Globally, retailers face the same challenges, namely how to reduce shrinkage and better understand customers. Today, video analytics can help retailers achieve both objectives.Globally, retailers face the same challenges, namely how to reduce shrink and better understand customers. Today, video analytics can help retailers achieve both objectives.
Needless to say, retail shrink – a loss of inventory related to theft, shoplifting, error or fraud – continues to be a huge problem facing storeowners across the globe. “Whether perpetrated by a dishonest employee or organized retail criminals, shrink costs retailers about 1.33 percent of sales, on average — a total impact on the overall US retail economy of US$46.8 billion in 2017,” said the National Retail Federation based on its 2018 survey. “Overall, shrink continues its upward trend — especially for those who see it as a higher percentage of sales. In 2015, only 17.1 percent of respondents reported shrink at 2 percent of sales or more. That is up to 20 percent in the 2018 survey.”
Beyond loss prevention, retailers are also faced with the need to better understand their customers – who are they? Are they men or women? What aisle do they visit most often? This way the retailer can optimize store layout, provide a better shopping experience and develop the necessary sales and marketing strategy, ultimately to optimize revenue.
Today, thanks to advances in video analytics, retailers can meet both security and business intelligence requirements. In a report by Allied Market Research, the video analytics market size was valued at $3.1 billion in 2017 and is projected to reach $14.4 billion by 2025, growing at a compound annual growth rate of 21.4 percent. “The retail sector dominated the overall video analytics market size in 2017 and is expected to exhibit significant growth during the forecast period,” it said. “The growth of this sector is mainly attributed to the increase in need to monitor consumer behavior, buying criteria and the pattern of product selection.”
How video analytics help
When it comes to security and shrinkage prevention, video analytics can be quite useful. A recent blogpost by eInfochips points out that for those loitering – standing at a particular part of the store without any doing any meaningful activities – or trespassing into off-limits areas, analytics can detect them and issue alerts accordingly.
Other suspicious activities can also be detected. “Shelf sweep is an action that employees usually perform outside office hours to clear out shelves for replacing the merchandise. However, this can be categorized as a suspicious activity if performed during the store operating hours, specifically by customers. Retail video analytics can detect this as a precursor to theft or nuisance creation,” the post said. “A walking or standing person when suddenly starts running at a high velocity, needs to be tracked for the further activities to ensure he/she is not involved in any security incidents.”
As for business intelligence, video analytics can play a role as well. Retailers, for example, can optimize store space usage by placing products and items at the right locations, based on studies of customer traffic and movement patterns derived from analytics. Meaningful promotions and campaigns can also be developed to encourage stronger customer engagement and retention, based on their behavior.
There are also additional benefits. “Video analytics differentiates the staff from the visitors which can help retailers derive the staff to consumer ratio and reallocate staff to minimize the service time,” said a blogpost by InnovatorsBaby. “Facial expression analysis can change the entire customer shopping experience. Using close-range cameras on product shelves, retailers can perform emotion analysis to some extent, analysing customer satisfaction with the products. A digital signage with a built-in camera can understand feedback and can also help stock the goods when there is a positive response through eye-ball tracking.”