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.

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.

Retailers using pent-up cash; 58% plan to increase capital spending, with IT No. 1 priority

While waiting for the recovery to take the hold, 58% plan to increase capital spending over the next year. The highest priority investment area is information technology – including data analytics and digital marketing channels – cited by 51% of the executives in the KPMG survey. Other significant areas of investment for retailers are new products or services (43%), geographic expansion (33%), and advertising and marketing (24%).

When asked about digital marketing channels, retail executives in the 2012 KPMG retail survey indicate that online shopping (59%), social media platforms (58%), and email campaigns (49%) are having the most significant impact on their businesses. Additionally, executive indicate that the incorporation of mobile technology is also having a significant impact, specifically mobile shopping (36%), mobile promotions (28%), and mobile payments (21%).

Executives also say that the use of data analytics is playing a larger role in their strategic decision making – including areas such as customer insight, brand and product management, pricing decisions and market expansion.

Why Loyalty Programs Can Be Bad for Business

In my work with companies on pricing strategies, it's common for executives to feel compelled to offer loyal customers something for free. My immediate question is: "Why?" Giving something away for free as a gesture of thanks has become almost reflexive in business. But when you examine the strategic value and underlying costs of these programs, I've found that loyalty discounts are rarely necessary to close a deal, nor are they always highly valued by customers.

Why Sephora Is Betting Big on Digital Shopping

Sephora is one of the brands that’s leading the way in shaping digital experiences for its customers. The company recently invested in an entirely new shopping experience that integrates mobile, social and in-store activity. On this episode of Revolution, Julie Bornstein, SVP Digital at Sephora, shares with us the importance of delivering a holistic digital and “IRL” experience, while also enhancing the individual path each customer takes to engage with the brand and their favorite products.

Brazilian fashion retailer displays Facebook ‘likes’ for items in its real-world stores

Through its new “Fashion Like” initiative, C&A has posted photos of a number of the clothing items it sells on a dedicated Facebook page, where it invites customers to “like” the ones that appeal to them. Special hooks on the racks in its bricks-and-mortar store, meanwhile, can then display those votes in real time, giving in-store shoppers a clear indication of each item’s online popularity. The video below (in Portuguese) outlines the premise in more detail:

Home Depot Rolls Out New Mobile Devices for Workers

Home Depot has started to roll out a scaled down, second generation mobile device for its sales associates, allowing more workers to use wireless technology to assist customers, CIO Matt Carey told CIO Journal. The 25,000 device roll-out is intended to make it possible for more store workers to help customers locate items and give information on products, even in areas for which they don’t have specialized expertise. It’s also an example of how Home Depot is attempting to use technology to increase the amount customers spend on each trip to the store, as well as sales to new customers, an area of focus as the chain has slowed the opening of new stores.

The device, called First Phone Junior, is a scaled-down version of the Motorola phone the company put in the hands of some associates two years ago, which allowed employees to better manage inventory, assist customers and speed checkout lines.

Overstored: How Retailers Can Retain a Profitable Physical Store Network in the Face of Growing Migration to Digital Channels

While the long-predicted demise of the bricks-and-mortar store has been greatly exaggerated, there is no doubt that customers are migrating to digital channels in growing numbers. Accenture looks at the issues, and identifies three steps that retailers can take to rethink the way they attract, serve and retain customers, then allocate capital and resources accordingly.

IBM Survey Reveals Marketers Face Tech Dilemma in Reaching the Connected Consumer

IBM's new survey of the marketing industry finds that chief marketing officers (CMO) and chief information officers (CIO) must join forces in order to connect with today's consumer across new channels including mobile devices and social networks. Fully 60 percent of marketers point to their lack of alignment with the company's IT department as the biggest obstacle to reaching today's consumers.

Mood Media Corp., a global, leading in-store media specialist that uses a mix of music, visual and scent media to help its clients communicate with consumers with a view to driving incremental sales at the point-of-purchase is acquiring Muzak Holdings LLC, best known for providing piped music in elevators, for $305 million in cash.

With the acquisition of Muzak, Mood Media extends its global footprint, creating the largest in-store media provider globally, nearly five times the size of its next largest competitor. It will service a staggering 470,000 commercial locations in over 39 countries after this acquisition is completed.

Mood Media to Acquire Muzak for $305 Million

Founded in 2004, Mood has a market capitalization of about $380 million. It has a large presence in Europe, where it provides background music and digital signage services to around 117,000 locations, from Nike to Hermes stores.

Muzak provides background music to about 300,000 U.S. locations, such as restaurants, malls and hotels. It makes most of its money through multi-year contracts and reported 2010 revenue of $195 million. The company traces its roots back to the 1930s when it distributed recorded music to theaters and stores. Today, it also provides on-hold messaging and video programming, although piped music is its forte.

Mood hopes to use Muzak's U.S. footprint to introduce more digital services, such as screens that allow customers to check merchandise in stores, Mr. Abony said.

Microsoft has launched Microsoft Dynamics AX for Retail R2 in Germany at the ongoing Euroshop 2011. The new version of Dynamics AX for Retail includes point-of-sale, store management, supply chain, merchandising and financials capabilities.

Microsoft Brings Retailers a Complete End-to-End Solution With Microsoft Dynamics AX for Retail R2 at EuroShop 2011

This solution, the next iteration of Microsoft Dynamics AX for Retail, offers midsize and enterprise specialty retailers point-of-sale, store management, supply chain, merchandising and financials capabilities to deliver business productivity, enterprise agility and customer service in a single, integrated end-to-end retail solution. It provides visibility from point-of-sale devices to the supply chain and the business insight needed to enable a real-time response to customer demand and build customer loyalty.

Nielsen reports on how consumer perception of store brand quality is getting stronger; nearly three-quarters of U.S. households believe store brands are a good alternative to name brands, and nearly two-thirds of households say that store brand quality is just as good as that of name brands.

According to Nielsen, three-quarters of U.S. households believe store brands are a good alternative to name brands and nearly two-thirds of households say that store brand quality is just as good as name brands. In a recent Progressive Grocer Store Brands article, the depth of store brand buying reveals just how much consumer’s behaviors and attitudes have aligned.

With nearly 70% of store brand dollar sales coming from consumers who are “variety-seekers,” retailers can encourage deeper levels of store-brand buying by:

• Rewarding key consumers with continuity-based promotions.
• Implementing repeat stimuli efforts
• Targeting specific shoppers through direct mail efforts

For more details and tactical examples, continue reading at Progressive Grocer Store Brands.

WSJ has a report on how companies are trying out new technologies such as interactive mirrors, interactive kiosks and others to increase footfall and customer satisfaction.

Marketing companies are experimenting with a new wave of digital technologies to pitch to consumers while they shop: interactive dressing-room mirrors, kiosks with virtual customer-service representatives, and shopping carts and digital scanners that offer personalized discounts.

These futuristic technologies are among the interactive tools on display at Interpublic Group of Cos.' new retail center at the advertising company's Media Lab in Los Angeles.

There, Interpublic is testing innovative ways for marketers to connect with customers as part of an effort to better understand what makes consumers buy and to encourage companies to rethink their approaches to the role of the retail store.

Connecting these futuristic concepts with social media takes it to all new level.

Another device is a mirror that enables a shopper to scan a dress and then project that clothing onto her body before going to the dressing room. She can also tap the mirror to view different colors, find matching shoes and send the image to her Facebook profile.

Read more.

If this is a question you are trying to seek answer to, I suggest head over to Cashier Live’s recently launched interactive microsite “Future of Retail”. New technologies like mobile advertising, in-store augmented reality, and cloud-based software are changing how retailers (big and small) sell to consumers. The microsite presents scenarios for Mobile coupons, Virtual mirrors, Welcome kiosk, Digital signage, Self-checkout, Email receipts, Store management, RFID tags and Purchase orders. For each scenario, there are Proof of Concepts which shows how the retailers are working or thinking about using these new technologies. For e.g. for Welcome Kiosk there is this cool Gap Welcome video from Minority Report.

LPInformation Magazine November issue has a very informative article on Returns fraud and how Retailers are using Returns Management Systems to minimize the loss due to fraudulent returns. Going by statistics, Fraudulent returns total $9.6 billion a year by one estimate and around $17 billion by another. Measures being adopted by retailers include the following:

Laurie J. Sorensen, vice president of LP and shortage control for Macy’s Northwest, says company policy requires customers to provide proof of purchase in the form of a receipt or a customer return label (CRL) to receive cash or credit back. Otherwise, the system will only allow store credit in the form of an easy exchange card or merchandise-only certificate.
A CRL containing the original purchase information “is placed on the merchandise tag and scanned at point of sale,” Sorensen says. “When a customer returns an item without a receipt, we are able to scan the CRL and identify the original tender, which they will receive a refund to.”

...

Within its proprietary refund management systems, one major retailer applies an algorithm to specific receipts, creating a unique number associated with that receipt throughout its lifespan. Depending on the payment method the customer chooses, that number can often be tied back to individual customers.

...

Mike Keenan, director of LP for Hayward, Calif.-based Mervyns, recently completed the implementation of a returns management system. He was sold on the concept due to his experiences while working for another retailer.
“We reduced returns by approximately $20 million,” he says. “It drove the people who did nothing but fraudulent returns right out of our stores.”
Returns management systems vary, but basically use either the original sales transaction history (stored in a central database) or statistical modeling to determine whether a return is potentially fraudulent.

Integrated Solutions For Retailers Dec 2007 issue also has an editorial on Returns Management where it talks about two ways to tackle the menace.

Two popular approaches are software-driven analytics programs and item-level product tracking. Both approaches have merits, and depending on your merchandise mix, they can be used independently or in tandem.

An analytic software approach helps retailers maintain flexibility in their returns policies, applying different returns parameters to different customer profiles. The last thing you want your returns policy to do is make legitimate returns difficult for your best customers, which are often the customers who return the most.

Modern returns management software lets store associates authorize returns in real-time by screening for fraud through analysis of customer-specific return behavior. By cross-examining historical returns and customer-specific transaction data, analytical software helps retailers identify specific return patterns. This is a great management strategy that provides retail leadership with vivid insight into the successes and failures of its returns policies. Oracle, Newgistics, and others offer such solutions.

IBM today launched it's customized Store Integration Framework (SIF) solution targeted towards Indian retailers.

SIF includes three solutions such as 'IBM Digital Video Surveillance (DVS)', an integrated multi-channel retailing solution and 'IBM any place kiosk solution', which would help retailers address issues related to security, channel integration and customer management.
"With increasing competition, companies are actively looking for IT solutions that will allow them to focus on strategic and innovative business models, IBM India South Asia Director (Solutions) KS Raghunandan said.

Targeting India, a booming economy with tremendous retail industry growth, IBM seems to be doing the right thing. I don't know any other such offerings from other Vendors for Indian Retail Industry. Let me know if you know of any such offering from any other company.

The Retail Boom in India is giving push to many different businesses, one of them being the Design Solutions Firms like Co-Design, Idiom among others. Yesterday, Economic Times carried an article on how these firms are engaged in designing Retail Spaces using emerging techniques like Interaction design.

The Rivet in Bangalore's Leela Palace Hotel is not your usual Levi's brand store. Step in and you are sure to be taken in by the 34-feet-long Heritage Wall - a visual and virtual walk through a hundred years of Levi's heritage and corresponding world history. With touch-sensor links depicting individual decades from the 1850s to the 2000s, the installation is a virtual scrapbook on Levi's past.
The Rivet is the iconic denim jeans maker's first heritage store in South-east Asia. And the man who created this installation is Rajesh Dahiya, founder of Co-Design.
Dahiya specialises in interaction design, an emerging tool that's catching the fancy of retailers these days. Simply put, it's about exploring new ways of enhancing the experience of interacting with other individuals, with products and with the environment by blending traditional design techniques, an understanding of human behaviour and modern technology.
"The user-centric nature of interaction design makes this new field important for retail development. An interaction designer has a strong understanding of the customer, the client's needs and the latest technology," says Dahiya.
Among the scores of retail designers who are sprouting across the country, Dahiya's work symbolises the change that's sweeping the Indian retail landscape. Retail design has come to mean more than wall graphics, in-store displays and signages. With availability of technology tools, designers are now helping marketers and retailers create unique experiences that connect with customers on a deeper, emotional level. Ergo, plenty of small design firms are gearing up to deal with this growing opportunity.

Some retailers, manufacturers and research company Nielsen is testing a new system in US called, Pioneering Research for an In-Store Metric, or P.R.I.S.M. system which measures store traffic using scanners in the aisles and researchers. Some new facts are coming to the fore by using this system like,

People who walk through the salty snacks aisle of a store are more likely to buy something than those who go past the dairy case, and consumers buy more in general when they shop with their kids.

Among other findings from the project are that shoppers are exposed to an average of about 3,500 pieces of marketing stimuli in grocery stores, including displays, packages, televisions and other items; more than 5,000 stimuli at mass merchandisers like Wal-Mart Stores Inc (WMT.N); and about 2,300 at drug stores.

Some more findings include:

Some of the findings are intuitive, Wishart said. For instance, only 13 percent of food shopping trips include kids, but shoppers buy more items when kids are with them.

But surprisingly, the items that had more sales when children were around included soup, water, canned vegetables and hair care items, Wishart said.

And even more surprisingly, the presence of children had little impact on candy sales.

Also, the middle of the day tends to have a higher percentage of people in stores who are not buying anything.

In food stores, 4.5 percent of all purchases happen around 2 p.m., but 7 percent of the store's traffic is seen then, he said.

The produce aisle tends to attract more traffic, while there are "some parts of the store that are virtual wastelands and are not visited at all," Wishart said. Those parts vary by store type and format.

New system looks at US shoppers differently

In the latest issue of Integrated Solutions For Retailers, there is a nice article by Tomax CEO, Eric Olafson. The article is about how Retail Enterprises silos, the "us vs them" mentality, exists as a friction against efforts to connect strategy with in-store execution. Technology while being a solution to this issue becomes a problem too.

In search of the elusive ‘best of breed,’ retailers implement point solutions within narrowly defined process and procedural boundaries. Meanwhile, software vendors spin out new, denser versions of these applications, resulting in a cottage industry called application integration. 

Worse still, each point solution requires nearly the same data, a cancer that exists across all retail IT – the burgeoning complexity of disparate solutions and underlying data integration issues that more or less brings IT progress to a coagulated halt.

Retailers are taking these issues in their stride and embracing technologies like SOA, workflows, open standards which help bridge the divide.

Happily, we are observing an industry trend to embrace technology to transcend silos. The emergence of SOA (service-oriented architecture), workflow, open standards, and source technologies are enabling new solutions and approaches that are process-driven, lightweight, faster to implement, and flexible. These same technologies drive new delivery mechanisms, giving rise, for example, to the adoption of software as a service (SaaS), where the solutions providers deliver and manage solutions faster and more economically than the retailer could on their own.

Another important trend is data centralization.  The cost of dividing and duplicating data in support of multiple applications occupies a great percentage of IT budgets. Now, a single version of the retailer’s information can support multiple applications, reporting instruments, and real-time event-driving workflow management. The cost reductions associated are massive.

On a related note, read this more elaborate article on the same topic by Tomax CEO, Eric Olafson.

Making the Leap: Driving Process and Change in Retail

RISNews is reporting on the new IT initiatives top 5 retailers in US have started or are involved in to keep a leg up over their competitors.

The Home Depot (#2) and Kroger (#3) have both leveraged multiple technologies to enhance store operations and processes.  The Home Depot’s most recent IT initiative is a deployment of an IT lifecycle management system from Matrix42. The Empirum suite is being used across all 2,164 Home Depot retail stores globally and centralizes the management of all enterprise networked devices. The Home Depot is using Empirum to increase productivity and reduce administrative support costs. A recent customer-facing IT initiative trial'ed by The Home Depot was a digital signage campaign throughout its Canadian stores. Partnering with RAM Forest Products and MediaTile, Home Depot Canada stores created the “Create the Deck of Your Dreams” campaign which resulted in an increase in sales of deck accessories by more than 50 percent. The campaign incorporated multimedia video advertisement which gave consumers a step-by-step education on deck building.

Supermarket retailer Kroger (which just last month won RIS New’s Supermarket Achievement Award for the Shopper Experience) also is deploying both back-end and customer facing technology to maintain a competitive edge. With a best-in-class shopper experience in mind, Kroger has been among the first supermarket chains to install self-checkout and DVD rental kiosks. On its back-end, in January of this year Kroger began an implementation of a new IBM infrastructure. The infrastructure will enable Kroger to more easily, and more speedily, create new services for its customers. “With this initiative, we will be able to introduce innovative services quickly and seamlessly to improve our customers shopping experience,” says Chris Hjelm, senior vice president and CIO at Kroger.

Number five on the Top 100 list is Target. As with The Home Depot and Kroger, Target is leveraging technology to improve its back-end operations. In particular, Target recently partnered with Swisslog to create and implement a new picking and storage system for its warehouse operations. The system will be designed to minimize warehouse logistic costs while optimizing distribution processes.

A few other retailers on the Top 100 list leveraging technology include: CVS (#9), Federated Department Stores (#13), Publix (#15) and Staples (#18). In January CVS deployed a new merchandise and data management system from Soft Solutions. Federated, which officially changed it’s name to Macy’s this past spring, trialed a futuristic SocialRetailing system from IconNicholson in the Nanette Lepore department of its Manhattan Bloomingdale’s store. Publix expanded its data warehouse with Teradata and implemented BlueCube workforce management from RedPrairie. Office supplies retailer, Staples is overhauling its POS hardware and deploying nearly 8,000 new POS terminals from Fujitsu to its US, Canada and Europe stores.

Imagine walking into a retail store and, with the swipe of a card, receiving a printout that includes a personalized shopping list, relevant coupons, notice of associated store discounts or sales, and even a map to where the items can be found in the store. HP recently showed off the Retail Store Assistant, an experimental system designed to enhance the consumer shopping experience and improve efficiency for retailers by bringing the power of online access to brick-and-mortar stores.

Developed by HP Labs, the Retail Store Assistant includes an in-store kiosk, which customers can access with a loyalty card or by typing in their phone number, that is linked to a retailer’s IT system, which contains inventory, sales and customer purchase information.
By better connecting consumer and store data, the system works to the advantage of both customers and retailers. For example, if a grocery store detected that a customer bought yogurt every time it went on sale, it might offer that individual the sale price every time he or she went to the store. Or, if the grocery store determined it had an excess inventory of onions, it might give shoppers a recipe for onion soup, note that onions were on sale and point out where to find them.
The personalization provided by the Retail Store Assistant makes for a better shopping experience and is key to closing what retailers call the “intention-action gap.”
“Instead of sending consumers advertising and coupons and hoping they’ll come in to buy, it’s better to reach them when they’re actually in the store – they’re more likely to make the purchase,” said Mohamed Dekhil, manager of retail applications in the Digital Imaging and Printing Lab at HP Labs, the company’s central research facility. “Besides, about 99 percent of all junk mail is thrown out because it doesn’t offer anything people want. The Retail Store Assistant provides consumers information only about things they really care about.”