Using AI and computer vision to combat retail fraud

retail loss prevention
Dell Technologies

In the retail industry, inventory loss is a problem with a multi-billion-dollar price tag. By one estimate, U.S. retailers lose nearly $50 billion a year in inventory loss.1 While this problem has many drivers, most of the financial impact of inventory loss in the retail sector occurs in stores at the point of sale (POS).

Two of the big problems at the POS are fraudulent scanning activities and UPC barcode switching. To cut the costs of inventory losses, retailers need to put advanced technologies, like artificial intelligence and computer vision, to work to reduce these major sources of inventory loss.

These advanced capabilities are included in the new Dell EMC Ready Solutions for AI – Retail Loss Prevention. These solutions were developed in partnership with Malong Technologies, an AI company that provides state-of-the-art computer vision technology for the world’s largest retailers.

The new Ready Solutions for AI – Retail Loss Prevention uses computer vision and AI at the POS to reduce inventory loss that is caused by either accidental or intentional behavior during checkout. Powered by an in-store Dell EMC PowerEdge server that runs product recognition technology in the Malong RetailAI Protect system, the solution can be used in most retail stores to reduce POS inventory loss at both self-checkout and employee-staffed checkout lanes.

How it works

Let’s consider two scenarios in which Malong RetailAI Protect can prevent retail loss: ticket switching and mis-scans. In these use cases, an overhead fixed-dome camera captures video of an item that is either not scanned or has a suspect UPC barcode. The video is decoded by the processors in the Ready Solution and the decoded video is used as input to the Malong RetailAI model.

The model then predicts the item’s UPC barcode. If Malong RetailAI Protect determines that the item was not scanned, or if the scanned UPC barcode does not match the correct UPC barcode, Malong RetailAI Protect notifies the self-checkout system to raise an alert. The retail associate overseeing the self-checkout lanes can then take the necessary actions to stop the fraudulent behavior.

This solution is easy to put into use at scale for thousands of retail stores. This simplicity is enabled by the use of Dell EMC PowerEdge R540 and R7515 servers, which have a well-integrated management suite that makes them ideal as edge nodes in distributed retail environments.

The result is a cost-effective computer vision solution that empowers retailers to reduce inventory loss by detecting mis-scans and ticket switching in near real time at store checkout lanes — and to do it all in in a manner that is largely transparent to the customer.

The bottom line

Inventory loss at the POS in traditional retail stores is an extremely costly problem. Today, Dell Technologies and Malong are helping retailers fight back against this problem with the capabilities of the new Dell EMC Ready Solutions for AI – Retail Loss Prevention. These solutions make it easy to deploy advanced technologies that can help retailers reduce inventory losses and improve margins without affecting the customer experience.

To learn more

For a deeper dive, explore these resources:

  1. Money,Shoplifting and Other Fraud Cost Retailers Nearly $50 Billion Last Year,” June 22, 2017.

Copyright © 2020 IDG Communications, Inc.