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Retail SecurityDiscussing the Growth Potential
Satish Lele, Vice President
Industrial PracticeIndustrial Practice
October 14, 2011
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PHYSICAL SECURITY / ACCESS CONTROL MARKET
Others
• Intrusion Detection System (IDS)
Electronic Access Control Systems (EACS) – Hardware
• Card access
• Proximity cards (RFID) &
Surveillance and
Monitoring
• Video Surveillance Systems
7
Source : Frost & Sullivan
• RFID, RTLS, EAS
• Alarm Monitoring
• Biometrics
• Perimeter Protection
• Video Analytics
• Smart Cards
• Other EACS hardware: Controllers, EM lock, etc
• Proximity cards (RFID) &
readers
• Contactless Smart cards
& readers
• Keypad
• Biometrics
• Integrated Readers
• Software
• Cameras (Analogue & IP)
• DVR
• NVR
• Video Server
• Software
• Encoders
Focus Points
Retail Security
Overview of retail industry- Challenges and Drivers
Technology Assessment
8
Regional Analysis of the Retail industry
Pricing Trends
Asia Pacific Growth Potential
Future Outlook for Retail security
Overview
9
2010
2011
2012
2013
2014
Global Retail IndustryY
ear
Global Retail Sales Forecasts
India and China leading the growth in
retail sales
10
0.0 2.0 4.0 6.0 8.0 10.0
2010
W. Europe Americas Asia Pacific
US$ Trillion
Source: PWC Publication 2010
• China is the world’s second largest retail market after the United States.
• China experienced a year-on- year retail sales growth of over 14% in 2010.
• Emerging markets fuelled by increasing consumer spending and increased international retailers footprint. I
• Medium growth of 5-7% due a balance between saturated western European and growing eastern European retail sector.
Major Drivers
Drivers 1-2 Years 3-4 Years 5-7 Years
Increased focus on loss prevention to reduce retail
shrinkage . High High High
The need for flexible innovative solutions and excellent
customer service drive demand for securityHigh High High
IP technology to bring about integrated systems and
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IP technology to bring about integrated systems and
remote monitoring Medium High High
Increasing footprint of international retailers expands
opportunities for security vendors in emerging markets Medium High High
Use of security solutions as business and management
tool opens up new avenues for vendorsLow Medium High
Decreasing cost of latest technology in security space
drives investment from the price-conscious retailersLow Medium High
Major Challenges
Challenge 1-2 Years 3-4 Years 5-7 Years
Retailer’s requirement for tailor-made solutions
increases the need for customizationHigh High Medium
Low awareness among retailers about latest
technology hampers the adoption rate for the same High High Medium
High influence of distribution channel partners on end-
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user decisions necessitates strong vendor-partner
relation
High High Medium
Increase in the number of decision makers involved in
procuring security. Medium Medium Low
The availability of low-cost security equipment has
made price the key differentiatorMedium Medium Low
Technology Assessment
13
Technology Segmentation in Retail Security
Video Surveillance
• Most popular form of
Intrusion
Detection
• System is primarily
Electronic Article
Surveillance
(EAS)
• Most popular
Access Control
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retail security (afterEAS).
• Key trend is inhaving videosurveillance on IPtechnology.
• System is primarily
the only line of
defense in store after
work hours.
• Modern day systems
are connected with
local security
agencies.
• Most popular
technology used by
retailers.
• Provision of tags at
the manufacturing
site of the product
itself is becoming a
key trend.
• Primarily used for
employees of stores.
• Access control is
essential at critical
sites in the store.
Technology Segmentation in Retail Security
Priority for
RetailersPurpose
To curb shoplifting
To prevent vandalism
Security
Systems
EAS
Video
Life SpanExpected Growth
Rate
15-20 years 3-4%
8-10 years 6-8%
15
To prevent vandalism and curb shoplifting
For basic security of building infrastructure
To restrict and allow staff access
Source: Frost & Sullivan
Video Surveillance
Intrusion Detection
Access Control
8-10 years 6-8%
10-12 years 1-2%
15 years 4-5%
Regional Analysis
16
Regional Analysis of the Retail IndustryPercent Contribution
Asia Pacific, 1
7%Americas
, 48%
17
• North America and Latin America, are the major contributors of the physical security solutions in retail
irrespective of the type of retail. It is closely followed by Europe (35 percent). These two geographic
regions have a huge installed base of analog systems.
• Asia is an emerging market, with low current overall contribution; however, it is expected to have a higher
CAGR in the upcoming years.
Source: Frost & Sullivan
W. Europe,
35%
Factors Influencing Retail Security
Factors Influencing Retail Security
Americas W. Europe Asia Pacific
Budget available for security High Medium Low
Preference given to manned guards Medium Medium High
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Trend Towards IP High High Medium
Increased Focus on Retail Shrinkage High High Medium
Acceptance of Security in Retail High High Medium
Penetration of Retail Security High Medium Medium
Source: Frost & Sullivan
Physical Security Solutions in RetailBy Type of Retailer
Physical Security Solutions in Retail Market: Percent Spilt Between Big Box and Small/ Independent Retailers (Asia
Pacific)
Physical Security Solutions in Retail Market: Percent Spilt Between Big Box and Small/ Independent Retailers (Americas)
Big Box Retail, 91
%
Small/ Independe
nt Retail, 9%
Big Box Retail, 70%
Small/ Independen
t Retail, 30%
19
Physical Security Solutions in Retail Market: Percent Spilt Between Big Box and Small/ Independent Retailers (W. Europe)
Physical Security Solutions in Retail Market: Percent Spilt Between Big Box and Small/ Independent Retailers (World)
Source: Frost & Sullivan
%
Big Box Retail, 80%
Small/ Independen
t Retail, 20%
Big Box Retail, 77%
Small/ Independen
t Retail, 23%
Pricing Trends
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Pricing Trends Retail Security
Pricing
• Highly price sensitivevertical of security.
Price Parameters
• Various factors form the
final cost of a security
systems.
• Cost of installation
Sales Channel
• For most vendors in
Asia, sales of products
takes place through
distributors.
Highly competitive
21
• Retailers arerestricted by reducingsecurity budgets.
• Some retailers selectsecuritytechnology/vendorpurely on price ratherthan accuracy.
• Cost of installation
• Cost of maintenance
• Cost of licensing of
software
• Training costs
(especially if retailer has
high attrition rate).
• Training and technical
support also provided by
distributor.
competitive price
sensitive market
Pricing Trends for Physical Security in Retail
Video Surveillance
• IP video surveillance is a key trend.
• Through IP technology, retailers are now employing “remote viewing” of security footage from mobile devices such as mobile phones, tablets and PDAs.
Electronic Article Surveillance
• Current trend involves having the products “tagged” at the manufacturing site itself.
• This reduces the cost for the retailer in terms of man hours spent by employees that would otherwise tag each item.
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that would otherwise tag each item.
Intrusion Detection
• The intrusion detection systems used are basic ones, and once the system is installed, it has a life span 8 to 10 years.
• They form a smaller, but important, part of the security investment
Access Control
• Scalable systems are used.
• Higher proportion of the cost is for the card reader.
• Lesser than 5% of the total security investment is from access control, as it is not used largely in retail outlet.
Source: Frost & Sullivan
Asia Pacific Potential
23
Asia Pacific- Retail Sales Growth by Volume (%)
0.0
3.0
6.0
9.0
12.0
15.0
18.0
24
-3.0
2010 2011 2012 2013 2014
• The outlook for Asia Pacific overall remains positive, with average growth of about 6%
• Growth will continue to be unevenly distributed, with China driving regional momentum
• India’s annual growth will increase from 3.9% in 2011 to 5.8% in 2014
• Vietnam will be a rising start, with growth averaging over10% annually to 2014
Source: PWC Publication 2010
Asia Pacific Retail Security Potential
Retail Security
Asia, a high growth market after Europe and North
America
Growing popularity of organized retail, inflow of
FDI with entry of multinational retailers in
China
25
Retail Security Potential
Vendors increasingly providing customized solutions, E.g., ADT
Security
Move to more advanced and expensive solutions to
tackle issue of retail shrinkage
Supporting infrastructure and adoption of new
technology to drive markets in future
Information Security Trends in Asia Pacific Retail
E- commerce next major area for retailKey Technological Trends for 2011
26
• Increasing budgets towards data protection.
• Vendors providing the use of “cloud” as a viable
option for the storage of critical data.
• Remote accessing tools creating interest for
security officers/personnel.
• Japan is ahead of its Asian peers with e-
retailer Rakuten, positioning itself for global
expansion.
• Online retailing still in nascent stage in China.
• Online transactions through mobile phones
taking place in Japan and South Korea.
E- commerce next major area for retailKey Technological Trends for 2011
Key Megatrends in Retail Security
Smart Buildings
Smart buildings to provideretailers with vitalinformation on storeperformance.
Smart Communication
Smart communication to allow for remote access to critical data.
27
Cloud Computing
The next stage in evolution in storage and accessibility of critical data.
Business Intelligence
A solution for retailers to target their customers more effectively.
Innovating to Zero
� Shrinkage losses continue across the globe ranging from 1 – 3 % of retail sales globally.
� Shoplifting , employee theft and losses from inventory
Current Scenario 2011
“INNOVATING
Scenario 2020
� Shrinkage losses to be eliminated through integrated security systems.
• Through real time inventory management, costs in storage and time to market
28
and losses from inventory mismanagement, product defects from the source, items being misplaced at the stores etc. all account towards shrinkage.
� Retailers looking at new means to target customers and in utilizing present technology to help them achieve this
TO
ZERO!”
will be reduced. • Furthermore, retailers will be
able to monitor each item thus preventing mismanagement of items.
� Business intelligence solutions providing information on customers habits and purchases will allow retailers to target customers more effectively thereby increasing sales.
Innovating
• IP Video surveillance with biometric facial
recognition to identify previous shoplifters allowing the store to have an extra vigil on
suspects.
• Mobile connectivity providing real time
information on inventory stocks allowing retailers to
have zero inventory wastage costs and storage costs.
Innovating to Zero
29
Innovating to Zero
• Wireless surveillance connecting fire and police
forces to Central Server for monitoring, control and
command communications
• Instant information transfer of new products, offers, deals to
customers through mobile communication and use of
smart posters.
Porter’s Five Forces
New Entrants
Medium Threat
Degree of CompetitionSupplier Buyers
30
Degree of Competition
High Intensity
Supplier
Low Bargaining Power
Substitutes
Medium Threat
High Bargaining Power
Source: Frost & Sullivan
Future Outlook
31
Future Outlook for Retail Security
• Well established security vendors in European and American markets, need to
start focusing more on emerging markets where there is a lot of potential.
• Security vendors need to create more awareness among retailers so that retailers
stop viewing security as a commodity and start looking at security solutions.
Cu
rren
t S
cen
ari
o
Fu
ture
Scen
ari
o
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stop viewing security as a commodity and start looking at security solutions.
• The Asian retail security market has considerably more competition from low-cost
manufacturers and the grey market.
• Security vendors could possibly have a promotional team with products and offers
especially for the smaller retailers.
• Future trend towards integration of key security systems for retail security.
Cu
rren
t S
cen
ari
o
Fu
ture
Scen
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o
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For Additional Information
Donna Jeramiah
Corporate Communications
Asia Pacific
(603) 6204 5832
Jessie Loh
Corporate Communications
Asia Pacific
(65) 6890 0942
34
Parul Oswal
Research Manager
Automation and Electronics
(65) 6890 0974
Satish Lele
Vice President
Industrial Practice
(65) 6890 0959
