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Shop Nation

by msecadm4921

If the market for network video is growing by some 38 per cent year on year through to 2010 (Source: IMS Research) then the growth will be in no small part due to its rapid adoption by the retail market which already makes up 21 per cent of the total video surveillance (both analogue and network video) market (Source: IMS Research). Why then is demand so strong in the retail sector and what applications are driving adoption now? Steve Gorski, managing director of Axis Communications (UK) writes.

Napoleon once described Britain, somewhat disparagingly, as a nation of shop-keepers. Although this is no truer today than it was in the late 18th century, there is no doubt that the UK is leading the race for adoption of technology solutions to reduce shrinkage levels in its stores. UK retailers, like all retailers across the world today, have to work hard to improve profitability and cut their shrinkage levels which now stand at 1.33 per cent of total UK retail sales and at 1.24 per cent average across Europe as a whole (Source: European Retail Theft Barometer IV, 2006).

Britain, which used to suffer the worst shrinkage levels in Europe, is gradually getting to work on the problem. It fell to ‘third worst’ position in the European Retail Theft Barometer in the latest figures with an estimated loss of nearly £4 billion in 2006 from a combination of theft, and transaction and supply chain errors. UK Retailers estimate that in 2006 some £1691.7m of losses were attributable to customer theft (43.3 per cent of the total); a further £1,486.7m (38 per cent) came from staff theft; £559.1m was attributed to internal error; whilst suppliers generated a further £172m (4.4 per cent); creating a total shrinkage of £3,909m in the UK alone last year.

For expanding global players like Tesco and Wal-Mart these figures contribute significantly to profit levels as margins are increasingly tight. For example a quick estimate of the possible costs of shrinkage within larger retailers produces some startling findings. Britain’s largest retailer Tesco which made £46.6 Billion sales last financial year (ending 24th February 2007) could have had shrinkage losses worth as much as £578m in that 12-month period, if the company’s own shrinkage figures are the same as Europe’s average shrinkage rate of 1.24 per cent.

So if Tesco could cut shrinkage by just 25 per cent the savings could equate to as much as £145m per year. It is in this context that it is not surprising that significant investments are going into development and implementation of innovative solutions designed to cut shrinkage. Put simply, senior management can see very rapid Return on this Investment (ROI) in shrinkage reduction and security systems.

Set against this backdrop Axis has seen a great deal of interest in enhancing systems by integrating network video into them. Over the last two years Axis has teamed up with a number of leading retail technology providers to help them deliver solutions which specifically reduce shrinkage, cut fraudulent damages claims and offer improved retail analytics capabilities.

For example, Axis has been working with Point Of Sale (POS) solution providers including Extenda to help deliver POS systems which incorporate network video. The Extenda Observer tool is used to find patterns as well as analyse and capture exceptions. Due to collaboration with Axis the Extenda tool can now trap both the data relating to the exception (e.g. a till receipt) and its corresponding video. An example might be the opening of a till without any transaction being in progress. The video provides vital, irrefutable evidence in case of wrong-doing but also acts as a training tool when incorrect procedures are being followed.

Network video can also be integrated in Electronic Article Surveillance (EAS) tagging systems so that high value items can be tracked as they leave their pegs and move towards the tills. If tags are not removed and alarms are then triggered as unpaid items leave the store, shop managers can be sure that network video systems have captured the carriers of those high value items as they moved through the store.

Network video can also be used to help analyse and understand customer behaviour. It is possible to study the most travelled routes around a shop or to carry out people counting analysis in specific lanes or promotional areas to help assess response to a new display or promotion and then use this intelligence to design the shop to maximise sales and minimise customer confusion. This sort of analysis can also be used to support optimum staff allocation. We know of other retailers such as the Irish book retailers Hughes & Hughes Booksellers that has also used Axis network cameras and video management solutions to support management decision-making – checking on trading activity during busy periods and adjusting staffing levels accordingly. Hughes & Hughes has also found network cameras invaluable for authenticating the validity of so-called ‘slip and fall’ insurance claims – most of which are fraudulent in their experience.

It is also clear that both the image quality offered by network cameras today, together with their ability to handle analysis such as people counting in the camera itself (taking load off the network); and the relative ease with which they can be integrated into existing networked applications; all goes together to make investment in network video more attractive, cost effective and useful than ageing analogue-based CCTV camera systems that are still in wide use in the sector.

The retail sector is now seeing that network video solutions have a great deal to offer their market and it is perhaps no accident that sales of Axis products to this sector are rising fast. It would be a surprise if these sales did not increase further as retailers embrace network video as they enhance and improve existing systems for reducing shrinkage and increasing their understanding of in-store customer behaviour.

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