Cameras move beyond loss prevention

During the past two years, video surveillance systems have moved beyond loss prevention and have found a place as an intelligence gathering tool to help retailers learn more about what really takes place in all corners of their stores.

Today's digital video technology is more than an alternative to older analog video surveillance systems. It is of greater strategic important to retailers than past analog incarnations because the data captured can be analyzed to understand how the physical design of the store, the merchandise space plan, and promotional campaigns improve upon or detract from the customer experience. That's the finding of a study conducted late last year by Retail Systems Research, or RSR, a retail industry analysis firm in Miami.

An ABI Research report released in May predicts a fourfold increase in video surveillance software revenue over the next five years, says Stan Schatt, ABI Research vice president and research director.

Savvy retailers are viewing the visual images captured by video system feedback with an eye to analyzing shopping behavior. They're also tying the video to analysis software that further scrutinizes and breaks out shopping and purchasing patterns. Retailers use this information in a number of ways, primarily to identify customer connections with products and to determine how to best plan and merchandise the store to align with shopper behavior, according to Steve Rowen, RSR partner.

For its report, RSR interviewed several retailers to determine how each called upon video surveillance — beyond loss prevention — for marketing and merchandising.

"There's reason for us to believe the evolution of video technology and the software capability of what you can do with that data has moved quite quickly in the last two years," Rowen says. "We wanted to find out how much progress has been made into identifying hotspots in store and redesigning the merchandise mix."

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The retailers originally relied upon video for what Rowen termed relatively simple ideas like using determining customer conversion rates. 

But many have plans to ramp up those uses in the near future. Some spoke for example of identifying what they called store hotspots — areas that see a great deal of foot traffic or shopper interest in particular items. They then place the items they wish to attract attention to at those hotspots.

Also, newer, managed-service delivery models for the systems and attendant software mean retailers need not actually purchase video systems or install and maintain software. These video cameras continually stream content to a password protected Web site that can be accessed be retail executives or managers from any location.

Think of the service as analogous to a cable television subscription, said Matt Steinfort, chief executive officer and president of EnVysion, a video surveillance managed service provider in Louisville, Colo. You provide the vide cameras in the same way you provide your existing TV to be wired to cable. The managed-care provider arrives at the small business to establish the Internet connection and the Web site. Should they go down, the provider repairs the connection.

At EnVysion, a four-camera set up runs $150 per month. Installation fee is $1,000 and the vendor maintains the Web site and software.

By viewing video via a Web site, retailers can instantly check the effectiveness of a marketing program they've launched, Steinfort says.

"Maybe they put new promotional materials near a cash register," he says. "You can watch the video to ensure those materials are doing what they're supposed to be doing."

Steinfort cites a chain of dollar stores that has placed a video camera at the end of each aisle within one particular store.

Executives review footage on the Web site at regular intervals.

"They use that store as a test environment for them," he says. "They track layout and see what works and make sure shelf positioning is correct. They want video on each aisle to take a look at traffic flow in those locations. That way, when someone buys a particular product it gives managers the ability to see what's happening within the stores to adjust the layout accordingly."

Retailers also use Steinfort's system to determine whether a product is attracting its intended demographic and to measure how it performs against its original market objectives.

"Today you'd send people to stores to watch what's going on or you'd ask the manager to write down who bought the product," Steinfort says. "With a video system, you can look up the POS information from the sale of every one of those products across 600 stores and look at the video associated with every transaction and then get exact demographics."

The video systems can be tied to a store's point-of-sale systems to synch consumer behavior with eventual sale. The POS returns are automatically synchronized with video to achieve this type of product-purchase information.

"You tie the POS system to an overlay of text of the POS transactions so you can see what people buy on the video," Steinfort says.

For instance, executives reviewing video will see consumers selecting an item and note the demographic into which the consumer falls. They can then review video located near the POS system to ascertain when the customer bought his or her items. POS information returned from that particular time will demonstrate that the customer did buy the item he originally selected.

The video systems can also be integrated with video analytic software that analyzes the video up-close to count people through the aisles and compile a formal report that includes how many times shoppers touched, moved or lingered before a particular item, Rowen says.

Examples of video analytics applications include counting the number of pedestrians entering a door or geographic region, determining the location, speed and direction of travel, identifying suspicious movement of people or assets, license plate identification or evaluating how long a package has been left in an area.

"We can integrate with them so every time there is movement in this area we can show you the video or show you what the people they counted looked like, for demographic purposes," Steinfort says. "This is an affordable way of giving people insight into what's going on in their stores."