Physical retail spaces are a vital link in modern, omni-channel retailing but how can you maximize their returns? Kimberly Goldsworth, VP marketing, Prism Skylabs, helps answer this burning question.
There’s no question that more commerce is moving online. Amazon’s acquisition of Whole Foods is just one piece of recent evidence pointing to this trend. The flipside, however, is that the acquisition supports Amazon’s strategy to open more physical showrooms where shoppers can smell, taste, and handle products. As part of this, Amazon recently opened seven bookstores (with several more planned) in the US to cater to the resurgence in demand for physical books and allow people to test-drive gadgets like the Echo and the Fire TV Stick.
When the world’s largest online retailer is opening new showrooms across America, it’s clear that physical retailing plays an important role in the omni-channel mix. But in this brave new world, different rules apply when it comes to choosing store locations, size and staffing. Showrooms need to be in prime locations and also attract skilled brand ambassadors who can serve as product experts (like the Apple ‘Geniuses’).
At the NG Retail Summit in Scotland last May, my colleague spoke to leaders from several large brands that were grappling with their property strategies. All were downsizing their portfolios gradually as leases expired, moving towards fewer, higher value sites in prime locations. Some lacking good data lamented that they were feeling their way around in the dark.
Indeed building an optimal property portfolio depends on gathering as much data as possible about things like neighboring business and local consumer traffic volume, affluence, preferences and behaviour. Obviously it’s easier for retailers with historic sales figures to make informed decisions about existing sites. Those with in-store analytics systems may also have traffic figures, which are invaluable when it comes to renegotiating contracts.
Once a retailer has chosen a premium site for a showroom, the value shouldn’t be measured by its cost but how much revenue and loyalty it can generate for the brand. For many retailers, this means turning conventional retail thinking on its head by investing more per square meter in people, technology, and other aspects of the in-store experience.
One of the key differences between a brand showroom and a more traditional retail site is the extent to which the former changes in response to visitor behavior. The idea is to continually be fine-tuning the experience for maximum return on assets. If, for example, no customers are visiting a particular area of the shop floor, the reasons for this – poor lighting, messy appearance, etc. – must be addressed without delay. If people are frequently visiting a promotion, but not buying anything from it, this also needs to be diagnosed and fixed.
Video-based analytics systems are invaluable for managers and their staff members to continually analyze and diagnose what’s happening in a showroom. Not only are these systems readily available and easy to install and use, but often serve multiple purposes from people counting to loss prevention to analyzing promotional effectiveness and even health and safety compliance. Thanks to artificial Intelligence and computer vision technology, it is now much easier and efficient to mine high volumes of video data. With these technologies, retailers can tag and search video to not only improve security and loss prevention, but to drive ROI through better merchandising as well.
Store Of The Future
Our involvement with Store of the Future (SOTF), the first retail innovation lab in The Netherlands, provided a valuable opportunity to test video analytics’ full potential. SOTF trailed many new technologies including augmented reality, wearables and holograms in a live environment. As SOTF’s sole analytics provider, we installed our system, which transforms IP video cameras normally only used for surveillance into data-gathering IoT sensors. When SOTF’s retailers were armed with relevant data about visitor numbers, in-store ‘hotspots’ and the most popular products and displays, they were then able to continually fine-tune pricing, promotions and staffing to improve outcomes.
Prism Vision turns endless quantities of video into rich and meaningful content.
The key metrics retailers can learn about the performance of their brand showrooms using in-store video analytics are:
Accurate people counting – knowing how many people enter your store, and when, is essential for making optimal staffing decisions. We learned that Wi-Fi and Beacon technologies aren’t great at counting people accurately. In SOTF, Wi-Fi___33 counted 2.5 times as many people that were actually entering the store due to people carrying multiple devices and other technical weaknesses. SOTF decided not to compare mobile data (via beacons) in the people counting test because it required too much of the visitors —installing and registering an app and turning on Bluetooth— to make a fair comparison. Using video cameras as sensors to detect adult humans proved the most accurate way to count people.
Heatmaps – indicate visually how many people are dwelling in different locations to determine whether display areas, promotions and demonstrations are effective or not.
One global jewellery retailer we work with used our heatmaps to test whether customers would gravitate towards stations with tablets to search for merchandise and carry out transactions. In their case, the tablets proved unpopular. It turned out that customers were looking for a more physical shopping experience that they couldn’t get online.
Pathmaps – show the journey shoppers are taking throughout a store to help managers understand things like which merchandise is drawing people in and the sequence of actions shoppers take. For example, a popular path might be a customer first being attracted to a dress displayed in the window, enters the shop, and then searches for a pair of shoes to go with it.
Of course, retailers always face some element of risk and uncertainty as they change their property portfolios as part of their overall omni-channel strategies. However, one sure way to mitigate that risk is by ensuring that brand showrooms create as much value as possible by using valuable in-store data to their maximum advantage.Source: prism.com