PREDICTIVE ANALYTICS: WHAT IT IS IN SIMPLE TERMS

Everyday shoplifting causes billions of losses to the retail business every year. This is between 2% and 5% of the revenue of retail chains. The damage is covered by everyone: owners, staff and honest customers who are willing to buy goods at an inflated price designed to partially cover the losses incurred.

How can theft be prevented? Is it possible to reduce the facts of its manifestation to zero, or significantly reduce the number of thefts? Experts of the Predictive Analytics Company answer the question.

Predictive video analytics: what is it in simple terms?

Researchers who have devoted years to studying the behavior of thieves and ordinary shoppers have come to the conclusion that the sequence of their actions in the store and the actions themselves have significant differences. The methods of these studies are used to create algorithms for mathematical modeling and predictive analytics.

Today’s technologies are capable of recognizing the presence of a shoplifter in real time. How does it work? A system for processing video streams from video surveillance cameras is triggered on the territory of the store. A store employee receives a signal on his working gadget that a potential intruder is on the sales floor, and then has the opportunity to prevent theft.

Why do people steal in stores?

Some large chains treat shoplifting as a cost of production. Future losses are realized by business owners even before stores open. Therefore, when planning to install security systems, many people today decide to utilize the power of predictive analytics through video surveillance.

There can be several reasons for theft:

— excitement and the desire to get the «forbidden fruit» for free and unnoticed;

— difficult life circumstances;

— armed robbery.

Theft of goods is often prompted by their abundance and variety. Experts call it impulse shopping, when there is a desire to buy everything at once.

Conflict-free theft has its own name — shoplifting. To protect your business from deceivers and fraudsters, it is not enough to rely on current legislation. In any situation in which shoplifting takes place, the human factor comes into play. Mistakes made by people who once decided to steal can be fatal for them, and cost them the confiscation of their property. A newly discovered thief runs the risk of gaining a ruined reputation, being fined and becoming a convicted thief.

How predictive video analytics works

Predictive analytics can be considered as a scientific discipline and Industry 4.0 branch that studies methods and ways of making predictions.

Predictive video analytics system functions:

— processing continuous video stream from cameras in real time;

— analysis of customer behavior;

— sending an information signal about the presence of a thief to the mobile application of a store employee.

The advantages of this method of protection are obvious:

— Reduction of losses from theft;

— theft prevention and prevention of various dangerous situations;

— implementation of predictive analytics can be done remotely.

To accurately calculate the future behavior of an object in predictive analytics, it is enough to get reliable data about the past and current states. You regularly encounter predictive analytics in your life.

What industries use predictive analytics:

— stock market trading

— logistics (indispensable in forming a supply chain);

— industry (helps prevent accidents in large and small production facilities);

— insurance;

— banking sector;

— education;

— medicine and pharmacology.

Empirical modeling, statistical and parametric analysis, machine learning, neural networks, and a number of other technologies are also used in analytics. However, first you need to collect, accumulate and process data.

This extensive implementation of predictive analytics in all areas of human life has been made possible by the total digitalization of equipment and, as a result, the use of automated process control systems (APCS).

Digitalization has made it possible to connect sensors, interfaces and data acquisition systems to equipment in order to monitor the performance of production facilities, detecting and warning of critical deviations in a timely manner and protecting plants from overloading and overloading.

The predictive analytics framework includes methods for analyzing data and how to interpret it. This concept positively influences future successful decision-making based on the results of a past event.

Predictive analytics and trading

The world has well accepted and actively implemented predictive analytics tools in all spheres of human activity. New technologies have been particularly welcomed in the sphere of trade, marketing and finance. For example, banking systems have been able to create portraits of insolvent clients. Thus, the majority of loan applications are now screened out.

Summarizing the above, we can give an answer to the question of what predictive video analytics is for stores and retail chains in simple words — it is a set of digital operations implemented in a video surveillance system that predicts the behavior of visitors, promptly recognizing a potential thief.

The structure of predictive analytics includes:

— elements of classical statistics;

— game theory;

— mathematical analysis

Today, retail corporations and distributors are emphasizing the importance of applying predictive analytics to their business. With its help, they have learned how to:

— make forecasts of customer demand;

— keep track of product substitution during promotions and discounts;

— record product substitution for items during promotions and discounts;

— form a map of variability in the cost of goods with a focus on seasonality and demand;

— take into account climatic peculiarities, location and size of a store or retail space;

— specification of statistical indicators of competing firms and so on

Predictive video analytics is needed in stores to minimize the risk of theft occurring. Prediction is based on the results obtained from the units being analyzed. The collected data sets are processed and a prediction is made. The structure of modern video surveillance software installed in stores includes predictive analysis functions. Russian companies do not miss the opportunity to optimize their business processes everywhere by installing such systems.

Experts who track and monitor the core predictive analytics toolkit say that one of the main tools in next-generation video surveillance is the use of specialized programming languages. Some of the most in-demand languages include:

— Python

— RapidMiner

— Knime HR

— IBM SPSS Modeler

— Watson Analytics

— SAS Enterprise Miner

— Oracle Big Data Preparation

Every software environment listed in the above list is used in making predictions.

Predictive analytics likes accurate samples and values. Unless a specialist has enough information, it is hard to tell how accurate the expected prediction will be. Therefore, when developing software for video surveillance systems, developers take every component of the product as seriously as possible. And, first of all, the focus is on data collection, which will then be analyzed and modeled into a useful result.

How will predictive analytics help the modern business owner? It should be perceived as an effective tool that can be used to make important management decisions that prevent possible multi-million dollar losses at the «embryo» stage.

Experts of the Predictive Analytics Company believe that the integration of predictive video analytics into the installed video surveillance, if not a panacea, will play a decisive role in preventing theft in your store and reducing their number.