Designing Intelligent Retail Store

In-Store Video Analytics & Video Management Software


Video surveillance has become an integral part of every retail store and its daily activities. Though it was mainly incorporated to maintain the security inside the store, the advent of video analytics and video management software helped businesses to leverage insights to improve business processes. These insights allow a store to stand out from rest of the competition and to provide top notch services to their customers on a consistent basis.

Apart from the competition, retail stores also face problems such as pilferage and other fraudulent activities. To stay ahead of the competition, they needs not only to counter such activities but also to determine the needs of the customers to cater to them when they visit the store. The software gives needful insights in to the customer’s buying behaviour and an array of the methods to improve their shopping experience.

VMS also helps retailers to understand the effectiveness of their marketing activities, product placements, and optimizing their inventory to satisfactorily cater to their customers.

For any business, insights generated from different departments are very important to improve business processes.

VMS also provides necessary inputs into the business that render improvement of shopping experience and understanding their buying behaviour.

This white paper discusses how you can have a seamlessly connected retail store with the help of video analytics and using the derived insights from different aspects of your store to build a successful business. It also gives an in-depth view of how video analytics work. It’s a probable solution for any retail store to be successful in the long run.

Current trends in retail

The retail industry has undergone tremendous transformation in the last few years with evolving markets and technologies. Kasey Lobaugh, Deloitte’s Chief Retail Innovation Officer said, “The full extent of retail disruption is emerging due to a number of factors such as the rise of the digitally influenced shopping experience, the changing nature of retail competition, and the tidal wave of exponential technologies on the horizon.”

Growth in the retail industry requires continuous expansion. This expansion is not only from a physical stand point but it also requires expansion from cost and revenue perspectives. Though there is a need to keep up with the sales and profit figures, there is also a need to keep a tab on store metrics.  These metrics can be divided into two sections: Revenue and Cost side.

Video analytics addresses in-store metrics like footfalls, conversions, average basket size from the revenue side; and employee management, inventory management and POS solutions from the cost side.

One of the methods to improve footfalls in retail stores is incorporating video analytics. It helps in getting insights on managing your stores. At the other end, video analytics primarily helps in maintaining safety and security by minimizing incidents of thefts and fraud. This helps in proactively increasing profit margins that were being lost due to such incidents.

The advent of online shopping has forced most retail store chains to identify e-commerce as a highly visible revenue stream which means traditional retailers have embraced the online medium with gusto. Due to stiff competition and the need to stand out, most stores focus on creating a unique shopping experience for all their customers.

A customer could go to a retail store and browse through the shelves for products they like to buy. They could then go online and compare the prices to see if there are better price options or variants. This is where video analytics can play a very crucial role. Though the primary function of a video management software is security and surveillance, video analytics is simultaneously being used to extract various customer-centric information to improve footfalls and eliminate or minimize the challenges faced in day-to-day operations.

The need for comprehensive in-store analytics

In a survey conducted by the National Retail Federation in the year 2015, which included participation of 100 retail stores spread over 20 retail market categories, shoplifting alone accounted for 38 percent of the reported shrink. On the other hand, internal thefts also contributed to about 35 percent of shrinkage due to which retail stores faced heavy losses.

Daily in-store operations have to overcome pilferage by implementing proper security and surveillance measures. Such incidents hurt the performance of the business. Though most stores are actively involved in maintaining security, the need to analyze this data has also become eminent. Video analytics enhances the in-store security systems which not only helps in loss prevention but opens up ways to improve customer service.

The main focus, however, still remains in converting potential prospects into buyers. Product placements, promotions, customer assistance etc., influence the decision of the buyer. With the help of video analytics, stores can understand the effectiveness of their marketing strategies and product placements and can make necessary changes to make them more effective. In-store analytics can help in this direction giving insights into the metrics, which will help convert prospects into buyers.

However, many businesses use video surveillance and video analytics for various purposes. According to the Seagate Video Surveillance Trends Report of 2016, the key use cases for video surveillance include the following.

Video analytics – the game changer

Video analytics has really become popular in the last few years for various reasons. It allows managing the video streams with ease allowing the team to focus on specific incidents rather than scanning through long streams of videos, which helps them to save time and manpower. Smart security systems with analytics record videos when any motion is detected that reduces the network load, and at the same time, helps save storage space.

Further insights can be gained in to the performance of the employees enabling to make accurate assessments. Video analytics does not require exorbitant infrastructure, which makes it affordable for the small retail stores to have a state-of- the-art video management system.

Analytics can be chosen as per the needs of the business, thus, ensuring a fool-proof customized solution that will be exclusive to the business. Many retail stores also consult service providers for solutions ideal for their stores.

Implementing video analytics

System architecture can be divided into two parts – Centralized Setup & Distributed Setup.

In a centralized setup, data is collected by cameras and sensors which is communicated to the central command and control center where the acquired data is analyzed. In a distributed setup, the edge devices are capable of analyzing the data by extracting relevant one. The edge-based video analytics distribute the image processing to the camera or a video encoder. Digital network video allows to have distributed intelligence which helps in countering certain limitations of centralized architecture by distributing the processing to different elements in the network.

Edge based analytics

The popularity of edge-based analytics has increased the prevalence of IoT devices. Initially, video analytics was only available as a server-based solution. This was just raw unprocessed data that was being recorded requiring high bandwidth to send the data to the command and control center. However, there have been some significant improvements in the recent times, especially in the design and also with the processing power of DSP chipsets, which has made it possible for video analytics software to operate with great efficiency.

There are specific IP cameras that come with on-board capabilities of analyzing the images/ visuals that are recorded by the camera. This saves network bandwidth and only streams those visuals to the server that are relevant.

Using smart edge-based devices has their own advantages. It considerably reduces the traffic and volume of the data. The data can be acquired and viewed in the real-time at low computational power. The alerts are sent in real-time to the command and control centers ensuring the quality of the security and surveillance. IP cameras with on-board analytics yield exceptional user experience along with high scalability and low latency. It provides you with an improved Quality of Service (QoS). Some cameras come with the capability of having distributed storage with the help of an SD card, communication, command and control.

Server based analytics

The need to perform proper analytics or connect metadata real-time or stored video from multiple cameras requires greater processing power and central management capabilities of a server-based video analytics. Under server based analytics, the analytics is deployed to a server in form of software from where all the security and surveillance can be managed effectively. It is a centralized solution which could have multiple access points to manage the security inside the store. Server based analytics with custom video management software makes it easy not only to manage but help your business in improving and mapping your business processes. You can also choose the analytical features based on your business needs.

According to the Gartner Report released in 2016 regarding video surveillance, storage cost itself amounts to about 40 percent of the total costs. Cloud storage allows you to manage your VMS remotely along with savings in infrastructure costs.

Since it is a centralized solution, the decisions are made on the software rather than on the edge devices. However, much of these video analytics software provide you more than just security and surveillance. Server-based analytics enable more complex video analytics and have the ability to search the archived data faster. Features such as mapping customer behavior and their browsing patterns can be key insights for the store to facilitate better services for their customers and also improve customer experience. Video analytics algorithms are segmented into two parts and divided between the video encoder and the central server managing the image processing.

Applications of VMS in retail

Some analytics features are exclusively pivotal to the workings of a retail store. These analytics provide due advantage and can help the store in their day to day operations to improve efficiency, tracking employee performance, mapping customer behavior, surveillance, and stopping theft and pilferage.

Motion detection

The motion detection algorithm detects motion or movement of an object or human being in a field. The camera triggers and starts recording as soon as it detects movement in the defined field with a fixed background. Motion detection can be done by various sensor technologies or algorithms. These algorithms can be very simple and could also be very complex depending on the purpose.

Basic algorithms when integrated to a VMS, can detect any kind of motion to a fixed background inside a defined field. However, motion detection can be selected based on preference and detection can be set to detect human presence and non-human presence in the field. Motion in ‘no-entry’ zones can also be managed by alerting authorities whenever there is unauthorized intrusion.

Queue management

Billing queues can also be managed seamlessly with the help of queue management algorithm. This can be done by setting a threshold for your queue and once the queue moves beyond the set threshold, an alert will be sent to the command and control center which can then take required actions to help their customers or automatically trigger the opening of a new cash counter. It can also address wait time issues and thus help in improving operational efficiency and customer satisfaction.

Face recognition

Another feature that is common to video analytics is face recognition. It is a process of matching faces from the real-time video feed against the images already stored in the database. This enables retailers to identify regular customers who visit their stores and note their buying patterns and the average time spent by the customer inside the store. Face recognition can also be used to prevent vandalism and theft. Miscreants and law breakers can be identified and a close watch can be kept in order to keep the store safe. Alarms can also be raised at sight of usual suspects. This will ensure a great shopping environment for the customers.

Heat mapping

Heat mapping tool can help in assessing the effectiveness of your ads inside the store. It tracks how much time customers have lingered around an ad or any display in the store. This will help store authorities to understand the interest of various customers and thus advertise and display items according to their interest. You can also identify cold areas and improve promotional efforts in such areas to improve sales. It also helps in planning for stationing staff at the right places.

POS integration

For a long time, the retail industry has been victim of ‘sweet heartening,’ where store employees with the help of their friends, who pose as customers, engage infraudulent activities. Since employees know the business processes very well, they take advantage of any loopholes that is visible in the system and use it to take unfair advantage.

POS integration allows you to detect any suspicious activities like unauthorized discounts, incorrect returns, unauthorized refunds etc. The date of sale and the video evidence recorded will stop such fraudulent activities. This will also allow you to rapidly detect frauds but at the same time detect the source of it.

Perimeter blackout

In a retail store, sometimes, there arises a need to maintain the privacy of VIP customers. Private details like credit card numbers that can be viewed from the camera that is mounted on the payment desk also need to be protected. In such scenarios, perimeters can be chosen and blacked out in a defined field so that confidential details or identity is not recorded. This will help maintain confidentiality and avoid theft of private details like credit card information and other personal details.

People counting

This feature allows you to monitor how many people are entering and exiting your store. For most retail stores, traffic may vary at different time slots during their hours of operation. The people counting feature can help the end user better understand their own operations and also maximize the revenue generating opportunities.

Video analytics increasing revenue in retail

Video Analytics has grown beyond just security and surveillance. It is no longer a value added component in the infrastructure but it is now considered an inevitable part of any retail store. It has helped many retail stores to increase their revenue by way of proactive utilization of the analysis.

Analyzing customer behaviour

About 95 percent of the consumer’s thinking happens in his/ her subconscious mind (Zaltman, 2003). For every retail store understanding customer behaviour inside the store has become very important. Identifying your usual customers and their browsing patterns and the impact of the promotions in their buying patterns after they enter the store can be achieved by video analytics.

Staff optimization

Video Analytics also helps in monitoring and optimizing your staff. It allows you to detect any fraudulent activities that are carried out. POS integrations can help capture any suspicious activities and appropriate steps can be taken to prevent it. Queue management also allows in measuring the performance of the store clerks during peak hours.

If a customer requires any assistance, you can also send alerts to your store staff and inform them to assist the customer. You can identify the high traffic areas inside your store and position your staff in such a way so that the customers visiting your store can be served properly. So, it allows you to effectively manage your workforce and also allows you to identify flaws in your system and address them immediately.

Low cost of ownership

Many times, the costs associated with managing video analytics system or just video security and surveillance could be high. Especially for retail stores, where the need for cameras is high in volume and the data recorded on a day to day basis is enormous.

So it is important to choose services and products that are cost effective, yet meet the needs of the store. Most video analytics are server based and require strong bandwidth along with a centralized server and ample storage space. However, with the advent of edge based analytics and custom video management software on cloud have become key to bringing down the storage costs. Though the cost of ownership is reduced, the quality has not been compromised. This has allowed even the smaller retail stores to have a state-of-the-art security system at a very cost effective price.

Analyzing marketing efforts

Retail stores are required to map the effectiveness of the advertisements. With the help of video analytics, the marketing efforts and the advertisements can be managed proactively. It can help in gaining insights on the ads indifferent aisles and change them or boost the advertising depending on the customer’s response. So this becomes a major player in analyzing the ad revenues and thus concentrating efforts in the right areas inside the store.

Advertising strategies can be implemented based on the insights derived from the surveillance systems. Customer reaction can be mapped real time and based on the results of the macro analytics, new strategies can be implemented to attract the customers towards buying the products that are advertised.

Proactive customer service

The traditional methods of customer service have evolved to an era of greater personalization. Most customers seek personalized attention while they shop so that shopping becomes convenient. Most stores are innovating customer service in order to provide their customers with a unique shopping experience. Analytics like queue management helps in identifying the wait time in queues and alternatively open other counters for quick and speedy service. Such proactive actions and understanding customer behaviour can raise loyalty towards the store.

Most consumers not only like to shop but also talk about their experience. Proactive and personalized customer service can help increase brand loyalty which ultimately leads to more revenue, popularity and more customers.

Loss prevention

One of the primary reasons for deploying video analytics has always been about maintaining the safety and security at the premises. The National Retail Security Survey in collaboration with the University of Florida in 2016, reveals that 47 percent of retailers noted significant increase in shrinkage during last year, which is one of the main contributing factors for the losses suffered by retail stores (Florida, 2015). Though numerous stores have loss prevention officers, it is not enough to manage the growing losses. So managing such large numbers is a challenge.

The stores that have adopted and implemented video analytics have seen considerable decrease in shrinkage, helping them to maintain their profits. It also equips store authorities to monitor employees engaging in pilferage and thus ensuring a fraud-free environment.

The retail industry has been constantly evolving and new methods to improve customer satisfaction are being sought after. Video analytics have the potential to improve revenue in the retail industry.

Video Management software on Cloud

During 2011 to 2016, Cloud contribution went up from 3.91% to 11.82%, and it is assumed that by 2021 Cloud is supposed to capture at least 16 percent of the total VMS market. The trend of moving VMS to Cloud is fast catching up and seems to be a great option for retail stores.

VMS on Cloud has been developed on a multi-tenant federated architecture to facilitate runtime definition of device provisioning and access rights. It also allows setting rules to handle different types of event/ alarms based on the criticality of the alarm and the business need.

The micro-services based architecture enables complete flexibility and customization to add or remove any services on-the-go. This makes it extremely cost-effective and efficient for our customers to deploy these VMS systems which provides end-to-end security.

Storage could be a major challenge for many retail stores as it takes the major bulk of the infrastructure costs. With eInfochips’ VMS on Cloud offerings, storage costs will be reduced considerably. The cloud-driven architecture is scalable, and it also provides great flexibility to meet the requirements of the retail sector and also other industries.

The VMS can also be managed remotely by way of a mobile application that is available on IOS and Android. The cloud-driven architecture along with the tailor-made video analytics solution can help retail stores take control of  their business.

VMS on Cloud reduces the risk of theft and damage to equipment. The enhanced coverage provided by cloud-based video solutions help in monitoring and tracking commercial conversion rates and providing predictive analytics in order to prevent incidents from happening.

The VMS solution is available in three different versions which can be chosen based on your specific requirements. It also comes with an option of pay-by-feature, which allows you to pick the video analytics that you need. This will help the smaller businesses to make use of video analytics to improve their business and maintain security and surveillance at their stores.

Conclusion

Video analytics surely makes managing stores very convenient and helps in improving footfalls and steadily increasing their profits by stopping pilferage. Though the primary focus has always been on improving security and surveillance, video analytics adds more by playing a great role in improving customer experience and managing in-store operations seamlessly. Since video analytics are constantly evolving, going further, smarter and complex analytical features can be expected to improve business processes.

Customer experience is a key factor for any retail store. A unique shopping experience encourages customers to not only come back but also be loyal to the business. VMS system can help you proactively serve your customers and improve the quality of your service.

VMS on Cloud is expected to become a major player in the field of security and surveillance as it is getting more popular. Most retails stores will now be able to have a state-of-the-art video management system without incurring big infrastructure costs. Future improvements in 4K and addition of other connected devices like access control devices and handheld devices can also be integrated into the VMS system.

eInfochips has been devoted to providing cost effective solutions for retail stores all around the world with offerings like IP camera design, benchmarking reports, Video management software on Cloud and more in the last decade. With the years of experience behind us, we very well understand the challenges faced by stores, and can help retail stores to manage their stores effectively.


By Smishad Thomas – Customer Experience Manager – eInfochips


 

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