LPRC - CrimeScience – The Weekly Review: Episode 19 with Dr. Read Hayes, Tony D’Onofrio, Tom Meehan and Featured Guest Greg Buzek (IHL Group)

Episode Date: August 13, 2020

In this episode of LPRC CrimeScience: The Weekly Review, Dr. Read Hayes, Tom Meehan, and Tony D’Onofrio are joined by Greg Buzek, Founder and President of the IHL Group, to delve into COVID-19’s impact on retail, inventory distortion, emerging technologies (artificial intelligence & computer vision), the millennial unemployment rate, global retail sales, virtual SOC, cybersecurity training, and much more. Greg Buzek is the Founder and President of IHL Group and one of the Founders of the Retail Orphan Initiative (www.retailROI.org), a charitable foundation that seeks to help the 400 million orphaned and vulnerable children around the world. In 10 years, RetailROI has been involved in over 200 projects in 24 countries helping an estimated 226,000 children through clean water, education, computers, language training and care. The post CrimeScience – The Weekly Review: Episode 19 with Dr. Read Hayes, Tony D’Onofrio, Tom Meehan and Featured Guest Greg Buzek (IHL Group) appeared first on Loss Prevention Research Council.

Hi, everyone. Welcome to Crime Science. In this podcast, we aim to explore the science of crime and the practical application of the science for loss prevention and asset protection practitioners, as well as other professionals. We would like to thank Bosch for making this episode possible. Take advantage of the advanced video capabilities offered by Bosch to help reduce your shrink risk. Integrate video recordings with point of sale data for visual verification of transactions and exception reporting. Use video analytics for immediate notification of important AP-related events and leverage analytics metadata for fast forensic searches for evidence and to improve merchandising and operations. Learn more about extending your video system beyond simple surveillance in zones one through four of LPRC's zones of influence by visiting Bosch online at boschsecurity.com. Welcome everybody to another episode of Crime Science the podcast and this in the latest of our weekly update series. Today I'm joined by our special

guest Greg Busick of IHL Group and of course our normal co-hosts we've got Tom Ian and Tony D'Onofrio and our producer Kevin Tran. We're going to spend a few minutes, each of us sort of talking with each other and you all about ways that we can navigate and emerge from the series of crises called 2020. And so we'll start off, of course, with looking a little bit at what's going on as far as reducing the effects of COVID-19 on individuals in the world at large, but especially retailing, which is a big part of our discussions here, of course. And we're, again, the main focus is on reducing infection. And so that's what's kind of driving everything. And so we know that continually emerging evidence is all around the dose.

If someone should be exposed, do they onboard any of the viremic, if somebody's viremic around them and they inhale, do they onboard any of the viral components, any of the particles in some sort of droplet? And the way to reduce that, of course, is to have a non-infectious dose if we are exposed. If we do take on board some and it isn't enough, sufficient to be labeled an infectious load, in other words, we somehow our body detects and starts to respond, how serious is it? So again, reducing the load, the dosageage the amount of viral particles that we on board is critical and that's again the concept behind masks and more masking studies coming out

showing just why different types of materials the amount of layers and combinations, including eyewear and things like that. They're all there to design to reduce the idea that you'll be infected, or if you are, that it's not too serious of a dose. And so clearly the N95 respirator style is much better. Almost nothing can get through that as far as the the particles that would transport that particularly if it's properly sealed around your face it's not going to come through some way or around it surgical mass sort of number two if you will they have multiple layers their crease that precludes some of the onboarding and so on particularly effective at reducing the load coming out of somebody that's infected,

a viremic individual, even if they're preclinical or pre-symptomatic or asymptomatic. And so then it goes all the way down to the least effective, of course, is our bandanas and the so-called Gators, G-A-I-T-O-R, very thin nylon material that people will pull up around their nose and mouth. If they're treated with sunscreen, they can be protected there, but don't really cut down all, but certainly not even most of the particles in some cases. So just a little bit there. I think the next thing is a lot of research on, you know, why are some people that take on a larger load still not symptomatic or very, very low clinical symptoms

as a response? And so, and why do some people start to become overly reactive, even if it's not a large dose and so on? So you can see there's a ton of science is going on. It has to go into all this. Those exposed to coronavirus colds, those of us, they're seeing in some cases a lower response because we've got some T cells or maybe even antibodies that are particularly the memory T cells that were activated for a prior coronavirus infection of some level, but that may have some protective response, provide some protective response for us, and so that may minimize the seriousness of the disease. So there's a lot. It's complex. We know, though, in the therapeutics, we talked about the numbers, what's going on out there. The first level, of course, is prevention. We talked about

masking and distancing and so on so that you don't take on any or very much of a dose. The second level is, okay, if we are infected, our immune response, both the innate and the adaptive, kick it out. Are we talking about a nasal infection or does it even progress into lung infection or even beyond the blood and AT receptors? So those are things that are all aiming points. And again, the way we look in criminology, understanding if somebody ideates and considers a particular crime and then initiates, which is the big point, right? Just like an infection and then finally progression. So how do we disrupt or document and later detain somebody?

So that's kind of the same logic flow and looking at it. Still a ton of therapeutics and vaccines going on. Just on the vaccine front alone, 135, over 135 are preclinical. In other words, they've not progressed into humans. And remember, they started in silico testing done with computers looking at molecules and combinations. And do they seem to affect in a positive way? Are they disruptive? Or do they reduce the activity or even kill the virus? You can move the next into cells, that kind of testing next into animals and finally into humans and again if you remember phase one is mostly about safety and dosage phase two now we're moving

into more expanded safety trials still looking at dosing and dose ranging trying to understand that again in the same way we're looking at criminological treatments protective treatments out there in the field and then phase three are the large-scale trials looking at criminological treatments, protective treatments out there in the field. And then phase three are the large-scale trials, looking at the efficacy. Does it actually kill or disable the virus? Does it reduce the intensity? Or does it at least keep it from progressing again from nasal to lung infection? So 19, in addition to the over 135 in preclinical phases, we've

gotten phase 1, 19, phase 2, 11, phase 3, 8, and 1 in Russia, and 1 in China. The China version is tentatively approved now. It's completed all three trials or levels of trials. And now the Chinese People's Republic Army are now out there being dosed with it. So pretty interesting there. Russia's come out and claims that they've got one completing, a vaccine completing phase three trials. Now it's been through phase one and two. And so we'll see what's going on with that. The UK has several, but the AstraZeneca Oxford seems to be particularly valuable. They're in phase two or phase two, three trials, or even just phase three trials in several countries around the world. Several million doses have already been manufactured

with many, many millions coming just in case it turns out to be safe and efficacious. They'll be ready to have, by October, several millions of doses that they can apply immediately should it look like it's a promising treatment or preventive measure. measure. So going on from there, of course, testing, moving from the gold standard of nasal swabs to something that doesn't require an expert or at least a trained person, isn't quite as uncomfortable, is quicker and doesn't use all the chemicals that are so critical that we're having to get a lot from overseas, including China. They use spit tests and lick tests and things like that. I know that at Yale here at University of Florida and other places, those are in clinical testing right now as well. So you can take a very low-cost, daily, almost immediate understanding,

somewhat similar to a home pregnancy test. So let's keep our fingers crossed there. Moving next to our retailer call, we had an amazing retailer call late last week or mid last week. I think over 30 chains got on and got involved with us, sharing corona, sharing the violence and what they've gone through, lessons learned, and then adjustments that they made. And some of the main recommendations are, of course, this idea of coordinated situational awareness. They want almost a fusion center or backup.

And I'm going to go to Tom when he's up after Tony and Greg and maybe get a little more insight from Tom as the discussions continue. I know we've got a call coming up with several retailers that want to brainstorm some ideas. We've got some potential support from a couple of companies that will provide some sort of SOC behind our R&D SOC that we've got, our SOC lab, we call it. But just the idea is creating a common operating picture, it's called,

so that those within an organization would have a better coordinated understanding of what's happening and earthquakes and so forth, that organizations and enterprises could have that common operating picture to a certain extent across each other. So again, I'm going to kind of tap Tom to see if he might provide us some further thought and ideas around that. There was a lot of discussion on physical security, barriers to keep people from penetrating, There was a lot of discussion on physical security, barriers to keep people from penetrating, better protection inside for high-value items or potentially dangerous items that they don't want looted, of course.

What are better ways to secure those so that the protection can't be breached as readily? Some of the protective people tactics, who should they be outside or in? What should they be doing, look like, how should we protect them, some of the covert survivable documentation of using video and maybe other mobile device signature documentation so that for later prosecution. You see now waves of arrests taking place in some of these jurisdictions where people were identified. waves of arrests taking place in some of these jurisdictions where people were identified. They thought they were anonymous and burned and destroyed in all kinds of places. I know it's continuing in a few areas, but some sort of covert survivable technology that would help them

in that way. We know that we mostly work on deploying technologies to deter and disrupt offending and victimization. In this case, we're also talking about, of course, to better document what's going on, but in particular, who is involved and what they're doing exactly. Progress on the overall UF Innovate Hub building as an R&D venue. What we're doing is we continue to have a series of calls on campus with others. And the idea here is that Innovate Hub, we've got permission to create a world-class, unprecedented R&D lab for everybody to learn more, to do blue sky things together. So clearly with LPRC's five labs inside, we have a simulated store and a place to simulate things and so on. But in this case, we've also got a building, a big building that has laboratories and all kinds of secret things going on.

But we've got entry exit places, lobby. We've got a loading dock, a parking lot, of course. It's co-located where it is. It's not on main campus. It's about a mile from there. So we've got commercial on the north and the east and south side. We've got residential on the west side. So you have this interface with the city, with municipal. We've got mass transit stops right there, and we've got all the other components of a community. So this is going to provide a wonderful place to really understand and R&D together. We've got two so far big security technology companies are going to provide all kinds of cutting edge technology. Some computer science, engineering, other faculty on campus,

we're working on plans. We got an NSF grant to work on the interface between university and city. That's going to play well into this. And then finally, NVIDIA led by Jumby and others have been working on ways that will leverage artificial intelligence to use, deploy the sensors better, pull things together. And again, it's sort of having that common operating picture within a venue and a place. So I guess there's a call for support if anybody listening to the podcast has interest in learning more about what we're putting together and how you might think about getting involved. Possibly we'd love to hear from you.

AI continues. We're now eagerly awaiting our Dell Technologies NVIDIA powered server to be used for artificial intelligence training data sets and inferencing and adjustments for computer vision and human language recognition on certain things that we know would be important, including some of the things we just talked about before. LPRC's working groups continue, all seven of them. Impact coming up again first week in October, heavy planning. We're excited. The sessions are, again, being recorded now as we speak. It's going to be a neat event. And thank you to our end crew for

allowing us to work with them and understand how to pull something like this off and some lessons learned. Strategy at the same thing for the number one. So a ton going on. That's sort of the tip of the iceberg. But again, everybody, please stay safe out there. Let me go over now. Let me go to Tony D'Onofrio and let's talk to Tony and let's talk to Greg and all the amazing things that IHL has been doing and continues to do. So, Tony. Thank you.

Thank you very much, Reid. Pleasure to be with you. And let me start first by introducing our special guest, Greg Musick. Greg is the founder and president of the IHL Group. He's also one of the founders of the Retail Orphan Initiative, a charitable organization that seeks to help 400 million vulnerable children around the world. Greg is a top 10 retail influencer about RIS News and is also on the list of NRF list of people shaping the future of retail. The IHL group is a highly respected leading data voice in retail globally.

Greg has been on almost every publication imaginable, including Business Week, Supermarket News, The Wall Street Journal. He's also been a data analyst and technology analyst on NBC, CBS, and CNBC, and much more. So it's my great pleasure to introduce my good friend, Greg Buzek. Thanks, Tony. It's such a pleasure to be with you. And Tony, I so appreciate the friendship and support over the years. You guys may not know this, but Tony, he's the one that hired me into loss prevention and gave me an opportunity years and years ago at Centromatic Electronics. So we go back several decades now. So it's a pleasure to be collaborating here with everybody. So my role here is to talk about COVID from a perspective of how it's impacted retail. And I'm going to talk specifically about North American retail, but give a hint of worldwide. So to start, I want to go back to

where we were pre-COVID. So in February of this year, things were booming in North America. Retail was up 7.5%, which if you follow retail, that is huge. It's just growing extremely fast. In fact, your restaurants were up 9.3% year to year. Now, when you're talking about a $5.5 trillion business that's growing at 7.5% overall, there was a lot of money and a lot of things going into retail all over the place. And then COVID happened. And what's the impact of that? And we've got this bifurcation that has occurred. Segments like the food, grocery, drug stores, mass merchants, super centers that got an extra Christmas and saw spikes that in a two-week period jumped 80 to 90 percent. And we've seen vast differences between how fast different groups locked down and limited number of people into their store and how that affected first quarter same store sales and same source sales growth.

We saw almost a 5% impact in same store sales growth based on one week of limiting people into the stores versus somebody that didn't do that. So it was this massive spike that occurred for those groups. The flip side of that is you had the general merchandise folks from mall-based stores, they saw a great reduction. And then your C-stores had the added problem with fewer people driving at the same time that fuel prices dropped because of a fuel war between Saudi Arabia and Russia. So that went down precipitously. And of course, restaurants, lodging, transportation, entertainment, casinos, cruises, of course, all of those has taken a huge hit. So we have some groups that are projected to be up as high as 12%. Groceries right now run about 14% higher.

And then we've got others that are looking to be down close to 35 percent for the year. So we went from being up seven and a half percent through February to now we are projecting for North America to be down 7.6 percent for the year. Now, when you take a look at that worldwide, that bifurcation holds and worldwide in the food, drug, convenience, and mass merchant side, an increase of $224 billion worldwide added into their economy, a drop of nearly a trillion dollars for general merchandise, and then hospitality losing about $825 billion. So a net loss worldwide to about a $15 trillion economy of about $1.6 trillion there. The people that have taken the brunt of this have been the small retailers. And it's been incredibly unfair the way different municipalities

rolled things out to where large retailers like the Walmarts and the Costcos and the Targets were allowed to be open because they were selling essential items. But at the same time, they sold clothing, yet the local clothing store was not allowed to be open. And that has been devastating. And in total, we are estimating a loss of 443,000 stores nationwide, the vast majority of those being stores under nine locations. In fact, 337,000 of those being one store company, another 50,000 of those closings being two to nine store chains. 50,000 of those closings being two to nine store chains. So that gives you 387,000, actually 88,000 stores closing that are small mom and pops.

Clearly, there's some hits to the larger stores, particularly in the general merchandise area, specialty stores, department stores, and your restaurant chains. But the overwhelming majority of the losses have, and your restaurant chains. But the overwhelming majority of the losses have come at the smaller chains in place. So the question is, when does this recover? When do we expect this to recover? And so at IHL, we've done the data and we've focused on when do we get back to 2019 levels, which is really what recovery is. It's not just a quarter to quarter look, etc. So the general, or excuse me, the food, drug, convenience, mass merchants, when do they plan to come back? And worldwide, we are projecting about a first to second quarter of 2022 before we're going to be able to get back to the levels we were at in 2019. And that's simply because so many of these small businesses, not just here in the U.S. and North America, but worldwide being impacted. And those businesses

come back quickly, but they don't get back to the same levels quickly. And thus, the end result is it's going to take a while for us to get back to those levels. But in the near term, it's going to benefit the large retailers who are able to sustain and they will grow market share in the near term until those smaller retailers get back up there. Next, I wanted to talk really more closely to the loss prevention side, particularly in what we would call a superset of loss prevention, which is what we call inventory distortion, which is the collective cost of overstocks and out of stocks worldwide. And in reality, prior to COVID, we had seen great improvement in North America

and Western Europe, improvements in forecasting, inventory control, the use of AI and machine learning starting to apply to different things, computer aided ordering, better forecast overall. We saw upwards of $158 billion improvement from 2017 to 2020 prior to the pandemic, major improvements that were made there. But then all of a sudden, we had the pandemic explosion. And that created major, major problems, particularly when it came to out-of-stacks. So the typical supply chain is one in the United States where the manufacturer's warehouse in the States has about one month's supply. The wholesale distributor has about one month of supply.

The retailer's warehouse has about one month's supply. And then the store itself may have two weeks to one month's supply. And the challenge was, as we saw in some categories, wiping out four months' worth of inventory in about two months. Things like hand sanitizers went up 600 percent, disinfectants 366 percent, all-purpose cleaners 313 percent, according to IRI. In a two-week period, we just wiped out the entire supply chain there. And it's taken a great while for that to be replenished because we not only had the demand on this side, we had the supply problem where China was shut down for two months. And in some categories, like for instance, the wipes, it wasn't the availability of the wipes or those materials, it was actually the plastic canisters

to put them in. And they didn't have the packaging in place to be able to fulfill the demand domestically to meet those needs. So when you have that giant push, it greatly increases the amount of out-of-stock situation that occurred there. In total, in 2020, we're looking at about $1.8 trillion worth of inventory distortion, the combined look at out of stocks with $1.1 trillion there and over stocks about $626 billion there where we've got too many and they have to be marked down. Most of those situations have occurred in the specialty soft goods environment for this year because they had an entire season that was lost. And this was particularly exasperated because of fast fashion where a lot of the merchandise was in the stores for even e-commerce, and those were locked down. And because they were locked down, they couldn't even ship those to their customers, and they lost a season there. So in total,

$1.8 trillion. To put that in perspective for you, that's an amount greater than the GDP of Australia, or excuse me, not Australia, of Canada. The entire GDP of Canada, $1.8 trillion. Not retail sales, the entire GDP. And that's the lost opportunity that we have for retail there. Now, our definition of inventory distortion or out of stocks is considerably higher and wider than the typical, what does the system say versus what are your sales, et cetera. How we define it is we have a customer that was willing to come into your store to buy something and left without buying it for a reason other than the price was too high. As we mentioned, shelf being empty worldwide, that's about a $710 billion

problem worldwide, greatly increased due to COVID as a result. But it also includes things like, I found somebody to help, but they couldn't find the item. The dreaded, it says we've got two, but I don't know where they are within the store. To the customer, that's an out of stock. They came to buy and they thought it was there to buy. I tell all my friends, if you see something on the website that says limited stock, don't even bother going to the retailer because they have no idea whether or not they have it or not in that situation. And so that is a big problem where the system says it's there, but nobody can find it. Then they came in and they couldn't find anybody to help or they were just too busy or it was understaffed. That's $139 billion worldwide.

And sometimes it's the price and the offer didn't match. The signage never got updated from what the ad was. And people walk out the store due to that. And then another $74 billion in reference to something else. So in terms of that, we're talking about $1.1 trillion out of stocks when customers were planning to come in. And now this doesn't include where somebody just chooses a substitute on the spot there. This is literally a lost sale to that retailer and they had to go elsewhere to find it or the industry lost that sale completely because it simply wasn't available. Next, you have the overstocks. This is when you have too many.

simply wasn't available. Next, you have the overstocks. This is when you have too many. And the biggest area of category for that is your spoilage and your sell-by dates there. $221 billion lost due to spoilage or out of season. Upwards of 40% in India, 40% of the produce meant for market never makes it to the market before it spoils due to infrastructure problems. That is a huge problem there. So Asia has a much higher issue here than most other regions of the world because of infrastructure problems when it comes to spoilage. But then the next biggest category is you're buying your planning issues. $174 billion lost because buyers didn't believe the forecast. We heard stories during COVID where computer-aided ordering said, hey, the demand is such that we're increasing the order by 40 times. And a merchant came in and said, that can't be right, and they

canceled the order. And thus, that retailer lost out on getting to that wholesaler to get that supply from their competitors and lost out on those sales. Those buying and planning issues still are a huge chunk there when it comes to overstocks. And this is where AI, machine learning, and better forecasting, and better planning overall could come into play. Then you just have straight up supplier issues that are a problem. People just, they ship too many. They shipped way more than you expected it to be. But then you've got process issues.

And then one thing that is often very much hidden to everybody except the consumer is when there's a problem in the distribution where you've got the marketing planned, let's say for Black Friday. However, the items don't get to the dock in Long Beach or LA fast enough. And thus they're not going to make it in time for the sale. And that's not communicated. So the ad has never changed. So what you do is you drive consumers in for the sale. You have no product and you do is you drive consumers in for the sale, you have no product and you have an overstock, excuse me, an out of stock. Then the product comes in and you've got no ads and that becomes an overstock. Those are those disconnects where technology can help to make a difference. So overall, we estimate there was about a $570 billion impact in overstocks and out

of stocks and the whole inventory distortion as a result of COVID because we had this surge in certain categories and lockdowns in others. And we also had hidden, previously hidden things where substitutes were taking place that no longer could happen. And this was particularly true when it came to your grocery environment and your click and collect and local delivery. Now, when you go in and you specify that you want Chips Ahoy chocolate chip cookies, but they're out, there may be 10 other brands of chocolate chip cookies there that you'll pick up if you're walking through the store. However, if it's an online order, they now have to decide whether or not to give you a superior brand or a lesser brand and what to do with that cost.

But there's that time delay back and forth that labor is involved in that time frame to make that decision. is involved in that timeframe to make that decision. So the end result is you're either going to eat the margin difference there as a retailer, which in grocery, you're only making 1% typically overall. So eating that margin may take the margin away for the entire deal. Two, you're going to increase the price or charge them the new price there. Or three, you're going to cancel that part of the order and force them to go somewhere else to get that item and thus potentially lose that customer. So those are previously hidden areas of inventory distortion

where the customer would make a substitution on their own that are now being exposed because we had a 400% increase in click and collect and local delivery during the surge period. In total, we believe that about $505 billion or about 85% of the cost of the surge, the pandemic impacts of inventory distortion were due to known causes and traditional ways we track inventory distortion, about 15% of that was the overall new things that were previously hidden there. So what are some solutions? What are kind of the solutions that fix inventory solution? And number one, it's getting to clean and accurate inventory data and having a maniacal focus about that. The first step was simply getting to a single version of the truth, a single data source for all your channels and understanding where your data is. And related to

that sort of a cultural change that has to occur there in terms of the processes and how you do things. A lot of merchants went to school where math wasn't required. And thus, they're hesitant to trust systems and trust forecasts. And that needs to change. And one of the things that's happening with COVID, because of the reduction in the number of people and sort of the mandate that you have because of the crisis, you're able to eliminate positions where people are in the way of certain technologies. And in other cases, you're able to

expedite or greatly improve the speed at which to deploy certain technologies that might otherwise have been prevented because they might affect jobs long term. But we're seeing a huge increase in a lot of these technologies because there's a pass. Your food, drug, convenience and mass retailers, they hired over a million people. And as such, worried about jobs that might be lost in the future is less of a concern. So there's this time period where things like self-service and self-checkout systems and kiosks and handhelds and consumers checking out with their own devices, all those sort of things are now being deployed at rapid pace. But they're being deployed under the guise of associate and consumer safety rather than labor savings. And there's a window where that can be done.

And those things are being raced through. can be done and those are those things are being raced through but when it comes to the inventory data it's that maniacal focus and the technologies that really apply there are things like rfid computer vision iot sensors robots video video analytics repurposing some of those loss prevention technologies that are in play sharing those items items there. To do that, you have to change your architecture. You're going to move more to an edge-like environment where you have a lot more processing at the store, either in the back office or in the devices themselves. If it's too much data, like you would see with computer vision, a lot of those robots that go through and check inventory levels now do the processing in the robot themselves to determine what's missing, what's there, et cetera, before they bombard the RF network or the Wi-Fi network with that data.

And then certainly at the other side, on the other side of the WAN, you're going to leverage cloud architecture there as well. We're seeing great increases in forecasting and analytics, computer-aided ordering, and once again, AI and machine learning there. So to be able to measure and improve once you get to that true data, and that's really what it is. It's right now for the next decade, we believe that the race is to getting to clean, accurate inventory data and whoever gets there first, and then is able to apply AI and machine learning to that, they win the next decade.

And that's why you see the Walmarts and the Targets and the Kroger's investing so heavily into those technologies to improve that functionality. In total, the traditional shrink loss prevention piece of that in relation to inventory distortion worldwide is about 15%. We still have the issues with theft. We have the issues with spoilage. We have the issues with damage and traditional shrink

from employees and customers there. But when you look at the entire picture, the picture that is the customer came in to buy and they left without buying, we're talking about 10% of same store sales that's lost when that's not optimized. And with that, I will turn it back to Tony. Thank you very much, Greg. Great update. So let me just end on a couple items just to add to the discussion. Wall Street Journal this week actually had end on a couple items just to add to the discussion. Wall Street Journal this week actually had some really good data on what's happening to millennials.

And the millennials are important because in 2019, they crossed over as the largest consumer generation, passing over boomers. So they're going to be extremely important for retail. So Wall Street reported that millennials' unemployment rate is at 12.5% now and higher than Gen X and boomers. One in six millennials were unable to cover a $400 emergency expense before the pandemic, and that share is now one in eight among all Americans. one in eight among all Americans, more millennials than older generations lost jobs, came into the pandemic weaker because they are still not recovered from the 2008 crisis. And they had bigger losses in overall earnings

during and after the last recession. So that next generation is suffering through this and they're gonna be important to watch in terms of how they recover and where we go from here. Let me end my section on a positive note from global retail sales from other parts of the world. So China, which went first into the pandemic, continues to recover. In January to February, their sales dropped 20.5% in June. They dropped only 1.8%, so a great recovery. And a lot of that is being driven by digital companies such as JD.com and Alibaba. E-commerce, like in the rest part of the world, is up 16%. This year, and interesting, China is leading with these new channels so social commerce or doing retail through social media is gonna grow to two hundred and

forty two billion dollars up nearly twelve percent this year so good news in terms of the continued recovery in China similar news out of Europe actually which was one of the weakest regions going into the crisis. The European Union in June reported that retail sales were up 1.1% from the previous month, and that was the largest rise since November 2017. So the rest of the world is starting to recover. So that is good news. So with that, I'm going to turn it over to Tom.

Well, thank you, Tony. Thank you, Greg. And I'll be somewhat brief. Just wanted a couple of things. One, I'll start with, Reid had mentioned kind of a virtual SOC or virtual Emergency Operations Command Center. So part of the LP Innovations Group, the Innovate, and actually it's crossed over to several different groups at this point. There has been talk about the need for a central repository of data related to retail. And this is a concept that's been around for a while. And to kind of dial back a little bit, a few years ago when the LPRC moved into their older lab space, we created this virtual SOC and put a created this virtual sock and put a whole bunch of technology and consumed a whole bunch of information. And I don't recall which hurricane

it was, but we were actually in the lab, Reid, myself, and a couple other individuals. And there was a hurricane hitting. I actually took the last flight out of Gainesville. And we were talking about this concept of how great it would be to be able to basically activate the lab and allow people to virtually log in, to consume social media, news media, really open source intelligence gathering tool for everyone around a weather event. And this resurfaced heavily when some of the civil disturbance occurred in the first round of civil disturbance around the Floyd riots. And then we were discussing it and the group of how could we consume that information? And I think we use the example of some retailers have huge special operations

command centers with 24 hours a day, 365, with multiple people and other retailers operate in a virtual environment off their phone. And then there are a lot of retailers that don't have any resources to do this. So they do it basically using free tools during events, and they have an overwhelming amount of information. So what will occur is the LPRC and several members are working together to kind of come up with a first phase approach on how we would do this. And we believe that we would center it around weather at first, and then we would transition into civil disturbance. And the reason we want to center on weather is we really want to get the feeds working correctly and realize that during a national event where there are multiple jurisdictions and multiple different parties reporting that protests can be very challenging provide the level of service today to the whole entire

country where we know we could do it regionality wise, we would have, we would struggle. And I think when I talk a little bit later this morning about some of the things that occurred over the weekend, I'll use an example to kind of, of how challenging that can be. So more to come on that. I feel pretty confident that I'll be around the weather. I probably would guess that we will have something around the election as well. And what it would be as a service to the members to be able to go in and log in during an event and basically have access to that information. That would be the first step. So more to come. Stay tuned to that. I know that we'll keep talking about it. I know as things occur, this continuously comes up. Switching gears into some of the unfortunate things that occurred over the weekend, and this is a good example of while there were several protests in both Portland and Chicago, there were some looting, some rioting, some arson and other things.

At the same time, there were very peaceful, well-assembled protests. And additionally, there were also some pro-police movements, not protests, or assemblies. And when you take those all into consideration over the weekend, there was a lot of chatter. When you take those all into consideration over the weekend, there was a lot of chatter. And one of the things I would say is Antifa and some of these Argus trying to learn everything about the events that are going on. I got a couple calls over the weekend and I will tell you that I did some very cursory looks at some data specific to some folks and it was overwhelming is probably an understatement because you just had multiple events throughout the United States going on. And then in our, you know, we're in this big islands away from

everything globally, there's quite a bit going on. So when you really started to peel back, there's a lot of chatter on the, what I would say are the known public intelligence channels. So continue to utilize the tools that the LPRC has, get on those groups and talk about how some of the best practices in gathering information and understanding that, I know that Reid talked about the barriers and some of the physical security pieces. I think you'll continue to see growth in the computer vision platform, not specific to facial recognition. I know that that was some controversy around that and a lot of questions around that, but computer vision in general to help kind of gather that video evidence and help identify bad actors. So a lot more of that is coming down the pipe. And I'll just touch a little bit on

cybersecurity because there are quite a few reports coming out. As we've been saying now since I think when we started this podcast back in March, there has been a reported increase in breaches and cyber attacks throughout all sectors. And this is a global phenomenon related to COVID-19. But what's starting to happen now is that we're starting to see some of the solutions offerings changing and are more rapid-paced than you would normally see. So there's a significant increase in spend around cyber initiatives, whether they be physical or virtual software packages. So there is a need to kind of refresh the thought process specific to retail and banking.

When you had a very robust zero trust environment, not a lot of letting people in. We talked about this many times overnight. There is a whole new kind of, and Tony and I talk about this all the time in the retail world, this forced adult transformation of organizations that had no choice but to do this and now have really invested heavily into a more remote, robust, and I wouldn't say future, but just connected environment. And I think we'll continue to see this cybersecurity refresh in both the policy and the technology side. This comes with the consequence of these are extremely expensive and fast-paced things

that are occurring, and they're still occurring today. One of the other big challenges we're seeing in the cybersecurity world is the inability or the challenge with getting people from point A to point B. There are still some restrictions on travel and what we're starting to hear a lot of chatter about, and I know personally I'm dealing with this here, is that your technicians and your engineers and some of those folks have limited travel bases. I know that I travel pre-COVID quite a bit globally. Obviously, I can't do that. And we have a couple related to ControlTech customers where we are traveling, but it's

a little trickier to get from point A to point B. In the cybersecurity world, this is starting to come into play when companies are installing robust systems and switching out hardware firewalls and now are challenged with some of the folks that can travel, have a little bit longer of a gate, airlines aren't flying as much. So while at face value, this probably isn't the biggest challenge here, it does pose a challenge that we have not experienced before. And then the ever needed, I think this is something that Reid and I talked about many times for years, education and awareness around everything is, you know, related to security, specific to cybersecurity. There is this huge expectation of growth with the increased

amount of remote workers to really push the cybersecurity and security training and awareness and that early, often reminder of the best practices. I know here on the podcast, we are repetitive on those best practices, but as we are in the remote role, and we talked a little bit off air about this, folks are having to change their hardware at home. What worked before doesn't work as well now because of the use cases. So with all of those things, there's inherent risk that occurs for introducing new hardware, changing your software platform.

Half of that risk is driven by actually introducing new devices and software. And the other half is by the learning curve that occurs when you all put in new hardware and software. So this occurs in retail. This occurs in your home. This occurs in academia. This occurs in law enforcement. It occurs around the base. So it's a good reminder that this is the time to take a step back, look at your organization's training and awareness programs around remote work and around cybersecurity because the risk is just increasing. It's not decreasing. And I feel that every single day we're going to continue to see a rise in some of these reported events that are occurring. And I think what we should

start to see too now is what the impact of going from brick and mortar stores to an exclusive online environment overnight without some of those fraud controls. I think we'll start to see some of those fraud numbers, whether or not they'll be reported or not is left unknown. But I think that's going to be the next wave of things we see. So I will turn it over to Reid. All right. Thank you very much, Tom, for all that incredible knowledge. Greg, I don't even know where to start. Thank you again so much. The deep and broad insights are invaluable. And just for our listeners and our members, with Tony D'Onofrio's assistance, Greg and his team and our team have been conferring on looking at what we would call these macro studies. What are some great ways to work together with LPRC, with our community and beyond to understand and inform across topics that are very vital to selling more and losing less?

And then combining that with the power of doing our meso and micro research that we do as well so that we're understanding and testing options in a rigorous way. So excited about it, all the possibilities. But again, thank you, Greg, for your insights. Tony, as always, thank you. Kevin Tran, our producer, I want to thank you for all your hard work and creativity. And to everybody out there, thank you for tuning in. Stay safe. And please reach out to us at lpresearch.org. Let us know what we can do to better support you and your success. Everybody have a great day. Thanks for listening to the Crime Science Podcast presented by the Laws Prevention Research Council and sponsored by Bosch Security. If you enjoyed today's episode, you can find more Crime Science episodes and valuable information at lpresearch.org.

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 LPS Prevention Research Council.