August 18, 2014 in Business

Digital vigilance: Liberty Lake company helps stores fight theft, fraud

By The Spokesman-Review
 
Kathy Plonka photoBuy this photo

Transactions are monitored at WinCo in Coeur d’Alene on Aug. 5, using the OpenEye SafeGuard surveillance system.
(Full-size photo)

Grocery chains and retail stores are increasingly combating in-store theft and cashiers’ money mistakes by adopting advanced video surveillance systems that link every sales transaction to high-definition video.

It’s not new for companies to use video surveillance, but software has become sophisticated enough to allow managers to quickly and precisely isolate issues, and powerful enough to generate analytics that help guide training and sales strategies.

Cashing in on the trend is Liberty Lake’s OpenEye, founded in 1999 by a Gonzaga University grad with $5,000 and a general idea of the business he wanted to run.

Within two years of starting OpenEye, President Rick Sheppard realized in-store and industrial-site video systems were his company’s sweet spot.

“Since then we have been focused 100 percent on video and loss prevention solutions,” Sheppard said.

The growing adoption of video surveillance has helped OpenEye expand to 125 workers. The private company’s customers include Boise-based WinCo Foods and CKE, which installed the system in 900 of its Carl’s Jr. and Hardee’s fast-food locations.

Both companies use OpenEye networked video systems that show real-time video streams and store the footage in a searchable format.

Other customers, including Gonzaga University, use the systems as security networks. The GU OpenEye system has more than 300 cameras, Sheppard said.

All of OpenEye’s video systems are Internet-based, allowing managers to review transactions and footage from any Web-connected device.

At WinCo, in-store, high-definition cameras give close-up and panned views that can provide key evidence when confronted with customer “slip and fall” complaints, which can lead to lawsuits, said Don Hook, WinCo’s loss prevention asset protection manager.

WinCo installed OpenEye’s SaleGuard in the chain’s new Coeur d’Alene store. In addition to internal cameras, the store has OpenEye cameras recording outside activity.

“The difference (from the older analog system) is we now can use the footage, zoom up and examine in detail,” Hook said. “You really have a good record. If it lets us stop one false slip-and-fall claim, it pays for the system.”

Using older video systems, supervisors would go through two separate records to check on a cashier issue or a customer complaint – a log of the actual register activity, and a second archive of the recorded video. The two systems were not linked.

The SaleGuard system provides that link plus grabs lots of other details. For instance, if a cashier rang up 20 items, counting 15 of them as onion instead of steak, the SaleGuard system can search for the keyword “onion” and the system will return a list of each instance an onion was swiped at the register. Included in that will be the recorded video to verify what went through the register at that moment, Hook said.

The system is also a training tool, Hook added, since the OpenEye software is set to flag “voids,” or instances when a cashier cancels a transaction and has to rekey an item.

The software cranks out analytics for the store’s registers showing the cashier ID number, number of sales during the shift, total value of sales, the number of voids and refunds, and other data.

Human resources supervisors can use the system to retrain workers who show a higher-than-average number of voids or refunds, said Kirby Evans, WinCo’s division loss prevention supervisor.

The high-definition quality from store cameras can be used for other purposes, Evans noted. Earlier this year, managers at the Coeur d’Alene store found footage showing two men in a possible drug deal. The company sent the footage to local police to investigate.

Reducing theft can help keep operating costs down, Hook said. The National Retail Federation says retailers lose between $25 billion and $30 billion per year to customer and employee theft. A study done at the University of Florida found that “shrink” in grocery stores amounts to 2.4 percent of all sales; that’s 50 percent higher than the overall retail average of 1.6 percent.

Beyond stopping loss, the OpenEye system streamlines response when customers or employees report unusual events inside a business. Anne Sullivan, loss prevention director for the CKE fast-food chain, said SaleGuard lets the company investigate a concern within two hours, instead of the eight hours it used to take with the analog system.

While food retail is a starting point for sales, OpenEye’s Sheppard said the company has other retail segments in focus. One higher-end company evaluating the OpenEye system is Michael Kors, the global luxury fashion brand, he said.

The company’s engineers and software designers are now testing a “heat map” tool that produces a color-coded display of a store’s interior, showing where customers spend the most time.

The goal would not be to identify individual customer preferences, but to help companies understand what items appeal to shoppers and how effective in-store promotions are drawing eyeballs to deals, Sheppard said.


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