LP Magazine EU








Retail Environment

What’s In Store For The Future?

From Technology to Risk Management—How Retail Is Designing Out ‘Next-Gen’ Risk

Depending upon who you talk to in terms of the future look and feel of retail, you’ll get a different vision. 

According to the Nottingham-based Centre for Retail Research (CRR) in its Store of the Future report, retailers and consumers remain as passionate about the “next best thing” as they did 100 years ago when a visit to a department store was the most thrilling experience.

Stores of The Future

The report said:  In the last 50 years the next best thing of course has included the shift to self-service with the new supermarket (and later the hypermarket or superstore) seen as the essence of the “Future Store”. Self-service and self-selection is the norm these days in virtually every store. Eliminating slow checkouts and lengthy queues, a typical bugbear of most shoppers, has involved better layout, electronic point-of-sale (EPOS) and laser scanning, automatic card readers, customer self-scanning machines and contactless payments. EPOS has provided customers with an itemised receipt and retailers with accurate information about stock and detailed information about who buys what and what time of day.

New technology probably will be an important element of the store of the future. Some people think that the “Future Store” is only about using new technologies, although our view is that this is mistaken. If physical stores are to survive they need to add something different to the shopper experience—something they cannot get online—but if the new stores are too slow, inefficient or too expensive they probably won’t be the “Store of the Future” for very long.  Moreover, technology-intensive stores will have much higher costs than other stores and this probably means they will be confined to major shopping destinations. However it is true that technology costs normally fall with mass production so that a product like a virtual 3D mirror (which shows you what the garment looks like from every direction and can even change the garment’s colour without the customer needing to put a fresh garment on physically) may potentially become very common. 

New Technology is Limited by People

The report continues: However people don’t necessarily embrace technology warmly. Customer self-scanning is still seen as problematic five years after the major push to get shoppers to use them. The reasons are probably partly technical (they are very clunky and slow to use) and partly psychological (they are not private enough). Even Amazon Go stores, which received tremendous favourable publicity a year ago, have a limited range of goods and the average customer spend is currently very low, suggesting that technology alone is not the answer. 

At the extremes, there are the utopians versus the dystopians, the former envisaging an all-connected customer-centric world where technology speaks to us, recognises our habits and buying behaviours and markets or “up-sells” accordingly while at the same time buying our unflinching loyalty into the all-consuming bargain. The latter sees a mission creep of data capture and intrusion where technology and machine-learned AI talks to each other to make sweeping assumptions or draw false positives about our behaviour in a more recrimatory and cynical post-COVID world. 

It is the classic “passive aggressive” polemic, a condundrum for solutions and store designers alike. Consumers are not passive sponges that unquestioningly absorb every retail promise because they recognise that the march of technology can be as much to do with business reality and the need for head count management and controlling costs as it is about the customer journey. 

The rise of violence and aggression during and post COVID-19 was not all to do with brazenly pugilistic store thieves, but in many instances frustrated and often scared shoppers lashing out after being told to socially distance, wear face coverings and queue outside to keep occupancy levels to manageable levels.

Against a backdrop of a thinly-spread police presence, young and inexperienced store staff who had suddenly been elevated to the role of “key workers” were mandated to do more with the less they had found themselves with. 

The Global Picture

The unrelenting automated march of self-checkouts (SCO) and technologies such as Shop and Go is a case in point as more stores took a hands-off approach to allow the technology to do the “heavy lifting”, with many paying a heavy price in terms of customer fraud and trolley push-out crime, despite the staff savings of fewer manned till points.

A report by RMI in April this year found that dishonesty around SCOs is five times more likely than traditional cashier checkout theft, with retailers experiencing a 50 per cent higher rate of loss when using these systems. The findings also suggest that shoplifting increased by 30 per cent after their introduction in some areas, with approximately 4 per cent of items scanned at self-checkouts not being paid for, on average. 

In the US, ninety per cent of customers aged 18–34 years prefer SCO over traditional checkouts, but fifty-six per cent felt it encourages shoplifting even further due to its ease of use compared with manned tills.

In Australia, total losses from such thefts amount up to $3.2 billion annually whereas France reported increases of up to 30 per cent. The UK also faces similar issues where £3 billion worth of goods were stolen through these machines every year according to one article in the Daily Telegraph. 

Canadian retailers surveyed revealed that 40 per cent of shoplifters used them whilst Walmart reported a 10-15 per cent increase in theft post-adoption, leading researchers to calculate an average of 1.47 per cent in inventory shrinkage per store due to fraudsters taking advantage. 

For these reasons, many UK retailers struggling with post-COVID cost-of-living challenges, reduced footfall and spending moratoriums remain frozen into the foothills of decision-making rather than being able to ascend the empirical slopes of proven technology and solution investment that could help reduce both their malicious and non-malicious losses. 

The only way may be up, but some are failing to even reach base camp in their board’s thinking when it comes to the strategic cash injections needed to gain the necessary financial footholds, resulting at best in ad-hoc “free” trials of technologies with little or no guarantee of a final push to the top after the pilot programme concludes.

The Loss Prevention Research Council

In the US there is a more formalised, yet assured climb. The LPRC (Loss Prevention Research Council) was founded in 2000 by leading retailers and Dr Read Hayes, an LP specialist with more than thirty years’ law enforcement experience.  The LPRC’s objective is proof-enabled investment decision-making that enables retailers to cut their losses through research and peer review.

With founding retailers including Target, Walmart, OfficeMax, CVS, GAP, Home Depot, Beall’s and Barnes and Noble, the LPRC is now collaborating with 70 major retail chains on embryonic solutions, a journey that has seen over 300 real-world loss prevention research projects designed to effectively combat and deter theft, fraud and violence.

The LPRC utilises the appliance of science through its Research StoreLab locations which act as physical mock stores to test the technology in real-time scenarios. It also uses randomised control trials, benchmarking surveys and quantitative and qualitative data analysis. 

Offender analysis through bringing former shoplifters or fraudsters on-site to interrogate and penetration test solutions as well as shadowing them “at work” is central to the approach of the LPRC to help gain valuable insights into how to try and thwart their attempts in the future. 


In Europe, such an approach has long been seen as the zenith of achievement as retailers are forced to rely on the more ad-hoc approaches outlined earlier. 

In the UK, for example, academic research from the University of Leicester, particularly the work of Emeritus Professor Adrian Beck and the ECR (Efficient Consumer Response) Loss Group which specialises in shrinkage research, on-shelf availability and food waste reduction, and Professor Martin Gill, formerly of the University but now head of the Perpetuity Group has built a respected commercial reputation around shoplifter and fraudster penetration testing.

Four years after the launch of the LPRC, Europe blazed its own trail with the opening of a unique store that became a test bed of differing retail technologies where shoppers could pilot the latest in operational excellence. 

Metro Group’s Future Store

The Extra Supermarket was opened in the town of Rheinberg, Germany by retailing giant Metro Group and became a shorthand term for the most talked about technology projects in the retailing world when it opened for business in April 2003 to a fanfare of attention and celebrity endorsement, including German supermodel Claudia Schiffer who hailed from the town.  

Düsseldorf-based Metro Group wanted to bring together some of the most interesting and potentially useful technologies to support in-store operations in a live retail setting, including intelligent scales, personal shopping assistants, kiosks, electronic shelf labels, electronic displays, employee PDAs, self-scanning and applications of RFID (radio frequency identification) with the explicit brief of seeing how these systems would work individually and together, and how consumers would react to them. Metro Group realised it couldn’t act alone and assembled a collection of more than forty technology companies in what became the “Future Store” initiative, all of whom had a stake in the success of the project. The companies contributed technology and marketing resources to the initiative in return for access to the results in the same way that LPRC shared its learnings with US retailers.

The hype around Future Store reached a fever pitch in January 2004 when Metro Group demonstrated its success in a 13,000-square-foot exhibit at the NRF (National Retail Federation) annual conference in New York.

At the conference, Metro Group’s chief executive officer, Dr Hans-Joachim Körber and its chief information officer Zygmunt Mierdorf also unveiled the company’s plans to have its top suppliers begin RFID tagging of pallets and cases following in Walmart’s footsteps.

Dr Gerd Wolfram, project manager, Metro Future Store, who had worked in IT for Metro Group since 1990 saw the Future Store as an opportunity to start planning for better investments in technology. From a practical aspect, the company realised that a store serving as an integrated “test bed” for new technologies would be a more effective way of evaluating systems than testing individual solutions in isolation from one another. 

While acknowledging the risks of conducting tests in a functioning store, he said: “We now see it was the best thing to do because you can get direct feedback from customers. In a lab, it’s not a real situation—seeing is believing, I always say,” said Dr Wolfram.

In addition, Metro Group wanted to demonstrate to young people interested in technology that the company could be an attractive place to work, an issue that has resonance in today’s retail environment where recruitment and retention has reached crisis point for many businesses as a result of the pandemic and increasing levels of violence and aggression aimed at store colleagues.

 “If you ask students where they want to work after graduating, they’ll say Daimler or Lufthansa,” he explained at the time. 

“Retailing is seen as conservative. We’re trying to change that by developing leadership in technology.”

Although Future Store is no longer operational, Metro blazed a trail of transparency and made a point of being open about it with other retailers. Major chains from around the world, including Walmart, Tesco and Carrefour, were given guided tours often by Dr Wolfram himself.

“It’s better to talk with them and get feedback than for them to go through the store hidden,” observed Dr Wolfram. “This is first about Metro, but we also want to get others to do similar things so there’s more innovation in retail in general.”

Twenty Years On

Now, twenty years on, other stores are taking a similar approach, albeit in more modest formats, namely the adoption of “free-trials” in so-called “hot stores” where suppliers get to test their LP technology in a live retail environment. From behaviour-driven AI technology to aisle monitoring, vendors are able to test their solutions and get real-time feedback from the retail client of its effectiveness in a trial that could either deliver a lucrative roll-out contract or further food for thought if a technology needs to go back to the drawing board. 

One  example of a successful roll-out from such a trial, which has also been introduced by other retailers, is a new entrance camera and screen that simply puts a red box around a customer’s face as they enter the store to inform them that they have been captured on camera, but without retaining the images so there are no GDPR implications.

Facial Recognition (FR) is a technology that will arrive in the very near future, particularly as the ICO (Information Commissioner’s Office) has conducted trials into Facewatch’s use of FR where Stephen Bonner, the ICO’s deputy commissioner said: “Based on the information provided by Facewatch about improvements already made and the ongoing improvements it is making, we are satisfied the company has a legitimate purpose for using people’s  information for the detection and prevention of crime. We’ve therefore concluded that no further regulatory action is required.” 

Other areas of concern lie with the use of AI technology in real-time applications. Professor Stella Pachidi from Cambridge University’s Judge’s Business School said firms need to beware of AI “dysfunctions” that include bias that can harm operations, reputation and internal morale.

Areas that organisations need to be aware of include:

Algorithmic bias that can produce inequity by putting certain groups at a disadvantage.

Outcomes that are difficult to explain due to the many layers that went into the AI-generated decision, so managers need to be transparent about the data used.

Blurred accountability boundaries when outcomes are influenced by both machines and humans.

Invasion of privacy given the potentially huge amount of data often involved.

Stella also cautions that many organisations, including retailers are using AI in an experimental phase, need to take care when experiments are scaled-up across the business including integration with legacy company infrastructure.

Secure by Design

Although many businesses are looking at applying new technology to older systems, such as CCTV, for example, many new developments include baking secure design into the infrastructure of future developments. Some businesses even have Secure by Design experts who sanity check proposed technologies so that they accord with wider security strategies. For example, it could be the placement of technologies in new builds or retrofits or even marketing or merchandising proposals that include risk elements that could result in lost revenue or brand reputational challenges.

Here they may challenge the decision or even require a department to compensate the business in the event of a foreseen loss predicted by the Secure by Design team which provides a salutary and sobering lesson for all departments.

EV Charging Points

Other new-build risk issues could include the future of sustainable buildings and even mobility round stores. These so-called future risks are actually present today but will soon be ubiquitous to our everyday experience.  Electric vehicles (EVs) are already outstripping diesel and petrol car sales as the Government targets 2030 for the end of fossil fuel internal combustion engines, but at present the infrastructure for charging them is lagging behind demand.

Many retailers are already looking to introduce customer charging points to their larger “longer-linger” stores as well as their head offices where many colleagues are already opting for greener transport. This roll-out is likely to escalate as the second half of the decade comes into view, but many retailers are already making the investments as an added-value offering.

Catherine Bowen, former head of policy at the British Retail Consortium and now senior policy advisor for the British Vehicle Rental and Leasing Association (BVRLA) said the “plug in pledge” will see 80 per cent of all new vehicles being electric by 2025. 

But many retail sites may require additional grid capacity provided by the distributed power networks to provide such a service and, according to the BVRLA, even motorway service areas, those refuel and refresh points along the UK’s major road network, are not yet served with adequate energy capacity to keep the nation running on electric.

“Supermarkets are in the same situation—they can’t assume that they will have enough power to recharge vehicles on top of their current electrical requirements. They will have to make an application to upgrade to ensure that they are in a position to offer charging services,” she said.

The application can also take a long time to process because of the complexity of the requirement and expertise needed, not to mention areas of the country that may have less coverage, the so-called “geographical blackspots”.

Then there are the levels of charging while customers are in the stores—the fast-charge 350 watt versus the snail’s pace seven to 22 kw chargers which, Catherine argues may create risks further down the line.

“We are already wise to incidents of what is being called charge rage where people jump the queue or park in charging points because there is currently no etiquette. Charging rage could also be where people get frustrated because they want to charge to 100 per cent before beginning an onward journey, but currently it takes the same amount of time to charge from 0-80 per cent as it does to get from 80 to 100 per cent.”

“Overall, there is a long way to go on charge points in the future,” she added.

From charging offenders to charging customers cars, the future of stores is no longer another world or summit to conquer. Instead, it is being imagined and implemented today in both the fantasy and real aisles of future stores and in the forward-thinking minds of retail executives and their risk teams who are already looking to understand how their introduction will impact the profit and loss landscape and what leaps of faith are sharable and ultimately scalable.  

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