RETAILING STORE TRACKING CUSTOMER-FIRST. Customers have three currencies which they can spend: Money, Time and Emotion
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1 CUSTOMER-FIRST RETAILING GROWING RETAIL SALES WITH CUSTOMER CENTRIC STRATEGIES By Jason Nathan STORE TRACKING HOW CUSTOMERS SHOP IN-STORE IN THE DIGITAL AGE When shopping, customers have three currencies which they can spend: money, time and emotion. Retailers have become adept at measuring and attributing customers spend of money, from the advent of EPOS to the sophisticated analytics enabled by customer loyalty cards or store debit/credit cards which allow spend to be allocated to customers (and only those who opt in) and tracked over time. These provide valuable data to help understand the shopper. The growth of online shopping has not really added greater sophistication to the measurement of the money currency, but has reinforced the value of the data. At the same time, this has opened many retailers eyes to understanding how customers spend their time with their website. It is now possible to understand how long customers spend on each page, how they navigate through the site, and where they invest their time. The measured path they take around the virtual store can provide insight into the time currency. There is a rapidly emerging, and even more rapidly evolving, set of technologies that measure how customers spend their time in a physical store. Customers have three currencies which they can spend: Money, Time and Emotion There have always been approaches and solutions to understanding customers movement around a store - ranging from accompanied shops to self-observed shops and even extending to wearing glasses which track eye movements. However, the universal presence of smartphones and continuously innovative technology hardware have brought new tools into play which will complement, and in many cases replace, existing solutions. As the role of the physical store evolves, being able to understand customer preferences (measured through their behaviour) and continually refining the design and content of the physical store will be critical for the most successful retailers. This paper discusses the emerging technologies and the potential application of those for brickand-mortar retailers. There is a rapidly emerging and even more rapidly evolving set of technologies seeking to measure how customers spend their time in a physical store. dunnhumby
2 COLLECTING STORE TRACKING DATA Store tracking data describes a customer's physical journey throughout a retail store. What can be seen is an individual s movement and periods of non-movement from the moment they enter the store (and potentially a little before) to the moment they leave. There are two main variables which inform the quality of the data: 1. Frequency of Polling - how often the location of the customer is pinpointed and/or identified. This can vary from virtually continuous (every second or less) to relatively infrequent (every 30 seconds). The effectiveness of tracking is based on combining these polling points. 2. Accuracy of Location - within how many meters can the location be tracked. This can vary from very precise (within 30cm) to not very precise (within 2-3m). The store map/layout, which physically describes where categories are merchandised in the store, is necessary to gain utility from the data. To be truly effective, this should include promotional space, like gondola ends. Store tracking data is the information that describes a customer's physical journey throughout a store. Gondola ends are subject to continuous change, but are often some of the most interesting parts of the store to a customer. Retailers analyse this information in different ways. Store maps can be represented as graphics or simply as data points. To be effective as part of customer tracking, the store map should be presented as data. PUTTING THE DATA TO USE The technology can basically be used in two ways: 1. Locate customers in store to deliver timely communications to customers based on their real-time location 2. Provide insight and understanding of customers journey in the physical store in order to be able to pull levers in-store The utility of the data changes dramatically if identifiable, opted-in customers can be linked with the physical tracking data. This means it becomes possible to connect the transactions (and potentially the online behavior and transactions) with the customer s physical journey. What can be seen is an individual s movement and periods of non-movement from the moment they enter the store (and potentially a little before) to the moment they leave. dunnhumby
3 INSIGHTS THAT CAN BE GAINED Opportunities to gain deeper understanding of the customer in the physical store are exponential. Specifically, one could: Understand time spent on different missions to focus on certain activities when relaying out stores Focus on optimising the layout for loyal customers, rewarding them with a store better organized for their primary missions Specifically optimize the layout of smaller stores where convenience is essential Measure the total time spent by the customer in the store, weighed against the propensity to be loyal / physical spend / online spend or participation to gain a more comprehensive view of the overall customer experience Assess customers' response to layout changes and refreshes - both of total store and of individual categories' merchandising (by analysing dwell time and conversion) Understand which categories and store fixtures have the highest dwell times Track how customers get to high dwell locations and where they go when the leave the area to help improve merchandising planning Analyse conversion rates /spend per space valuable metrics in the context of shrinking big boxes, nongrocery retailers or sections of general retailers Understand impact of showrooming by tracking dwell time followed up by a non-conversion, or an online conversion with the same retailer Track emotional engagement with the category by evaluating dwell time and follow-on shopping behaviors Evaluate the sequence of categories visited in store to discover more interesting communications / offers Specifically optimize the layout of smaller stores, where convenience is essential Opportunities to gain deeper understanding of the customer in the physical store are exponential dunnhumby
4 VISUALIZING DATA ON STORE MAPS Data is visualized on store maps (examples below) indicate dwell times of customer behavior. This shows exactly where customer spend the most time and where they move the fastest through the physical space of the store. Maps show exactly where customer spend the most time and where they move the fastest through the physical space of the store dunnhumby
5 CAPTURING STORE TRACKING DATA The following are ways retailers capture tracking data in their stores. VISUAL RECOGNITION Cameras positioned throughout the store capture and uniquely identify people as they move around. This can capture faces, fingerprints of the top of the head, etc. Strengths Weaknesses Universal: captures every person including those who did not shop Does not need to link to retailer system Possibility of capturing other data (such as emotional state of customer) MOBILE DEVICES Not explicitly opted in by the customer - risks adverse PR, negative customer perception, and potential legal implications No native link to the basket purchase event and unlikely to be possible to create one Currently not as reliable as other technologies Likely to be more expensive in the short-medium term Triangulation devices positioned throughout the store capture the position of a mobile device using Bluetooth, Wi-Fi, GPS or the image sensor within a smartphone device. Strengths Technology is commoditized and inexpensive Does not need to link to retailer system Could include an explicit customer opt-in, using - for instance - coupons to phone or in-store navigation app Weaknesses Not be explicitly opted in by the customer No native link to the purchase event Not universal. This is further exacerbated if implementation requires a customer opt in (loyal customers are likely to use any relevant app) Visual recognition, mobile devices and customer product scanning are the 3 primary ways of capturing store tracking data. CUSTOMER PRODUCT SCANNING Customers scan products using a digital device which is aware of its physical location in store. Strengths Explicitly opt-in by the customer, mitigates risk of adverse PR, negative customer perception and possible legal issues Fully linked to customer purchase data Fully within the Retailer data and technology estate Weaknesses Self selecting customer set and likely will miss certain missions Position of scanner/trolley may be different from position of customer Tracking the physical movement of customers is not the primary usage of system so is likely to be controlled/ managed by a different business unit at the retailer dunnhumby
6 THE ROAD AHEAD In coming months, technologies will be tested and assessed by more retailers. Expect to see more imaginative measurement and applications that are less costly. The combination of this new data asset with existing data will generate a massive new competitive insight advantage for retailers that are able to harness it. Geo-located communications in the store will need to be handled very carefully to not trigger concern and paranoia with the customer. Retailers should be looking at their own store map data today in order to better leverage the ability these technologies can bring. There are a number of companies operating in this space. Almost all have an analytics suite which enables the data to be understood and applied in the retailer s business. Below are a few technology providers to consider: The combination of this new data asset with existing data will generate a massive new competitive insight advantage for retailers that are able to harness it. Uses WiFi and Bluetooth includes proprietary app WiFi / Bluetooth Tracking On Device App but geo-location Video recognition of customers LED Sensors in phone Uses tracking of mobile devices using beacons: unclear what technology is employed. WiFi Tracking NOMI Mobile Phone Tracking GPS Tracking Facial Recognition - Recently acquired by Google Aimed at malls rather than stores RFID Tags Video recognition of customers to gauge reaction, rather than customer movement Uses RFID and then wireless trackers of tags Primarily focused on the analytics rather than the technology Personal offers oriented, rather than analytics WiFi Tracking Aimed at luxury stores Retailers should be looking at their own store map data today in order to better leverage the ability these technologies can bring. Mobile phone tracking WiFi Tracking - Recently acquired by Apple dunnhumby
7 MORE INSIGHTS ON BUILDING LOYALTY dunnhumby is the leading customer science company. You can access many of our insights and reports on leveraging customer data to grow sales and build long term loyalty online at: ABOUT DUNNHUMBY dunnhumby is the world s leading customer science company. We analyse data and apply insights from more than 400 million customers across the globe to create better customer experiences and build loyalty. Our insights and strategic process help clients create competitive advantage and enjoy sustained growth. dunnhumby employs more than 2,000 employees in offices throughout Europe, Asia and the Americas, and serves a prestigious list of companies including Tesco, The Kroger Co., Coca-Cola, Macy's, Procter & Gamble, PepsiCo and Shell. For more information, please visit us at
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