Eight-store appliance/electronics chain in New Jersey minimizes losses

Eight-store appliance/electronics chain in New Jersey minimizes losses

Mar 1, 1997 12:00 PM
By CAROL CAREY

The cashier at Top's Appliance City's Union, N.J., store seemed to be doing everything right: putting a salesperson's number on receipts, ringing up the sale, and placing money in the cash register. But at the eight-store electronics/appliance chain's Edison, N.J., headquarters, loss prevention personnel knew the picture they were viewing through the remote surveillance system was deceptive. The recently hired employee's scheme, they believed, was simple enough: She was putting her boyfriend's sales number on receipts to boost his commissions, whether or not he actually made the sales.

Loss Prevention Manager Barry Masuda and Special Investigations Manager John Davis from the Edison headquarters alerted loss prevention officers (LPOs) at the Union store who then brought up the cashier's camera location on a Techtron high-resolution color monitor. Davis used a newly installed remote surveillance system to dial up the location and watch, on a 21-inch Toshiba color monitor, the cashier not only put her boy-friend's sales number on receipts, but also periodically open the cash register drawer, take out money, and place it in a wallet beside the drawer.

When we saw her take the money out of the drawer and then leave the cash register, we immediately called Loss Prevention at the location, and they apprehended her while she was on a break. She had $163 she had planned to put in her locker, as she had done with some $2,500 in stolen money over the past 10 days, according to her confession. She is now paying restitution, says Davis.

The remote system that caught her in the act, now set up in six of the chain's stores, includes a Robot Research Hyperscan Plus color system receiver and a Dell Pentium computer. It was installed by New York Security Systems (NYSS), Middletown, N.Y. It works through a Robot Research TI-50 Series Hyperscan color transmitter at each store, for which the company designed a custom interface to the CCTV master control system. The transmitter is connected to the interface with Belden and Technitrol 8281 video transmission line cable. Headquarters can access a store's CCTV system using Motorola ISDN modems and ISDN phone lines, which use 2 B channels at 128K bandwidth to transmit the video image 40 percent faster than conventional phone lines, according to NYSS. The color transmitter is an 81/2 x 81/2 x 6-inch box with a circuit board and input and output jacks.

The Hyperscan system uses one modem for four cameras, handles up to 16 cameras, and can be upgraded with additional modems if the need arises. Currently, Top's has only one modem at each of its stores, so management can view four cameras from each store at once.

The CCTV system consists of several Techtron high-resolution color monitors, and 16 to 30 Techtron black-and-white and color, high-resolution, still and pan/zoom/tilt, covert and overt cameras in each store, controlled by a Pelco microprocessor-based series 7500 master control system with keyboard. Each store also has a time-lapse VCR, which records 24 hours a day, and a Techtron 32-channel torroidal transformer power supply system.

Currently, 40 percent of store cameras are covert, and as new stores are built, the ratio of covert to overt surveillance is increasing; Masuda believes covert cameras are more effective against crimes such as credit card and check fraud and external theft.

Top's began piloting the remote surveillance system in September 1996 at the Edison and Lakeland, N.J., locations to see whether they would help reduce shrinkage. If so, Masuda could justify fewer store security officers. Consumer demand for electronics is waning and retailers in the industry are struggling. During such times you have to make adjustments in expenses. Though loss prevention was not earmarked for a drop in payroll, because of our low shrinkage level, I wanted to explore the possibility of being more productive at less cost, says Masuda.

By December 1996, Masuda was satisfied the pilot was successful, and he decided to roll out the remote surveillance system (which he calls IPATCH because it patches your eye into what's happening in a remote location ) in four more of the chain's 65,000-square-foot superstores, which average $4 million of merchandise each.

An average of 10 fewer loss prevention officers per store were needed, with one supervisor remaining per shift in each store. The savings in labor cost has been close to $900,000, says Masuda, and he considers the ability to solve problems as they happen from headquarters invaluable.

I felt the technology was such that we could begin to replace payroll and staff with remote surveillance, says Masuda. The resolution enables management to make decisions on what is viewed on screen with assurance, rather than speculation.

For instance, the system has unmasked safety violations, attempted theft at warehouses and procedural violations at the stores' electronic pick-up units (EPUs). Certain warehouse workers, Masuda notes, were stacking heavy appliances too high - a habit that could result in boxes falling and product damage and also in accidents. On one occasion, an appliance fell on a worker, seriously injuring him and leading to litigation.

Now, we can watch the warehouses from headquarters and call the location immediately if we see violations such as doors being left open and unauthorized people walking in or out, products being unpacked and stacked immediately without counting, or products being set aside, in all probability, to be stolen. We can send a security investigator to talk to an employee on the spot; we can skip through a whole series of stores we would have never gotten to in one day before, says Masuda.

The system has also enhanced the effectiveness of several Top's security programs. It enabled security to monitor and enforce Top's Card Watch system, resulting in an 85 to 95 percent reduction in proprietary credit card fraud. When customers purchase high-shrink items such as electronics, they must go to an EPU, show their receipt or credit card, and, if paying with credit, wait while the clerk punches their card into a PC. Using the Card Watch system, the customers' signatures and photos have been archived into the system, and both appear on screen.

Remote surveillance allows us to monitor whether employees are following procedures at the EPUs, interacting with the terminal, or as we have observed in some cases, giving out merchandise to customers without checking receipts or credit cards. On such occasions, we have called the location immediately and taken appropriate action, says Masuda.

Combined with ODO - a company-designed software program that records check-out data - the system helped catch the aforementioned employee stealing with her boy-friend.

It also works in conjunction with mobile communications. It is installed in Top's surveillance van, which is equipped with an AST Ascenta 950N Pentium laptop and Motorola cellular phones and corresponding interfaces for access to the store site Robot transmitters.

Security Intelligence Manager (SIM), a custom-designed software program installed in a laptop, accesses the system using cellular technology and calls up information from Top's proprietary database such as security files, reports, statistics, past interviews with employees guilty of wrong-doing, banking contacts who have helped uncover credit card fraud, and floor plans of all Top's locations with identification of all security devices.

If an investigator in the van or on an assignment notices something amiss at a remote location, he can access security information on the spot through the databases, says Masuda.

SIM, which was conceptualized by Masuda and implemented by Top's programmers, can also access national and international databases to which Top's subscribes, such as Dunn & Bradstreet, Auto Trak and Data Times.

The system has also proven useful in addressing operations. Investigators can verify that outsourced maintenance crews have cleaned indoor areas and plowed parking lots, for instance.

Over the years, continues Masuda, I have realized that loss prevention has a certain structure. Stores will call headquarters with problems, and the security executive will give advice or make an appointment to inspect the store, render an opinion and make an appropriate change. Now, we can cover a lot of ground remotely, without time-consuming and expensive travel - often for relatively minor problems.

That is not to say there weren't repercussions, as there always are, when staff is reduced.

The security supervisors were upset at first and weren't really sure the technology could adequately replace procedures employed by humans, but the success of the pilot project showed them it could, says Masuda.

He adds that there are, however, two locations in which management has decided to retain a full security staff. These are our high-risk stores, where passive intervention is not sufficient, because technology is not confrontational enough to inhibit people who live and work in a high-crime environment, says Masuda. But for the majority of the chain's stores, remote surveillance has proven to be a highly effective and cost-efficient management tool.