Preventing Liquor Store Thefts and Robberies

The Issue

Liquor store robberies and thefts have dramatically escalated over the past 18 months in the City of Edmonton (the “City” or “Edmonton”).   The Edmonton Police Foundation (“EPF”) and the Edmonton Police Service (“EPS”) have teamed up with Alcanna Inc., Alberta’s largest retailer of liquor, to combat this epidemic.  This challenge is part of that effort.

In the Edmonton area, liquor store retailers have experienced approximately a 290% increase in liquor store thefts between 2018 and 2019. The total liquor store robberies/thefts were 9595 in 2019, compared to 3306 in 2018 and only 488 in 2015. Currently liquor store robberies/thefts are occurring on average 26 times a day. These robberies/thefts aren’t only isolated to the Edmonton market; the situation is as dire in Calgary and other communities across Alberta and Canada. The Liquor Control Board of Ontario (LCBO) in Ontario reported $77 million losses in 2018, and the province of Manitoba had also reported similar dramatic crime increases in its stores. 

As these incidents escalate, the criminals have become more violent and threatening over time, and the likelihood of serious injuries or worse increases. Alcanna alone has lost millions of dollars in product through these robberies/thefts. Proceeds from stolen liquor have now gone to fueling the drug trade and organized crime gangs, who openly claim responsibility. The safety of Alcanna’s employees and customers is paramount and as robberies/theft continues to rise, it increasingly endangers their safety. From occasional instances of individual offender or single location theft, events now have groups – often armed with knives, pepper spray or guns – targeting locations with groups of individuals entering with large empty duffel bags, filling them with products and walking out – this has now become a daily activity with offences being coordinated and methodized in different parts of the city. 

In most cases, once a robbery/theft Is reported, there is little a police officer can do besides taking the report and investigating what information from the crime may be available. In order to ensure safety, store staff are prohibited from engaging with or detaining offenders, or attempting to prevent the crime. In the last year, liquor store employees have been stabbed, hit with broken bottles, and sprayed with bear spray - all without provocation. Alcanna uses proactive mitigation strategies to prevent robberies/thefts, including video surveillance, alarms, locks and the use of internal and external loss prevention staff in stores, but these have all had no impact on the worsening situation. 

Robberies/theft are also not limited to the Liquor industry, a range of products from different industries are often targeted; from high-end designer clothing to day-to-day products (razor blades, cologne, baby formula), anywhere there is an opportunity to profit from resale, there is an opportunity for theft. The Retail Council of Canada states that an average of two per cent of annual sales in retail is lost to theft, which amounts to a total of $5 billion in losses across the retail sector in Canada, that’s over $13 million in a single day.

The Market Opportunity

Alberta is the only Canadian province with a fully privatized retail liquor industry. Liquor store operators in Alberta are free to set their own retail prices, including selling at or below the wholesale cost, and may adjust prices based on the customer, the amount of the sale or any other factor determined relevant by the store operator. In addition to selling alcoholic beverages, liquor stores may also sell certain related items, such as soft drinks and other drink mixes, ice, de-alcoholized beverages, glassware and other accessories, although sales of such items may not exceed ten percent (10%) of total sales. Liquor stores may sell liquor to other liquor stores, other licensed premises (e.g., lounges, restaurants, pubs, taverns, etc.) and special event license holders. Liquor stores may also sell special event licenses for private functions and may provide delivery service. 

The liquor store industry in Alberta is a fragmented market, with over 2,200 locations that provide sales for off-premises consumption in total. While across Canada, beer and liquor stores and agencies sold $23.5 billion worth of alcoholic beverages during the twelve-months prior to March 31, 2018, Alberta’s share of the alcoholic beverage market during that time period was 11.0%. In Alberta, alcoholic beverage sales totaled $2.58 billion for the twelve-months prior to March 31, 2018, a 1.2% increase over the previous year (all figures cited in this paragraph are from the most recent information published by Statistics Canada). 

Successful submissions to this challenge will:

• Increase safety and prevent harm to liquor store employees and the public.
• Reduce robberies and thefts from liquor stores:
  • by a minimum of 50%, with a target of 80%
  • with minimal disruption in revenue/sales and
  • minimal increase in labor costs.

Additionally, EPF, EPS, and Alcanna would like submitted approaches to:

• Reduce, minimize, disrupt and prevent the resale of stolen commodities for profit and funding larger issues of crime and disorder.
• Support law-enforcement in the intervention and investigative components of liquor store thefts.
• Support and encourage the justice system in imposing consequences for these criminals once caught.

Challenge structure and overview

This two phase challenge seeks to identify and test approaches that can significantly reduce the rate of liquor store robberies and thefts.  There is a total prize purse of $250,000 CAD to award the most compelling approaches.  

Phase 1

Phase 1 is open to everyone. In this ideation phase, participants are invited to submit their proposed approaches to preventing liquor store robberies and thefts.  Phase 1 winners will be selected based on how their submissions score against the evaluation criteria listed below.  Note that proposed approaches must be demonstrable in order to advance. Conceptual approaches and those that are not technically mature enough to field trial are not of interest.  Up to 5 of the Phase 1 participants will be selected to advance to Phase 2.  

Phase 2

During Phase 2, each participant will field trial their proposed approach for a minimum of 90 days.  The specific length of each individual field trial will be partly dependent on the trend line evidenced by data collected.  Each Phase 2 participant will receive $5000CAD to help defray the costs of field trialing their proposed approaches. At the end of the field trials, the Phase 2 prize(s) will be awarded as follows:

• Grand Prize:  If the largest reduction in theft and robbery rate among participants is 80% or greater, the grand prize winner will receive $200,000 CAD.  If the largest reduction is 50% or greater, the grand prize winner will receive $125,000 CAD.
• Second Prize:  If the second largest reduction in theft and robbery rate among participants is 80% or greater, the second winner will receive $25,000 CAD.  If the second largest reduction is 50% or greater, the grand prize winner will receive $15,000 CAD.
• If no field trials result in rate reductions of at least 50%, the sponsors may elect to award up to 2 consolation prizes of up to $10,000 each.

Time Frames (approximate)

• Open to submissions March 9, 2020
• Informational webinar TBA (all submitters will be notified through the portal)
• Phase 1 submission deadline April 9, 2020 @ 5pm ET
• Phase 1 Reviewing & Judging until Apr 30, 2020
• Phase 1 winners announced May 2020
• Phase 2 field trials start May 2020
• Phase 2 field trials minimum performance period ends August 2020
• Phase 2 Reviewing & Judging August 2020
• Grand Prize winner announced September 2020

What’s in it for you?

Alcanna is offering up to $250,000 CAD in a financial prizes, subject to the terms and conditions appended below, that will be awarded based on results from field trials conducted at select Alcanna stores in the City of Edmonton.  The specifics regarding the number and amount of prizes have been described above in the Challenge Structure and Overview section. Additionally, opportunities exist for successfully field tested approaches to receive assistance in commercialization.  Such assistance could include a being a reputable paying first customer, providing pre-seed funding, and/or marketing assistance.

What’s in it for the Edmonton Police Foundation (EPF) and the CSA?

The Primary purpose of the Edmonton Police Foundation (and the CSA formed and operated by the EPF) is to support community safety. To maintain funding sustainability for this primary purpose, the EPF will work with Alcanna to negotiate with the appropriate competitors within the contest to determine a fair royalty or other agreeable compensation model for the commercialization of the successful field trial(s). All intellectual property will remain the property of the Edmonton Police Foundation but will be free to assign any such IP to appropriate party(ies) as they deem fit. All parties will act in good faith to ensure the venture Is commercially viable and not hinder iIt In any way deemed harmful. If a submitter has a commercial solution and charges a license fee, they are welcome to submit their proposal and instead of the prize money, we would negotiate a fair license agreement.

What’s in it for Alcanna?

Alcanna is passionate about fighting the war on liquor theft and committed to finding a solution to this issue. In the last couple of years, Alcanna has lost millions of dollars in product through robberies/thefts and has seen firsthand, the increasing violence and risk it has had on the safety of Alcanna’s employees and customers.

As the prize sponsor, Alcanna is committed to working with the selected contestant(s) on performing a proof of concept (field trial) in select stores and for those solutions that are deemed to be successful, Alcanna will commit to implement the solution based on a negotiated licensing rate when it is commercially viable.

Stakeholders

• The City of Edmonton
• The Edmonton Police Service
• The Edmonton Police Foundation
• The Government of Alberta
• Alcanna Inc.
• Alberta Gaming, Liquor & Cannabis
• The Alberta Liquor Store Association
• Customers/Public
• CSA Partners

Evaluation Process

Phase 1 submissions will be judged by a panel of Alcanna and EPF or EPS experts.  They will be evaluated using the criteria and weighting listed below.

Phase 2 field trial results will be evaluated by Alcanna and by a committee of research experts, independent of the Community Solutions Accelerator (CSA) Governance Board., They will determine whether the results of a field study align with the prize thresholds identified above. The committee will be formed by the CSA Governance Board and include members from the stakeholders identified.

Upon completion of a field trial, methodology and results will be posted on-line – subject to approval from Alcanna and limited to non-financial data only.

Evaluation Criteria (subject to change without notice)

Previous Efforts at Theft Prevention

In the past 18 months, Alcanna has partnered with the Edmonton Police Service (EPS) to proactively disrupt the liquor theft Issue. Several projects have been attempted in order to reduce the Impact of liquor theft; outlined below is a summary of those projects that have already been done. During the challenge webinar, Alcanna can discuss the outcome of each project and feedback on the impact of the project based on several factors (I.e. liquor theft reduction, sales impact, employee safety, customer experience, etc.). In most instances, subjective feedback will be provided rather than quantitative evidence.

Note that approaches which have already been tested or are otherwise mentioned below are not of interest.  Only submissions which cover approaches significantly different from those listed below will be eligible for consideration.

Prevention

• Protective Fixtures (i.e. Locking Displays for High-Value Bottles): Modern locking display cases created from reinforced tempered glass to provide additional layers of protection from theft and damage; equipped with an anti-tampering devices and audible alarms to discourage theft.
• EAS Surveillance (electronic article surveillance systems): Individual products packaged with EAS tags that alert staff when products leave the vicinity of the store.
• Facial Recognition Programs: Alert loss prevention team of identified suspects entering the store via real time notifications.
• Incident Data Collection: Internal reporting system to Identify all robberies/theft (products stolen, incident time, offender profiles, image and video clips of incident, etc.) allowing for Identification of hotspots and trends.
• Special Task Force: Formation of an internal team specialized in the surveillance of organized retail crime to track and follow prolific offenders to determine where/how products are being moved after they are stolen from the store. In partnership with the Edmonton Police Service, extra duty officers are assisting internal Loss Prevention task forces with making apprehensions across the city; using the data collected from our incident data collection system, hotspots are Identified in order to best identify locations leading to high rates of apprehensions.

Deterrence

• Greeters: Individuals hired to greet customers at the front entrance and ask for Identification prior to entry into the store.
• Entrance Locks: Buzzer style doorbell system that requires staff to unlock the doors prior to a customer entering the store.
• ID Scanners: The use of ID scanner technology to identify the customer to the store clerk prior to unlocking the door. Customers are required to provide a valid form of identification on the scanning device, which Is reviewed by a store associate – If valid, the store associate can unlock the doors from behind the counter.
• Merchandising Best Practices for Crime Prevention: Product placement using the principles of crime prevention through environmental design (I.e. site selection, access controls, surveillance, etc.) For example, many retail locations have modified entrance doors allowing for egress solutions to prevent grab and runs.
• Loss Prevention Officers: Alcanna has substantially increased its investment in very costly full-time internal and external Loss Prevention Officers, plain-clothes floorwalkers and security guards. However, the expense required to have this presence in all stores at all times is unsustainable in such a highly competitive low margin industry.

Disrupt Sale of Stolen Goods

• Bottle Identification Tags: Black light, luminescent markers and If-Found Stickers used to identify and recover bottles sold to other businesses.

Lessons Learned

As many solutions have been explored in this area, several learnings have been experienced throughout the process:

1. Safety of staff and customers is primary. Proposals that may appear to be effective, may increase safety concerns. For example, preventing a thief from leaving the store via electronic locks had been tried- resulting in violence and property damage. Or, a creative idea may reduce liquor store robberies/thefts by 80% but reported robberies/ thefts from customers outside the liquor store may have increased dramatically. With the latter example, the prize would not be awarded even though technically the liquor store thefts per se decreased by 80%. Competitors should review all potential impacts of their idea(s)-some of which may be harmful.
2. Workarounds. As an example, advanced facial recognition software linked to various data bases might appear to be helpful, until the thieves begin to wear face masks or balaclavas. Competitors should review how their idea may result in a change in behaviour by the thieves which in turn neutralizes the effect of the intervention.
3. Motivational Factors. There are at least four motivational factors involved pertaining to alcohol robberies/theft. Organised crime gangs robbing and stealing as a criminal enterprise to make money and to finance other criminal activities and the drug trade in particular. For some individuals, they may steal alcohol for their personal consumption-which can be related to an alcohol addiction. For others, they may steal alcohol to sell/barter to dealers that give them a “drug” credit. Finally, some individuals outside the gangs may steal large amounts of alcohol for financial resale to unethical bars and stores and online to the public.
4. Implement and Observe. Although an intervention may result in a variety of consequences- some of which may neutralize the overall effect- this does not necessarily mean all potential consequences will in fact happen. Apart from the due diligence involved in selecting an idea for a field trial, in the end the field trial will objectively determine the effect or effects of the intervention.
5. Please see the FAQ section of this challenge for more examples and details.

Data, Information and other assistance available 

Information available on EPF portal (https://drive.google.com/open?id=1P4bl9HgqRdWAvTfozYc6_r_EZiVxb7CN):

1. Use of the data room is subject to these terms - please read them and only access the data if you agree fully with them.
2. Edmonton Police Foundation will provide aggregated data which is described per below:
   1. Data Provided: https://drive.google.com/open?id=1MnUG1q09YRziHN01kmG-Jbh5m2cRMztt
   2. Methodology on how the data was gathered: https://drive.google.com/open?id=1LWRwsz7mxRYMPr4d0omNZ66_d6v-Xceu
3. Alcanna has provided some store layouts and they are also in the data room mentioned above.
4. The CSA may offer the following to those ventures selected for further evaluation and request
   1. Cloud computing resources
   2. Physical office space
   3. Devices and other equipment that may be used to aid In the projects success
   4. Resources (domain experts, mentors, entrepreneurs experienced with software commercialization, AI/ML professionals, etc.)
   5. Funding (e.g. Pre-Seed type VC funding) to help In the commercialization of the venture(s)
   6. Other assistance