E-commerce has gotten most of the attention in the retail industry over the past few years. While online sales are trending ever upward, brick-and-mortar stores still have room to grow and thrive if they capitalize on the right technology. One of the most helpful of these technologies is retail video analytics.
Video analytics applies machine learning models to in-store video data, either in real time or recorded. Many stores already use it to some extent to determine which areas see the most foot traffic, but retailers can go further. Leaning into this technology can yield significant benefits across companies and their supply chains.
Agile Inventory Management
Inventory management is one of the best applications for retail video analytics. Brick-and-mortar retail stores have infamously low inventory accuracy, making stockouts and surpluses common. These mistakes are becoming increasingly costly, as business logistics costs reached a record high of $2.3 trillion in 2023 (9.1% of the GDP).
Video analytics helps by enabling more agile responses. AI can monitor items on shelves to accurately determine when they need restocking. Similarly, it can detect which products linger in stores longer. Pairing these in-store, real-time insights with a digital inventory management system enables far more inventory visibility.
This transparency lets retailers better understand what to order and when. Consequently, they can prevent over- or understocking anything, ensuring all the money they put toward logistics and sourcing doesn’t go to waste.
Richer Demand Forecasting
Similarly, video analytics can provide more data for more reliable demand forecasting. Analyzing inventory turnover can inform relevant supply chain shifts, but this information can be misleading by itself. High turnover could indicate missed sales as easily as it could mean large throughput volumes.
Machine vision tools could identify the rate at which people buy products at different times, days or seasons. Similarly, they could see when sales lead to stockouts, adding context to high inventory turnover ratios. Feeding this data to predictive analytics will give retailers a better picture of demand cycles and trends.
These informed predictions have benefits across the supply chain. Stores can prevent stockouts despite shifting consumer trends. 3PLs can provide more timely, helpful services to boost business. Suppliers can adjust their production levels to meet demand and avoid waste.
Informed Marketing Strategies
Retail video analytics can also be a helpful way to refine a company’s marketing strategy. E-commerce businesses can collect digital data on each customer through cookies and account information to personalize marketing materials. Brick-and-mortar stores historically lack this ability, but video analytics provides a solution.
People-counting video analytics provide exact data on conversion rates by offering precise figures on the number of customers who enter the store. Comparing this to sales figures removes the guesswork in figuring conversion rates. With this information, retailers can determine which goods or niches they need to remarket to boost sales.
Similarly, retailers could use video analytics to identify which areas of the store see the most traffic but few sales. Advanced analytics could even break data down by customer demographic. This insight can inform targeted marketing campaigns to help brick-and-mortar businesses keep up with e-commerce.
Safer Stores
There are safety advantages to retail video analytics, too. AI monitoring systems can detect suspicious behavior, like someone taking something off a shelf and hiding it in their clothes or bags. These tools can then alert managers or security staff to investigate the issue and prevent theft.
The same technology can automatically alert security staff of more severe emergencies. Machine vision systems can detect altercations between customers or hazards like fires or flooding from extreme weather. These early warnings enable faster responses to protect employees and customers alike.
These safety improvements prevent financial losses from theft or property destruction. As a result, retailers have more room in the budgets for expansion, leading to increased business across their supply chains as they order and transport additional products.
Optimized Customer Experience
The same underlying principles can help retailers craft a better in-store customer experience. Real-time warnings about non-emergencies like out-of-stock items, spills or knocked-over displays make it easier for stores to ensure everything looks as it should at all times.
Roughly one in five customers will leave a brand after just one bad experience, and four in five will do so after a few. While many retailers understand the impact of e-commerce site functionality on this churn, in-store experiences also matter. Video analytics provide the agility to ensure a more comfortable, convenient and engaging brick-and-mortar customer experience.
Real-time alerts about spills and other messes help keep stores clean to improve a brand’s image. Similar warnings can direct employees to stock shelves for a more convenient shopping experience. These quick adjustments will create more loyal customers, and the increased sales will ripple throughout the supply chain.
Better Staff Management
Because retail video analytics enables faster, more effective responses to changing conditions, it is easier to manage staff workflows. That’s particularly poignant today when there are 662,000 unfilled job openings in the retail industry.
As in-store foot traffic rises from pandemic-era lows, brick-and-mortar stores have more to accomplish with fewer workers. Video analytics helps by highlighting which things need the most attention at any moment. Machine vision can identify which workflows or sections of the store currently face the most demand. Managers can then assign employees in response to fill gaps and maintain productivity.
Stores can apply the same concept to longer-term optimizations. Over time, video analytics will reveal which days and times see the most business. Retailers can then schedule workers accordingly to prevent staff shortages and uphold productivity.
Retail Video Analytics Will Push the Industry Forward
Improved in-store experiences lead to higher revenues across the retail sector. These gains, in turn, create more business opportunities for the suppliers and logistics partners serving brick-and-mortar stores. Consequently, while retail video analytics may apply only to physical stores, the benefits affect the entire supply chain.
In-store video analytics will become increasingly important as e-commerce sets new customer expectations about efficiency and convenience. Capitalizing on this technology will help brick-and-mortar retailers and their supply chain partners adapt to these shifting trends and ensure ongoing success.
