Feature Article

Evaluating the Pros and Cons of Remote Video Monitoring
Written by  Nathaniel Fry & By Robert Rice
Sep 01, 2005

Video monitoring has been used successfully in retail settings for several years.Video surveillance has enabled significant improvements in customer and associatesafety, as well as proven an effective tool in theft deterrence through improving lossprevention productivity and accuracy.

Recent increases in network bandwidth between store locations and retailheadquarters now enables the use of remote video monitoring for retail loss prevention.

This technology has already become pervasive in other industries. For example,remote location and gauge monitoring is common in the public utility and industrialsegments. In the law enforcement world, the city of Chicago recently installed videosurveillance cameras around town and saw its murder rate fall to its lowest level infour decades. The city is now employing new technology that recognizes the soundof a gunshot within a two-block radius, pinpoints the source, turns the surveillancecamera toward the shooter, and places an emergency 911 call.

This article outlines the pros and cons of remote video monitoring for retailersand establishes a decision framework for its implementation. It also addressesfuture improvements in remote video monitoring based on research efforts currentlyunderway.

The Argument for Remote Video Monitoring

Remote video monitoring enables the reallocation of loss prevention personnel from low-activity locations without the elimination of loss prevention coverage and oversight. This not only increases the effectiveness of LP associates, but also increases overall job satisfaction, which reduces turnover, lost time, and recruiting, hiring, and training costs.

Loss prevention personnel productivity can increase five to ten times depending upon the current coverage model and activity levels. This increase in productivity is partially due to the fact that low levels of activity lull loss prevention personnel into a false sense of security, resulting in missed observations and apprehensions. Maintaining a video monitoring “sweet spot” improves their effectiveness.

Remote video monitoring enhances loss prevention’s business value to the organization by raising overall loss prevention personnel productivity while simultaneously increasing coverage and oversight—without increasing the loss prevention budget. 

It also increases loss prevention deterrence. Sophisticated external and internal threats are aware of the physical presence of loss prevention personnel and, in local monitoring locations, focus their efforts when loss prevention personnel are physically present. When remote video monitoring is used, it is more difficult for sophisticated external and internal threats to determine if they are being monitoring, increasing the deterrence effect.This technology also positively impacts district, regional, and corporate loss prevention management by providing the capability to observe remote locations without having to be physically present. This improves management’s effectiveness by reducing both the time and costs of travel.

Coupled with the integration of additional key data elements, such as POS, alarm, and EAS data, remote video monitoring enables loss prevention professionals to investigate and resolve threat events quicker and more accurately. This data integration also enables store and retail management to better understand the nature and volume of threat events by store and departments within the store, improving management and loss prevention program targeting and effectiveness. For those retailers with proprietary alarm systems, remote video monitoring can dramatically reduce the costs associated with false alarms.

In addition to its loss prevention uses, establishing a remote video monitoring capability enables cross-functional corporate executives to obtain real-time feedback on customer traffic, customer service execution, merchandising presentation, and in- and out-of-stock conditions. 

This extension of the use of video technology beyond LP adds significant value to the retail organization both in a functional as well as bottom-line basis. For example, retailers are using remote video to conduct on-going audits that effectively help reduce shortage and increase sales, safety, and productivity.

Negatives Associated with Remote Video Monitoring

While there are many positive aspects of remote monitoring, there are several issues to consider that reduce the impact of this technology in the retail environment.

Remote video monitoring works most effectively for activity that is clearly discernible or detectable, versus fine or complex activities. It is also less effective when observed activities require immediate on-site response.

 Remote monitoring can prove difficult in environments where existing camera angles create zones where activity can’t be observed or the environment is complex, requiring detailed first-hand knowledge.

Remote video monitoring can be fatiguing. Associates performing only remote video monitoring duties become increasingly less effective without regular breaks or additional work assignments that don’t require video monitoring.Care is needed when evaluating the costs of digital video for remote monitoring. 

While digital recording systems are comparable in cost to tape recording systems, maintenance and storage costs can be higher, depending upon how maintenance is performed and the retention period for the digital records.

 

A Decision Framework for Remote Video Monitoring

Three variables establish the viability of remote video monitoring for a retail location, including the best times and locations. These variables are

  • The level of activity, 
  • The response time needed to respond to threat events,and
  • The need for independent verification of threat events

When evaluating this decision framework, consider threat events to include shoplifting, robbery during store open hours, burglary during store closed hours, internal theft of merchandise or cash, and thefts by outsiders but enabled by employees

.Locations are candidates for remote video monitoring when their activity level does not warrant full-time loss prevention coverage or when their activity level does not require an immediate threat response from an internal loss prevention associate, such as in most cases of internal thefts.

Locations are not candidates for remote video monitoring if the video system requires independent verification of a threat event due to insufficient camera coverage, such as the continuous observation of shoplifting suspects.

 

Next Generation Video Monitoring

There are a number of emerging technologies that will impact the effectiveness of remote video monitoring.

Smart camera technologies are improving dramatically, enabling these cameras to detect and track movement independently based upon preset criteria as described above in the city of Chicago. As another example, several locations along the U.S. border with Canada are monitored using smart cameras, enabling remote video monitoring on an exception basis, which is dramatically increasing the scope and productivity of each monitoring agent. 

U.S. airports are also implementing smart cameras coupled with remote video monitoring to increase perimeter security, monitoring vehicle activity, and detecting tailgating into secure areas.

Smart cameras have also improved to the point where they can track a subject quicker and better than a human operator.

Digital video technologies are also improving, offering greater capability at increasingly lower costs. This will further enable lower storage costs and increased integration of video data with other important data sources such as POS.

As cellular devices become more sophisticated, they will be used for remote monitoring as well. Newer cellular devices such as smart phones and pocket PCs have larger screens, faster processors, and an ever improving user interface that will be able to take advantage of cellular networks that can support video transmission.

 While remote video monitoring can be an effective tool for both loss prevention and other retail disciplines, its use must be considered carefully, as it does not presently work well for all environments or all situations. However, the continuing advance of technology coupled with innovative applications of the technology will keep remote video monitoring on the forefront of the tools used to reduce losses and increase retail sales and productivety

My introduction to remote video monitoring began fifteen years ago when this technology was in its infancy. In 1990 as a young corporate loss prevention executive in the San Francisco Bay area, I worked for Natt Fry, the author of this article, at Mervyn’s department stores.

 Natt lead the LP division back then and was a visionary of sorts. He was instrumental in establishing, among many other things, the proprietary alarm monitoring system at Mervyn’s. Since we had a command center at our corporate office in Hayward, California, monitoring alarms on all of our locations, Natt had a passion to supplement this monitoring with remote video.

 It was his dream to have the ability to pull up video real time from one of our locations as we were receiving alarm signals in our central monitoring station. We wanted to do down-and-dirty remote video verified alarm response, plus have the ability to phone into the public address system as a burglary was in progress to call out to the perpetrators, “Hey, you in the black hat and plaid pants. Drop the merchandise. The cops are on their way!”

One day, we drove out to one of the local ADT offices to review a remote video monitoring system about to hit the market that was “cutting edge.” I remember viewing “live” remote video of an office building somewhere in Australia. We watched the video paint across the screen at about one image a minute or more. It was more like watching a series of snap shots rather than true video, similar to how many intricate websites download on the slowest of dial-up modems. 

Although we found in the end that the technology was not quite there yet...both in price and efficiency...it continued to feed the passion and the vision for where it could take us.

 Sadly, it is now fifteen years later, and it has taken almost this long to bring much of what we had dreamed of into reality

The Office Depot Business Model

The remote video monitoring initiative here at Office Depot began in earnest about three years ago, led by Bill Gavin, the director of loss prevention for our Business Services Group. An understanding of our retail business model will help you understand the large potential remote video monitoring has both with our warehouse and our North American retail operations.

To quote our most recent earnings release, “Office Depot provides more office products and services to more customers in more countries than any other company.” We do this in a number of different business models. While many of you might know us because of our 1,000-plus retail stores throughout North America, we also drive more than half our business through direct customer office supply sales. We are the third largest sales business on the Internet, and drive both direct customer sales as well as business-to-business through these channels and our call centers throughout the U.S.

 This piece of our business is supported by ten cross-dock warehouses that feed all of our store locations and twenty-two customer service center (CSC) warehouses that fill our direct customer business. We also have as many as sixty-eight satellite warehouse locations that support this supply-chain network.

 Office Depot has wholly-owned business operations in fourteen different countries, and our international business can account for as much as 36 percent of our business. We are starting to implement remote video monitoring in the United Kingdom this year, and now have twelve warehouse locations up and running. I can pull these locations up on my office PC in Delray Beach, Florida, by IP address. However, I will focus my remote video monitoring discussion to the U.S.

 

Success in Our Warehouse Operations

In talking to Bill Gavin, I see a great deal of the same passion for remote video monitoring that I saw in Natt fifteen years ago. Let me share just a small sample of the success that Bill recently showcased for remote video monitoring in our warehouse environment. 

We have reduced our guard cost and support in our warehouse environment by as much as 20 percent annually in facilities throughout the country. Since Office Depot spends millions of dollars a year in guard coverage, these savings are not insignificant.

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We are remote monitoring video centrally in the field, where one warehouse location monitors video in several satellite warehouse locations attached logistically to the hub warehouse, thus eliminating the need to use manpower in a small facility that might not warrant continuous dedicated guard coverage. 

We also have a command center here at corporate that remote monitors large warehouse facilities in four different time zones. This model brings some manpower relief to certain facilities on the weekends and other non-peak times. Operationally, we have also begun remotely opening and closing truck gates in certain circumstances.

Anecdotally, here is just a small sample of some of the huge wins that we have celebrated here at Office Depot with the continued integration of remote monitoring in the warehouses.

We have thwarted three workplace violence incidents in three separate facilities.

  • We have stopped two recent burglaries in one of our large warehouse facilities, where burglary thefts can mount up into the hundreds of thousands in losses per incident. 
  • In one facility, we were actually able to identify and put out a fire that had ignited in a trash can outside one of our exit doors from a cigarette butt where there were no fire-detection devices available.
  •  And finally, after enduring more than our share of hurricanes that blew through Florida last year, we were able to survey property damage immediately after a couple of these storms in a number of locations without putting our associates at risk of harm in the aftermath of some of the severe storm damage.

 

Moving to Our Retail Operations

The future of remote video monitoring is starting to impact our retail operations at Office Depot as well. We have now networked six of our retail locations for remote video monitoring, and, after a short test, we hope to have as many as 130 store locations networked by third quarter 2005.

 Some of the immediate wins we hope to have from a loss prevention standpoint is the ability to conduct internal LP investigations remotely.

 We also want to refine our digital video recording (DVR) equipment to maximize data retention and viewing. We want our DVR systems to record the video that is worth reviewing, and not store hours upon hours of an empty door way or POS stand where no movement or activity has taken place. Standard default settings on the equipment we purchase from our vendor partner often won’t cut it for our business needs. The ability to tweak these systems remotely will provide a big system win.

We also want to look at using the remote video system outside of loss prevention. The ability to enhance return-on-investment and substantiation to a CCTV system might revolve around the ability to network camera systems. Networking video monitoring may prove to be a very useful tool for our business partners in merchandising and store operations. The ability to see how the rubber meets the road on any number of merchandising and operations initiatives may prove invaluable to internal customers. The capability to assess such things as associate zone coverage, response at POS, new merchandise receipt processing, and merchant POG set up, might prove to be a better payback than what is met by the traditional LP model.

 

NATHANIEL FRY is a partner with IBM Business Consulting Services focusing on utilizing innovation to improve the sales and profit performance for retailers. He has thirty years experience in helping retailers successfully improve their performance. Fry can be reached at 630-240-5434 or at This email address is being protected from spambots. You need JavaScript enabled to view it.

ROBERT RICE is the director of loss prevention operations and risk management at Office Depot. Prior to his current tenure, he was director of loss prevention for several years at Nike, Inc. Rice has almost twenty-five years of retail experience in loss prevention, finance, store operations, inventory control, internal audit, store field management, and alarm monitoring management. He can be reached at 561-438-6422 or This email address is being protected from spambots. You need JavaScript enabled to view it. .

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