Under the Lens

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Security cameras could become the next essential tool for gathering data about consumer behavior.

Late last fall, just before the holiday shopping season, FAO Schwarz's flagship store in Manhattan placed about seven video cameras in its Star Wars boutique. The reason: So online customers could get a closer look at in-store displays. Consumers who logged on to the retailer's site could not only view the Star Wars exhibit, but also zero in on particular aspects of a product.

Forget watching out for shoplifters, the video camera is moving past security departments, and into the marketing divisions of some companies. Videotape is the latest tool that some businesses are using to enhance a customer's shopping experience - and it may even become the next data bank from which marketers glean insight into consumer shopping patterns. FAO, for example, hasn't used the technology to gather consumer data yet, but it doesn't rule out the possibility. Says Alan Marcus, vice president of public relations for the toy chain: "It's still in the infancy stage, but [marketing] is something we'll look at. We're relaunching our Web site (www.fao.com) and this will be a key component."

FAO is not alone. New York-based Canal Jean Co. installed a Webcam (a camera that can project images from their store onto their Web site) on the first floor of its 60,000 square foot, four-level store this spring, and plans to link the camera to its Web site (www.canaljean.com) this fall. Executives at the clothing company installed the camera as a unique selling point for consumers. "We romanced the idea of having customers see what's in the store - people and products - when they're not in the store," says Zenaide Russack, Canal Jean's manager. "The idea is to give the customer another service that's fun and good."

Canal Jean Co. already has a very successful cyberbar in the store, where shoppers - 40 percent to 75 percent of whom are from overseas - can access the Internet. Once the Webcam is linked to the Web site, customers will be able to access it from a special terminal and send postcard e-mails to friends and relatives. "A lot of tourists come with shopping lists from family and friends," says Russack. "With the Webcam, they can try on merchandise, take a picture with the Webcam, and show it to their family member or friend."

Video marketing isn't exactly new, but it is becoming more popular thanks to the preponderance of retail Web sites. Anecdotal evidence suggests that video marketing is on the rise, due in part to improved technology, and the continuing search by business owners, for creative methods to boost sales. Since 1996, Perceptual Robotics of Evanston, Illinois, has been installing Webcams, primarily for sporting and entertainment events. But last year, it began to install cameras in stores for retailers, to allow customers to view merchandise. "We provide software that gives consumers the ability to see in stores," says Paul Cooper, Perceptual's CEO. "But recently, we've started to supply software to allow retailers to see customers and find out what customers do and want."

It's a technique that Envirosell, a New York-based consulting firm, has been using for more than a decade on behalf of its clients. Videotape is just one method the company uses to determine what's on the minds of consumers - along with customer interviews, and on-site researchers' "mapping" of customer movements as they shop. According to Paco Underhill, managing director of Envirosell and author of Why We Buy: The Science of Shopping, "We observe people shopping, follow them through the store, look at what they pick up, how they look at a product, the amount of time they spend in an aisle, whether they bring other things to the aisle, (such as coupons), what kind of basket they use, what's in their basket, if they take something off the shelf and return it to the same place."

Einstein Brothers Bagels enlisted Envirosell's services five years ago when it sought to gain insight into how customers interacted with store displays. The bagel broker - which had a camera installed in one of its stores - sought answers to questions, such as: Do customers know where to order? Do they have enough information to make a decision? Are they taking in everything in the store or focused on a few things? Gail Lozoff, chief marketing officer at Einstein Brothers says, "It's a constant struggle to get customers' attention because they only have limited amount of time and energy. It was interesting to us that the video cameras showed a pattern of how much people behave the same. I don't think there were any huge `aha's' about the technology, but it was good to have our intuition supported."

From the study, the bagel company learned that customers proceed immediately to the store counter, and that they are focused on one thing - looking for something to eat. Food cues (items on display) and menu boards are their primary means of making a decision. As a result, Einstein Brothers made adjustments to its 14-foot menu board, and continues to reorganize to ensure that customers are able to quickly decipher the information, scan all of the options laid out in front of them, and make an informed decision.

Another firm that helps its clients get results is Chicago-based RCT Systems, Inc. For eight years, RCT has gathered foot traffic data from video cameras for indoor mall developers and retailers. The video cameras record movement so RCT's custom software can generate counts. These counts are tabulated into reports, which are delivered to clients via the Internet. RCT's systems monitor more than 12,000 stores in 5,000 malls. Mall developers and retailers use pedestrian traffic information extensively, to optimize their management practices. "Mall developers use the information to aid leasing, marketing, operations, and management decision making," says George Kramerich, founder and president of RCT. "Retailers compare their traffic figures to store sales, transactions, and labor to create critical metrics, such as conversion - the number of visitors who make a purchase, labor minutes per visitor, or promotional dollars per visitor."

While the use of traffic information may not be new to the retail industry, the method of gathering the information and reporting it to the user has evolved greatly. With the advent of national standards and benchmarks, business people with a keen interest in retail activity, such as Wall Street and retail consultants, have begun to take an interest in traffic information, recognizing that it is a key indicator of retail performance, Kramerich says.

Crown American Realty Trust, a real estate investment company based in Johnstown, Pennsylvania, that owns and operates 26 shopping malls in the Northeast, used RCI's technology to get a better understanding of traffic patterns at its properties. The company found that in some areas, perceived as not having a lot of traffic, the amount of pedestrian visits was actually higher than believed. This has helped the real estate company to be more successful in leasing specialty or temporary (one year, or less) retail merchandizing space to tenants in areas they originally thought didn't generate a lot of traffic. But RCT reports confirmed they actually did, says Chris Menna, vice president of corporate communications and marketing for Crown American.

"We can gauge the success of programs and promotions, such as radio remotes, and tell if they are affected by traffic," says Menna. "This helps us do our marketing more efficiently and effectively. [The technology] also tells us when consumers like to shop, what hours they like to shop. The better we know our customers, the better we are able to market to them."

With regard to customer behavior, traffic density during any given hour of the day or across an entire week or month can help retailers gauge labor and promotional effectiveness, adds Kramerich. For example, Retailer X's sales were $10,000 last week - a 3 percent increase over the previous week's sales. Relative to previous periods, $10,000 is a good week for this time of the year. Retailer X assumes that performance was good. But the addition of traffic data reveals that although sales were up 3 percent, traffic was up 25 percent. Now management knows that a number of customers visited but elected not to buy. Retailers must now ask: What opportunity dollars were missed? Were labor levels appropriate? How can those levels be established? What will the retailer do differently next time? RCT - whose clients include about 15 percent to 20 percent of the 1,528 indoor malls in the U.S. - helps them tailor some solutions.

Yet the concept of spying on shoppers is disconcerting to some because of the voyeuristic effect of the technology. "It's a little creepy - anyone in the world can go online and look at someone else shopping in a store environment," admits Underhill. Adds Kent Gordon, principal of SMART: Strategic Marketing and Research Techniques in Walnut Creek, California: "If it's secure and private, Webcam technology can give marketers a profound understanding of consumer behavior. Rather than having focus groups on the road, retailers can watch real-time, rather than debriefing after the fact with a moderator."

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