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Ten strategies to maximise store productivity

When it comes to in-store business intelligence, retailers can now literally remove the blindfold that has been holding them back. With the use of real-time, affordable visual intelligence, today’s retailers can clearly see the path to understanding daily activity in the store and maximising the use of every square foot.

New data from network-based video, combined with data from existing sources, presented in easy-to use reports, will drive more targeted decisions about merchandising and promoting products, directing traffic more effectively through the store and maintaining best-in-class customer service at all touch points. Customers will enter the store with a clear purpose and leave happy with purchases in hand.

As retailers and brand manufacturers become more willing to collaborate, real-time video intelligence will provide the means for information sharing that will benefit both partners. Suppliers can test different promotions, packaging and product placements that will bring the most bang for the buck, creating significant upticks in sales that inevitably benefit the retailer and the supplier.

With real-time visual data, store management can be empowered to make operational decisions in a timelier manner, improving operations, sales and customer satisfaction based on daily information rather than weekly, monthly or annually.

Today’s best-in-class video intelligence solutions are based on IP video or network video and will be fully integratable with current in-store systems, including traffic counting systems and cameras. Built on open standards for future growth, the best system will be affordable, easily installed and user friendly.

This whitepaper will help bring retailers up to speed with the latest innovations in real-time video intelligence, providing the top 10 strategies needed to effectively compete in today’s increasingly challenging retail arena.

Ten strategies to real-time retail enlightenment

1. Embrace real-time retailing

To successfully implement real-time video intelligence, retailers must first embrace the concept of real-time retailing. Instead of only viewing sales as a product of days, months or seasons, as they have in the past, retailers must narrow their view to get closer to real time.

“The Internet and the widespread adoption of broadband connectivity have introduced the notion of ‘real-time’ or ‘near real-time’ information to retailers’ operational processes,” according to the Retail Systems Research (RSR) report Improving Retailer Responsiveness with Real-Time Business Intelligence. “Many retailers want to enable their operations with near real-time alerting, reporting and performance management capabilities.” This real-time actionable information can be referred to as 'operationalised real-time business intelligence',” notes RSR, which is 'critical to improving retailer responsiveness'.

With access to real-time data, retailers can respond more effectively to changes in consumer demand. Simultaneously, retailers are able to “maximise their operational efficiency, by focusing more of their labour spend on activities that build consumer loyalty, and to lower the amount of paid-for inventory while at the same time improving (lowering) out-of-stocks on the selling floor,” according to the RSR report.

The most effective way to monitor all store activity, from warehouse dock to POS transaction, is with an integrated platform that delivers daily reports and provides a user-friendly mineable dashboard. “Combining real-time signals from the store on a consistent platform can help the retailer better understand consumer and store activity,” says Hung LeHong, Gartner analyst, in an August 2009 report titled The Real-Time Store Monitoring Platform.

Retailers should aim to collect all available real-time signals into an integrated platform, including:

* Point of sale transaction log (POS TL).

* Customer traffic.

* Video over IP (network video).

* Radio frequency identification (RFID).

* Location-aware applications.

* Remote monitoring of appliances, including heating, ventilation and air conditioning (HVAC).

Taking the lead from the online channel, brick-and-mortar retailers are becoming more attuned to the benefits of real-time data. Although until now many of the technology offerings that facilitate real-time retailers have been cost prohibitive, recent additions to the marketplace are making them affordable and cost-effective for retail stores.

2. Empower store managers

The most forward-thinking retailers will now take a fresh look at the role of the individual store managers and begin to arm them with real-time data, empowering them to make actionable decisions in a timelier manner. Successful retail executives will work with store management to execute strategies that deliver immediate results from the store floor.

“CIOs and their team should work with their business counterparts in store operations, merchandising and marketing to determine what business processes can take advantage of real-time signals,” says LeHong.

A system that enables information flow to multiple levels of the organisation at the same time can facilitate the cross departmental collaboration that creates a high performing retail business.

3. Monitor store touch points

The key to optimising customer service inside a store is to attend to every square foot in the store. With video intelligence technology, retailers can get valuable data and insights on every part of the store, from entrances and aisles to customer service, dressing rooms and even bathrooms. And, while creating a better customer environment retailers also can save time and money by improving labour scheduling throughout the store.

Video intelligence also provides valuable information on customers’ movement throughout the store – including where they stop for a significant amount of time. Called dwell analysis, this lets retailers know which aisles and products are attracting consumers.

4. Direct traffic more effectively through better merchandising

Marrying the art of retail with the science of retail is an ongoing struggle. Acknowledging the experience and expertise of retail managers and buyers, it can be valuable to give them some leeway when it comes to inventory selection, merchandising and promotion. But the value of factual information about customers’ movement through the store, dwell analysis and overall in-store behaviour cannot be minimised.

Putting that data in the hands of these talented individuals is where the real improvements can be created. Using video intelligence, retailers can track shopper behaviour using analytics that are integrated with in-store data sources such as point-of-sale. The result is ongoing traffic and conversion-rate analysis, not only for the store, but also by aisle, display and down to the SKU level. This data allows a retailer or manufacturer to optimise layout, shelving, displays and packaging based on real data, minimising the guesswork that has long been an art form in the retail business.

In-store video intelligence is a competitive differentiator because it enables a much deeper understanding of how consumers respond to products, product placement, packaging and promotions,” adds Leslie Hand, research director, Global Retail Insights. “For example, intelligence regarding a product promotion that seemed successful on the surface may reveal that 50% of customers that stopped to look at the promotion compared it to something else, or simply changed their minds after reading the ingredients.”

5. Reduce shrink with on-shelf tracking analysis

When integrated with on-shelf tracking systems, video intelligence can provide information on out-of-stocks and loss prevention analysis. For example, certain products are considered ‘high shrink’ items which are pilfered more often than others, such as razors, high-end cosmetics and alcohol. With visual information on how and when the shrink is happening, retailers can make changes to minimise the problem.

For retailers who already have loss prevention systems and cameras in place, a best-in-class video intelligence system can be integrated with loss prevention and monitored independently by different groups in the organisation.

6. Enhance multichannel marketing

The multitude of information gleaned from online marketers has motivated brick-and-mortar marketers to meet the challenge and find ways to gather the same type of granular information at the store level. Integrated video intelligence answers that call. “In-store video intelligence does for in-store customer marketing what social media and Web analytics does for on-line commerce, levelling the playing field between channels to a certain degree,” notes Hand.

As stores become able to gather more detailed information, the entire multichannel experience is enhanced. “Use of video intelligence in a brick-and-mortar environment designed to capture customer activities can be blended and compared with similar data available from the online channel through Web analytics to help formulate more effective multichannel retailing analysis,” says Janet Sherlock, AMR Research analyst. “Retailers can expand learning from Web analytics such as time on site, shopping funnel, abandonment and product conversion by applying in-store analytics from video intelligence to optimise enterprise merchandising and customer experience. For example, a merchant that knows her in-season key item top converts 50% more in stores when displayed on a main aisle display table with a mannequin may choose different online merchandising tactics to achieve the same conversion rate.”

7. Create better retailer-supplier collaboration

Video intelligence offers a significant opportunity for retailers and suppliers to work together, improving the bottom line for both partners. And often the supplier will be willing to contribute financially to facilitate a video intelligence project. “If supplier partners want a direct line to consumer responsiveness to their promotions, there is no better opportunity than in real (not test market) in-store video monitoring,” says Hand.

Manufacturers typically welcome any consumer information that retailers are willing to provide. With access to information on consumer traffic patterns and dwell time within aisles, manufacturers can adjust product displays and in-store merchandising to better serve consumers, retailers and the manufacturers’ own interests.

8. Leverage existing infrastructure and integrate in-store systems

One of the reasons some retailers may be resistant to adding a video business intelligence solution to their in-store technology mix is the concern of having too many different systems functioning at the same time. But today’s best-in-class video intelligence system can be integrated into the existing store infrastructure for a seamless transition.

“An integrated video intelligence platform should support multiple use cases including loss prevention, traffic counting and POS data,” says Hand. “It does not make sense to require multiple replicas of video or POS data to support discrete video analytics applications.” This is where the strength of network video makes the difference.

9. Install best-in-class equipment

When researching video intelligence solutions, retailers should look for cameras with high-quality video and analytical solutions that can provide a complete store-monitoring platform. The BVI Networks’ RetailNEXT product brings the real-time signals together and presents them in a user-friendly and highly scalable dashboard.

To make the system work, retailers should look to combine the analytical solution with intelligent cameras that provide network video. Intelligent cameras accommodate on-board embedded applications such as business intelligence analytics that can analyse traffic counting and customer dwell time. “Retailers now have the capability to deploy cost-effective analytic applications processed by the camera, working in parallel with the overall solution,” says Patrik Pettersson, business development manager, Axis Communications.

10. Plan for future growth

A significant advantage of implementing an integrated video intelligence system is that it can grow with the retail organisation. Beyond the basics, retailers have a long list of in-store data that can be leveraged today and in the future using the right system. “The sources of available real-time data in retail stores have been steadily increasing over the last few years,” reports LeHong. Current data sources include POS data, customer traffic data, queue data, electronic article surveillance (EAS) data and IP-based video feeds. Emerging technologies include RFID, the ability to locate mobile phones via GPS, cell tower or Wireless Fidelity (Wi-Fi) triangulation, plus new in-store shopping devices such as shopping cart computers and handhelds. “It’s obvious that, in the future, retailers will need to have some kind of platform that integrates, manages and makes sense of these real-time signals in the store.”

Conclusion

The amount of data available today and in the future could make any retailer’s head spin. The trick is harnessing that data, analysing it properly and using it to the benefit the business. Integrated video intelligence that can combine disparate technology sources within the store and deliver customised reports and a data mining dashboard give headquarters and store management the information they need to make real-time business decisions. This is a strategic imperative most retailers cannot ignore and many are building into their near-term plans.

This is a shortened version of an Axis whitepaper. The original can be found at http://www.axis.com/files/whitepaper/wp_bvi_retail_38199_en_1001_lo.pdf

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