In 2017, J.C. Penney closed 138 retail stores across the country. This figure for Crocs and Gap are even worse. The fate of Macy’s, Staples, American Apparel etc is not any better either. Adding to it, many retail stores are notifying their customer to use their gift cards ASAP. That hints that in 2018 we will see more number of stores closing down.
Why Retail Stores are Closing
The answer is simple. The sole reason any retail store pulls their shutters is that they are not able to draw the customers. But why it is getting harder to draw customers now more than ever. Because the increased real estate and maintenance cost of retail stores in an urban ecosystem are becoming too expensive to manage. Also, tough competition from eCommerce companies in terms of lowered price-tags and buyer friendly options like easy returns and ‘try and buy’ features have made survival of retail stores even more difficult.
Can Retail Stores Still Survive
Despite having a relative advantage over retail stores, eCommerce companies lack the real-time touch and feel of the brick and mortar stores. The store buying experience in segments like apparel, luxury fashion, beauty care and perfumery can never be matched by that of an eCommerce website. People like to hang out, try, touch and smell the real products before making a buying decision. This holistic excitement of buying is something which an eCommerce service provider cannot hijack. But the advent of technology has equipped them to do so and they are trying every bow in their quiver.
Technology is a double-edged sword which has to be leveraged to meet our needs. Retailers can bring in technology to make the store experience more appealing and indispensable. To offer better experience, retailers need to have a deeper understanding of their customers. Understanding customers mean knowing their buying preferences, attention span, and in-store movement too. Once we know our customer, it is easy for us to customize the buyer experience. But to understand our customers, we need to fetch colossal amount of crowd(buyer) data, interpret and draw prescriptive insights from it. Crowd Analytics can help us to do all these things.
What is Crowd Analytics
Crowd Analytics is a process of interpreting the data fetched through studying the free and natural movement of buyers in the retail stores. Here human beings en masse will become the objects of high-resolution cameras capturing the real-time feed. Crowd analytics helps retail stores to make insightful decisions towards increasing the efficiency and profit whilst promoting the better customer experience.
How Crowd Analytics can help Retailers
A high-resolution camera say of 4K or 1080p resolution connected over a mesh records the real-time video stream. The camera will make use of heatmaps to check the human presence. The feed received by camera is sent to a central server or cloud for further analysis. There it defines the total area of the retail store and breaks it into a certain number of blocks. Then it estimates crowd density within that unit area(each block) between the given time period. The total crowd density is calculated by the sum of all the blocks.
Then the crowd flow is calculated by evaluating real-time pedestrian movements coupled with Artificial Intelligence. As per the Pedestrian movement theory of John J. Fruin, when the crowd density is high, the crowd flow starts to decrease. When the crowd flow is less in certain area, that shows that area is drawing the attention of the buyers. This could perhaps be attributed to a new apparel design or a special offer on a product and this helps us understand the crowd behavior based on changes in certain areas of the store. Also, if we have announced a new offer on the third floor but was worried that why customers are not drawn for it, we can refer to last one-week crowd flow in that place and infer why buyers are not feeling motivated to go till the deck. Then we can change the placement or add more appealing graphics to the billboard.
There is no business sector which is being unaffected by technology. The automation it offers can push many current operations to obsolescence. The flipside of it is it also creates new opportunities and collaborations. It also applies to the retail sector.
We now know how crowd analytics paired with high-resolution 4K camera can help us understand customer behavior. This can enhance their buying experience and make them feel the retail store experience exclusive and indispensable. Like any business, retail is about how we adapt to the ever-changing customer trends.