Why In-Store Analytics will be the Game-Changer for Retailers

The retail industry is a competitive business, and not just since the emergence and growth of e-commerce.Therefore, understanding your customer's behavior and preferences contributes to your business's success. While it can be challenging, the advent of smart retail technologies has aided retailers in gaining valuable insights through in-store tracking and analytics.

The relevant sections in this retail technology whitepaper:

• What are Retail In-Store Analytics?

• The Importance of Analytics for Retailers

• Challenges of tracking Customer Behaviors in Stores

• 4 Ways To Track Customer Behavior in Stores

• 5 Benefits of Retail In-Store Analytics

What are Retail In-Store Analytics?

The use of retail in-store analytics involves incorporating data tracking and analytics techniques to gain customer insights and make informed decisions about the performance and operations of physical retail stores.

By collecting and analyzing various data generated within the store, such as customer behavior and interactions, retailers can optimize store layouts, improve operational efficiency, and enhance the overall shopping experience.

The Importance of Analytics for Retailers

Analyzing customer behavior in stores is crucial in the retail industry. It provides significant benefits and advantages to retailers in the long run. While challenges such as data analysis complexity and inconsistent data may arise, there is no doubt that they play a significant role in enhancing the overall success of a retail business.

According to Lawnstarter, 70% of consumers are eager to spend more money with companies that deliver positive customer experiences^[3]. With in-store analytics, retailers can optimize their customer's experience while staying competitive in a more and more data-driven industry.

That said, here are some of the key reasons why retail analytics are crucial to retail stores:

• Customer Insights

  One of the known perks of retail analytics is that it provides retailers with valuable insights into the customers' behavior and overall purchasing patterns. Retail analytics may help develop closer connections, discover pain spots and areas for improvement, make personalized product advice, and engage customers on a deeper level by personalizing marketing messaging and promotions, generating audience groups, and running highly targeted campaigns.

• Promotion Optimization

  Retail analytics provide a great contribution when it comes to optimizing store strategies and campaigns. This can lead to a significant increase in sales and revenue and also improve every retail store's overall competitiveness.

  Using in-store analytics, retailers can launch focused marketing campaigns and discounts. Sending targeted communications to certain consumer groups, as well as providing the appropriate offer to the right person at the right time, can lead to improved conversion rates and revenues. Retailers can offer complimentary products (up-selling) to customers by evaluating their purchasing habits and preferences. These individualized strategies improve not only the average shopping cart value, but also the whole customer experience. In addition, retailers can determine the most effective pricing strategies.

• Store Performance Analysis

  54% of consumers say customer experience at most companies needs improvement^[4]. With the help of retail analytics, retailers can analyze data on sales, the performance of the store, and the customer's overall experience. They can identify what are the underperforming things that stores have been doing. They would take corrective actions as soon as possible to successfully meet the consumers' expectations.

Challenges of Tracking In-Store Customer Behaviors

In the past it has been highly challenging to track user behavior in stores. Retailers looked desperately for something comparable to click-data available on e-commerce websites.

In addition, some problems and issues could hinder the overall customer tracking process, such as privacy concerns, accuracy and reliability. But through the emerging growth of innovative smart retail technologies, improved customer behaviour analytics can now be made accessible to retailers.

As 1/3 of consumers say they will walk away from a brand they love after just one bad experience^[9], smart retail technologies can address these challenges effectively.

4 Ways to Track Customer Behavior in Stores

Tracking customer behavior in stores has become increasingly important for retailers to gain insights and improve their operations. Which makes sense: 86% of consumers will pay up to 25% more for a better customer experience^[4].

By harnessing smart retail technologies, retailers can collect valuable in-store customer behavior, preferences, and engagement data. This data empowers them to make well-informed decisions to improve the in-store experience and achieve superior business outcomes.

Beacons

Retailers can track customers within their stores, monitoring their movements and behaviors through beacons. Beacons are capable of collecting data regarding high and low foot traffic areas within stores, as well as information about new and returning customers. By processing this data through retail business intelligence tools, retailers can enhance stall and merchandise placements, and reduce wait times at checkout and other touchpoints.

One limitation of beacons is their need for granularity in capturing data. While they allow retailers to track customer movements within stores, the collected data may not provide detailed insights into specific product interests or preferences. Beacon signals can be easily reflected or absorbed depending on the materials around them or their proximity to other beacons. As a result, certain areas of your store may develop blind spots.

Nevertheless, beacons are compact wireless devices that employ Bluetooth Low Energy (BLE) technology to establish communication with customers' mobile devices. Retailers can monitor customers' movements and proximity to specific beacon locations by strategically deploying these beacons across the store.

Camera Tracking

Retailers can utilize cameras to collect basic customer data such as gender, age, and mood. Camera tracking enables retailers to understand the demographic composition of their visitors, which supports inventory optimization, store layout and focused marketing activities.

Camera tracking has various advantages for retail stores. Footfall analysis and occupancy check allow you to track visitors, assist with inventory management, gauge store performance, and measure customer reactions to marketing. Cameras can readily provide real-time data on store occupancy and client stay time. Heatmap analysis monitors consumer traffic, finding hotspots and assisting with data-driven decisions.

Nonetheless, it's crucial to recognize that there might be limitations in the precision of customer parameters such as age and emotions. Moreover, it's important to consider that adhering to data security and privacy regulations could impose constraints on the adoption of camera-based in-store tracking in certain countries.

Virtual Shelves

Despite the surge of e-commerce online sales, according to Forbes, physical stores still account for 84% of all retail sales^[13]. Nonetheless, customers can't locate what they're looking for up to 75% of the time in stores^[12], resulting in stagnant inventory and missed revenues of more than $1.1 trillion every year^[11]. Another urgent reason to digitize the point of sale.

One of the most effective ways to digitize stores and avoid loss of sales is to use professional touchscreen systems with special software at the point of sale. These innovative solutions excel in tracking customer behavior. By leveraging touch input and cloud analytics, retailers can access valuable usage insights similar to "click-data" typically associated with online e-commerce platforms.

To implement virtual shelves, retailers need a touchscreen system like wall-mounted displays, video walls, tables or self-order kiosks - and the necessary interactive software. The touch data collected are securely stored and made easily accessible, preferably on a cloud-based platform. Thus, it enables retailers to conveniently retrieve and analyze the data, which empowers them to make the right decisions based on customer interactions and behaviors.

Digital Surveys

Once integrated into stores, touchscreens have the potential to serve as interactive feedback platforms. Surveys offer valuable insights into customer profiles, particularly in cases where camera tracking is not feasible. Surveys play a significant role in monitoring and enhancing customer satisfaction across various channels, as well as identifying opportunities to amplify loyalty, revenue, and in-store traffic.

Retailers gain the ability to trace the complete customer journey, obtaining detailed understandings of the primary drivers behind loyalty and spending within each customer segment. By delving into what holds utmost importance to customers, digital surveys enable the identification of key spending influences in stores. The information collected can be harnessed to construct an extensive database of insights specific to each crucial customer category, facilitating the delivery of personalized experiences. To encourage customer engagement in surveys, employing games and coupons as incentives has proven effective.

5 Benefits of Retail Analytics

Retail in-store analytics stands out as a recognized approach for understanding customer behavior. It effectively functions as a tool to track and monitor your customers' preferences and needs.

• Improved customer satisfaction

  Based on findings from a research study by the Harvard Business Review, 69% of business executives who had allocated resources to analytics for their front-line staff noted an increase in customer involvement and contentment^[14]. Regardless of whether a retailer is gauging customer satisfaction indirectly via sales metrics or directly through surveys and feedback mechanisms, retail analytics can aid in monitoring and enhancing customer satisfaction progressively.

• Insights on customer behavior

  The primary benefit of adopting retail analytics is that it provides tangible and actionable insights into customer behavior. Retail in-store analytics provide retailers with a highly accurate picture of what works and what doesn't, from examining social reactions to a product to measuring touch input on interactive displays, showcasing the complete product portfolio on virtual shelves.

• Optimization of Inventory

  When dealing with a wide range of products, especially those that expire, change rapidly or go out of season, managing inventory becomes a critical aspect of every retail company. It is crucial to maintain a balance where popular items remain available without ending up with unsold merchandise that needs to be sold at a loss or disposed of. Retail in-store analytics can analyze and manage store inventory, allowing optimization depending on trends, seasons, and other factors.

• Increasing the Return on Investment

  Retail in-store analytics aid in monitoring and improving return on investment in a variety of business management areas. The marketing manager can track the impact of in-store campaigns on purchasing habits, and tailor future promotions accordingly. Retailers can concentrate on effective campaigns and streamline marketing initiatives depending on what resonates best with the company's target audience. Retail in-store analytics can also be used to evaluate the viability of consumer loyalty programs, seasonal discounts, one-time deals, and other marketing initiatives.

• Higher sales andprofit margins

  In various sectors, enhancing profit margins and pricing stands out as a primary application for business analytics, across all industries. This is particularly vital in the context of retail, and it remains one of the most crucial trends for the point of sale. A retail store's ultimate profitability hinges on the volume of sales achieved and the corresponding pricing strategy. Retail in-store analytics serves as a reliable method to eliminate uncertainty surrounding this fundamental challenge, aiding in refining pricing strategies to maximize revenues and margins.

Summary & Take-aways

In-store customer experience has never been more crucial as brick-and-mortar retailers struggle to reinvent themselves in the era of e-commerce and mobile shopping.

One major reason why e-commerce platforms seem to excel in the retail race is because of their ability to track the daily customer inflows, dwell time, and purchase choices through an automated click-tracking system.

Through innovative in-store analytics, retailers can now finally close the gap to e-commerce systems and track customer behaviour in their stores.

Beacons, camera tracking, virtual shelves and digital surveys will undoubtedly improve the overall store and customer experience.

Retailers that welcome digital transformation and smart retail technologies in their stores will demonstrate increased earnings and profits. Conversely, those who have been slow in adopting these changes, holding on to obsolete perspectives and technological setups, are struggling.

Consequently, the ultimate purpose of retail in-store analytics is to provide customers with a seamless and satisfying shopping experience now and in the future.

Outlook

By implementing interactive touchscreen systems in combination with virtual shelves, retailers can now collect and analyze huge amounts of information on touch input data about their customers' buying interest in relation to their product portfolio. This data offers huge potential for optimizing sales margins, the return on investment and the customer experience in stores. Analyzing the data and correctly extracting meaningful recommendations for action is an important next step, but it will also be a challenge. Specialized service providers such as Key-Work GmbH^[15] help companies to provide valuable analyses, forecasts and recommendations for action from the data obtained for the point of sale. It remains exciting to see how this future trend in retail will develop.