Counting on intelligence: Retail wises up
Editor / Provider: Eifeh Strom, a&s International | Updated: 6/16/2014 | Article type: Hot Topics
In 2012 the aggregate retail revenue of the world's top 250 retailers amounted to approximately US$4.3 trillion, a composite year-over-year revenue growth rate of 4.9 percent, according to the Global Powers of Retailing 2014 report by Deloitte Touche Tohmatsu. Although economic conditions that year were a bit rough, leading retailers across the globe continued to grow. However, with growth comes the desire to not just sustain it, but capitalize on it. The benefits of intelligent solutions in the retail sphere are helping global retailers do just that.
As more and more retailers are starting to realize the benefits not only for security, but for marketing, efficiency, and management as well, the number of retailers adopting intelligent solutions such as “smart” cameras is growing. In fact, the global intelligent video surveillance market in the retail industry is forecast to grow at a CAGR of 27.1 percent over the period of 2012 to 2016, according to an October 2013 report by Infiniti Research. This increase in retail adoption of analytics is also obvious in the number of security providers coming out with retail-targeted analytics solutions.
Sales and return on investment (ROI) have become increasingly important for brick-and-mortar retailers who are now competing with the convenience of online shopping thanks to the Internet. In an age where the click of a button can deliver anything ranging from clothing to furniture to groceries on one's doorstep, brick-and-mortar retailers are even more conscious of the importance of good marketing, loss prevention, and operational efficiency to name a few. According to the Global Retail Theft Barometer published in October 2013, shrinkage due to shoplifting, employee fraud/ theft, etc., cost the global retail market $112 billion in 2012. That is where intelligent solutions come in. Where old security systems failed to prevent shrinkage and optimize marketing strategies, intelligent solutions are picking up the slack and proving their worth.
Benefiting From Intelligence
The retail market is not known to have a lot of extra money laying around to throw at fancy technology; however, as the price for intelligent solutions come down, some retailers are realizing the investment is worth the price tag. While retailers in the more high-end luxury market are more likely to be able to afford such intelligent solutions, those in the middle market looking to boost sales are also starting to look towards intelligence. Furthermore, not every intelligent system is created equal. Different stores need different functions, and since the price often depends on the features needed, it is possibly for mid-end retailers to find intelligent solutions that fit their budgetary scope. Retailers in the middle range not needing as many or as advanced functions may opt for a more cost-effective solution comprised of a NVR and camera with only basic intelligent features. This solution gives the retailers some of the benefits of intelligence without breaking the bank.
Regardless of the degree of intelligence a retailer chooses to deploy, the ability to improve space optimization, stock monitoring, shop floor tracking, shopper behavior, bottlenecks, queue lengths, staffing levels, etc., are just some of the benefits retailers can expect from an intelligent video solution. With a wide range of features, video content analysis (VCA) software, also known as video analytics, has much to offer retailers in terms of business intelligence (BI). Whether on the edge or integrated into a video management system (VMS), the BI data gathered from VCA features such as face recognition, heat mapping, people counting, and dwell time provide businesses with immediate ROI. But how does it do this? The Beginner's Guide to Video Business Intelligence by 3xLOGIC puts it this way, “Technologies that aggregate the vast amount of disparate data — video data, transactional data, structured and unstructured data — that is generated today, and distils that data into relevant business intelligence that can be easily understood and acted upon; that's video business intelligence.” The idea of actionable intelligence, turning video data into more than just images on a screen, giving that data value, that is how analytics transforms a retailer's security camera system into more than just video surveillance.
Case Study: Analytics Optimizes Croatian Retailer's Marketing
While the benefits of analytics is easy to talk about, actually seeing it might be harder; however, Croatian retailer Pevec not only saw the benefits, they utilized and made the most of it. As a retail chain store, Pevec has always taken security seriously, installing video surveillance cameras in each of their 13 stores since their opening. Having heard of the benefits analytics could add to their marketing, Pevec installed a number of RIVA cameras with onboard analytics. The intelligent cameras would not only extend the retailer's existing security system, the onboard people-counting filter would count customers, which would help the marketing department optimize marketing activities and plan sales space. The built-in people-counting filter provided the retailer with important and invaluable data. By counting the number of customers, the marketing department was able to determine the number of visitors during a promotion period and whether the number of customers increased, which if it did was considered short-term success. This success could then be measured in long-term success by seeing if after the promotion ended, whether those acquired customers continued to return to the store.
People-counting data also helped the retailer determine how many of the customers entering were actually making purchases, which was done by comparing the data with the cash desk data. With the data, the marketing department was able to deduce the effectiveness of their marketing strategy. If the majority of customers do not turn into buyers, this indicates that the product range, product presentation, and/or product placement needs to be changed. If the number of customers drops but the majority are buyers, this indicates that the company should pursue more marketing activities. Also, comparing the peoplecounting data of the different stores within the chain gave the retailer better insight into the strengths and weaknesses of each of its branches.
In addition to marketing optimization, people-counting data also helped the retailer increase operational efficiency. By analyzing data for customer traffic during specific times — daytime, weekends, holidays, seasonal periods, etc. — Pevec was able to better utilize their manpower by adjusting the number of employees on staff according to customer traffic. The use of real-time data also helped the stores manage queue lengths and diffuse bottlenecks during peak hours.
Graduating to Smarter Operations
Although price remains a deciding factor for many retailers regarding the feasibility of deploying an intelligent solution, the price of such solutions is going down, meaning soon enough price will no longer be a viable excuse. Combine declining prices with the obvious ROI provided by analytics in terms of business intelligence and it seems that intelligence should be able to find a comfortable home in the retail area sometime in the future.