Video Surveillance Analytics is a Deal for Retailers
Loss prevention and merchandizing are coming together, as retailers see value in data mining images collected by security video.
They were, at one time, two separate retail tracks – merchandizing (Make money) and loss prevention (Save money).
There were store detectives to catch shoplifters and reduce shrinkage. And then there were mystery shoppers and people counters, most often clicking each shopper at a retailer’s entrance.
It is not surprising that retailers have caught on that the more they know about their shoppers, the more sales they have. And more sales can translate into profits and a stable or even growing business.
Then in the 1960s and through a pioneering electronic technology loss prevention offering, enter the “Shopper’s Enemy,” electronic article surveillance (EAS) and tags, introduced by Sensormatic, now part of Tyco Retail Solutions. At the time, the loss prevention focus was on shoplifters, still a key source of shrinkage. But over time, merchandisers continue to shop for ways to gain even more information about customers and staff members. It was big data before there was big data.
Security video arrived to replace, to some degree, those store detectives; cameras are a deterrent, able to catch shoplifters or rogue sales associates while providing damning forensics evidence at the after-event end.
Now, the two tracks – loss prevention and merchandizing – are melding into one at prominent stores, chains and malls as retailers see value in data mining images collected by security video. There are even some retailers who have built video-based data collection systems separate from security; not many of this route, of course, since such action would cost more money and piggybacking made more sense. While not everyone’s cup of tea, the evolution has been spurred in great part by online shopping, which automatically collects customer data and demographics, as well as webpage views that do not lead to a sale. Third-party retail firms, able to focus exclusively on analytics, also are encouraging the entrance of security video as part of a more total picture.
The Omnipotent Omni Channel
An umbrella concept also bringing everything together is omni channel, a recent business model covering a variety of channels in a customer’s shopping experience including retail stores, online stores, mobile stores, mobile app stores, telephone sales and any other method of transacting with a customer.
Uniquely, security video can complement other retail – non-pictorial – analytics going beyond the numbers by showing visually customers’ interaction and behaviors in a store.
The bottom line is the bottom line. While loss prevention has always made a case for saving money by diminishing illegal or unintentional losses from shoppers, sales associates and contractors, new-age analytics that includes security video can also generate an increase in sales as well as better product placement and store layout.
Security video as well as other retail analytics can:
- More accurately count shoppers at entrances.
- Identify shopper demographics including type of shopper, time and frequency of shopping, with demographics growing more diverse.
- Compare how many shoppers engage with displays versus don’t.
- Capture insights into foot traffic patterns, helping a reevaluation of a store’s optimal layout.
- Test and measure product displays across store locations to understand the most effective product placements by demographics, traffic patterns and dwell time.
- Count total shopper access to non-traditional brick-and-mortar stores, such as store within a store, mall kiosks and temporary “pop up” stores.
Value in Repurposing Security Video
Enterprise security executives are or will be seeing value by squeezing more merchandizing data out of their security technology and how they and their operation can gain from such a shift of involvement. Security’s contribution to retail’s data-driven transformation is not limited to video. Top merchandisers are broadening the worth of EAS and point-of-sales (POS) concerning inventory accuracy and just-in-time replenishment of goods, to name a few outcomes.
Compared to other sectors, retail is different; there is tactical use of video, according to Hedgie Bartol, retail business development manager at Axis Communications. Security video can help identify the effectiveness of end caps – distinct spotlighted product displays usually at the end of aisles – as well as apps on the camera, people counting and heat mapping, as examples. Today, security is more focused on how to enhance the sales side. Loss prevention can add measureable value to the organization, he observes.
Bartol contends that today’s camera systems are a computer with a lens, an eye in the sky.
It is the move to use security video images and tools impacting retail decision-making and processes that is at the heart of this tech progression and security’s involvement.
One example: TIM Brasil, one of the largest Brazilian mobile phone operators, has implemented a new security and operations solution in its physical stores throughout Brazil. In order to better care about its customers and staff, including their security and safety, the firm uses a security solution to analyze and manage data, in order to anticipate and mitigate risks as well as enhance the sales side.
Emphasis on Quality
The security technology creates an even better and higher level quality experience during customer visits to stores. Based on video data collected, it is also possible, among other things, to reduce customer waiting times and map out the busiest periods and locations in stores. Such information is leveraged for staff planning and better decision-making of the most appropriate actions to take on-the-fly. According to Suzana Strauch, planning and business continuity manager at TIM Brasil, video “helps us obtain a wider view of improvements to our contacts with consumers. It allows us to take advantage of investments in security to gain unique information from our business operations. Another benefit is increased confidence in managing the unexpected, allowing us to significantly reduce our response times.”
Real-time and retrieved video monitoring can also identify long-term retail needs and trends, which can form a basis for constructing new business strategies such as a marketing campaign or the very location of new stores.
The combining of security video with more general business goals outside of loss prevention is an exciting advance, says integrator Mike Hanlon, director of sales, managed services for G4S Secure Integration. One interesting retail area where security and customer analytics come together is at ATMs. There can be various video streams, achieving various outcomes with purpose-built video inside vestibules and even outside, according to Hanlon, pointing out business intelligence gathered that’s in addition to security.
Hanlon points out that video systems in real-time are different than stored video. And, he believes, overall advances such as megapixel, HDTV, high definition and 4K cameras complement retail business analytics, too. The better quality of images, the better, more effective uses of more detailed video-based information, Hanlon says, adding that we are just seeing the understanding and growth of security video analytics applied to business goals in addition to loss prevention. The future is predictive analytics, he says.
Loss Prevention Can Help
There are more high-end video and hardware tools on the security video side, says Keith Jentoft, a part of the integration team at Honeywell Security Group. He sees growth with analytics at the edge before images are sent to monitoring or storage as well as expansion in the use of the cloud. Retailers continue myriad ways to become more profitable.
Mall operators can also gain from the diverse applications of security video. A case in point is The Strand at Coolangatta, recently extensively remodeled and which offers beachside dining, shopping and entertainment in Coolangatta, the southernmost suburb of City of Gold Coast, Queensland, Australia.
Systems integrator Chris-Tech Security Alarm Systems has a unified video analytics platform solution at the mall site. Of the 60 cameras deployed around the facility, feeds from 26 cameras – those above the facility’s entrance and exit points and along the street-front shop entrances – are analyzed to create actionable business intelligence.
The technology enables automated statistical analysis and extraction of data from surveillance video, providing easy and rapid access to operational and business information captured within stored video to view traffic volumes, movement trends and motion patterns through advanced visualization tools that can include charts, graphs and heat maps. The site has a video management system recording and viewing application and which is fully integrated with the video analytics platform.
The video analytics solution “Provides an accurate measurement of people movement,” insists Ken Howell, operations manager at The Strand at Coolangatta. More detailed useful information on the installation: See Security magazine’s September 2015 issue online at SecurityMagazine.com.
Retail Customer Analytics
by the Numbers
The retail customer analytics business is on the cusp of a new generation of growth with ABI Research, projecting the market to approach $1.5 billion by 2021, with a compound annual growth rate of 13.8 percent. As retailers increasingly adopt in-store analytics and new 3D sensor technologies, camera analytics vendors and loss prevention executives must move with these trends or miss the growth opportunity.
Most cutting edge analytics companies support at least one in-store technology, such as Wi-Fi, Bluetooth Low Energy (BLE), location-aware BLE proximity beacons or nodes and LED lighting, through camera integration in the case of Nomi of Norcross Georgia, and RetailNext of Chicago, says Patrick Connolly, principal analyst at ABI Research. One LED lighting example: a pioneering effort by French supermarket chain Carrefour, which piloted a system that sends location-based services, offers and promotions to a shopper’s smartphone anywhere across the store floor.
“But these platforms pale in comparison to the offerings of a dedicated in-store analytics vendor, like Walkbase of Helsinki, Finland,” says Connolly.
Wi-Fi dominated the 2015 in-store analytics space with almost 400-percent year over year growth in deployments. While BLE beacons are not a great short-term analytics option due to their limited signal reach, there is secondary revenue potential in creating huge sensor networks. In time, beacons’ reach problems will disappear, and they will become another valuable approach.
This year’s market will see vendors launching analytics tools around demographic analysis, loss prevention, shelf level interactions and external footfall. As retailers transition to staff handheld devices, there will be a greater focus on staff analytics and merging inventory data with customer data. The integration of disparate retail technologies creates new services and a much clearer ROI for retailers.
Future developments? “Google’s Project Tango (a platform that uses computer vision to enable mobile devices, such as smartphones and tablets, to detect their position relative to the world around them without using GPS or other external signals) and Microsoft’s Kinect (a line of motion-sensing input devices for Xbox 360 and Xbox One video game consoles and Windows PCs) represent both threats and opportunities for the camera analytics industry,” concludes Connolly. “Vendors like Shopperception of Newark, Delaware, and Hong Kong’s Vizualize are already embracing the shift toward 3D camera technologies.”
The Cost of eCommerce Retail Fraud
Losses are ticking upward, according to Atlantic-based LexisNexis Risk Solutions in its 2016 True Cost of Fraud report. A central feature of the report estimates total amount of loss a merchant incurs, based on the actual dollar value of a fraudulent transaction. This year, every dollar of fraud costs merchants $2.40, up from $2.23 a year ago. Also, the report finds that the volume of fraud has risen sharply in the last year while the level of fraud as a percentage of revenue has also inched upward from 1.32 percent to 1.47 percent.
However, these values represent a moving target – the opportunities for retail fraud become ever more abundant in an omni channel environment.
Surveyed were more than 1,000 risk and fraud executives in ecommerce and multichannel retail organizations, and details current trends in retail fraud and the effects these have on the ability of merchants of all sizes to prevent and catch fraudulent transactions. The study also looked at ways of managing fraud, from automated to manual methods. Notes LexisNexis Risk Solutions Director of eCommerce and Payments and study author Aaron Press: “Merchants leveraging remote channels experience a disproportionate amount of fraud, and they are especially challenged in the mobile channel.”
Credit cards remain the most common method of payment for fraud – 41 percent to 63 percent across all merchant categories.
Retail Buys into Video In-Store Analytics
Colgram, one of the top women’s and children’s retail apparel company based in Chile, uses sensors across more than 90 store locations in South America. The outcome: real-time metrics and reports on in-store occupancy, traffic paths and more, giving store managers insight they need to make better decisions related to staffing, service and other key areas impacting retail performance.
Previously, Colgram had been using infrared beam technology to count shoppers entering or shoppers exiting their stores, but the retailer found that the data that was captured was not accurate, not comprehensive or not timely.
“We wanted a solution that would enable us to move beyond the door and analyze shopper behavior throughout the full store,” says Hernán Ferragut, director of retail for Colgram. The newer “sophisticated real-time data capture capabilities, combined with granular analytics and reporting, will give us immediate access to accurate information about store traffic, allow us to count children and adults as a single shopping unit and understand other key metrics,” says Ferragut.
For RetailNext, analytics includes a strong base in security video to:
- Identify issues instantly and easily.
- Minimize time spent on investigations.
- Eliminate complexity.
- Maximize operational ROI.
- Integrate easily with point-of-sales and workforce management systems.