Luxury Retail Security: Challenges and Solutions
Luxury retail is a key segment in the retail industry. More and more, offline luxury retailers are turning to security solutions to address certain challenges and difficulties they face.
By: William Pao, asmag.com
Luxury retail is a key segment in the retail industry. More and more, offline luxury retailers are turning to security solutions to address certain challenges and difficulties they face. This article takes a closer look. While luxury retail stores vary from place to place, they have a few things in common: they typically feature famous brands, sell high-priced items and provide a personalized/tailor-made service to wealthy customers.
“A high-end retail store offers premium and exclusive products or services to the affluent segment of consumers. Luxury retail stores often carry high-end fashion clothing, accessories, jewelry, watches, perfumes, cosmetics, home decor, and other luxury goods. Luxury retail stores include brands like Louis Vuitton, Chanel, Harry Winston and many more,” says Addy Ho, Segment Development Manager for Retail, Asia Pacific at Axis Communications.
“Luxury retail stores emphasize creating an upscale and opulent shopping experience for their customers. These stores often have elegant and visually appealing interiors, well-designed displays, and luxurious decor to enhance the ambiance,” says Keith Aubele, Chief Security Officer at Salient Systems. “Exceptional customer service is a hallmark of luxury retail. Employees in luxury stores are trained to provide personalized attention, offer expert advice, and deliver a highly attentive and exclusive shopping experience to each customer.”
Challenges From Several Fronts
Offline luxury retailers face challenges from several fronts. First and foremost is security. As luxury retail stores continue to do well in business – in spite of the pandemic and inflation – they are also faced with various real and potential criminal activities.
“Last year, the market for luxury goods in America grew by 8.7 percent, well above inflation. For the same year, the US Jewelry Security Alliance reported the highest-ever crimes against firms – a total of 2,211 – representing just over a 31 percent increase compared to the previous year. Distraction threats are on the rise as well, including smash-and-grab robberies, despite the fact that many high-end jewelers are located in high-end shopping malls, away from more vulnerable downtown locations and strip centers,” says Jason Burrows, Sales Director for IDIS America.
He added: “A similar picture has emerged in Europe, with one of the largest luxury goods giants reporting a 17 percent year-on-year increase in sales in the first quarter of 2023. Many brands have benefited from the end of the Chinese government’s zero-COVID approach. This has seen the return of Chinese tourists to European cities, each with its own chic streets. However, these locations are also more vulnerable to smash, grab and run robberies carried out on motorbikes and mopeds, particularly during off hours. Crime in many parts of Europe fell during the pandemic due to lockdowns, yet figures hit a 20-year high in the U.K. to the year ending March 2022 with daring raids on luxury jewelry and watch stores, as well as increases in fraud and organized crime, while charge rates hit a new low.”
Beyond security, luxury retail stores also face other challenges. These include operational efficiency, inventory management and delivering a good customer experience. The latter is especially important as competition from e-commerce and online counterparts intensifies.
“The rise of e-commerce has intensified competition for offline luxury retailers. Online platforms offer a wide range of luxury products, often at competitive prices. Luxury retailers must find ways to differentiate their physical stores and create unique in-store experiences that cannot be replicated online,” Aubele says. “Maintaining consistent and excellent customer experiences across all touchpoints can be challenging, especially as the customer base grows.”
He continued: “Managing inventory in luxury retail can be complex. Luxury products often have limited quantities or exclusivity, making it crucial for retailers to optimize their inventory and ensure they have the right mix of products available. This requires careful forecasting, stock control, and efficient supply chain management to avoid overstocking or understocking items.”
Turning to Security
To tackle these challenges, luxury retail stores turn to security solutions, which can play an important role.
“For high-level security measures, it is no secret that luxury brands are an attractive target for thieves who often target high-end luxury products through shoplifting or smash-and-grab theft. This is where video surveillance cameras inside and outside stores are critical. Access control solutions can ensure that only authorized staff are allowed into backend storage and restricted store areas,” Ho says.
He added: “To ensure operational efficiency, luxury retailers must consider the customer experience from when they enter the store to when they leave it. Luxury retailers must consider their operational efficiency workflow – from store layout and design to staffing to ensure personalized attention to checkout. Solutions like AXIS People Counter can help determine if the store is too crowded for staff to handle and ensure enough manpower to attend to each customer. With people counting, the stores would maintain customer satisfaction. When encountering difficult customers, stores require video evidence to support their staff and protect their brand from unreasonable disputes.”
Four Ways Luxury Stores Can Benefit from Security
Needless to say, luxury stores selling high fashion, jewelry, watches and other luxury items are often targets for theft, robbery and other criminal activities. These can be somewhat mitigated by conventional security solutions such as bollards and man guards. But it’s electronic security systems such as video surveillance, analytics and alarms that can effectively help luxury stores gain situational awareness, achieve operational efficiency and deliver a great customer experience, all of which are necessary for luxury stores to achieve success.
With theft and organized retail crime on the rise, keeping luxury stores safe from these has become critical. Security systems can do a good job in this regard.
“Security measures such as surveillance cameras, alarm systems, and access control can deter potential thieves and vandals. Visible security presence and monitoring can significantly reduce the risk of theft or damage to valuable merchandise and property. Utilizing an open platform Video Management System such as Salient’s CompleteView will enable luxury retailers to monitor and respond to real-time alerts from various data points,” says Keith Aubele, Chief Security Officer at Salient Systems.
“By leveraging AI technologies such as facial recognition, incidents can be correlated to identify thieves on record. For example, the facial information of unwelcomed persons is stored in a central database in SOC and synchronized to stores. When an unwelcome person is recognized when entering any store, an alert message will be sent to the in-store security personnel to pay special attention to that person,” says Addy Ho, Segment Development Manager for Retail, Asia Pacific at Axis Communications.
He added audio can also play a key role: “Integration of IP cameras and IP audio systems can also be used to deter theft and prevent break-ins. During non-retail hours, the AI camera detects unauthorized entries or loitering. It will then trigger the IP speaker to play messages to deter the theft, trigger sirens and alert the security personnel of the incident. During normal business hours, the IP audio system will play background music as usual.”
Security solutions can also help ensure employee security and safety, which are key requirements for luxury stores. “Security measures can also protect employees by creating a safe work environment. Panic buttons, emergency protocols, and well-trained security personnel can help respond swiftly to any potential threats or incidents, ensuring the safety of staff members,” Aubele says.
Inevitably, disputes and fraudulent activities happen from time to time at luxury stores. Security systems can help settle these disputes. “Video is an essential tool to identify instances of fraudulent behavior, such as returns fraud, sweethearting, or suspicious transactions at point-of-sale terminals. By detecting anomalies and patterns, luxury retailers can minimize losses associated with fraudulent activities,” says Jason Burrows, Sales Director for IDIS America.
Ho echoed those remarks. “Surveillance cameras can provide evidence of customer interactions, transactions, and other activities in the event of any disputes. Securing POS systems is an effective way to minimize disputes and false claims related to transactions. Integrating the POS system with the surveillance camera system allows for the correlation of POS data with video footage, enabling retailers to verify that transactions occurred as recorded,” he says.
He added: “Body-worn cameras can provide video evidence for customer disputes with clear images and audio recordings. Wearables can view live action from around a corner or behind a barrier.”
How Advanced Security Measures Transform the Customer Experience
Customer experience enhancement is another benefit security can bring to luxury retailers, who must maintain high safety and security while providing a frictionless shopping experience.
“Security solutions can enhance the customer experience by ensuring a safe and secure environment. For example, well-designed security systems and protocols can operate discreetly, minimizing their impact on the overall customer experience. Efficient access control measures can streamline entry and exit, reducing queues and wait times. Security personnel trained in customer service can provide assistance and guidance, enhancing the overall shopping experience. Leading edge technology such as facial recognition, license plate recognition and other analytics are playing a larger role in luxury retailers’ defensibilities,” says Keith Aubele, Chief Security Officer at Salient Systems.
Meanwhile, it’s important to note privacy protection is a key part of the overall customer experience. “Balancing privacy concerns with forensic purposes is crucial when implementing video surveillance systems. When consumers enter a store, it is normal to see security cameras inside the stores. However, for consumers wary of being monitored, Axis Camera’s Live Privacy Shield (ALPS) can mask customers’ faces in live view monitors and provide video footage with facial information in case of an incident and a need for forensic investigations. The second level of customer privacy protection lies in the cyber security capabilities of the entire surveillance system. This is important to prevent hacking and potential leaks of surveillance footage,” says Addy Ho, Segment Development Manager for Retail, Asia Pacific at Axis Communications.
Luxury Store Security: What Cameras, and AI, Should Be Considered
We’ve established that security and video surveillance play a crucial role in luxury stores. Due to the specific layout and design of such stores, the selection of cameras is important. More and more, AI is also used to enhance security and business intelligence as well.
The deployment of video surveillance systems at luxury stores begins with camera selection, which requires careful thinking and consideration. “Several factors should be considered when selecting surveillance cameras for luxury retail shops. Firstly, the camera must be discreet and customizable to blend seamlessly with the shop’s interior design,” says Addy Ho, Segment Development Manager for Retail, Asia Pacific at Axis Communications. “Secondly, camera reliability is crucial, as the cost of replacing a camera is much higher than the camera cost. Additionally, an unreliable system may make footage unavailable when needed.”
“Store fit-outs can cost millions of dollars, so it’s critical not to detract from the ambiance of the retail environment with overt security cameras. This makes system design critical in luxury retail settings to protect high-value assets while ensuring the ultimate shopping experience,” says Jason Burrows, Sales Director for IDIS America.
“Identifying high-risk areas such as entrances, exits, cash registers, vaults, and high-value product displays first will ensure optimal locations for cameras and determine the right model,” he added. “It’s also worth considering a mix of visible and covert camera placement, depending on the specific requirements of each area, while wide area coverage without blind spots is important for sales floors, stockrooms, and back-room cash handling areas.”
That said, below are the types of cameras that may be considered.
Luxury storeowners can consider panoramic cameras, which can meet their need for wide-area coverage. “Low profile UHD fisheye and multi-head cameras can provide complete domain awareness across often open plan stores right to the edge of every scene, as well as provide clear views of display cabinets. These can eliminate up to three to four conventional fixed lens models and minimize the impact on aesthetics,” Burrows says.
It’s also important to consider cameras with good low-light and wide dynamic range capabilities. “A camera that can provide color information without motion blur in a low-light environment is recommended. Furthermore, a camera with forensic WDR capability is recommended for jewelry retailers where high reflection often happens in jewelry shops,” Ho says.
As previously mentioned, cameras in luxury stores should be discreet to not disrupt the customer experience. To that end, these are cameras that should be considered, according to Keith Aubele, Chief Security Officer at Salient Systems.
Ceiling-mounted cameras can blend seamlessly with the store’s architecture, providing an unobtrusive and inconspicuous surveillance solution. Next, recessed cameras can be installed flush with the ceiling or walls, ensuring they do not protrude and draw attention.
Finally, in some cases, strategically placed hidden cameras, such as pinhole or covert cameras, can be used to monitor sensitive areas while maintaining a discreet appearance.
Storage and AI
As for where the video footage should be stored, a hybrid solution is ideal. “A hybrid model is recommended for video footage storage, with footage stored locally for 30 days and secondary storage in the cloud to store footage for 90 days – local footage to be uploaded to the cloud after business hours,” Ho says. Increasingly, luxury store operators are also turning to AI, which, when combined with video, can help achieve the following purposes:
Indeed, security/loss prevention is of utmost importance for luxury stores, which can use AI for smart detection and search purposes. “For loss prevention, adopting AI-powered analytics is now seen as imperative as they allow monitoring teams to alert security personnel on the ground to suspicious behavior. Advances in deep learning-powered analytics functions – including highly accurate detection alerts to virtual line crossing, object detection, loitering, and intrusion – can be customized to meet security and operational requirements for each store. When analytics generate real-time alerts to suspicious activities, notifications can be immediately sent to security personnel, store managers, or loss prevention teams,” Burrows says.
AI Empowers Luxury Retailers with Business Intelligence
Needless to say, today, retailers, including luxury storeowners, attach strong importance to business intelligence, and AI can also play a role in that regard. “AI technologies can analyze customer data, including purchase history, preferences, and behavior patterns, to generate valuable insights. These insights enable personalized recommendations, targeted marketing campaigns, and tailored customer experiences, helping shop owners understand their customers better and provide customized services,” says Keith Aubele, Chief Security Officer at Salient Systems.
“AI-powered video can also support assessment of employee behavior and performance, such as adherence to protocols, customer engagement, or response times. This enables luxury retailers to provide targeted training, improve employee productivity, and maintain consistent service quality across every store,” says Jason Burrows, Sales Director for IDIS America.
The AI can be run on edge devices, on-premises, or in the cloud, depending on the use scenario. “For instance, AI that can detect suspicious behavior or slip-and-fall incidents should be run on the edge device, and trigger alerts through the shop network. Incidents should be recorded both locally and in the cloud for future reference. However, for AI involving big data analysis, such as identifying suspicious individuals or analyzing conversion rates across multiple stores, the AI should be run and analyze the aggregated data in the cloud,” Ho says.