Stock loss or shrinkage is a $5.3 billion problem for the retail industry, according to the National Retail Association, with shoplifting and employee theft now responsible for more than half of the missing merchandise.
To manage this issue, retailers have invested in surveillance solutions, including cameras and security personnel to protect their business. However, with advancements in technology, retailers are increasingly able to put these surveillance and video imaging systems to work to make money for their business.
The most notable advancements are around AI and data analysis, with video imaging systems now capable of providing valuable data-driven insights into how the business operates. And with data now considered the new “oil” of business, many retailers could find that they are sitting on a gold mine of footage.
Analytics can be used to help merchandising teams understand customer movement in store, better manage inventory, and be more strategic with both staff allocation and placement around the store to help boost sales.
For example, retail businesses are creating a competitive advantage by using data to determine product placement and inventory status to enhance profitability.
Cameras with a corridor mode or fish eye functionality can easily monitor store aisles as customers interact with products and displays. Adding analytics to the solution can generate a visual demonstration of customer flow throughout the establishment, identifying key areas of interest where customers dwell, for example.
By analysing customer movements and interactions, retailers can improve or completely alter their sales floor, placing high-value items in high-traffic areas to increase sales.
The ability to accurately count and analyse foot traffic also allows store owners to ensure their business operations are as efficient as possible, allowing easier decision making on staffing during specific days and times.
The emergence of AI-integrated video analytics allows retailers to expand their use of surveillance beyond crime prevention to revenue generation. By leveraging the valuable information that these systems deliver, retailers can substantially improve their stock management efforts and enterprise operations margins, compounding the existing benefits of surveillance set-ups.
At the edge
This business intelligence would not be possible without the secure capture, analysis, transfer, retention and preservation of the surveillance data. However, for retailers with multiple locations, the hours of footage quickly add up, demanding modern data storage and computing requirements.
Video and sensor analytics applications are exploding and are already creating massive amounts of data. As a key component to every video surveillance system, storage is expected to grow 18% annually, according to IHS. Applying AI to retail operations will also drive a significant increase in data storage requirements, as well as powerful capabilities to process the data.
It’s predicted that global retail spending on AI will grow to $7.3 billion per year by 2022, up from an estimated $2 billion in 2018, according to Juniper Research. With this increase in AI adoption, getting the value out of analytics investments requires smarter data management.
For example in the surveillance use case, embracing edge computing — putting the compute power and the data analysis in-store, where the action happens — insights can be surfaced more quickly, without great cost to the business.
On-site recording storage solutions have the ability to apply artificial intelligence to enable instantaneous data availability for real-time predictive analytics and decision making. By processing information at or near the source of the data is cost effective and reduces latency.
While the massive growth in online sales throughout 2020 has driven large investments in digital technology, retailers are also rethinking their store strategies to better understand the role physical locations play in their wider omnichannel strategy.
Data is crucial for brick-and-mortar store owners attempting to hold their own against online behemoths offering reduced prices and fast shipping. Understanding what is happening in-store empowers retailers to optimise their operations and to deliver an incredible in-store experience. Efficient inventory management also frees up cash for further investments in digital or omnichannel experiences.
Spreadsheets and manual planning processes are no longer sufficient to compete in a world where planning processes are orchestrated using advanced analytics and vast data sources.
With retail margins under pressure, data-driven decision making will improve the customer experience and the bottom line.
Jeff Park is country manager for Australia and New Zealand at Seagate