Friday Nov 30, 2012

Facial Recognition for Retail

My son decided to do his science project on how the brain recognizes faces.  Faces are so complicated and important that the brain has a dedicated area for just that purpose.  During our research, we came across some emerging uses for facial recognition in the retail industry.

If you believe the movies, recognizing faces as they walk by a camera is easy for computers but that's not the reality.  Huge investments are being made by the U.S. government in this area, with a focus on airport security.  Now, companies like Eye See are leveraging that research for marketing purposes.  They do things like track eyes while viewing newspaper ads to see which ads get more "eye time."  This can help marketers make better placement and color decisions.

But what caught my eye (that was too easy) was their new mannequins that watch shoppers.  These mannequins, being tested at European retailers like Benetton, watch shoppers that walk by and identify their gender, race, and age.  This helps the retailer better understand the types of customers being attracted to the outfit on the mannequin.  Of course to be most accurate, the software has pictures of the employees so they can be filtered out.  Since the mannequins are closer to the shoppers and at eye-level, they are more accurate than traditional in-ceiling LP cameras.

Marketing agency RedPepper is offering retailers the ability to recognize loyalty shoppers at their doors using Facedeal.  For customers that have opted into the program, when they enter the store their face is recognized and they are checked in.  Then, as a reward, they are sent an offer on their smartphone.

It won't be long before retailers begin to listen to shoppers are they walk the aisles, then keywords can be collected and aggregated to give the retailer an idea of what people are saying about their stores and products.  Sentiment analysis based on what's said or even facial expressions can't be far off.

Clearly retailers need to be cautions and respect customer privacy.  That's why these technologies are emerging slowly.  But since the next generation of shoppers are less concerned about privacy, I expect these technologies to appear sporadically in the next five years then go mainstream.  Time will tell.

Monday Nov 19, 2012

Selling Solutions, Not Products

When I think about next-generation retailers, the names that come to mind are Apple, Whole Foods, Lulu Lemon, and IKEA.  They may not be the biggest retailers, but they are certainly growing fast. Success is never defined by just one dimension, and these retailers execute well across many dimensions, but the one that stands out for me is customer experience.  These stores feel...approachable...part of the community...local.  Customers are not intimidated to ask questions, and staff seem to go out of their way to help.

What's makes these retailers stand out in the industry?  These retailers aren't selling products -- they're selling solutions.  Think about that.  You think you're going to the Apple store to buy a phone, but you're actually buying a communications solution that handles much, much more.  If you carry an iPhone, your life has changed.  The way you do things is different.  The impacts go much beyond a simple phone.

Solutions start with a problem, which is why these retailers greet customers with "what brought you in today," or "can I answer any questions for you?"  Good retailers establish a relationship, even if it lasts only a few minutes.

You don't walk into Whole Foods looking for cans of soup.  You are looking for meals: healthy snacks, interesting lunches, exotic dinners.  Its a learning experience where you might discover solutions to problems you didn't know you had.  Mention what foods you like, and you'll get a list of similar items you had not considered.  I didn't know I needed a closet organizer until I visited an IKEA and learned about all the options.  They were able to customize the solution to meet my needs, and now I'm much more organized.

One of the differences between selling products and selling solutions is training.  Visit any of these retailers' sites and you'll see a long list of in-store events for the benefit of customers.  You can buy exercise clothing from Lulu Lemon, and also learn new yoga techniques, meet like-minded people, and branch off to other fitness regimes via their ambassadors.  You can visit the Geek Bar at Apple, eat lunch at IKEA, and learn to cook at Whole Foods.

These retailers are making an investment in a relationship with their customers.  They are showing loyalty to their customers before asking for it back.  In the long-run, this strategic approach will outlive any scan-and-bag mentality.

Wednesday Nov 14, 2012

Showrooming: What's the big deal?

There's been lots of chatter recently on how retailers will combat showrooming this holiday season.  Best Buy and Target, for example, plan to price-match certain online sites.  But from my perspective, the whole showrooming concept is overblown.  Yes, mobile phones make is easier to comparison-shop, but consumers have been doing that all along.  Retailers have to work hard to merchandise their stores with the right products at the right price with the right promotions.  Its Retail 101.

Yeah ok, many websites don't have to charge tax so they have an advantage, but they also have to cover shipping costs. Brick-and-mortar stores have the opportunity to provide expertise, fit, and instant gratification all of which are pretty big advantages.

I see lots of studies that claim a large percentage of shoppers are showrooming.  Now I don't do much shopping, but when I do I rarely see anyone scanning UPC codes in the aisles.  If you dig into those studies, the question is usually something like, "have you used your mobile phone to price compare while shopping in the last year."  Well yeah, I did it once -- out of the 20 shopping trips.  And by the way, the in-store price was close enough to just buy the item.  Based on casual observation and informal surveys of friends, showrooming is not the modus-operandi for today's busy shoppers.

I never see people showrooming in grocery stores, and most people don't bother for fashion.  For big purchases like appliances and furniture, I bet most people do their research online before entering the store.  The cases where I've done it was to see if a promotion was in fact a good deal.  Or even to make sure the in-store price is the same as the online price for the same brand.

So, if you think you're a victim of showrooming, I suggest you look at the bigger picture.  Are you providing an engaging store experience?  Are you allowing customers to shop the way they want to shop, using various touchpoints?  Are you monitoring the competition to ensure prices are competitive?  Are your promotions attracting the right customers?

Hubert Jolly, CEO of Best Buy, recently commented that showrooming might just get more people into his stores. "Once customers are in our stores, they're ours to lose."


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