Video-based Loss Prevention (LP) systems are widely considered a best practice in the retail industry. They enable better surveillance of a large number of geographically diverse stores to keep both shoppers and employees honest. And in the unfortunate circumstances when theft does occur, video LP systems are an indispensable tool to identify and possibly prosecute offenders.
Yet, many retailers are missing out on the immense potential of their video LP systems. In-store video systems also provide a seamless way to gather other critical information needed to manage and optimize your locations. Just as online retailers have mountains of data gathered from shoppers' actions on their sites, in-store video analytics provide brick & mortar retailers with traffic and conversion data as well as more advanced analytics to improve store performance.
Research firm The Aberdeen Group just released a report, The State of Loss Prevention in Retail: Controlling Losses and Maximizing Profits, which emphasized the role of analytics as the source of intelligence necessary to detect missed opportunities that add to profitability. According to the report,
Traffic and conversion measurement is a mainstay of retailers seeking to understand their performance. Because video analytics differentiate between those entering and leaving the store and detects and counts individuals in a broad set of conditions, they are the most reliable traffic measurement technology. What is considered "good" conversion can vary greatly from segment to segment, region to region, and retailer to retailer. But what is clear is that conversion is a critical metric that retailers can use to compare performance between stores, identify weak times of day or days of week, and measure improvement (or decline) over time.
In addition to traffic counting and conversion, in-store video analytics open up a host of deeper insights for store managers. Retailers can:
- "Heat Map" their stores, providing information on how much shoppers travel to specific parts of the store, from aisles to endcaps. Heat mapping has helped retailers increase sales considerably by matching the location of the products they most want to sell with the most trafficked parts of the store.
- Compare staffing to traffic to identify opportunities for increasing conversion rates or learn how actively sales associates engage with customers.
- Test the effect of promotions, programs, in-store merchandising, and even the weather to truly understand their effect on making the register ring.
Many retailers have seen the results of these analytics in terms of the bottom line. In the Aberdeen report mentioned above, Director of Loss Prevention at Brookstone Wayne McBrian explained, "We have insight into employee behavior that is linked to traffic patterns and conversion rates. For example, we use analytics to identify suspicious returns and even use video to make sure a customer is present during the transaction."
Retailers have realized impactful results based on in-store advanced analytics, combined with LP (video) data.
- Montblanc reported a 20% increase in same-store sales
- Brookstone reported it decreased shrinkage more than .2%
- Family Dollar remodeled 1300+ stores to take advantage of these insights
Until recently, retailers had to install two different systems to offer video-based Loss Prevention and video-based traffic counting. Current, state-of-the art, in-store analytics solutions make it possible to accomplish both of these functions with a single setup. This saves both capital expenses for installation of cameras and ongoing support costs. For instance, American Apparel reduced capital costs up to 40% by combining LP and traffic counting into a single system. And by having fewer cameras, there is less hardware to maintain or to distract from the aesthetic appearance of the stores.
In-store analytics are an irreplaceable element of a successful store optimization effort. The Aberdeen Group said it best – "sustained use of these processes by retailers will ultimately enhance profit, customer satisfaction, and employee and customer safety."