In-store Video Analytics Solution for Retailers

by Deepak Sharma on Wednesday, October 03, 2012

This week LightHaus, a provider of Visual Customer Intelligence (VCI) solutions for retail enterprises and chain stores, announced that Foot Locker became their latest customer to deploy LightHaus VCI solution. Foot Locker  will be using the solution to measure customer traffic and sales conversion rates at all of its Champs Sports stores in the U.S. and Canada, as well as its Foot Locker Canada stores.

I reached out to Dr. Mario Palumbo, CTO of LightHaus to get answers to some of my questions on how LightHaus VCI solution fills the unmet industry need with its in-store video analytics solutions for retailers.

What is LightHaus Visual Customer Intelligence (VCI) solution and how does it impact Retailers? Can you provide few scenarios where VCI solution is a great fit?

Mario Palumbo: The LightHaus Visual Customer Intelligence system analyzes video from in-store cameras to measure customer traffic and engagement in retail brick-and-mortar stores. Retailers, like Foot Locker, user data delivered by the LightHaus VCI system to gain new insights into their store performance. For instance, by combing transaction data with customer traffic data into the store and browsing data for specific categories, displays or products, retailers can understand their conversation rate – the percentage of customers that purchase- on an hour by hour, day to day, and week over week basis. By comparing conversion rates over time, and across stores, retailers can identify high performing stores to learn from, and lower performing "opportunity" stores. With in-store shopper insights, retailers can drill down to find out why customers aren't purchasing.

LightHaus VCI is a good fit for any retailer who wants to increase their sales and wants to give their managers better tools to discover the factors driving purchases, and where problems and opportunities exist. LightHaus VCI retailers them understand what their customers are doing in their stores, and learn how to influence their customer's experience to improve sales. For example, in a retailer where service is essential to their customer's experience and ability to purchase, retailers are alerted to the need for more associates by reports comparing conversion rates to their customer to store associate ratio. A strong correlation between low conversion and high customer-to-associate ratio indicates staff are being overwhelmed and customer service and sales are suffering.

Another great fit is with retailers who want to know the effectiveness of their marketing campaigns. Because LightHaus goes beyond traditional traffic counting, which simply counts people entering the store, and goes inside the store to measure where customers go, where they stop and engage, and what they browse, retailers can measure conversion not only by store, but by category and product. With LightHaus VCI, marketers can see the impact of their campaigns not only on store traffic, but also on the number of customers that pass by the promotion and the number that stop to browse the promotion.

Using the VCI solution, can a Retailer predict the footfall and resulting sales for a future timeframe, maybe predict month over month sales increase/decrease and thus take corrective actions.

Dr. Mario Palumbo: With LightHaus VCI retailers can incorporate actual traffic data into their business processes – from workforce scheduling to sales forecasting. Instead of basing planning simply on historical transaction data, they can also use data the show the sales potential.

Also, using VCI on an ongoing basis retailers can establish traffic trends within their stores based on time-of-day, day-of-week, seasonality, and in response to promotional activities. This allows them to optimize their store layouts, merchandising, and staff scheduling to ensure they capitalize on the true sales opportunity

For a small store chain (let’s say less than 20-30 stores nationwide), how does the deployment work? What is the ROI a retailer can expect after deploying VCI?

Dr. Mario Palumbo: There are a couple of aspects to deploying the LightHaus solution. We've found it's important to think about both how the resulting insights will be used, and how the system is deployed.

The first step is establishing the business case. As LightHaus VCI is all about helping retailers increase conversion, we work with the retailer to understand their current conversion rates, the factors driving conversion, and the ways the retailer can influence them. This is where the retailer establishes a target ROI. While we can't share specifics, we can share that retailers are finding the VCI data reveals many "opportunities" and that even a small improvement in conversion rapidly pays for the system, and then adds significant dollars to their bottom line. Just some of the opportunities include matching labor to demand, increasing effectiveness of store layouts, merchandising and marketing, and increasing store staff focus on closing the sale. LightHaus Visual Customer Intelligence System diagram

Now, let's consider the in-store deployment. One of the things that's attractive to retailers, both large and small, is that LightHaus VCI is designed to be easy to deploy. The retailers deploy an IP camera for each area they want to 'SpotLight'- that is capture and analyze video from. In a typical mall format store this would include an Entrance SpotLight, and 2 to 3 In-Store SpotLights in key locations such as end-caps, promotion areas, or service areas. LightHaus works with leading system integrators who are familiar with the retail environment to install the required cameras and the LightHaus VCI appliance - a small form factor network appliance. Then LightHaus service reps remotely configure the system to ensure it is accurately measuring shopper behavior. The LightHaus VCI appliance processes video from each camera, or SpotLight, and sends the resulting data to the LightHaus VCI hosted server. No video ever leaves the store - only low bandwidth numerical customer intelligence data is sent to the hosted server, where a web-based data mining application allows the retailer to view and mine the data in near real-time from any standard web browser. Installing a typical store takes less than an hour.

How easy is it to integrate VCI with other LOB applications that a Retailer may be using?

Dr. Mario Palumbo: LightHaus is designed to allow retailers to easily access the customer intelligence data from other retail systems such as business intelligence systems and WFM through a simple and comprehensive Web Services API. Also to meet customer requests, we support standard CSV file import.