Report • 29.06.2017

In-store tracking: customer buying behavior analysis ever more precise

… but keep it anonymous and compliant with data protection legislation

At what times do guests visit the store and how do they behave? And how does this impact sales? Retailers have to address these issues to optimize the brick-and-mortar shopping experience. To do this, retailers have access to a wide range of technologies on the market that measure customer football and consumer behavior.

Previously, brick-and-mortar businesses used loyalty programs or purchase receipt data to get to know their customers and preferences better. However, this data can often not be compared to other relevant parameters – so-called key performance indicators (KPI). That’s why customer footfall measurement and customer behavior analysis are increasingly elevated to a digital level. This is how in-store tracking is getting closer to what online retail has already been able to do for a long time: analyze the complete customer journey.

The two key performance indicators that can be identified through in-store tracking are the conversion and capture rate. They provide clues and information about choice and assessment of retail store locations, control over sales and operations planning as well as marketing events, and they support planning and sales forecasts. In the course of tracking, dwell time and the total number of visitors are also relevant. In the process, the performance of all stores as well as the individual departments, sales areas, shelves or product lines can be determined.

The conversion rate examines the ratio of the total number of sales to the total number of visitors. The capture rate represents the conversion of passerby into visitors.

Dilax identifies numerous KPIs with Instore Analytics that make transparent...
Dilax identifies numerous KPIs with Instore Analytics that make transparent sales performance and customer behavior at POS.
Source: DILAX Intelcom

Precise localization: range and location accuracy take top priority

There are many technical capabilities to take in-store frequency measurements or conduct a consumer behavior analysis. However, retailers need to be aware that not every technology option generates the same KPIs. They need to predetermine what information they need to possibly create synergies.

There is a distinction between visual systems (camera systems, optical 3D sensors) and positioning systems that use mechanical (ultrasound) or electromagnetic waves (WLAN/Wi-Fi; Bluetooth/beacons; RFID; ultra-broadband). They mostly differ in terms of range, location accuracy, implementation cost, as well as user acceptance. In addition, many application scenarios facilitate a smartphone integration.

Pyramid Computer GmbH compares various processes and technologies for the POS...
Pyramid Computer GmbH compares various processes and technologies for the POS in their whitepaper "Indoor Localization". Further information are available at www.pyramid.de/pls.
Source: Pyramid Computer GmbH

Personnel planning, category management, and shopfitters benefit

Tracking solution providers often directly offer software to analyze the collected data or they collaborate with systems integrators. You can integrate external data about the weather, cash register receipts or personnel planning into these systems. The analysis partially takes place by using international benchmarks or by conducting a performance comparison between several stores.

Photo: In-store tracking: customer buying behavior analysis ever more precise...
Source: iXtenso/Günther

By now, it’s possible to not only quantitatively measure visitors (people counting) with the help of in-store tracking solutions, but also to generate complete movement profiles and traffic flow analysis – so-called heat maps. They indicate which areas of the store are frequented more or less. This lets retailers make deductions about navigation systems or store design. The same also applies to visual merchandising to analyze how store window displays or entire retail store concepts have to undergo target readjustments to achieve improvements.

In addition, in-store tracking lends itself to target audience and product analysis: category managers gain insights into the performance of individual sales areas or products and can thus quickly respond to a lack of interest and wrong placements but also draw conclusions on successful campaigns and promotions.

Personnel planning also benefits from tracking activities. It is possible to make a real-time recommendation and state down to the minute when staff has to be available at the checkout (calculated based on the average dwell time and number of people who have entered the store). Mobile devices update associates ahead of time about their tasks. In doing so, workflow pertaining to service and checkout management can be improved.

Retailers are often left to their own devices when it comes to utilizing the collected data to increase dwell time at the store or boost the attractiveness of less frequented areas for example. After all, only very few providers offer intensive consulting pertaining to optimizing marketing performance or store concepts. Once again, this is where category managers and shopfitters come into play.

At EuroShop2017, IBM and C&A presented a digital shop window which recognizes...
At EuroShop2017, IBM and C&A presented a digital shop window which recognizes age, gender, number of persons and the clothing style of persons recorded on a photo. This analysis is used to make suggestions for outfits from the C&A collection.
Source: iXtenso/Lormis

Facial recognition: exercise caution to ensure data privacy

“Facial recognition“ is currently a hotly debated issue that’s steeped in controversy. Cameras that are embedded in displays register the exact time and duration a guest looks at the display, they estimate the person’s age and gender and play target group-specific advertising spots based on this data. These types of technologies are especially interesting when customers are in a waiting scenario, for instance at the checkout, sales counter or service point. Supermarkets subsequently play ads featuring the latest brand of beer for middle-aged men, while women are wooed with beauty products for example. real,- and the German Post Office (Deutsche Post) have recently adopted this type of concept.

In the future, the DOOH market will also increasingly rely on facial recognition to analyze patterns of behavior and identify the points when consumers lose interest in a commercial. Another interesting aspect is to determine the time of day specific target groups are dwelling at a certain location to display customized advertising spots.

However, these types of systems are only permitted if no conclusions are drawn on the actual person and data is completely anonymized as is the case with optical 3D sensors for example. In this case, people are only seen in profile in a pixelated form, to where the system can only guess whether the person is an adult or child. In addition, clearly visible signs need to indicate that the store or screen uses video surveillance. Before they decide on using this type of solution, retailers should therefore carefully study data privacy laws to ensure compliance.

Photo: In-store tracking: customer buying behavior analysis ever more precise...
Source: panthermedia.net/Wavebreakmedia ltd

Personal brand experience with digital signage and beacons

The use of in-store beacons is not just practical to locate guests anywhere in the store, but also to send special offers to their smartphones. What’s more, the small devices are able to help customers navigate the store. This is also why beacons are being increasingly used, especially in the digital signage sector. Not only are they sending signals to the mobile devices of customers, they also communicate with digital signage displays. One example: the guest receives a current sales offer for running shoes, while the surrounding monitors play the corresponding image video of the respective brand.

Some manufacturers already make it possible to link in-store tracking solutions with a corresponding app since beacons only detect whether a customer is nearby. The system subsequently consolidates the data from the CRM system with the data from the app, to where the program delivers additional data, for instance on the use of the app, the number of store visits, dwell time and product preference.

Digital in-store tracking is still in the very early stages

Retailers increasingly focus on customer behavior analysis. Having said that, customer counting and surveys are still the most commonly used tools for in-store data acquisition. According to an EHI study from November 2016, a total of 65 percent of surveyed retailers already tracks customer behavior at their stores, while an additional 20 percent are planning to do so in the near future.

Despite high interest, digital in-store tracking is still in its early stages and is so far only being tested in individual projects since capital expenditure is still very high, solutions vary drastically in their scope and the analysis resembles more of a big data project.

Nevertheless, according to a McKinsey study from 2015, in-store tracking can achieve an increase in sales of up to five percent. Retailers are strongly advised to seek consultation and rely on manufacturers that also cover in-store analytics with integrated software or at least a systems integrator. At the end of the day, it’s the retailers that must use the data and implement the findings on their own.

Selection criteria for in-store tracking systems

- Precision and accuracy
- Range
- Robustness to ensure measurements are not distorted by reflections or obstacles
- Infrastructure expenditure
- Number and costs of required components
- Expenditure for system setup and calibration
- Smartphone use
- Simplified use for customers
- User acceptance
- Expenditure and value added
- Privacy considerations
- Low energy consumption

Author: Melanie Günther; iXtenso

related articles:

popular articles:

Thumbnail-Photo: Self-service sells
08.02.2019   #touch screens #kiosk terminals

Self-service sells

Kiosks represent an important part of retail’s future

Self-service is growing exponentially in all areas of retail, hotels, restaurants, healthcare and banking environments. Customers increasingly expect self-service technology options and traditional brick-and-mortar stores are no exception. Retailers ...

Thumbnail-Photo: Kaufland relies on state-of-the-art technology...
07.11.2018   #pos systems #retail

Kaufland relies on state-of-the-art technology

With an innovative POS system by AURES Technologies

Kaufland offers a completely new shopping experience with ist new store concept. The markets convince with their new, noble and highquality appearance. Modern colors combined with light wood and a new lighting concept create a pleasant atmosphere. ...

Thumbnail-Photo: Trend 2019: The digitization of the stationary retail trade...
29.11.2018   #digitization #omnichannel

Trend 2019: The digitization of the stationary retail trade

From retail to omnichannel business model

For stationary retailers, it is no longer enough to think individually about e-commerce or other digital strategies. Instead, the focus is on networking online, mobile and offline channels and implementing a multichannel strategy, the so-called ...

Thumbnail-Photo: ISE 2019 to showcase the finest in international AV...
29.11.2018   #event

ISE 2019 to showcase the finest in international AV

All the connections you need at the world’s largest systems integration exhibition

The 2019 edition of Integrated Systems Europe is set to be the largest in the show’s history, with more exhibitors, more floor space, more visitors and more events than ever before. ISE 2019 takes place at the RAI Amsterdam from Tuesday 5 ...

Thumbnail-Photo: RFID tags with features for the cashierless store...
29.10.2018   #mobile payment #payment systems

RFID tags with features for the cashierless store

Customers can unlock products on their own thanks to smart tags

China and the U.S. already feature cashierless stores but things are coming along in Europe, too. Several startup companies want to eliminate long checkout lines and advertise better retail security tags. We took a closer look at these ...

Thumbnail-Photo: The right payment options for online stores
11.02.2019   #online trading #security

The right payment options for online stores

How you can combat shopping cart abandonment with the right methods

One of the main reasons why shoppers will abandon a purchase is when popular online payment methods are not an option. That’s why online retailers must know what these payment options are. We give you an overview of the pros and cons for ...

Thumbnail-Photo: EuroCIS 2019: from the trade fair to the points of sale...
27.11.2018   #digitization #POS Solutions

EuroCIS 2019: from the trade fair to the points of sale

Analogue and digital elements merge in physical retail

Many digital tools presented at EuroCIS over the past few years, have become indispensable to retail today. Which in-store media asserted themselves and what is so special about them? And, beyond this, which tools and technologies have great ...

Thumbnail-Photo: Store Transformation drives Self-Service Technology...
08.01.2019   #Trade fair special EuroCIS 2019

Store Transformation drives Self-Service Technology

Self-Checkout Solutions at EuroCIS 2019

The annual “Global EPOS and Self-Checkout” report care of London-based market research and consulting firm RBR shows what is happening around the globe at self-service checkouts. According to the report, retailers worldwide ...

Thumbnail-Photo: 10 years E-Commerce Day in Cologne
06.02.2019   #e-commerce #event

10 years E-Commerce Day in Cologne

Birthday anniversary at RheinEnergieSTADION

On Friday, 17.05.2019, the E-Commerce Day - made by real.de offers online retailers, manufacturers and other interested parties the opportunity to discover new features and find out about the latest trends in e-commerce. More than 100 exhibitors ...

Thumbnail-Photo: Using digital data to drive brick-and-mortar retail success...
31.01.2019   #data analysis #brick and mortar retail

Using digital data to drive brick-and-mortar retail success

Advanced Outlet Analytics

When it comes to using and analyzing relevant data, brick-and-mortar retail lags behind its online competition. While e-commerce retailers use detailed data from web analytics, CRM, and Google searches to analyze user behavior and generate ...

Supplier

Permaplay Media Solutions GmbH
Permaplay Media Solutions GmbH
Aschmattstr. 8
76532 Baden-Baden
Allgeier Enterprise Services
Allgeier Enterprise Services
Westerbachstr. 32
61476 Kronberg im Taunus
AURES Technologies GmbH
AURES Technologies GmbH
Maisacherstr. 118
82256 Fürstenfeldbruck
Intenta GmbH
Intenta GmbH
Ahornstraße 55
09112 Chemnitz
APG Cash Drawer
APG Cash Drawer
4 The Drove
BN9 0LA Newhaven
CCV Deutschland GmbH
CCV Deutschland GmbH
Gewerbering 1
84072 Au i.d.Hallertau
POSIFLEX GmbH
POSIFLEX GmbH
Flinger Broich 203
40235 Düsseldorf
Axis Communications GmbH
Axis Communications GmbH
Adalperostraße 86
85737 Ismaning
LANCOM Systems GmbH
LANCOM Systems GmbH
Adenauerstraße 20 / B2
52146 Würselen
MobiMedia AG
MobiMedia AG
Rottpark 24
84347 Pfarrkirchen