Friday, March 7, 2014

What options for data and analytics do brick-and-mortar retailers have?

While talking to many retailers, we realized that the answer to retailing eludes many. Even with full information on products and markets, retailers find it hard to define why certain brands or products sell while others don’t.

Statistics can help to elevate the level of understanding of the successes and failures, provide important information that retailers can work with. Example, number of visitors to your store can tell you whether low sales level is due to low activity, or simply that the visitors are not converting. Visitor profile information can help you to understand whether you are attracting the right crowd with your marketing campaigns, browsing patterns lets you know which areas are getting more attention, and provide you with an idea on how to place your products and ads.

Online retailers are already using a wide array of data such as visitor counts, visitor profile, click statistics, and browsing patterns. These data are used to help them understand customer preferences, and optimize (online) store layout. However, the same type of information can be relatively difficult to mine for a brick-and-mortar store. Most physical retailers are still dependent on sales data and loyalty programs to help them understand their customers. These forms of information gathering tend to exclude important metrics such as:

  • Visitor Count: The number of visitors, as opposed to the number of transactions
  • ‘Bounce’ rate: The number of visitors who leaves without making a purchase
  • Visitor profile: As opposed to member profiles, visitor profiles tells of the people who do not subscribe
  • Browsing pattern: A vital information that describes what visitors do after they come into a store

So what are the reasons for the slow rate of adoption to gather visitor intelligence?

It is still possible to obtain these data manually, by getting employees to perform manual counting and tracking, or to engage market research firms to perform surveys. However these methods are not only costly, prone to human error, the data also has limited validity, quickly becoming out-of-date.

In recent years, there has been a rise in technologies for automatic counting and tracking processes in the physical retail setting. These technologies are able to provide the up-to-date visitor data on the fly. Yet, adoption rate has been slow. One of the main causes of resistance is due to the perceived high cost of acquiring and implementing new technologies, as well as from subsequent efforts for training. Secondary concerns include technology maturity and result accuracy, as well as privacy concerns.

Most retailers remain unaware of the wide variety of options available to them, some of which are inexpensive and relatively simple to implement, with options to address concerns on accuracy and privacy. In the section below, we’ll elaborate on some of the more commonly available technologies suitable for physical retailers in today’s market, with their own merits to help you make better informed choices.

List of technologies available to gather retail intelligence

Infrared beam counter

Infrared beam counter is the simplest and most widely used counting technology for brick-and-mortar stores. As the name indicates, it works by emitting infrared beams which breaks when a person passes through to perform counting. It is easily the cheapest method to gather visitor data, but faces several limitations. The solution has the following advantages and disadvantages:


  • Simple setup and implementation process
  • Inexpensive
  • Non-intrusive


  • Limited to people counting data only
  • Cannot work in high traffic situations (Unable to count people walking side by side)
  • Might not work for larger entrances
  • Accuracy is affected by if lighting condition changes

Prices starting from: $100 - $1000 depending on complexity of the system. A standalone counter with numbers displayed on LCD screens can be purchased for as little as $100, while a more comprehensive setup with proper reporting can cost more than $1000. Retailers can choose between horizontal or vertical beam systems, of which the differences are listed below.

  • Horizontal

    Usually come in sets of 2 devices, one of which is a receiver or reflector. Single device horizontal beams have a shorter range of 2.5m (compared to 6m for dual device setups)


    • Simpler setup than vertical beams
    • Cheapest option available
    • Ability to detect direction of travel (In and out)


    • Higher level of inaccuracy when the traffic volume is high
    • Easily blocked by someone standing at the entrance
    • Range is limited
  • Vertical

    Installed above the entrance, and detects when people walk past and shortens the length of the beam.


    • Not blocked by people standing at the entrance
    • Able to count people walking side by side
    • Can achieve over 90% result accuracy


    • Not able to capture direction of travel
    • Requires careful placement to obtain accurate results

Thermal sensing people counter

Thermal sensing people counter performs by detecting heat that is emitted by people. The system is able to capture directional information, and has the highest accuracy amongst the other counting technologies.


  • Highest accuracy level of up to 98%
  • Ability to provide directional information
  • Can be used to track in-store browsing patterns
  • Able to handle heavy traffic flow
  • Non-intrusive and simple to implement
  • Long life-span of more than 25 years
  • No limitations to entrance size (Easily scale up by adding more sensors)
  • Non-intrusive


  • Temperature change in the environment can affect the result
  • Area of detection is small
  • Not able to capture profile information (age, sex, etc)
  • Complex implementation process
    • Not able to see the ‘field of view’ of the device
    • Considerable machine training required to maximize results

Prices starting from: US$2000

Indoor positioning systems (Bluetooth/Wi-Fi)

The indoor positioning system makes use of Bluetooth or Wi-Fi technology available on mobile devices to track visitors to your store. Using the unique ID of each mobile device (MAC address), the technology can follow the visitors on their paths, and detect return customers.


  • Ability to collect route and dwell time information
  • Able to handle heavy traffic flow
  • Unique ability to track return customers
  • Versatile technology, business owners can use the connectivity to push messages to the visitors’ mobile phones
  • No limitations to entrance size (Detection is performed while visitors are in the store)


  • Only able to track visitors that has their Bluetooth/Wi-Fi turned on and set to ‘discoverable’, resulting in lower accuracy rates and bias readings
  • Unable to pinpoint visitor demographics (age, gender)
  • Complex implementation process
    • Requires effort to map sensors to the store layout
  • Certain level of privacy concerns

Prices starting from: US$1000

Video analytics

Video analytics uses image processing to detect people and track their movements. Typical setup includes video cameras and a PC to perform the analysis. There are a wide variety of solutions to choose from, with differences in ease of implementation, type of analytics, amount of details captured, type of customization available, reporting format, result accuracy, and pricing.


  • Ability to capture directional details
  • Able to handle heavy traffic flow
  • Can achieve high accuracy level of above 95% for counting
  • Ability to capture routes taken and dwell time (how long a visitor stays in the store)
  • Unique capabilities to capture visitor profiles (mostly age and gender)
  • No limitations to entrance size (Easily scale up by adding more cameras)
  • Implementation can be simple or complex, depending on each solution
  • Can be non-intrusive with masking technology


  • Higher power consumption and lower lifetime
  • Might require an additional PC to perform image processing
  • Configuration efforts required to adjust analytics parameters
  • Network required to transfer the data
  • Relatively more expensive solution

Prices starting from: $500 – 10,000 for off-the-shelf solutions. Higher for customized solutions.


So which technology is suitable for you?

These are some of the questions you should ask when deciding on which solution is suitable for you

  • How much detail do you want to capture? Only People count? Or also the route taken? What about visitor profile?
  • How accurate do you need the results to be?
  • Do you need information on an hourly basis? Or daily basis would do?
  • How heavy is the traffic flow into your store? Are there always multiple people walking in at the same time?
  • How big is your entrance? Do you have multiple entrances?
  • How much are you willing to invest into implementing the solution? Not just monetary, but also the effort required to learn and understand the system, and to train your staff to understand the reports.

It may sound scary, but there are simple turn-key solutions out there, catered for first time adopters. Post in the comments section below to let us know what are your concerns, or the problems you’ve faced when trying to gather data for your brick-and-mortar store!