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Is Twilight Zone Entering the Retail Zone?


Imagine if you will.  You walk into a store (no particulars on the type) and as you approach a rather gnarly, but intriguing-looking device, displayed proudly for all to see just at the cusp of the entrance and the gallery, a red light appears and wink’s at you (but what it’s really doing is scanning you from head to toe).  One more step closer towards the leering Datatron and a slip of paper emerges.  Your curiosity causes you to grab it: what does it say?  Now before you is a list detailing everything that you may have (the store doesn’t want to presume, of course) come to the store for and has carefully mapped out the locations to each item in their perfectly manicured aisles.

Sounds farfetched?  Well, not if today’s retailers have anything to say about it.

As the need for innovation grows, retailers are coming up with new-and in some cases-controversial ways to streamline operations, boost profitability and attract customers.  This is coupled with the fact that the speed in which new-aged technology is being developed has outpaced the ability of businesses to incorporate that same technology into effective, efficient, and -dare I say- ethical means.

The practice of gathering customer insight and mapping out shopping details are essential for the livelihood of e-commerce, however, for the brick-and-mortar sector, this strategy has not yet been fully implemented.  While assuredly not a new concept- data collecting- used for the purpose of predicting customer behavior rather than merely observers of it is fast becoming the new business trend.

The use of data collecting becoming more common-place for retailers was heightened when the discount chain Family Dollar Stores (NYSE: FDO) conducted in October 2011 a 20-store test using real-time, in-store monitoring through the use of video analytics, on-shelf sensors, data taken from the point-of-sale, and other business systems.  Tim Callan, CMO of RetailNext, the firm responsible for the ShopperGauge data-mapping software used by Family Dollar, claims that “Retailers who use in-store analytics routinely report sales increases in the double-digit percentages,” and “a robust in-store analytics installation should measure on the order of 10,000 data points per store visitor,” as stated in Chainstoreage.com.

No hard numbers, as of yet, has come out as a result of the analysis, but, if last quarter figures  are any indication, researching in-store movements and sales patterns may not be such a bad thing after all. Fourth-quarter 2011 results (ending Nov. 26) for Family Dollar report net sales of $2.15 billion compared to $1.82 billion net sales for the corresponding quarter in 2010 – a 15 percent increase.

Recently Target (NYSE: TGT) came under fire when a report in the New York Times revealed at the “urban boutique” company was able to determine the due date of one of its shoppers and sent the expectant mother an assortment of promotions for various baby supplies.  What’s the big deal, you ask?  The father of the mother-to-be was surprised (in more ways than one) when “baby stuff” for his daughter came in the mail congratulating the sixteen year-old.

[Read the full article, How Companies Learn Your Secrets, here.]

No backlash on sales though; Q1 2012 (ending Jan. 28) reports total revenue of $21.29 billion for Target with $16.40 billion reported for the previous quarter.

In-store analysis has been around for sometime; the use of it by retailers began in 1998, but the first actual application of it as a study for research started in the 1970s.  The practice has now evolved into predictive analysis, or data mining, and businesses -other than retailers- are also taking notice.

Intellio Technologies ZRT, the Belgiumdeveloper of intelligent video analytics, mainly for the security industry, entered the retail and traffic-monitoring fields of analysis in 2009.

intellio

Image courtesy of Intellio

The company was first introduced to the fashion industry by the German-based men’s clothing retailer, Hugo Boss.  What was initially a security-based functionality for the retailer, later served as a way to track incoming and outgoing traffic, tallying the number of visitors, and following the paths of customers once inside a store.

Year-end total revenue for Hugo Boss was $1.56 million in 2009, at the end of fiscal-year 2011, total revenue was $2.06 million.

Facial recognition capabilities, thermal-imaging infrared cameras, calculating human behavior; sounds more like an episode of Star Trek: The Next Generation.  What’s next, time and space manipulation just to purchase a pair of shoes?  Well, that may actually prove useful.

Human nature: a study once reserved for anthropologists and sociologists has gravitated towards the realms of statisticians and IT-professionals all for the sake of sales and profit, but, as technology progresses, will business integration soon win over individual/group behavior?

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