Analytics have a crucial role to play in modern retail business. But to many retailers, this is still a gray area.
Analytics have a crucial role to play in modern retail business. But to many retailers, this is still a gray area. Many are not sure of how analytics can help improve customer experience and drive sales. Nor are they sure of how the information gathered can be put to use.
In a recent blog post by
Axis Communications, Anna Arwidi, Business Development Manager for Retail Solutions at the company gave an overview of the fundamentals of retail analytics and what shop owners should know.
“The obvious starting point for most retailers is people counting,” Arwidi said. “It’s straightforward: knowing how many people have visited their store and when. It’s accurate: video-based analytics has come a long way with consistent accuracy of 95 percent or higher. It’s extremely cost-effective using standardized IP cameras. And it’s intuitive for retailers to cross-reference with other data such as point of sales transactions, promotional campaigns, and even weather reports, to pinpoint the factors driving people in-store.”
She pointed out that visitor traffic is a major performance indicator for most fashion and global chain retailers. It is second only to sales. To calculate sales conversion, analyzing marketing campaigns, understanding store performance and developing employee incentive programs, this is critical. “Ultimately, it is a metric that determines whether a store opens or closes.”
But this is just the initial part. Retailers are fully aware that there are several aspects that can influence the shopping experience and the business’ bottom line. For instance, long queues can be a major deterrent to many customers. This is one of the reasons several huge grocery and home good stores are switching from manual monitoring to automatic queue analytics that can inform the retailers to open additional tills or redirect customers to shorter checkout line.
According to recent reports by Global Retail Theft Barometer, loss and shrinkage affects profitability by about $123 billion.
“Retailers are therefore looking for intelligent technology solutions to prevent and mitigate loss,” Arwidi said. “One example is grocery store chains who supplement their one-way traffic flow systems with direction detection analytics, to alert staff of a visitor exiting from the store entrance rather than the check-out area. Another points to a growing number of round-the-clock open membership clubs and gyms who use tailgating analytics to detect when members bring non-paying friends with them after regular working hours.”
Bringing together a strong retail business strategy with video analytic technology and expertise can help retailers boost their profit and remain competitive. With the global retail market getting increasingly competitive, the insights that analytics provide could prove to be a decisive factor for success.