Report • 29.09.2017

Smart retail through use of sensor technology

How brick-and-mortar retail can catch up to the informational edge of e-commerce

E-commerce has a clear advantage over brick-and-mortar retail when it comes to subjects like big data, personalization, and automation. Every time search and buying processes take place online, information about customers practically collects itself. The data only needs to be analyzed and used strategically. Product suggestions based on recently viewed items, ads personalized to the consumer and automated CRM processes are the norm by now.

If brick-and-mortar retail stores want to catch up to this informational edge and streamline their processes, they need efficient methods for information acquisition and processing. The use of sensors and the smart use of collected data can assist in this endeavor.

Photo: Engineer examining the underlay for the SensFloor System. Source:...
The SensFloor system underlay can be placed under any type of flooring. The capacitive sensors measure changes in the electric field and transfer data to a computer system via an integrated radio chip.
Source: Future-Shape GmbH

Customer Journey: Knowing and serving customer needs and interests

As a general rule, the more retailers know about their customers, the more accurately they can align their product selection, advertising, and stores with consumer needs and buying habits.

For example, retailers could use sensors in the floor to gain information on paths customers take through the store, what shelves or ads they linger at and when they prefer to be in specific areas. The Future-Shape Company near Munich and its SensFloor system provide a tool that can measure visitor flow without privacy violations and subsequently use it to generate heat maps. This information could be used to automatically control lighting, digital signage content or customer service stations.

To optimize consulting services for consumers and the sales approach, T-Systems Multimedia Solutions GmbH developed an IoT retail shelf. Thanks to precision balances, this interactive retail shelf is able to identify the product that has been removed and display the relevant product information on the display screen. When customers use their charge card to identify themselves via an integrated barcode scanner, they can be personally addressed with personalized product suggestions.

Photo: Internet of Things retail shelf, filled with bottles, with interactive...
Internet of Things retail shelf that interacts with customers and measures how many products have been removed and put back.
Source: T-Systems Multimedia Solutions

Needs of consumers are written on their faces: ‘Feel Data‘

Valuable information about the shopping experience and shopper preferences are written on the faces of customers in a manner of speaking. Modern camera sensor technology combined with the respective software is able to analyze and interpret facial expressions and gestures of consumers. This ‘emotional decoding’ method allows instant conclusions on how customers respond to products or advertising and the needs they currently feel.

On behalf of trend research experts PSFK, a future concept store was designed for fashion label, Loewe. The goal was to detect moods based on movements, facial expressions, heartbeat and body temperature. Customer service can subsequently be directly custom-tailored to this ‘feel data‘ and it can be determined whether a customer wants to be helped or just wants to take a look around the store without being disturbed. It can also discern whether the customer is unhappy or just undecided. Associates are then able to take a more targeted approach and best serve the customer.

Information is the first step towards automation

Depending on the type, sensors that measure specific properties (for example, temperature, pressure, intensity, radiation or position) deliver information about their surroundings. A computer system can analyze this input and ultimately utilize it to achieve a specific goal. The retail sector could use this type of data to create more exciting and convenient shopping experiences or to practice more effective customer relationship management.

When the terms ‘intelligent’ or ‘smart‘ are being used in this context, the system can autonomously use the data measured by the sensors to trigger approximate responses. Thanks to the intelligent integration of sensor technologies, specific store functions could manage themselves and interact with the surroundings. Automated customer communication is already quite common in online retail and digital merchandising, though it is only in its early stages in brick-and-mortar retail.

The balancing act between data acquisition and data protection

The sensor technologies presented here and many others are already available but are so far rarely or never being used in brick-and-mortar retail. Meanwhile, the demand for technological solutions that are also able to obtain information about customers offline is increasing. When retailers are also able to communicate with customers at the store across several channels and learn more about their interests and preferences, it sets the stage for an increase in conversion rate.

Having said that, this type of intensive ‘monitoring‘ makes many people feel uncomfortable. Privacy and data protection is an important subject for consumers, retailers and marketing experts. That’s why there is a need for technological solutions that provide valuable information about (prospective) customers while making it impossible to identify individual customers at the same time.

Author: Julia Pott, iXtenso

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