Magazine Article | May 18, 2006

People: Still The Critical Factor

Source: Innovative Retail Technologies

The next great technology-based tool? People counting.

Integrated Solutions For Retailers, June 2006

The retail sector has gone through a number of transformations over the last 20 years as new technologies have been introduced. These have enabled us to dramatically enhance our logistics and operational efficiencies and permit us to add a few extra points to our bottom line. Additional technologies have provided us with merchandising and consumer buying pattern capabilities that have aided us in product placement and selection, getting consumers to depart with a bit more of their money. With the back end and front end of operations sufficiently engaging the latest in technologies, many retailers are satisfied that they are doing all they can to keep expenses down and profitability high.

Recently, a new technology has been introduced into the equation that provides retailers with the ability to truly measure a store’s performance, taking the analysis away from pure financial data and into the relationship between customer volume and conversion rates. People counting technology now available drives this new capability and is emerging as a critical analysis tool.

An Example Of The Power Of False Conclusions
The people factor, although lacking in most comprehensive retail suites, delivers data that, when reviewed from the perspective of overall store performance, can lead to conclusions dramatically different than those now being drawn. Consider the following:

Store A averages 80 tickets per hour while store B in the same region (and store type) averages 160 tickets per hour. Assume both stores have the same average dollars per ticket. The natural conclusion based on all existing analysis tools is that the manager of Store B is outperforming his colleague in store A.

Now let’s throw the people factor into the equation. What if we discover that store B has an average of 480 patrons an hour (conversion = 33%), while Store A has 100 patrons an hour (conversion = 80%)? Obviously, the previous conclusion that store A was being outperformed is reversed, and the training team is sent to assist the manager of store B.

Without a people counting solution, not only could this conclusion not be determined, but in fact, the wrong conclusion would have been the basis for decision making. Linking a retail chain’s POS data with actual, accurate traffic data significantly improves all the foundations upon which critical decisions are made. In addition to performance measurement, retailers that have implemented a people counting strategy have been more effective in accurately tracking advertising effectiveness, matching staffing hours to actual customer hours (improving conversion rates and customer satisfaction without raising labor costs), and extracting a comprehensive picture of business results.

Making Each Patron Visiting Your Store Count
The people counting strategy enables retailers to build onto their existing technology and information infrastructures and consider another, perhaps the most critical, factor in the management of individual stores – how well they convert the shoppers drawn into the store through marketing and promotions into buyers. Implementing a business strategy encompassing accurate people counting in addition to existing performance tracking is the most certain way to significantly improve the bottom line.

We know every retail chain has as a core component of its philosophy “the customer counts.” By actually counting them, retailers will find that they can significantly improve individual store and, by extension, chain-wide performance.