Figures from major UK supermarkets show that, despite strong performance, margins remain razor-thin. Tesco reported an operating profit of 3.9% for the 2024/2025 fiscal year, with equally sized outfits such as Sainsbury’s showing similar figures, with little indication that rising food costs have meaningfully contributed to their bottom lines.
This price increase has increased the share of shrinkage attributable to grocery theft, which compounds with expensive labour costs to create uncertainty about the industry’s future security. Video analytics have emerged as a way to deter and combat shrinkage by turning passive footage into an active source of intelligence.
The margin squeeze in UK grocery stores
How exactly can historically high food prices not result in proportionate profitability? The answer to this question is intimately understood by retail leaders, who understand the myriad pressure points felt throughout the industry.
Inflation impacts businesses as much as it does individuals, driving up energy, logistics, and supplier costs and forcing grocery chains to make difficult decisions regarding pricing. Internal and external theft, spoilage and waste also contribute to this issue, causing monetary ripples that single-digit margins struggle to absorb.
Data from the British Retail Consortium paints a worrying picture, as crime prevention now costs the industry £4.2 billion a year, and instances of violence have risen 340% in the last 6 years. These trends have pushed retailers to adopt a more active, data-driven approach to store visibility.
Moving beyond traditional CCTV
Manual oversight is a central part of traditional video security. An operator must sit watching monitors for hours on end for the footage they capture to result in an active response. A more common occurrence is shoplifting or internal theft going unnoticed until staff review the footage later. At this point, it is escalated to the authorities and sits alongside a pile of similar reports, only 15-20% of which ever end in a conviction. The reports themselves must also be collected manually, leaving room for human error and operational bottlenecks that together can slow the process.
Intelligent retail security cameras analyse feeds in real-time using pattern recognition and object detection algorithms. Blind spots, either caused by legacy cameras with restrictive viewlines or by the staff attending the monitor, are addressed by 360-degree coverage and automated alerts that notify staff when an incident requires their attention.
Features like enhanced zoom and crowd analysis help tackle the growing epidemic of organised retail theft, in which groups of attackers overwhelm staff and cameras through aggression, crowd coverage, and misdirection.
All captured footage is timestamped, logged, and tagged for easy searchability, aiding investigators with timely evidence.
Video analytics also help support and optimise daily decision-making. A few examples of this in action include live video feeds that detect stock levels to enable more effective shelving strategies, and enhanced visibility in storerooms, where internal shrinkage commonly occurs. AI-powered alerts can extend from security into the realm of safety, notifying staff when spills or obstacles pose a potential health risk.
By alleviating the burden of vigilance on security teams and general staff, video analytics and the insights they provide create safer, more efficient shop floors.
Where analytics are protecting margins
Every decision on the shop floor comes with a cost. Video analytics protect margins by sharpening human decision-making in the following ways:
- Shrinkage – Analytics can detect repeat offenders and suspicious behaviour, such as loitering and signs of concealment. Staff are given real-time alerts that allow them to act in the moment and provide a richer cumulative context for actual shrinkage, which can shape strategy moving forward.
- Efficiency – Smart alerts save time by highlighting concerns as they arise, lightening the cognitive load on staff and allowing for better focus on the task at hand. Analytics detect queue movement, stock levels and hazards, surfacing pressing issues that require immediate attention.
- Waste reduction – Cameras can spot how perishables, such as fruit and vegetables, are handled and identify process gaps or protocol breakdowns. Integration with temperature sensors can give a more in-depth view of storage quality.
Security through sustainability
The capabilities this technology grants must be balanced with its responsible implementation. Public-facing security cameras are already subject to a wealth of data protection and privacy regulations, and AI video analytics introduce an additional layer of requirements on top of this.
The cost of full integration is also a critical consideration, though, as mentioned, retailers already spend £4.2 billion on crime prevention, and shrinkage continues to rise. Margins as tight as those seen in UK grocery stores leave no room for error, so rather than seeing video analytics as a separate investment, leaders should treat them as a way to unify visibility and intelligence, empowering day-to-day decision-making while helping protect the thin line between profit and loss.
Jawad Hai
Senior Product Manager
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