surface, very limited things, Very limited things, take pictures, and it really, what it allows is kind of a wearable for AI that is different than a watch and a glass. And glasses, there were chat GPD glasses. This pin really was all over CES.
Starting point is 00:24:37 People were wearing it. It has a pretty high price point, but it's basically taking the functionality out of the phone and putting it in a very small pin device. I think, again, it's where we might actually see some of the things in AI transitioning to see what is the right mix. Do people want to take it out of their phone? Do they want to use it in their watch? Do they want it in their glasses? So I think we're going to continue to see that kind of movement around. And I don't know that there's a good or a bad. OpenAI launched its ChatGPT store, which is a big deal, I think, where you can get custom chatbots. Basically, what they're saying is that users can have already made more than 3 million bots. So they believe that people are going to want to buy those out there.
Starting point is 00:25:26 This is kind of an app store kind of piece. If you pay for ChatGP Plus or ChatGP Enterprise, there is a new tier called Teams. Teams is meant for businesses, you know, with around 150 people to add access to ChatGP 4. And then there's advanced analytics as well for Teams. I think they will continue to look at different ways to do this. They did actually announce that they are going to announce a revenue share for app developers,
Starting point is 00:26:01 which is a commonplace that we see when there's app stores. I don't know that developers are going to love that, but I think that is part of course and what we expect. And I'll end the note with we have a tremendous amount of geopolitical things going on and Donald Trump has multiple lawsuits against him. So there is a ton of chatter on Twitter, now known as Axe, and Reddit, and Telegram, and all these channels about potential civil unrest. So absolutely stay tuned to the Loss Prevention Research Council's FusionNet. All right. Well, thanks so much for all that, Tom. Great stuff as always. And thank
Starting point is 00:26:39 you again, Tony. The same with you. We need your insights. We value both of you all's inputs, your vision, and how you describe the world is always helpful. The experience and expertise is almost unprecedented. And I want to thank Diego Rodriguez for his production and posting. And we want to remind each and every one of you all, please like and repost the Crime Science Podcast. Please refer us to others. And, of course, any suggestions, ideas you've got, please send them our way to operations at lpresearch.org. So everybody stay safe and stay in touch. Thanks for listening to the Crime Science Podcast presented by the Loss Prevention Research Council.
Starting point is 00:27:25 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.

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