In recent years, the role of asset protection in retail has significantly evolved. As technology advances and consumer behavior shifts, retailers face new challenges in protecting their assets and ensuring a safe shopping environment. From cybersecurity threats to shrink and fraud, the scope of asset protection now extends far beyond traditional shoplifting prevention.

Today, we’re joined by David Shugan, Certified Forensic Interviewer, and experienced executive leader with 30+ years in retail asset protection. As the VP of Strategic Initiatives at RetSci and one of the visionaries behind PRISM, David brings a wealth of knowledge to our discussion. With a proven track record in developing and implementing comprehensive programs to safeguard assets, employees, and customers, he’s well-positioned to shed light on the changing landscape of retail security.

David, thank you for joining us today. Could you start by sharing your perspective on how the role of asset protection has evolved in the retail space over the past few years?

The role of asset protection in the retail space has undergone significant transformation over the past few years and throughout my career. Traditionally, asset protection—previously referred to as loss prevention or even security—was primarily focused on preventing theft, catching the bad guys, and managing physical security. However, with the arrival of digital technology and the integration of e-commerce, the scope has broadened considerably.

Today, asset protection encompasses a wide range of responsibilities, from cybersecurity and fraud detection to compliance with regulatory requirements and ensuring the safety of both physical and digital assets. Importantly, it also includes the safety of our employees and customers, who are our most valuable assets, not only to the company but to their families as well.

The increasing complexity of asset protection in retail operations, driven by the need for seamless integration between online and offline channels, has necessitated a more sophisticated approach. We can no longer be reactive; we have to be proactive. The bad guys or fraudsters have become more creative, using social media and other tools to cause losses to companies. 

The National Retail Federation (NRF) recently announced a $112 billion hit to retailers. This evolution has led to the development of advanced predictive analytics, machine learning models, and comprehensive risk management strategies to proactively identify and mitigate potential losses and threats.

Additionally, the role now requires closer collaboration with other departments such as IT, HR, legal, and marketing to ensure a holistic approach to asset protection that aligns with the overall business objectives.

With the explosion of e-commerce and the industry-wide move towards omnichannel retailing, what new hurdles are asset protection specialists facing?

The rise of e-commerce and the shift towards omnichannel retailing have definitely thrown some new challenges our way in asset protection. One big hurdle is dealing with the increased risk of cyberattacks, account takeovers and online fraud. With more and more transactions happening online, there’s a bigger target on our backs for hackers and fraudsters who are always looking for ways to exploit vulnerabilities.

Another challenge is managing the seamless integration between online and offline channels. Customers expect, and deserve, a smooth experience whether they’re shopping online, in-store, or a mix of both. This means asset protection specialists have to be on top of security across all platforms, ensuring that both physical stores and digital environments are secure.

Plus, the sheer volume of data generated by omnichannel retailing can be overwhelming. It’s a double-edged sword: we have more data to help us predict and prevent losses, but it also means we need more advanced tools and strategies to sift through and make sense of it all.

Lastly, we’re also seeing more sophisticated tactics from criminals who use social media and other digital tools to orchestrate theft and fraud. Keeping up with these evolving methods and staying one step ahead is a constant battle.

Could you walk us through RetSci’s PRISM (Predictive Risk and Insight to Shrink Management) and explain how it differentiates itself from existing offerings in the market? 

Absolutely! PRISM, which stands for Predictive Risk and Insight to Shrink Management, is RetSci’s cutting-edge solution designed to tackle asset protection challenges head-on.

The concept for PRISM was thought up over 10 years ago. It was kind of like the movie Minority Report with Tom Cruise, where there’s a “pre-crime” unit that can see crimes before they happen. Our system analyzes a vast array of data points—from sales transactions and inventory levels to customer behaviors and external factors like local crime rates. This allows us to pinpoint patterns and predict where losses are likely to occur, giving retailers the chance to take preventive action.

What sets PRISM apart from other offerings in the market is its use of advanced predictive analytics and machine learning to proactively identify and mitigate risks. Unlike many other companies that utilize exception-based reporting, which informs you when a transaction looks suspect, PRISM takes it a step further by alerting you to a potential problem before it even occurs. This proactive approach allows you to work with your business partners on opportunities rather than dealing with law enforcement on losses.

Another key differentiator is PRISM’s integration capabilities. We’ve designed it to seamlessly work with a retailer’s existing systems, whether it’s their POS, inventory management, or even their HR systems. This holistic approach ensures that all aspects of asset protection are covered and that information flows smoothly between different departments.

PRISM also offers customizable reporting and real-time alerts, so retailers can stay informed and make data-driven decisions quickly. Our focus on user-friendly interfaces means that even those who aren’t tech-savvy can easily navigate and utilize the platform.

With RetSci being the world’s leading AI-powered retail data consulting firm, it was a natural fit to take that initial thought model and transform it into what it is today. PRISM is a comprehensive solution that evolves with the changing landscape of retail, helping businesses stay ahead of the curve and protect their most valuable assets.

There’s a growing tension between robust security and seamless customer experiences. Can you share some examples of how companies are navigating this delicate balance? 

Balancing robust security with a seamless customer experience is definitely a challenge, but many companies are finding innovative ways to achieve it. One common strategy is the use of advanced technology to enhance security without disrupting the customer journey.

For example, many retailers are implementing AI-driven surveillance systems that can monitor store activity in real-time without being obtrusive. These systems use facial recognition and behavior analysis to identify potential threats while allowing legitimate customers to shop without feeling watched or inconvenienced.

Another approach is the integration of secure yet user-friendly payment options. Retailers are adopting contactless payment methods and mobile wallets, which not only speed up the checkout process but also reduce the risk of fraud. These methods are convenient for customers and provide an added layer of security by encrypting transaction data.

Retailers are also leveraging data analytics to personalize and improve the shopping experience while maintaining security. By analyzing customer data, they can offer personalized recommendations and promotions, making the shopping experience more engaging and tailored to individual preferences. At the same time, advanced analytics can detect unusual purchasing patterns that might indicate fraudulent activity.

Additionally, some companies are focusing on employee training to ensure that staff can provide excellent customer service while maintaining security protocols. Well-trained employees can discreetly handle security issues without causing unnecessary alarm or inconvenience to customers.

Clear communication with customers about security measures can also go a long way. When customers understand that certain protocols are in place for their safety and convenience, they are more likely to appreciate the balance between security and a seamless experience. 

While these measures can significantly reduce risk and fraud, it’s important to recognize that there is no one-size-fits-all solution. Every retailer faces unique challenges and risks, so it’s crucial to continually evolve and reinvent solutions. Complacency is not an option in the dynamic retail environment. With theft reported by the NRF to have risen to $112 billion, up from $94 billion, it’s clear that the problem is real and growing. 

As asset protection experts, it’s our job to find ways to increase sales and reduce losses. I firmly believe that leveraging AI and machine learning is essential for staying ahead of emerging threats and maintaining this delicate balance today.

Recent headlines have been dominated by major data breaches. How are loss prevention professionals joining forces with IT teams to protect sensitive customer data?

In response to major data breaches, asset protection professionals are teaming up with IT departments to safeguard sensitive customer data. They implement comprehensive cybersecurity measures, including advanced encryption, firewalls, and regular software updates to prevent vulnerabilities.

Multi-factor authentication (MFA) adds an extra layer of security, reducing unauthorized access. Both teams use AI and machine learning tools to monitor for suspicious activities in real-time, allowing for quick action to prevent breaches.

Employee training on cybersecurity best practices is crucial, ensuring everyone recognizes phishing attempts and uses strong passwords. Incident response plans are regularly updated to ensure a coordinated response in case of a breach.

Also, Compliance with regulations is a priority, ensuring data protection practices meet legal standards and avoid fines.

By combining their expertise, asset protection and IT teams create a dynamic approach to data security, staying ahead of evolving cyber threats and protecting customer information.

We’re seeing a shift in legal frameworks across some regions, with laws like California’s Proposition 47 effectively decriminalizing certain types of theft. In light of these changes, how are retailers adapting their strategies? 

Yes, retailers are having to rethink their strategies due to changes in laws like California’s Proposition 47, which reduces penalties for certain types of theft. Similar challenges are being faced in other states with evolving legal frameworks. To adapt, many are focusing more on prevention and using technology to help.

For instance, retailers are investing in advanced surveillance systems and security technologies that use AI to detect suspicious behavior in real-time. This helps prevent theft before it happens rather than just dealing with it afterward. That’s an example of how PRISM can play a big role by using predictive analytics and machine learning to identify potential issues before they escalate. This allows retailers to take preventive actions and manage risks more effectively.

Overall, retailers need to enhance employee training to ensure staff are better prepared to handle potential theft situations and engage with customers in ways that discourage theft. Some stores are also redesigning their layouts to make it harder for theft to occur, like placing high-risk items in more secure areas. However, this can impact sales if there isn’t enough floor coverage to unlock the product. PRISM helps retailers understand where the opportunities lie and work to prevent issues rather than just reacting to them.

Lastly, asset protection and organized retail crime (ORC) teams are also working more closely with local law enforcement and community organizations to address the root causes of theft and create a safer shopping environment. Despite the challenges, retailers are continuously evolving their strategies to protect their assets and maintain a secure environment for customers and employees.