LPRC - CrimeScience – The Weekly Review – Episode 94 with Dr. Read Hayes, Tom Meehan & Tony D’Onofrio

Episode Date: March 10, 2022

LPRC Research Team adds Another Team Member! Ukraine Crisis Perspectives Explored! In this week’s episode, our co-hosts discuss the impact of a new COVID variant, History is explored in a session and article named: Then and Now, Media Laws Change in Russia, 2022 Deloitte Trend Article Expanded, and the LPRC Research Direction is Explored. Listen in to stay updated on hot topics in the industry and more! The post CrimeScience – The Weekly Review – Episode 94 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. This is the latest in our weekly update series. I'm joined by colleagues Tony D'Onofrio and Tom Meehan and our producer Diego Rodriguez. And today we're going to talk a little bit about what's going on around the U.S., around the world, particularly with a focus on retailing and, in particular, protection of the retail places and, of course, mostly the retail people that are shopping and are working there. So let's start off again as we still find ourselves in a global pandemic, albeit restrictions or let's say

protective measures continue to wane, in particular the mandates around those protective measures. But we'll go a little bit about it still is a global pandemic in that the amount of humans continually being infected on a daily basis is still incredibly high. Estimates between three and six million people on Earth died primarily because of COVID. Those discussions are best left to the scientists that are relying on autopsy and other sort of community-level data to add to that individual-level data from autopsies and so on. But it still continues to be a huge issue, a huge problem, and it does severely affect and still can cause death for many of us on Earth. And so we'll keep talking about it for a little bit more. The dynamics are pretty incredible. We see this BA.2 variant out,

somewhat similar to Omicron, maybe even more transmissible. The seriousness of it, you have to be determined. I read one study that said it's pretty mild, and if you had Omicron, then it's very mild to nothing, others saying the opposite. So again, it depends on who you sample and what phase of the disease state the individuals are, is what I'm taking away from reading the literature and just leveraging the research training that I've got in a very, very different area, even though as we've often discussed on here, some of the dynamics are pretty similar. as we've often discussed on here, some of the dynamics are pretty similar. So going over to looking at those studies real quickly, the big thing that they're continuing to looking at is the antibody responses. Again, we have an innate and adaptive immune system that's very, very

complex. And so it's very difficult to understand. And so they simulate antibody responses into a certain extent, the cellular response that our bodies activate. Again, according to what I'm reading in the research, B cells and T cells and other types of activity that our bodies generate to combat and eliminate disease, or at least suppress the seriousness of it. And so we'll stay tuned on getting an idea, but the data is still remixed there. Looking at the vaccine, we've long talked about the way out of this pandemic and the way forward through future is, again, better and better vaccine candidates that allow for reducing transmission and infectivity of a given virus, an individual might not be infected or infected nearly as readily.

As we know, the current vaccines are designed to reduce the seriousness of disease, even though sometimes some studies show it reduces the likelihood of infection slightly. Others show that it doesn't and so on. So a little mix, but we do know that I still look at data that show that vaccinated people, particularly if they've been double vaccinated or if that's the protocol, still seem to much better handle and have by an order of magnitude, much lower likelihood of being seriously infected or, and even more so being a fatal outcome. So at this point right now, looking at vaccinations around the globe, starting with the United States now, just over a quarter of a billion Americans have been vaccinated now out of estimates between 310 and 340 million Americans.

So now you can see the idea here with 254, 55 million Americans now vaccinated. Globally, we've passed now the 5 billion mark, 5 billion humans on earth have now been vaccinated with one of the COVID, one or more of the COVID-19 vaccines. They continue to add vaccine candidates, again, trying to look at reducing infectivity, infection, likelihood, and seriousness level. And so, you're seeing 118 human clinical trials at this point, 51 candidates in phase one trials, looking at safety with a little bit of efficacy peaks here and there. Phase two trials that become larger trials now looking at dosing and as well as efficacy. And then, of course, the large scale double blind randomized controlled trials now in phase three, there are 50 candidates that have moved into that category. So a lot of movement in that area of therapies,

taking a look at the therapies, because not only do we need a good vaccine, we need better surveillance, by the way, on the front end, better testing, but better vaccines, and of course, better therapies. If the virus escapes the vaccine completely or in part, in other words, it's not, it's still getting around it, what do we do about therapies? We see a whole bunch in the hopper here coming out as well. The U.S. ACTIV program alone has conducted 30 therapies on studies, and there are hundreds more programs like the U.S. ACTIV program. So, things like an arthritis med, but some of the therapies seem to be highly efficacious, but may interact with other meds that humans might be on, that we might have. Also, others,

they're still trying to understand the longer-term effect, in addition to what they've found in phase one or two, or even early on in phase three. So, stay tuned to some of that. But some of the studies that show negative effects, again, it's like what we do in criminology. It may be one part that it's just not efficacious against the disease. In a human, it may have worked well on the computer in silico or in test tubes or petri dishes or other or even in animal models, if you will. But just in the humans, it, we're so much more complex and dynamic. But they help, they add even negative trials or trials that don't show efficaciousness or effectiveness can be very helpful in learning what not to do or how to

do it better. So look for that. There's a lot going on, over 200 monoclonal therapies under trial. Just one program alone is in heavy testing of 40 antivirals. So a lot on the vaccine front, a lot on the therapy front, which again is the way out of this pandemic and hopefully a pathway not to enter another one anytime soon. to a pathway not to enter another one anytime soon. Looking now over at the LPRC, we're excited. We've got a new team member starting in just about two weeks, just over a week and a half. More to come on our new research scientist who's coming on. That would add the most we've had in history and the most educator, well-trained team

in history of the LPRC. And again, this is our 22nd year. So we're very, very excited, adding very complementary skill set as far as research capability, technical capability, very good at things like understanding R in a much deeper way than those of us know a little bit or a lot about statistics or statistical packages so he goes way beyond that as well as a pretty complex mapping mapping capability to add to the mapping capability of orion san angelo and uh and dr sarah mcfan on our team uh in a little bit that uh dr corey lowe and myself. So we should have five of us that range from absolute experts to near novices like myself, as far as I know what I need, but with the complex software available today, we're going

to have the team members here. We're also, because of the ESRI, ArcGIS, and MapLarge, and CAP Index, and other support, we're going to be able to do some very amazing things to support theft, fraud, and violence research, as well as some of the green case use cases. So I'm beyond excited about what we're going to be able to do here. I'm going to turn a little bit here to some of what we do as our strategy, our research strategy here at the LPRC. It's three-pronged. The first thing is, we're trying to understand the dynamics and the typology of certain theft, fraud, or violence issues that we have, whether it's an event or a pattern that we've got. We need to look at a

typology. What does this look like? Let's take violence. Are we talking about stranger to stranger violence? Are we talking how aggressive is that? Are we talking stranger and or excuse me, non stranger to stranger? Is it did it start somewhere else and spill over or end up in our retail environments, the parking lot and or the stores, offices or D.C.'s? or DCs. These things are complicated. And so what we're trying to do is sort that out, working with absolute experts, not only on the research side around the country and the world and our own team, but also with the retail practitioners that deal with the situations and have an incredible amount of knowledge. So we're pulling any and every report that we can find around the globe that deals with person-to-person aggression, again, whether it's stranger, stranger or not, and come up with typologies. And so we're doing that with fraud online or in-store or both, some interaction there. And then there are different types of fraud online. And I mean,

as you all know, hundreds of different types. There's a typology in itself, as well as in-store types of fraud. So stay tuned on that, as well as typologies around theft. So looking at that, the dynamics, the size, the scope, the scale, if you will, is a big area. Look for Corey Lowe, Dr. Lowe's ARCS program and others that we're working on to much better and more accurately measure issues, where they're happening, how they're happening, when they're happening, how much they're costing, and things like that. The second key priority on our LPRC research agenda is understanding and describing total crime event harm. If somebody steals one thing or a lot from a place or a person, if somebody commits a robbery, a burglary, whatever the type of

victimization that we're dealing with, how much harm is generated? How much harm psychologically or traumatically is generated against an individual or individuals that were there and or their loved ones, describing individual harm. The next is describing place harm. What are the dynamics that are created if you wipe out a category, certain skews, or if somebody there has been exposed to a weapon or huge, large-scale, blatant theft where there's aggression. People can be traumatized temporarily or permanently as can their loved ones. So we're looking at the place harm generated as well as individual harm. And then finally, community harm. These crimes create a lot of harm in the community. We see retailers closing places because of the crime exposure and the vulnerability of their people and their

customers to rampant crime. So you can see the effects on the community in the near place, those places that are approximate to them, the neighbors, those that depend on those locations, as well as the tax base and others. Having to send law enforcement there and not somewhere else to handle some of the victimization and so on. So what are the dynamics of harm? That's our second priority after trying to better describe and understand the dynamics and typologies of crime. The third and final where we've spent most of our time over the years, and that is protective research and development. How do we now, using the first two, particularly the first one, the dynamics, the step-by-step pathway of a criminal to and from a place, left of bang, at bang, and right of bang, what does that look like step-by-step?

What are aiming points or targets for us? And then how do we best deter those people? How do we best, if that doesn't work, disrupt those people? If that doesn't work, document those people for later action. So that's just kind of a simplistic, even though it may not seem, description of the LPRC, that we have a very firm strategy. We've aligned our research science team to that strategy. We've prioritized the projects we're going to be working on, on anti-theft, anti-fraud, and anti-violence, taking into account those three components of our strategy. So I'm excited to continue to let you all know. Now with five of us that are researchers, you're going to see one to two from each of us research in action. There's sort of a research for action briefs coming out. Our producer,

Diego Rodriguez, is on now. He is setting up or has set up a schedule so that all of our membership will see and be able to benefit from an ongoing flow of research coming out of the LPRC starting this month to add to the over 320 past reports that we've already done that are in our knowledge center so stay tuned for more on the research um on that and from that front uh we're also right now on heavy planning on our um three summits excuse me now four summits uh because the innovation working group is coming out with a sock and sensor summit that will occur in Gainesville, date to be determined. You'll see the Product Protection Summit, where you just had discussions yesterday on where that's going to be located and when. We had to be determined right this minute. You'll see also the Violent Crime

Summit will take place in Philadelphia. We'll come out with a date soon. And then finally, the Supply Chain Protection Summit. And all of them will come out with a date soon. And then finally, the Supply Chain Protection Summit. And all of them, you'll come out pretty soon here with the agenda, the location, and of course, the timing with the invites to our membership and our law enforcement and other partners to come and join us to work on these issues supported by our research and others. So good stuff coming up. Again, always put in your calendars lprc impact again in gainesville florida the first week in october so go to our website again lpresearch.org for more information follow us on twitter on linkedin on facebook as well we're at operations

at lpresearch.org let me also so I want to thank Tony, and I want to thank Tom for these great insights. I want to thank Diego for the production work, and Tom as well. And everybody, stay safe, stay in touch. So, Tony, let me go over to you, and if you can light us up and let us know what's going on in the world. Thank you very much, Reid. And I went back and actually reread Deloitte's retail outlook for 2022. And I did it for a couple of reasons. One, we're in all this craziness. What were some of the forecasts before all this craziness that 5%, up to 5%, and 32% expected to grow more than 5% in the retail industry. And at the margin level, 38% expected to be stable, 32% expected to be higher, and 30% expected to be lower. The opportunities that we're seeing for this year, going into this year, were favorable consumer behavior, retailers' ability to use inflation as an opportunity to improve margins and take price reset promotional cadence approaches over buying and discounting approaches.

The challenges going into the year were retail bifurcation, which that means basically the haves and the has not in terms of strong brands going one way and then price focused retailers taking a different approach to the market. And I've written about this in the past. The second one is employee shortages are going to hamper growth. Supply chain disruptions will also hamper growth, and consumers are being more and more demanding on delivery. The winning retailers, so the ones that are doing the best in terms of retail, this is what they're focused on, tapping higher margin revenue streams, resetting physical stores to be more ready for omnichannel, expanding digital capabilities, incorporating social and governance policies, environmental, social and government policies, engaging in M&A, mergers and acquisitions, enhancing data privacy and security, modernizing the supply chain, and making the workforce future ready. In terms of

technologies that they see being very optimistic is coming about in the next five years, the following is what the winning retailers saw that will happen in the next five years. First of all, voice commerce will be widely used. Retailers will increasingly engage consumers through digital goods. Staff-free or cashierless stores will be common. And this one was interesting. Cryptocurrencies will be widely used by retailers and consumers alike. This is what the winning retailer saw as being optimistic in happening over the next five years. Let me switch topics to another very interesting insight this past week. Some great data from Visual Capitalist summarizing the shipping and logistical costs for Amazon.

In 2011, Amazon spent 18% of net sales on logistics. In 2021, so last year, that cost jumped to 32% of net sales. So that's a huge increase in terms of what they spend in terms of logistical costs. But don't cry for Amazon, as the report said, because Amazon makes a lot of profit and revenue. In two short years, from 2019 to 2021, sales soared to $469 billion from $280 billion, and their market share cap is resurged towards $1.7 trillion. But those fulfillment costs are a challenge. For 2021, shipping and fulfillment costs were $151.8 billion. And basically that cost is massive when you look at it a different way.

On a per minute basis, they are spending, so this is per minute, $288,000 on logistical costs. But they're also selling nearly a million dollars in goods per minute. But they are spending an awful lot of money on logistical costs. Amazon, with all those costs, is generating a lot of profit. In fact, it generated $33 billion in profits in 2021. One reason for this is the majority of Amazon's products actually don't come from all those products that they sell you online. Amazon Web Services, which accounts for 50% of the operating profits, but only represents 13% of the sales. So the real profitability is in AWS or Amazon services. profitability is in AWS or Amazon services.

And let me end this week with a new article series that I just started on that I call Then and Now, the Surprising Start of Your Favorite Retail Formats and Technologies. And so what I'm highlighting, some interesting retail formats, how they started and where they're at today. And in the first article, I highlighted three. I started out with the department stores. So when was the first department store? Several countries take credit for opening the first department store.

In the UK, Harding, Howell and Grand Fashionable Magazine opened in London in 1796. Fashionable magazine opened in London in 1796, and they had a product ensemble that resembled a department store, and at that time it included furs and fans, haberdashery, jewelry, clocks, millerian hats, and again, it resembled a department store. Many others give the credit for the first department store to Le Bon Marché, which opened in France in 1852. This Parisian location evolved into a multi-product development masterpiece and actually had input in terms of the design from Louis-Auguste Boulot and also from Gustave Eiffel. They actually

contributed to the design of the building, and it still is a very attractive store to go to in Paris. John Wanamaker brought the department store to the United States in 1875 when he bought a rail thread depot in Philadelphia and basically filled it with a bunch of specialty stores, and he introduced a bunch of innovations, some of which are used today, price tags, and aggressive advertising programs. I included this department store as a goal first because they were really the ones that were seen as being threatened to go out of business, and so everybody was talking about the end. But actually, for 2021, departments or sales were very strong. They grew 22 percent. And according to the Wall Street Journal, even Amazon is planning to open a series

of large physical shopping centers this year that are compatible to department stores. That's a little bit of the history and where we're at with department stores. Next, where are we? Supermarkets. The worst for supermarket was Piggly Wiggly, which opened its door in Memphis, Tennessee in 1916. Before the supermarket, customers would give their shopping list to clerks, mostly mom and pop stores who picked the goods, and typically you paid higher because of all that labor cost. The self-service supermarket reduced overhead costs and even consolidated especially retail stores like butchers and bakeries into one store. So that was then. Where are they now? Well, in the latest Deloitte 2022 Global Powers of Retailing

supermarket, which are part of the fast consumer goods segment, represent $3,396 billion, or 66% of the total revenue of all the top global 50 retailers. So it's really a sector that now dominates retailers. In fact, the top five retailers make up 33 percent of total revenue of the top 250 and nine out of the top 10 global retailers generate major revenue with what started in 1916 as the first supermarket and finally in this first part i talked about the barcode and the introduction of the barcode and what that did to retail. And it's interesting where it started. So today's barcode, which is printed on every single consumer

package you can imagine, started out as a finger drawing on a Miami beach by inventor John Woodland in the late 1940s. The inspiration was a frustrated supermarket manager who pleaded with the Drexel Institute to come up with some way of getting shoppers through the store quickly. And they were pushed along by a whole bunch of folks, including Kroger, who in 1966 signed off a letter with a despairing wish for a better future. And they said, just dreaming a little, could an optical scanner read the price and the total of the sale, leading to faster service, more productive service,

which is needed desperately. We solicit your help. So the first patent for the Barco was actually issued in 1948, but we actually did not scan the first item until 1974. And the first item was actually a pack of Wrigley chewing gum, which was scanned on June 26, 1974 at a supermarket in March. It was March supermarket in Troy, Ohio.

Fast forward 50 years later now, Smart Supermarket in Troy, Ohio. Fast forward 50 years later now, today more than 6 billion times the barcode is scanned around the world every single day. So we've come a long way with department stores, supermarkets, and the barcode. And with that, let me turn over to Tom. Hello, everybody. Thank you, Reid. Thank you, Tony. I am taping this podcast, and I'm actually in Chechnya, the Czech Republic, so Central Europe right now. And I want to give a quick update on the Ukraine crisis. To start, there are news reports here in Central Europe that are a little bit different, but I think they're starting to come to the US. ports here in Central Europe that are a little bit different, but I think they're starting to come to the U.S. There are several people that live within the confines of Russia that don't

believe there's a war. They've been told that it's an exercise, a training exercise. And there's actually been reports of POWs, prisoners of war, captured by the Ukrainians, young Russian soldiers, very young men who are saying that it is a training exercise and that they're not at war. So that's interesting news that's coming out. Additionally, Russia is basically shutting the internet off. So they're following kind of suit to what China has done, even more extreme and not allowing the open internet. This is not uncommon in communist countries, but a little bit unheard of here in this day and age to shut a country of that size down, especially with the global and economic impact it has. There's also been some laws changed for media, which basically

makes it impossible to be an independent news consultant or news agency in Russia, makes it a crime to report certain things. So lots of things going on there. Social media has, a lot of social media services have completely shut down or are being blocked. And there are numerous reports of people that are using social media to communicate. So Instagram and using Instagram direct messages to communicate that after they send their messages, their accounts are then deactivated or blocked. So lots and lots going on from that front, a very unfortunate situation. Numbers all over the place for the amount of casualties there in Russia and civilian casualties. And I think that this is unfortunately going to be a longer event than I think some people thought it would be. Additionally,

the supply chain issues or potential supply chain issues, talk about that most likely will happen. Let's talk about within Russia. Right now, basically, Russia has been cut off from import-export. So eventually, they'll run out of basic supplies that they can't make there. So this is a daunting and dangerous thing for the Russian government to deal with and the people of Russia. And then because of airspace restrictions, so what occurred is most airlines or countries restricted their space to Russia. So Russia did the, in a retaliatory matter, did the same thing. This changes commercial air travel. And some trips, it adds two to three hours of time because you have to fly around above or underneath. And when you have to fly longer, you need more fuel, which in turn causes the cost of flights to go up.

Even if fuel wasn't on the rise, it cost of flights to go up. Even if fuel wasn't on the rise, it would cause flights to go up. And this is the same impact it has for air shipments. So if you're shipping something via air and you used to fly over Russia, and now you have to fly around it or above it, the flight is longer, which requires more fuel, which makes it heavier, which drives the cost up. So while you may not see it today, there are some impacts that will face all of us around international travel as well as supply chain. And then companies like FedEx and UPS saying that they'll no longer deliver to the Ukraine or Russia,

Ukraine because it's not safe, Russia because they're making a stance, also further exasperates the issue of getting things in and out of that region. So we'll continue to monitor it. To date, it's not having a substantial impact outside of Russia. One thing that we're seeing is a huge amount of cyber attacks from that region. So a couple weeks ago, you were seeing ransomware and attacks happening every 11 to 12 seconds. Now you're seeing every three to four seconds. So substantial uptick, more than double the amount of attacks coming through Western

nations. So we'll continue to monitor that. The is definitely increased so something to keep our eyes on switching gears to us uh the payment um the digital payment provider is zella zella has been having challenges with scammers or people that are social engineering and getting people to give them money as posing as bank associates there was actually a wall street journal right up out of new york times right up about this. And what it was is you had a person who was defrauded of $500 and Bank of America did not refund them that money because he in turn gave his money to someone, social engineered scam. So this opens up the door of these middlemen who aren't banks, who don't have to follow the rules of banks, but just their transfer apps, what the impact is and how fraud will be addressed in the future. Zella has more than double the volume of Venmo. And it's

around $500 billion that was transferred through it. And it's more than double the 290th million billion sorry that were through Venmo throughout COVID again this is that these apps are designed to transfer money so they are middlemen if you will a little bit different than a PayPal because PayPal is actually a bank but but what Venmo and Sology is they hook up to your card or your bank account and they transfer money. It's very, very common. Nowadays, if someone doesn't bring their wallet, forget someone pays for lunch, you can just Zelle them or Venmo the money. So that's definitely a space that we're going to have to watch.

And it's kind of an untapped space of who owns the fraud. It's similar to wire transfer fraud or business email compromise. The challenge is generally the person perpetrating the fraud tricks someone into giving them their money. So this is becomes, this isn't traditional credit card fraud where someone takes the card. This isn't bank fraud where someone gets that. So it's a very, very challenging one to approach. So with that, we will continue to watch it and see what's going on in that space. And then last, it is tax time.

And we throw this reminder out often that there are a ton of tax scams out there that are coming up. So if you're getting people calling you or getting phishing emails on it, just always be mindful to double check before you click on an attachment or look at something. There's a lot of misnomers about just looking at something and not entering credentials. It's safe, but the reality is just clicking on anything really could open yourself up to malicious code. So we want to be mindful of that with tax time and the heightened amount of information that people are sharing intentionally

and how scammers or social engineers can take advantage of that. A little short today, but I will be back with you in the US next week. Back over to you, Reid. All right, well, again, thanks so much, Tony and Tom, for all the great insights. And by the way, Tony, I thought that was fascinating, that flashback.

I love that angle and help us all think and understand where things came from. But it's just interesting on top of that. And I know that Frank W. Woolworth evidently played some role in increasing theft by increasing convenience and was one of the first anyway that I guess took goods out from under the glass so he didn't have to employ so many people and it can increase his margins. But with that access, that low friction that the customer started to experience came a lot of theft. So that was somewhat of a watershed for shoplifting, evidently. So thanks again, both of you, for so many great insights. Diego, for production as well. Everybody stay safe out there. 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.