In recent years, the market has experienced turbulence due to the global economic downturn, impacting various sectors. The retail industry, in particular, has faced significant challenges such as heightened scrutiny in a sector where costs are closely examined, and profits are narrow. Navigating these conditions, retailers have recognised the critical need to streamline operations and maximise returns on investments.

Therefore, when purchasing a new surveillance function or solution, it’s crucial to assess its potential to reduce costs or affect profit margins. For profitability, the system should go beyond store security and offer additional benefits to lower overall expenditure. Ultimately, the ideal solution should add value to the retail business instead of being viewed as a mere expense.

But before exploring how businesses can drive a positive return on investment (ROI), let’s dive into why it’s important to consider the total cost of ownership (TCO) for a surveillance system:

Understanding the full spectrum of surveillance system expenses

The cost of individual pieces of surveillance technology cannot be overlooked. For retailers, implementing a system with hundreds of cameras across multiple stores can entail a substantial upfront investment. While the immediate hardware costs may accumulate rapidly, it’s essential to recognise that these represent just the most apparent expenses. It is often the invisible and ongoing costs attached to running these solutions – such as installation costs, operation and maintenance, training staff members, and so on – that ultimately far outstrip the initial cost of the hardware in the longer term.

When evaluating the total cost of ownership (TCO) for a surveillance system, it’s crucial to consider various costs that may arise during acquisition, operation, and decommissioning. The TCO approach is widely recognised and utilised across industries, focusing on capturing all costs associated with a purchase decision. By adopting this methodology, retailers account for expenses related to their camera solution throughout its entire life cycle, ensuring a comprehensive understanding of its overall value.

For instance, indirect costs encompass more than just day-to-day operations and routine maintenance; they also encompass installation management, security personnel hiring, data storage (both on-premises and cloud-based), energy consumption, cybersecurity measures, and firmware upgrade management. Effectively addressing these aspects can lead to substantial financial impacts over time.

This is where opting for a system that is scalable can benefit the retail business. For instance, if a system is based on an open platform, it can be easily upgraded and extended over time – improving its reliability. This will save a company operational and maintenance costs in the future and can ultimately drive a higher ROI.

Maximising ROI through strategic investments and integrations

When it comes to ROI, it’s important to consider how a surveillance system can impact the day-to-day retail business and generate value. These returns are particularly rewarding when combining the cameras with other solutions. For instance, if a business were to experience issues related to theft, loss, or fraud, it could use combined solutions to minimise this.

For example, a retailer can deploy a combination of advanced video surveillance systems with fraud detection software to address issues such as cart push out (where customers leave without paying) and effectively prevent inventory loss. This is extremely valuable, especially considering that the rise in retail theft offences since October 2021 have been steadily increasing, up 47.5% year-on-year.

Leveraging the additional capabilities within an existing security system is another way to generate more value out of the initial investment. Instead of solely using the system for security purposes, there are several other use cases that can benefit a retail business.

For instance, analytics capabilities within the cameras can be used to improve in-store staff management by detecting issues such as loitering or long queues and providing real-time announcements, or to optimise efficiency with the support of automated processes. All of these will help reduce operation costs and consequently improve profit margins.

Other potential benefits that can help improve synergy across departments include increasing budgets for projects through cooperation between operations managers and store managers, which can contribute to the total added value of the surveillance system and ensure it can realise ROI over time.

Leveraging surveillance solutions for retail profitability

The role of surveillance systems in retail goes beyond mere security; it’s about unlocking tangible returns and enhancing operational efficiency.

By adopting a total cost of ownership (TCO) mindset, retailers gain a holistic understanding of the financial implications associated with surveillance technology, encompassing not just hardware costs but also ongoing operational expenses. Scalability and strategic investments in integrated solutions further amplify the potential ROI, allowing businesses to address multifaceted challenges like theft, fraud, and operational inefficiencies.

Furthermore, leveraging advanced capabilities within surveillance systems can streamline processes, optimise resources, and contribute to improved profit margins over time. Ultimately, the journey toward maximising ROI through surveillance solutions is a strategic one, involving careful planning, integration, and ongoing optimization to drive sustainable value across all facets of the retail enterprise.

Rodney Guinto is account executive at Axis Communications.