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Ask the expert: Can retailers leverage video analytics beyond loss prevention?
While analogue and network cameras have been protecting retailers against shrink and frivolous lawsuits for years, more recently operations and marketing departments have taken closer looks at the technology for their own uses. In fact, the current trend is for non-LP groups to use video analytics to improve revenues and enhance operations.
May 20, 2009 By Robert Moore
For example, operations may use surveillance systems to detect how fast checkout lines are growing – or even predict when they will reach a size that requires additional cashiers. By doing so, they can address long lines (and impatient customers) before they become issues. Some stores are even using video analytics to improve traffic flows in areas that need to be addressed. Still others are using video analytics for people counting, so they can determine how busy their stores are at any given time. Knowing this information allows businesses to properly staff their operations to meet customer needs.
Marketing, which is generally thought of as a cost center, has also found novel uses for the technology. Using video analytics, marketing departments are increasing revenues for retailers by determining when they need to restock shelves, so goods are available when customers need them.
Studies have shown that when products aren’t available, retailers lose not only immediate sales, but often complementary sales as well. By keeping shelves stocked, they ensure the sales of stocked goods plus potential related items. In addition, a high percentage of shoppers say that if the items they are seeking aren’t available they are more likely to obtain them from a competing retailer.
Video technology can also assist retailers to determine their most popular goods in a timely manner. Doing so ensures that items are displayed properly, reordered before there are empty shelves, and secured if necessary to prevent shoplifting.
Retailers are also using video analytics remotely from centralized locations to see how regional stores are laid out and to ensure that end caps are set up correctly per marketing guidelines. This reduces travel budgets by reducing the number of trips required by central office staff throughout the year.
Another area of interest for marketers is the use of public view monitors (PVM), which in addition to displaying store surveillance images to shoppers, may also carry advertising and marketing images. These PVMs are becoming very popular and they can be seen scattered throughout many retail shops either showing in-house promotions or third party messages. But it is difficult and expensive to know how many people are viewing these marketing messages and the demographics of those who are.
Many retailers perform expensive manual surveys that use small sample sizes. However, this method often ends with inaccurate results. Using video analytics, retailers can see how many people are watching the monitors and for how long. In addition, advanced systems can even segment results by age group and sex. By adopting video analytics, retailers are finding invaluable customer feedback with a high return on their investments.
As a secondary bonus, studies have shown that the use of surveillance cameras in high-profit areas tends to attract customers. As counter intuitive as it may sound, shoppers are drawn to these areas, so retailers are capitalizing by installing surveillance cameras there.
Many retailers with CCTV cameras could benefit from video analytics, but aren’t ready to move to network cameras and aren’t familiar with the use of video encoders. Video encoders digitize analogue video signals and send digital images directly over IP networks, such as LANs, intranets or the Internet. They essentially turn analogue video systems into network video systems and enable users to view live images using a web browser or video management software on any local or remote networked computers.
Video encoders are the most cost-effective way to turn analogue video systems into network video systems. They also benefit the scalability and cost efficiencies by using video management software on any local or remote computer on a network. Once in the “digital world,” retailers can perform video analytics at the edge using video management systems. They can mix and match analogue and network cameras to make their solutions more future proof as well.
Another approach for retailers to attain the benefits of network video systems without the cost of implementing new systems is the software-as-a-service (SaaS) approach in which video analytics are outsourced to managed services firms with the proper expertise. Retailers pay monthly fees, as opposed to paying traditional licensing fees and ongoing maintenance costs. This way, they spread out the costs and can rely on outside experts to ensure that they are obtaining useful and actionable information to improve revenue, reduce costs and enhance operations.
Loss prevention groups will continue to use video analytics to reduce shrink; we shouldn’t minimize that value. But in a difficult economic environment, retailers are also finding creative ways to improve operations and merchandising with video systems. Because there are cost effective ways to move from analogue to network video systems, we can expect to see this trend accelerate.
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