Retail in crisis
How will biometrics technologies help retail stores recover from a pandemic?
Offline retail was one of the industries most affected by the coronavirus pandemic. It was especially hard for non-food stores: by data of the fiscal data operator Platform OFD, after the massive closure of shopping centers, clothing sales in some regions of the country fell by almost 90%, in Moscow — by 76%. In April, representatives of Russian fashion retail asked the federal authorities for help: already at that moment, most retail companies were on the edge of the abyss, clothing, footwear and accessories stores began to prepare for massive bankruptcies, due to which, estimates of the business itself, the country's budget may not receive more than 1 trillion rubles in the coming years.
Crisis or push for innovation?
The state responded to the call of the business for help and included non-food retail in the list of industries that need support. However, experienced businessmen urge colleagues not to relax: it will be difficult to overcome the crisis without government support, but it is not worth relying solely on the state. The phrase that the salvation of drowning people is the work of the drowning people themselves best describes the current situation. According to Mikhail Goncharov, a restaurateur and founder of the Teremok chain, even the absence of any action will bring a positive effect sooner or later: the system will come into balance itself, but the market will be discarded 10-15 years ago in development. What can a business do to stay afloat and even grow?
In May 2020, Nielsen asked the directors of manufacturing companies and distributors of FMCG products about how they assess the impact of the crisis and how they plan to get out of it. Most executives spoke in favor of continuing the course towards digitalization of the business and the development of digital channels of communication with customers. 63% will retain or partially revise the innovation strategy, but will not abandon it. In addition to online trading, the focus will be on digital transformation (74%), construction and development of IT infrastructure (51%) and marketing (43%). At the same time, the business is ready to significantly reduce the cost of proven advertising channels — outdoor advertising, TV and radio.
A quite natural question arises: how to find new ways to stimulate consumer demand? Experts believe that the future lies in personalizing sales. And if online retail has long learned to identify customers and work with demand for advances (tracking pages visited, an abandoned basket, goods that you might like, etc.), then offline stores are noticeably lagging behind in this direction. Are there technologies that can become a driver of business growth, will strengthen the market and use the crisis as a point of transition to a new level? One of the tools may be the technology of biometric facial recognition of customers.
Retail customer recognition.
How is the face recognition process of store visitors? Cameras installed at the entrance and inside the trading floor fix each visitor: the system automatically determines the gender and approximate age of a person, and also forms a base for all potential buyers. In the future, at the second visit, the client’s face will be correlated with all the accumulated data, a mark will appear in the system that the person has already logged in. This forms the base of regular visitors, as well as an understanding of how often the same person makes purchases.
Regular customers and participants of loyalty programs are entered into the database during registration, their photo is added to the system. From that moment on, the entire history of their purchases accumulates in the CRM system, as well as, perhaps, interest in a particular product. During the next visits, the system identifies registered visitors, and the sales assistant receives tips on the most relevant products and offers that are personally selected for a particular client.
Recently, the Russian company RecFaces, which has extensive experience working with foreign clients and specializes in the field of biometric technologies, has introduced the Id-Target software, a face recognition system designed to meet the needs of offline retail, on the domestic market.
According to Tamara Morozova, CEO of RecFaces, customer identification helps stores analyze the flow of visitors and their interests, increase the average check, refuse material loyalty cards, that is, manage customer relationships and stimulate demand. “The use of biometric technologies is equally effective and has great potential both for retail with a high level of prices, which includes boutiques, car dealerships, jewelry stores, and for retailers of the middle price segment — clothing, shoes, cosmetics, etc.”, — says the head of RecFaces.
Biometrics as a marketing tool.
Biometric customer identification solves several specific retail tasks, which ultimately give rise to a completely new type of relationship with customers. For example, it allows you to automatically highlight the categories of visitors requiring special attention — VIP, unwanted visitors or “intruders” and notify the sales floor staff or security personnel. This helps, on the one hand, to provide additional security and reduce the risk of theft, on the other hand, to increase the level of service for the most valuable customers for the business.
Even more important is the function of personalizing the interaction between the seller and the client. Client identification allows the consultant to quickly receive service recommendations and information on targeted offers from the CRM system, taking into account statistics of previous purchases: knowing the history and interests of the client, the consultant can offer the most relevant or complementary products. Such a personalized approach invariably leads to an increase in sales conversion, an increase in the average check and the formation of customer loyalty. In addition, biometrics can be invaluable in assessing the work of a consultant and the quality of services provided.
Separately, we can distinguish interaction with the buyer through digital signage — smart advertising media that display content for a specific buyer, taking into account the history of his purchases, or age or gender characteristics.
Client identification is equally important for marketing analysis. The algorithm can evaluate the gender and age of visitors, record repeated and subsequent visits, identify target audiences, evaluate the effectiveness of advertising campaigns, changes in loyalty indicators, etc.
Id-Target is, in fact, a ready-made marketing tool that allows you to get not just an array of data, the system generates complete reports, for example, about how the gender-age statistics of visits have changed taking into account the ongoing advertising campaign, to understand what percentage of visitors returned, made a purchase, how many visits on average do clients need to make a decision, what is the percentage of clients who do not return
Biometric identification is also a convenient way to provide privileges to regular customers without the use of tangible media: the client does not need to carry a card, remember the number, dictate the phone number to the seller or ask about accumulated points — the system will automatically tell the consultant about all the privileges and offers generated for a particular customer.
How are things going abroad?
Biometric customer identification is not a newfangled trend: retail has been actively interested in this technology for at least the last 10 years. The most active in this segment are considered the markets of China and the USA.
For example, the Chinese authorities ordered customers to undergo a face scan when buying SIM cards. In Saudi Arabia, SIM card holders are identified by fingerprints.
In January 2020, a recognition system was launched in Chinese pharmacies designed to prevent the sale of prescription drugs to people seen using or distributing drugs. Beijing-based vape maker RELX recently opened a flagship retail store equipped with face recognition cameras. The main purpose of using customer biometrics is to counteract the sale of electronic cigarettes and vapes to minors. In April of this year, it became known that the law on the sale of alcoholic beverages was updated in the US state of Michigan: amendments allow retailers to use biometric data to confirm the age of the buyer.
In the UK, about 60% of fashion retailers use biometric customer identification. Retail giants Walmart and Walgreens are actively experimenting with face recognition technologies. The first ones introduced the technology of recognizing the emotions of customers back in 2017: if the customer showed negative emotions, the system sent a signal to the store employees who were supposed to find out the reason for the customer’s dissatisfaction and try to form a positive experience of visiting the store. Walgreens scanned the faces of customers to determine their gender and approximate age, with further demonstrations of the most relevant advertising content.
Indicators for increasing sales using face recognition depend on many factors. And the main thing is not the collection itself, but the interpretation of the data received, the willingness of retail to change depending on the results. Biometric recognition makes it possible to know a client literally “in person”, formulate a personal offer for him and anticipate his desires. The use of biometrics is not a panacea, but an opportunity: to rebuild the processes of interaction with customers and independently create such an important consumer demand for post-crisis retail.