Why you should care
Your body heat, in-store Web surfing and general proximity are all being tracked and tallied by retail stores upping their game to battle online nemeses.
They may be old-school, but brick-and-mortar retailers are tracking you in ways the NSA might admire. Whether it’s video surveillance, in-store Wi-Fi monitoring, heat mapping or geosensors, traditional retailers are discovering technology’s value in combatting the spawn of technology: online retailers.
Heat-mapping can monitor shoppers’ movements to determine what they’re drawn to, even if they don’t make a purchase.
When Amazon.com launched in 1995, old-line retailers suddenly faced a burgeoning threat few had foreseen, much less planned how to counter. Increasingly sophisticated analytics tools now are enabling retailers to better cater to in-store customers by tracking foot traffic and shopping behavior, effectively deploying employees within areas of a store, and scheduling them during peak hours.
More than 1 trillion data points are harvested annually from 500 million-plus shoppers through 65,000 in-store sensors.
“Everyone rushed to judgment saying physical stores were going to be dead,” says Ed Cleary, publisher of Retailtouchpoints.com, which offers guidance and insights for retailing executives. “Retailers that provide a good in-store experience, one-on-one interaction with staff and strong loyalty programs with targeted offers will be around for years to come.”
Whether consumers shop online or at a mall, retailer success weighs heavily on gauging and responding to their behavior. The scope of brick-and-mortar’s recent technology adoption is broad. Among the data that retail stores can now glean and connections they can make:
- Geomapping via smartphone apps can alert retailers when a customer is approaching their store’s front door and send them special-offer coupons as they cross over the threshold.
- Heat-mapping can monitor shoppers’ movements within a store to determine what areas and inventory customers are most drawn to, even if they don’t make a purchase.
- In-store Wi-Fi connections offer information on specific products on the shelves — and also can reveal what online retailers and review sites shoppers call up during their visits.
- Video-surveillance cameras can determine which window displays attract what percentage of shoppers walking by a storefront, the gender and rough age of individual shoppers, and what products they are drawn to.
- “Sales conversion” comparisons between individual stores may show 65 percent of shoppers make a purchase, yet 80 percent do at another, allowing further analysis to gauge if it’s customer demographics, staffing levels, product offerings and inventory, or promotions that account for the difference.
“It really gives retailers a comprehensive view of what goes on inside their walls,” says Chitra Balasubramanian, vice president of insights at RetailNext, a leading in-store analytics firm. “They’re able to stay up-to-date on the individual-store level and the aggregate level, by regions, and even factor weather in.”
RetailNext collects and analyzes data streams for 100-plus, brand-name retailers and consumer-goods producers, to the tune of more than 1 trillion data points harvested annually from 500 million-plus shoppers through 65,000 in-store sensors.
After contracting for RetailNext’s services, retailers typically see a 6 to 8 percent sales increase in the first year, Balasubramanian says. “It often starts with correcting a misalignment between staffing and traffic; simply moving staff from one day to another has led to [sales] improvements.”
In-store Wi-Fi systems also help unify retailers’ brick-and-mortar and online environments, allowing shoppers to see what products in a certain category are available beyond what’s on the shelves — and order whatever may be out-of-stock on the shelf.
It allows management to optimize their labor force by better dispatching employees.
Brickstream, another leading retail-analytics firm, monitors 25 to 30 checkout lanes at 350 superstores in terms of customer wait time and transaction time, and feeds the data to a real-time dashboard. When combined with monitoring customers entering the store, and factoring in average shopping time, store managers can determine when they need to add cashiers 10 to 30 minutes in advance.
“That not only provides great customer service, it also allows management to optimize their labor force by better dispatching employees,” says Brickstream Chief Executive Steve Jeffrey.
Despite gloomy predictions at the turn-of-the-century, brick-and-mortar retail sales in the U.S. are only down about 10 percent overall from that time and are currently growing at an annual percentage rate in the high single digits, Jeffrey says. While much of that owes to continuing economic growth, it also owes to traditional retailers employing technology to stem their sliding market share.
A key indicator that retail stores’ position vs. that of their online competitors is improving: Cleary heard little discussion at the just-completed National Retail Federation convention about “showrooming,” where shoppers come into stores to view and handle merchandise — and then comparison-price shop and purchase online. “No one was talking about showrooming because retailers are finding more ways through analytics to combat it.”
If all the data-crunching keeps paying off, the day may not be far off when no sooner do you stop to wonder how much is that stuffed doggie in the window than your ideal price pops up on the sale sign — and a store clerk is placing a pup in your arms.