the impending in-store marketing revolution - WPP.com

Continued from page 5With this kind of fine-grained data, says George Wishart, the head ofNielsen’s in-store division, retailers can adjust store layouts and staffinglevels accordingly. Although retailers think they know how to positionproducts in a way that will maximise sales, says Peter Hoyt of theIn-store Marketing Institute, “the science of adjacency is not a science.”With P.R.I.S.M., he says, the gut feeling that peanut butter should beplaced on a shelf next to jam in order to increase the likelihood of acombination purchase can be tested directly against sales data.“Shoppers are not just being monitored by cameras andsensors — sometimes speech is recorded, too.”Best Buy, a big American consumer-electronics chain, takes this astep further. It uses Brickstream’s BehaviorIQ cameras to collect dataon its customers’ behaviour patterns and has used this information todivide them into five customer types — young technology enthusiasts,suburban mothers, affluent early adopters, family men and smallbusinessowners — who want different things. Each group is thenprovided with an area of the shop designed to meet their needs.As the technology improves, it is getting easier for other retailers todo the same sort of thing. VideoMining, for example, a spin-out fromPennsylvania State University, uses a combination of video camerasand software to capture and analyse thousands of hours of footage ofcustomer behaviour. As well as providing information about customerbehaviour, the firm’s software can also determine each shopper’s sex,age range and ethnic group with an accuracy of around 80%, says JeffHershey of VideoMining. The result is an “activity map” which can helpretailers to identify the factors that drive higher sales. The system can evenbe programmed to detect the characteristic behaviour of shoplifters.Inevitably, all this raises concerns about privacy. Counting customerswith motion sensors as they enter a supermarket is one thing, butsorting them into social or racial groups using video analysis is another.Mr. Hershey responds that none of the footage or information aboutindividual shoppers is stored. Besides, says John Greening of theMedill School at Northwestern University, customers are generallywilling to give up some personal information if they feel they are gettingsome benefit in return. Rather than seeing customer monitoring as aninvasion of privacy, he considers it a means of making shopping a morepleasant experience for “time-compressed” (i.e., busy) consumers.These systems, he says, are “not a matter of Big Brother,” but rather ameans of gaining insight and “understanding motives.”LISTENING INShoppers are not just being monitored by cameras and heat sensors,however; sometimes their speech is being recorded, too. Recordant, anin-store monitoring company based in Atlanta, provides shop assistantswith digital-audio recorders, to be worn around their necks, whichrecord all their conversations with shoppers. At the end of each day therecording devices are plugged into special docking stations and therecordings are uploaded to Recordant’s headquarters for analysis. Itssoftware trawls the recorded dialogue for particular words or phraseswithout the need for any human input in order to provide accurateinformation on employee performance and customer behaviour.BRICKSTREAM MAPS A SUPERMARKET’S HOT SPOTSRecordant says that trials in 40 locations have proved the value of thetechnology: one retailer was able to show that there was a 300% increasein sales of products recommended by shop assistants to customers.By providing precise measurements of this kind, the technology allowsretailers to refine their training programmes and evaluate the effectivenessof promotions. They can even collect “competitive intelligence” byprogramming the system to search for the names of rival retailers, saysChris Etter, the chief executive of Recordant.Unlike systems based on video cameras or sensors, Recordant’stechnology is required to notify customers explicitly that theirconversations are being recorded. To this end, the recording devicesinclude a small video screen which displays a message informingshoppers what is going on. Mr. Etter admits that both employees andcustomers have expressed worries about privacy and have shown someresistance to the devices. But he likens this to the initial disquiet over therecording of customer-service telephone calls, something that is nowwidely accepted. Besides, he says, the system can provide protectionfor employees who get involved in disputes with fractious customers.As useful as customer-tracking systems may be for exoneratingharassed staff or minimising shoplifting, however, their primary objectivesare clear. In an age when traditional “bricks and mortar” retailers facestiff competition from online merchants, any means they can use to getcustomers into their shops and buying as much as possible is seen asa worthwhile investment. Long before the advent of e-commerce, Wal-Mart’s founder Sam Walton set out his vision for a successful retailoperation: “We let folks know we’re interested in them and that they’revital to us — ’cause they are,” he said. Customer-monitoring systems areunderlining just how interested, and just how vital.6© Copyright © 2007 The Economist Newspaper and The Economist Group. All rights reserved.