Retail Analytics In-store analytics costs/benefits
The latest technology helps high street stores to analyse customer data, which allows profiles and statistics to be created, like in an online shop. But this only works when there is a strategy and the costs and benefits have been weighed up.
When we shop online, we automatically leave behind a large amount of information that can be analysed by the provider and used as a basis for more offers. Customers have probably now all become aware of this.
Every click, every page view, cursor paths, even the time spent considering a product is recorded, measured and analyzed. This works particularly smoothly online because there are two technical systems that interact with each other, the consumer's device and the online shop, and these interactions can be recorded automatically.
For physical shops, this is a lot more difficult. When a customer takes an item off the shelf then puts it back, they do so without leaving a trace. This means that in-store analytics needs systems that observe customer behaviour to draw conclusions from it. The technology to do this is now available, but to start, a strategy is needed.
What should be analyzed and why?
The good news for retailers that also operate physical branches is that the technology to fully analyze and measure customers' habits is now ready to use. But before investing in it, there are fine details to work out and homework to do.
- The strategy forms a basis for the research. Often, businesses mistake the second step for the first one. That means they make decisions on what data should be collected, but don’t identify the reason why they are collecting it. The question of what should be learned from the data must be decided at the outset. What are the goals? The analysis strategy impacts the technology used. A business that takes a multi-channel approach and wants to find out how the online shop and the physical outlets work together has different needs to a retailer that wants to optimise its range of goods in its high street stores. Clear questions need to be asked to determine what needs to be monitored to obtain this data. By taking this step, it will become clear what instruments are needed to retrieve the information.
- Data from different sources must be considered for a comprehensive analysis. This requires a certain porousness – that is, the data has to be able to flow. Bespoke solutions where data lands in separate silos are counter-productive. Comprehensive analyses are also a question of your own technical strategy.
A large tool kit
The tools available for conducting analytics right on the shop floor have increased enormously. To name a few examples:
- Even checkouts reveal a lot of information about customers' habits. For example, Migros is consistently analysing this data, and it's no easy task with the huge data volumes that are collected every day. A solution called POS Data Management makes it possible.
- Geodata from numerous providers helps with the benchmarking of stores, which helps to determine how the store is performing in comparison to the frequency of the location.
- The conversion rate can be determined with RFID technology that is attached to the products as labels, for example. This allows fashion retailers to find out which products are tried on a lot, but then not purchased.
- WiFi sniffing doesn't have a good reputation because of its name, even though it is simply part of the technology. Every device with WiFi activated sends out a signal that can be received. These allow the customer’s path through a store to be determined, for example. It can also be used to work out how successful a marketing campaign was. Zalando teamed up with the business Locarta to gain an idea of the success of an advertising campaign by figuring out how many visitors there were to an outlet.
- Cameras that are probably already there to prevent theft can be used in many ways with software: from a simple frequency analysis to tracking paths and interactions with products right up to analyzing the customers' in-store habits.
- Beacons have gone a bit out of fashion. These small IoT devices work using Bluetooth, and they can be helpful to customers trying to navigate large stores. They can also be used to determine movement and time spent. But for beacons to work, enough of the small devices need to be installed across the store. Solutions that integrate this beacon technology into lighting fixtures seem far more promising.
Anything is possible with technology, but how much will it cost?
It’s probably now become clear that technology has now become so versatile that even customers' physical store habits are becoming transparent. Modern systems are building a bridge to e-commerce. Of course, it all comes at a cost. That's why it's so important to determine which questions are most important and which analyses will contribute towards the desired strategy, against the backdrop of an ROI that is hard to nail down. On shop floors, it's advisable to first start with technology that is already in place, like cameras or lights. Analysis just for the sake of it is too expensive and offers too little benefit.
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