Optimizing Store Layouts
Beyond security – using video analytics in a retail environment
- By Will Kelso
- Apr 01, 2022
Video analytics and AI are hot topics for 2022 as the security industry seeks new ways to take a bite out of crime, even as staffing is light organized retail crime is on the rise. At the same time, brick-and-mortar businesses need to use all the tools available to them to get customers back in the door as the pandemic wanes.
If we’re going to have smarter security cameras protecting these premises, then another question is “what else can these devices do, beyond security, with the insights they are gathering through their lenses?” For retail stores, one of the key aspects to success is how a store and its merchandise is laid out and how that effects the customer experience.
Layout refers to how a store sets up product displays, fixtures, and merchandise. A well-planned store layout can positively influence customer experience, a critical factor to drive product engagement, sales, and improve customer lifetime value.
Retailers have several tools to gather and analyze data to understand if the store layout is working well and identify problem areas that need optimization. Some of these methods include store audits, mystery shopping, and customer surveys or shopper feedback.
These results from these methods are usually subject to interpretation, may not be consistent across all locations, and not accessible in real-time. On the other hand, using video analytics to measure store layout effectiveness reveals powerful insights almost instantaneously. Here are seven ways retailers can leverage video analytics to optimize store layout.
Streamline customer flow. Video analytics are well suited to map and measure customer flows through the store. Understanding customer flow helps retailers evaluate the effectiveness of the store layout, understand the best possible placement of products, measure customer actions at every section or department, measure the impact of specialized displays, in-store promotions, or marketing campaigns, to name a few.
Video analytics, when combined with POS data, can help retailers conduct a real-time audit of the store layout to identify bottlenecks in the design, and align the layout to help customers successfully accomplish their shopping missions.
Store floor plans dictate customer flow and how customers interact with the products. Irrespective of the type of store layout or floor plan (grid layout, herringbone, free-flow, geometric, mixed, to name a few), video analytics can play an important role in uncovering real-time business intelligence on how the layout is performing.
Delight customers with a better checkout experience. The last impression is probably the best impression for retail chains looking to provide a memorable customer experience. A long checkout queue can completely wipe out any positive experience customers might have had at the store before they wanted to checkout. In some cases, customers in a hurry can just abandon their carts and never return to the store.
Retailers have already implemented an assortment of improvements to make the checkout process efficient. These include changes in how queues are organized, self-checkout kiosks, app-based self-checkout, shelves near the checkout counters to entice impulse purchases, to keep the process predictable and customers engaged as they wait for their turn to pay.
Video analytics can help retailers use real-time data to understand what’s really happening at the checkout area.
Improve product placement. Product placement is probably one of the most important factors that impact retail sales and is closely tied to the store layout.
While planograms offer the template to slot products in the shelf space, real-time data-driven decisions can help retailers maximize sales by aligning shelf space to customer preferences and other factors that drive purchases such as the weather or local events.
Video analytics can be a game-changer in giving retailers instant visibility on potential product placement issues and identifying opportunities to maximize basket size.
Retailers with data on the performance of shelf space across product categories and departments can optimize the store layout and display units or even change the design of the store to offer most product categories the best possible exposure to customers.
Video analytics can empower local teams to make store layout decisions based on real-time data while ensuring planogram compliance or even using data as evidence to change the planogram.
A/B test store design or layout changes. The practice of A/B testing is a common practice to test or validate ecommerce sites and online experiences. With video analytics, retailers have the capability to conduct real-time, data-driven A/B tests to validate the effectiveness of the store layout or a specific component such as a brand-new display unit measured in terms of dwell time, heat maps and sales conversions.
In addition, video analytics also allows retailers to A/B test the effectiveness of store design on new customer behaviors such as BOPIS. For example, video analytics can help find answers to questions like “Would it make sense to design the in-store pickup area to showcase products that are not available online?”
With video analytics, retailers have the flexibility to test any number of store layout or design variations across multiple locations at a time.
Supercharge merchandising tactics. The merchandising function is at crossroads as retailers scramble to offer an omnichannel customer experience and stay ahead of evolving customer expectations. Technology solutions, like video analytics, can play a significant role in helping merchandising teams recalibrate their priorities, and become agile to keep pace with changes. According to McKinsey, the merchandising function will be driven by automation and here is how video analytics can help enable the transition to agile merchandising.
Improve storefront design. Storefront design has always been a major factor in retail success. When done right, creative storefronts make new customers feel curious and existing customers satisfied with their choice.
Video analytics can help retailers gather valuable data to improve the performance of storefront design.
- Heatmaps and dwell times can be used to understand which display elements are attracting attention
- Changes in display design or layout can be put through an A/B test to measure improvements in engagement and walk-ins
- Pathmaps can show how many people walk past the storefront (bounce rate) and what percentage of people walking by enter the store.
- All of the above insights can be correlated to other data such as holidays, time of day, day of the week, promotions, online campaigns to name a few to give a better insight on storefront designs that encourage desired customer behavior
Ensure layout and design compliance. There are three reasons why store layout and design compliance is a major operational requirement in retail chains:
- One of the key promises of a brand is delivering consistency at every touchpoint. In-store design and layout is an important factor that helps retailers create a unique yet consistent experience for customers.
- Layout and design compliance is also a key requirement for brands that may have paid for premium shelf space or set up special display areas. Retailers rely on physical in-store audits to verify design or layout compliance across stores.
- Ensuring that the store layout does not cause unintended issues such as closed spaces, bottlenecks, or blocks access to lighting or surveillance which might contribute to poor safety or health hazards for employees and customers.
Video analytics enable retail compliance, marketing, and merchandising teams to monitor store layout and design compliance at scale across a large number of locations.
As AI-based analytics become commonplace for use in video surveillance, it’s a perfect time to consider the additional value these intelligent devices can bring to operations, sales, and marketing efforts. Business intelligence doesn’t have to be something that only Fortune 500 companies talk about. The technology is here today, and it has the potential to significantly bolster revenue for retail businesses of any size.
This article originally appeared in the April 2022 issue of Security Today.
Will Kelso is the senior vice president, managed networking and business intelligence at Interface Systems.