LPRC - CrimeScience – The Weekly Review – Episode 89 with Dr. Read Hayes, Tom Meehan & Tony D’Onofrio

Episode Date: January 27, 2022

LPRC Kickoff was a great success! LPRC IGNITE is coming up on Feb 15th to the 16th! In this week’s episode, our co-hosts discuss the Top 5 Innovation Takeaways from NRF 2022, High Profile Retailers Visit the LPRC Labs, San Francisco Stores Continue to Close, and a Look at 2021 Online Holiday Shopping. Listen in to stay updated on hot topics in the industry and more! The post CrimeScience – The Weekly Review – Episode 89 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. 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-s 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 from the LPRC. Today, latest in our weekly update series, we all recovered and have returned from New York City and are live, if you will, broadcast from up there and the massive, massive Javits Center Expo Center as part of the National Retail Federation or the NRF's big show. And so I want to welcome my counterparts, Tony D'Onofrio and Tom Meehan and our producer, Diego Rodriguez,

today on this cloudy, cold Tuesday in Gainesville. And let's go ahead and kind of dig in a little bit and talk about what we saw and heard there, maybe some of the reflections coming out of the big show, what's going on in the United States, what's going on globally with retail. I'll spend just a minute on the COVID-19. I got tested, the rapid test that they gave out at the show on that Thursday when I returned. And then through the University of Florida, got my weekly test on Friday, both negative. So who knows? As of this minute, I've still escaped.

But I know that people that I met with up there did come down with COVID. And so it's still everywhere, but appears to be waning. The levels continue to go down. They do comparisons year on year and so on of reported infections, which we know is way under reported typically. And then, of course, reported deaths, which is just dramatically, dramatically down as a rate of infection. So those are really good, exciting things. Talk a little bit about there's a new vaccine being tested that's come out of India where I believe it has approval. They're looking at it. But the idea here is that this one is designed to expose a person in a more natural way, like natural infection,

so that the body's immune responses are exposed to the total virus. As we know, the mRNA vaccines that have been so highly effective in preventing serious disease, not infection or transmissibility necessarily, are designed to pick up or train the body's immune system to recognize very specific parts of protein, the spike protein, or in some cases, the entire spike protein. So, it'll be interesting to see a lot of new emerging studies on somebody that has had Omicron and has been two or three that nasal area. And then there's the more, the body antibody response and farther down, I guess, in the respiratory system. And then it looks like these B and T cells, that cellular response. So trying to look at what's the most effective, what combinations, what generates what, and critically, what provides the most durable protection over time so that everybody can move on. And if they get something like a lot of the colds, they're very minor and just don't last very long. So, you know, all that's pretty interesting to take a look at. Right now, we know that there have been, the United States, 64% of the population have been, you know, what they're calling right now, fully vaccinated

with two doses, at least. In other words, well over 210, 12 million Americans worldwide. Incredible progress considering the sheer number of humans that we've got on the globe. number of humans that we've got on the globe, 53% now fully vaccinated, if you will, or current, which is just over 4.2 billion humans that have been vaccinated. So, you know, we can see a massive amount of vaccination that's occurred. And hopefully all this, the chemo effect is helping people get on with their lives to a certain extent and reduce the incredible nightmarish pressure on the health care systems, the health care workers that have been dealing with this situation. And then a lot of studies I was looking at were just the numbers where we saw a complete flip evidently from those admitted into hospital with versus for COVID-19 disease. So, you know, these are huge reversals in part because it looks like the new strain, this Omicron, is much, much less virulent or serious. And then again, just such a high amount of humans that have been vaccinated so that their

immune systems are ready to go when they were fully exposed. So that's kind of it on that vaccine front. A whole lot to go. I have probably 50 other things, but I think we want to move over a little bit. And I want to mention that we're having some pretty powerful visitors that have been coming through our labs and conducting safe visits with all the HEPA filters and the doors open and people that would like to mask and everybody vaccinated and all these things, protocols in place. So we can just keep moving here. But we just were delighted to have the public supermarkets top team in here yesterday. As a matter of fact, on Monday and again, recently the CVS VP and his team. And then this just continues to add to the list of JCPenney and Walmart and Amazon and other

retail leaders that have come in here to brainstorm with us as they put their strategies together, as they test specific things. So pretty excited about these visits. We're moving forward, continually putting more technologies. We've talked about now we're just about 180 technologies in the LPRC engagement lab, which is a simulated lab environment that we've got. Remember, we've got five physical labs, the SOC or security Operations Center Lab, a command center lab. We've got the ideation lab designed for human-centered design thinking, in other words, brainstorming. It's a super cool place. And there, the sim or simulation lab where we can portray surround sound and imagery at near life size. So we can look at indoor and outdoor environments, but test options. We've got

the activation lab where we can work on AI type solutions and work on more computer-based digital options. And then we've also got the VR lab and then part of the parking lot lab as well. And then finally, of course, with Safer Places Lab for the University of Florida, it's the entire block that we've got. So a lot going on and new technologies inside and out. We met in New York with quite a few security technology companies. We've already heard back from a couple. They're pretty much pull out the catalog, show us what you would like, and then we'll help you get that installed and integrated. So it's pretty amazing what's taking place here across the scale. Recently, I've been working on two fronts, one being the

smart place or smart store connected place concept and integrating all these different AI technologies because of the camera infrastructure. And the camera infrastructure, while we may be totally saturated in a good way, we're trying to set everything up so it's more natural and cost-effective in the real world environment where a retailer needs to scale

and be cost-effective in that way. But linking the camera infrastructure with different types of AI technology, we're getting ready to put LiDAR inside as well to act as another powerful sensor. And then hooking that in with some audio connection type technologies. And then further with screens and different smart screens, creating this total connected environment. We've got four different types of body-worn cameras. And so the list goes on and on of what's going on there.

Another big initiative to pull this together is what we'll call and taking this from category management and retail or Catman. And that is dividing into five or six categories front end we've got parking lot we've got front end we've got center store we've got back uh back room and then we've got receiving area and so what are the solutions the receiving area also includes supply chain distribution or fulfillment centers but looking at what are all the cluster of technologies in those areas how do we best integrate those and display or demo or demonstrate what we're trying to get done. And so that's an exciting prospect of what we're working on right now. And with 87 technology companies that are members of the LPRC, we call them SPs or solution partners,

pulling all that together and demonstrating. And by the way, we've got a lot of digital solutions like Agilent and many, many others that are the capability, as well as the transition to make all of these technologies much, much more user-friendly for that decision maker and not overwhelm them. We don't want that overload. Tony D'Onofrio. And update two, by the way, we made the call yesterday. LPRC Ignite, the Ignite conference is normally our winter planning meeting for our board of advisors. It's expanded a little bit to include the LPRC Innovate advisory panel, those that are involved in advising us on and helping us shape an amazing capability here for innovation of current repurposing and new technologies and solutions. Also, now I'll explain a little bit so that some of the working group leaders and then others will be coming in. We're going to go ahead and go forward with that in a very physical way, but also accommodate some of the safety measures. We're going to have a lot of it

outside. We've got a cool way to do that, and that will be February 15th and 16th. So, if you're an LPRC member, you're on the advisory panel, the Board of Advisors, another leadership position, or you're playing a role in some of these initiatives, then you'll be hearing from us if you haven't already. Diego's put together a pretty neat agenda and invite. So stay tuned for that and more. And now I'll go over to you, Tony D'Onofrio, if I might, and let's tap into your wisdom and observations. Thank you very much, Reed. And again, great update and great work, really, in New York.

I heard it was extremely packed. Unfortunately, I couldn't attend, but we have people from my company there, and they were very complimentary of the event in New York. I also did not get COVID. I feel great so far, but you never know because of exactly what's going on. So it's good to be back from NRF, and I will cover a little bit of what i saw at nrf but let me start uh this week with a survey that was just published in january 2022 uh of uh 1000 plus online shopping consumers that was conducted by digital commerce 360 and bizrate on what happened in the 2021 holiday season so how did did it, how did consumers actually shop?

So the first question is where did the consumer shop compared to 2020? And again, you see the power of Amazon, 61% shopped on Amazon, 51% in general shopped online, and 30% shop in online marketplaces other than Amazon. 62% did run into inventory issues with 37% on some products and 25% on many products. But shoppers adapted with 32% shopping earlier to anticipating out of stocks

and 31% spend more searching for those items that were in stock in other places. Compared to 2020, searching for those items that were in stock in other places. Compared to 2020, 22% use more frequently, but those new services, buy online, pick up and store, and 20% use curbside pickup. Those services are here to stay. In 2022, 19% will shop in physical stores more, 51% the same, and 30% less. Again, the robustness of physical stores more, 51% the same and 30% less. Again, the robustness of physical stores.

How did consumers react to more limited promotion? 30% spent more than they wanted to on the website to get free shipping. 28% spent more time hunting the promotions, and 23% only bought the items that were on promotion. Why did consumers select specific retailers? And again, it gives you the power of the problem that is online, which is the logistics cost. 64% were looking for free shipping, 57% were looking for products to be in stock and 48 percent uh because they had a previous positive experience with the retailer compared to 2020 uh 45 and this surprised me 45 percent made few returns 29 about the same and only four percent and more returns uh shoppers say

retailers can improve the following to get more people to shop online on their website. 43% having the ads in their stock, 35% delivery speed, and 28% less website activity and advertised tracking. So that gives you a little bit of an idea of what was on the mind of consumers during the holiday season as they shopped online for planning in all future shopping holidays during the year. Switching topics, actually a friend of mine in California shared a story on Facebook that I found disturbing, but it's really at the heart of what we're talking about here at LPRC. So I wanted to share exactly what I wrote.

And this friend of mine who used to be work with Kroger and IBM in the past that said remember the song I left my heart in San Francisco think they are going to need a new song very sad to see what is happening to that city and our state and what he cited that is a bunch of store closures are taking place in San Francisco. CBS has identified six San Francisco stores closing in January. Walgreens to close five San Francisco stores due to increased retail theft. Gap is closing three stores in San Francisco, Embarquero, Market Street, and Stonestown. Lowe's to close two Bay Area stores deemed underperforming, Marshalls to close San Francisco store heading to Market Street, Retail Woes, H&M is closing its massive Union

Square store, DSW in San Francisco, Union Square is permanently closing, and Uniqlo is closing its flagship Union square store. Some of this is probably underperforming store, but I agree with my friend that it's sad to see that retail theft has also contributed this because of the law changes in California. And all of us really need to continue to work together, including engaging with LPRC on how we attack this problem much more aggressively.

And let me close this week. I did write an article already on my key takeaways, and I titled it the Top Five Innovation Takeaways from NRF 2022 that I just published yesterday. As I wrote, attending 2022 in New York last week was surreal on multiple levels. Three events that normally I go offside were either postponed, went online, or moved, including some of the ones that started on Saturday. We also had some flight changes in the South that actually made it challenging for me to get there. So karma was not with me in terms of getting there, but I did get there. And then the surprise was that multiple of the sessions that I attended had more people than I expected.

Yet the main show floor on the top level was eerily empty of major exhibitors. Much innovation and inspiration was possible, however, by spending time in the busy innovation and startup zones in the lower level, which were packed most of the time. And as I said in my blog, turns out fewer major booths and quality time with retailers more than offset initial COVID concerns. And NRF really did do a good job. They used Clear to provide green pass so you could prove you were vaccinated.

They provided COVID tests to increase safety and enforce masking all around. The big show previously, thinking back, I think it was getting actually too big, and it was refreshing to moderately transition to this new normal with record holiday sales, which were up 14.1%, easily beating the NRF forecast and setting a new record despite challenges from inflation, supply chains, and the ongoing pandemic. As I said, the sessions that I went were packed. And I really like the words, which again speak to the retail resiliency from the Target CEO that opened NRF 2022. And what he said is, quote, customers came out to shop. They were out physically shopping in our stores. They returned to shopping malls. They were engaged. They returned to shopping malls.

They were engaged. They wanted to be out enjoying everything that retail can provide. It gives me incredible optimism for the future. We feel more optimistic than we probably did six months ago about where we are. But we're leaving with COVID. So I nrf really did reflect that optimism so what were the top five takeaways innovation that i saw at nrf number one and i tell this one uh sarcastically artificial intelligence is so yesterday ai and really that was the opposite. AI was everywhere mentioned in both presentation and also in many of the booths that were present.

As I recently summarized for a publication in my predictions for 2022, if you have AI only on your roadmap, you are already behind. You really need to get active into AI. Jim Roddy from RSPA summarized it best. He said the top technology discussed the show was AI in a landslide. The applications vary, but software analytics and insights based on AI were the tip on every single vendor's page. So I fully agree. And the

good news, LPFC is heavily engaged in this area. Number two, innovation trend. Those cameras do have big eyes. In 2021, we crossed over a billion cameras installed in the world. The evolution of the camera into AI-driven computer vision was prevalent all over NRF. And you can see it in applications from managing self-checkout transaction with members that actually are of the LPRC to 3D cameras being installed on robots to actually more accurately pick products inside distribution centers. Number three, those robots just keep on coming. From taking inventory using multiple RFID readers to automating your warehouse, small parcel pickup lockers to delivering your goods to a home near you, more robots are indeed coming. a driven me man that brings their store to you but they're working on making it autonomous uh number uh four at retailers at the center of innovation again a trend that i saw in the past but it's

accelerating major retailers are directly investing in startup and actually there's two that i cited one is a company called gated that is actually working on autonomous autonomous delivery uh for uh good so autonomous trucks and they're testing it in arkansas another example is a is a company that called drone drone up that is again being tested in arkansas for delivering uh really your products via drone and uh and what they say is walmart is launching three full-time drone airports for demand delivery solutions and the first operation has already taken flight uh at a walmart neighborhood market in farmington arkansas and finally my fifth trend the store as a digital smart integrated canvas.

And this talks to exactly what Reid just talked about in terms of the greater focus on integration and seeing a lot more of that, even at this show in terms of vendors integrating different solutions and even non-traditional technology players making it easier. And that's an area we're going to spend more time. The bottom line from NRF 2022 is I was pleasantly surprised by the productivity of the big show. I did identify multiple other trends, but those were my big five. There's a lot of good stuff going on. They even had a live Amazon Go in there.

They talked about China. They talked about virtual try-ons. You're going to start seeing more LiDAR inside stores, and I saw multiple potential applications for that. And then finally, I do think NRF 2022 was a good indicator that we got to start learning to live with COVID. COVID is here to stay and it will become, as I said, again, in another prediction for 2022, we'll probably transition to endemic. So we either get busy living and continue to take measured risk and really measured precautions. So really mitigate risks. And we need to stop worrying about dying and live

because as the target CEO, I do see a lot of good optimism up front, but we got to leverage and really go on the attack going forward. And with that, let me turn it over to Tom. Thanks, Tony. Thanks, Reid. Great information as always.

Just wanted to cover a couple of topics. And yes, some of them are repetitive. Great information as always. I just wanted to cover a couple topics. And yes, some of them are repetitive. And I think that's typical of the cybersecurity and risk space. It is tax time. So what we're seeing is a tremendous amount of tax scams coming up, emails, text messages, voicemails around trying to get personal information. around trying to get personal information. And some of them are very simplistically being approached where you have someone making a phone call saying they're from the IRS and giving some personal information and asking them to verify more personal information. And they basically go down a gamut to try to keep generating that information. Can you confirm the last four of your social security number? Great. Your address. All right. Do you mind just giving me your full security number to make sure that it's right?

But the tax schemes are here. A lot of emails. Most of the major publications around cybersecurity have talked about them. Naked Security did a really good overview on tax evening and you know it the the the message is if you you know don't click it if you're not expecting it and don't give your information out to anybody unless you're initiating the conversation and that doesn't mean you're returning a call so one of the tricky scams that that social engineers are doing with this is they give them a number they say give if you don't hey i'm definitely from the irs here's my number give me me a call back. They call, they get an operator. It feels like the IRS

and then they go through. Great. You've verified that I am who I say I am. I've got to get some information from you. Sounds simplistic, right? We talk about these scams all the time, but the reality is taxes are high stress for people. And sometimes people owe money. Sometimes people are late filing. Sometimes people are late filing. Sometimes people are working through challenges, especially with the pandemic. So I think you're going to see more of these popping up as well as, you know, taking the time to Google search, doing taxes online, make sure that you're on a reputable firm and you're not punching information and that you're using a computer that's as protected

as it can be. Absolutely think that that's great. Another thing, out of Russia, a very large credit card syndicate and fraud syndicate was arrested. It's a pretty interesting case because this syndicate was real. They're a gang of masterminds. They're under arrest in Russia. This is not typically what you see. And this is in fraud we trust. Cybercrime.org was what you saw. The listing, if you read about this, the Department of Justice was involved. And this is what they're estimating is $500 million in actual losses.

And the name of this group is in Fraud We Trust. They're responsible for more, they think, than $500 million, actually. They can prove $500 million. They actually believe it's closer to $2 billion. So huge, huge case. The case dates back to 2018. And this is a great victory. It absolutely is a good victory for all of us in this call because it shows that federal law enforcement and international federal law enforcement is working through cases that I think in the past would be somewhat victimless.

So these are groups that steal information through data breaches and resell card numbers online. Very, very prolific group and a really great win for all of us in the fraud world. I think there were 36 folks that were indicted. Obviously, there's more to come on where they're going to be extradited to, how this works. But this is kind of the theme that we're seeing. The U.S. government is really taking an aggressive approach to let online fraudsters know that if you defraud people in the United States, the United States government, they're coming for you. And this is great because in the past, these crimes not only were victimless, but they were very tough to challenge. And we've

seen with ransomware, we've seen with some of these cases that the government is taking a heightened approach. And the Department of Justice has actually said, we're going to treat these investigations with the same level that we would to terrorists and really, really pushing. So this is great news for us. And I think that times are changing in this space and we'll continue to see this coming. Lastly, in the international front, the Department of Homeland Security has issued a statement on fears of Russia and cyber attacks against Ukraine and other allies. So I'm sure all of us are following kind of what's occurring outside the U.S. right now in the Ukraine. and kind of what's occurring outside the U.S. right now in the Ukraine. There's 127,000 Russian troops on the border. There is the Russian Navy fleet is approaching under the Black Sea.

I mean, there's a real lot going on outside the United States now. And one of the things the Department of Homeland Security is warning is that the U.S. could really be involved in a cyber attack or cyber warfare. And it really goes both ways, right? So it could be something that we as the U.S. use as a tool or vice versa. So it's definitely something to keep an eye on. The thing about the Ukraine situation that's very interesting, and if you're not in the manufacturing space or deal in global business and may not be aware of, is that the majority of items that go to Central Europe and other parts of Europe as well, components from China go by rail to Central Europe, and they actually go through Russia. And while they're north of the Ukraine, they're very close to that. So I'm definitely keeping an eye on the potential supply chain disruptions in Europe. And, you know, I think that all of us could see effects with this. I read a really, really good intelligence report this morning on this, and there were some key takeaways from that report.

One is that a lot of the intelligence experts and analysts, I am not in this space, but I do follow it fairly well. I'm more focused on the United States, but have a lot of great contacts in this space, are saying that in order for Russia to effectively invade the Ukraine, they would need more like 300,000 troops. There's only 127,000. 127,000 is definitely a big number. The other thing that I read in one of these reports, and this is unclassified and it's open and out there, is that the Russian troops, the 127,000 troops, there aren't a lot of medical deployments there or these pop-up hospitals. So it's not likely that until they came that they'd actually be there. And then the last piece, and this is kind of a geopolitical piece, is that the Olympics are in Beijing this year.

They're in China. And one of the things I would say is the Chinese government, who is an ally with Russia, clearly doesn't want any distraction from the Olympics right now. So if there in fact was an event that occurred, there's a high likelihood that that event would occur after February 20th, based on all the intelligence reports. So while we won't spend a lot of time here on the podcast, I will continue to give updates. And because I do think there's implications for all of us, both in the stock market and the supply chain world. But I definitely will keep everybody up to speed, as well as the potential for civil unrest in certain markets. While those are certainly not likely, one of the things I do think that we will see in real experience is an increase in cyber attacks from that region to the U.S. and to other countries.

And I think that's something that will definitely keep our pulse on. With that, I'm going to turn it back over to Reid. All right. Well, thank you both, Tony and Tom, for all that insight. A lot to think about, a lot to do. And stay tuned. I mean, a major theme we went through at the 2022 LPRC kickoff conference or summit or meeting that you heard Tony reference earlier was a little bit around the root causes of some of these issues that we're seeing, where we might be seeing greater frequency of these events. They seem to be more blatant and more impactful in a negative way as well. And so some of the root causes we looked at were erosion of consequences, not as much downside risk for criminal offending.

Consequences are always there for those of us, our places and people that are crime victims have consequences for us. But for those that are victimizing others, that are harming others, that are committing these crimes, not always so much as far as consequences. And therein lies a big problem if there's not much downside. And, you know, we're sort of rational choice people here on our criminology team. And while there's not this very neat, careful calculus of upside and downside by a would-be offender before or during their offense. There is that calculus that underlies that, you know, what am I going to get and how bad could it be? They may over-underestimate all the above and more, but that's part of it. But we do know that if there's just no certainty or severity of consequence for an offender, somebody that harms another or a place, we've got a real problem on our hands.

And that's to a certain extent where we are today with lower numbers of law enforcement, with highly reluctant prosecutors in certain select areas that are refusing to prosecute or downgrading. We even heard in one area up in New York City, in Manhattan, evidently, the DA, newly elected, who came out point blank to his assistant DA, saying, even if somebody robs a place or a person at gunpoint, if no harm occurs from that, then we're going to charge as a misdemeanor. And, you know, we're trying to sort out, is this accurate? Where did this come from? But what harm is in the eye of the beholder? And we know that having a gun or a knife or another deadly instrument waved in our face or pointed at us with the threat that I'm going to

kill you, that can result in permanent traumatic or psychological harm. So, you know, we're all trying to figure out why there are lower consequences out there for offenders and what can we do to reinstitute some of that. And we hear about mass incarceration, but typically incarceration follows offending. And so there's mass offending or harm going on. That's why if there are a lot of people that are incarcerated, that's by and large why they're there. So what are research tasks that we can take on to better inform and to better evaluate and assess the best ways to do these things? And there are a lot of good people, a lot of good scientists working on that today. The other side of the equation we talked about, by the way, was seems to be a lot more easier upside through

online selling platforms. And we saw yesterday, for instance, it was announced in the state of Florida's legislature, and I understand others are working on this as well as at the federal level, that anybody that sells online as a third party would need to fully identify themselves, physical address, and so on, so that there can be some provenance or background done to make sure that this is not a fence that's dealing in stolen counterfeit or altered goods, what we call SCAC. So stay tuned, but appreciate all the 45 people that were able to make it to LPRC impact. I'm sorry, LPRC Kickoff, hosted by AXIS at their amazing Experience Center in New York City.

It's just an amazing venue. And then we had others that joined online. We had record enrollment going into this until Omicron. So everybody, stay safe out there. Thank you so much. Thanks to Tom, to Diego, to Tony, and to all of you all. Thanks for listening to the Crime Science Podcast, presented by the Loss 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. 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.