Is brick & mortar ready to leverage in-store shopper data?

Photo: RetailWire
Aug 15, 2016

Through a special arrangement, presented here for discussion is a summary of a current article from the Mark Heckman Consulting blog.

Much of the growth of and other e-tailers can be traced to their ability to leverage the plethora of shopper behavior data that e-commerce sites yield to create an increasingly efficient, customized shopping experience. Such has not been the case for physical retail facilities.

Unlike their online counterparts, among other critical customer data, traditional retailers do not, on a regular basis, track the time spent in-store by the shopper or how shoppers engage (or not) in their merchandising efforts.

Yet affordable and practical techniques now exist to provide retailers all the information they need to measure in-store shopper efficiency.

Traffic counters with clocks provide the time shoppers spend in the store, from the moment they enter to the time they leave. Personal observational techniques can be used to create a comprehensive shopper map that includes density of shoppers, their directional flow within the store, the time they spend in each area of the store, as well as their gender and the direction they are facing. Coupled with compatible transaction logs from the retailer’s POS system, this information can yield important diagnostics as to the efficacy of the store layout and design and the critical merchandising plan within the physical store.

Part of the disconnect is that, while most retailers manage their business at the category level, customers shop at the item level. The faster the items they are looking for is found, the more likely they are to have the time to impulse purchase unplanned items.

Accordingly, it is incumbent upon category-organized retailers to better understand how and where those categories are merchandised in their stores. The shopper centricity of a category can be defined on two distinct levels:

  • Shopper Exposure: What percentage of shoppers actually travel by the category in the store?
  • Purchase Conversion: Once a shopper ventures by a category, at what rate do they slow down to browse and actually shop? And most importantly, at what rate do shoppers actually put an item in the basket and make a purchase?

Scoring each of a retailer’s critical categories with exposure and conversion rates is vital to truly unleash the potential of category.

DISCUSSION QUESTIONS: Do you see brick & mortar stores eventually leveraging in-store shopper data to the degree that e-commerce sites capitalize on browser data? Will increased efforts at in-store shopper data collection enhance or significantly alter category management efforts?

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"Retailers need to walk before they run: first figure out who’s buying what before you worry about who’s doing what."
"The most important thing that stores can do right now is to do something online can't -- create compelling customer assistance through staff."
"...retailers can offer guided selling based on customer context. We call it “digitizing the black book.”"

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36 Comments on "Is brick & mortar ready to leverage in-store shopper data?"

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Chris Petersen, PhD.

Mark Heckman does a terrific job of summarizing why stores need in-store shopper data and behavior tracking: merchandising, category management, messaging, offers, conversion and the list goes on.

But brick-and-mortar stores have a huge mountain to climb in terms of being able to develop in-store shopper data comparable to that available online. While in-store tracking has come down in costs, much it of it is anonymous in the interest of protecting consumer privacy. And if consumers opt in to be tracked via their smartphone, the logistics of being able to dynamically respond in a physical space in-store is much more difficult and expensive than it is online. While better in-store data will happen, the most important thing that stores can do right now is to do something online can’t — create compelling customer assistance through staff.

Shep Hyken

How can any retailer, brick-and-mortar or online, not use data? Data gives you information you need to be successful. Take advantage of it at every opportunity.

Herb Sorensen
How can any retailer not use data? Very simple: just keep doing what you are doing, maybe thinking “data” will just jump up to bite you. Remember, there were a couple decades between checkout scanner data being produced and a business like dunnhumby demonstrating for Tesco one way for THAT data to be used. Retailers really get NO credit for the creation of scan data, nor for its intelligent use. Bear in mind, its original use was strictly to speed the checkout process, showing quickly what the customer must pay. Of course, moving on to inventory control — managing the flow of products THROUGH the store was a no-brainer. But I remember working with small chains in the ’90s that were still relying on VELOCITY data, what was coming into their stores from their warehouse suppliers to manage inventory, rather than SALES data, looking at individual items leaving the store with the shopper. Admittedly this was the far tail end of a business method that has largely receded to small relevance. The point of this… Read more »
Bob Amster

First we talked about getting them in the store. Once we got them into the store, we talked about making them purchase. Once they were buying, we talked about up-selling, cross-selling and re-arranging the floor sets to encourage impulse purchases. Do we really need to do more to get the consumer to buy? Why don’t we just come up with interesting, attractive product that is correctly priced to provide profit to the retailer while providing the perception of value to the consumer?

Ori Marom

Absolutely. Stores are fast becoming service providers rather than primary sellers. How can they possibly survive when they are not paid a cent for what they actually do best?

Store are “selling” services to customers who often prefer to buy the product elsewhere. When an online retailer loses a visitor, at least it knows about it. It is crucial that physical stores acquire similar or better capabilities of collecting and processing customer-behavior and conversion data.

Once they do, they can work towards charging brands and online shops a fair commission for servicing showrooming customers.

Lyle Bunn (Ph.D. Hon)

“Service” is what gives the whip its crack; it puts the morning sun in the sky and is the water that makes a garden thrive.

The tragedy of being buried in data and knowing the paralysis of analysis are THE call to action, for to have data and not use it is simply criminal (fiduciary duties not excluded!).

The challenge of location-based consumer behavior is met and then served well by anonymous viewer analytics that can link what shoppers do related to the messaging presented. A webcam-capture of facial detection attached to a digital sign can tell those who are messaging what information is relevant to the customer. Cell phone, electronics and sporting goods retail have known it for years and modify their in-store messaging based on target audiences and their behavior.

Sometimes the “low-hung fruit” of data can offer insights that move the needle the most.

Charles Whiteman

While stores can do a much better job of using data to drive their planogramming efforts, I don’t think they’ll ever leverage data to the degree that e-commerce sites do. The reason is that in a physical store, retailers must set the store to cater to the “average” customer. In a virtual store, every visitor can have a different experience.

Using data to tailor that experience increases relevance, engagement and sales in a way that isn’t possible in the retail store environment.

Kim Garretson

I’m looking forward to seeing more results of lower-cost technologies to capture and analyze in-store shopper data. Auto-analyzing existing security video footage is a very active category. I also like the emerging category of motion-sensing and analysis. With motion sensors like Microsoft’s Kinect technology mounted 16 feet above a shelf, the technology can analyze which SKUs are taken off the shelf and then put back or put in the cart. One of my favorite stories is that a cereal brand used this technology to measure lift in putting the healthier SKUs at eye level and moving the sugary items lower. The results were that when a parent was shopping alone, more of the healthy items went into the cart, but when the technology measured a child accompanying an adult, more of the sugary stuff at their eye level went into the cart.

Dr. Stephen Needel

Of course they should be using their data more — this goes without saying (but I said it anyways). That said, Mark’s suggestion of exposure, conversion and purchase would put all categories in the same part of the store. Most of the time, shoppers are exposed to the categories they need to be exposed to — it’s not like we can’t find most stuff in the grocery store. When a category is high on exposure, the question is whether it’s the category or the location. This is a relative measure, comparing to other stores or other chains. When shoppers stop at it, look and don’t buy, it’s usually a price or assortment problem.

Richard J. George, Ph.D.

I agree with much of the article’s premises. Brick-and-mortar retailers need to do more to better understand the in-store pathway to purchase.

On one consulting opportunity, I was asked to observe consumers purchasing milk and other fluid dairy products. I was intrigued by a focus group comment that described this portion of the store as “cold, white, dull, boring metal.” I actually sat in the aisle with a stopwatch and observed behaviors. I discovered that in this area people don’t shop. Instead, they buy, spending only a few seconds observing the color of the milk cap and the expiration date. On the other hand, time was spent considering the value-added dairy products, like dairy creamer. We recommended that the retailer put a small refrigerator in the coffee aisle and found that away from the cold dairy section and within the coffee environment, these value-added products experienced significant sales increases over the more traditional placement.

Lesson learned: don’t assume anything and set your stores for customer convenience, not yours.

Ross Ely

These new techniques in shopper data collection and analysis are promising, but retailers should first focus on fully understanding their purchase data from their POS system. Using a shopper identification (or loyalty) program, retailers can track purchases by shopper and identify key segments and trends among their shoppers. They can target specific shoppers with specific promotions based on the insights.

Analyzing data around shopper traffic and conversion can be interesting, but retailers should first ensure that they are getting the full benefit from analyzing their purchase data and taking action based on these results.

Lesley Everett

Although data could be useful to stores, I’m not sure how accurate it would be and how possible it is. Stores have a huge advantage over online sales in creating a customer experience that makes them stand out. Perhaps more energy should be put into creating an exceptional experience, analyzing the effects of that and improving it from the data collected.

Steve Montgomery

Will brick-and-mortar locations leverage more shopper data then they do now? Yes, absolutely. Will they ever have the level of data that online retailers have? Not likely.

One of the many tools online has that brick-and-mortar retailers don’t have is cookies that track not only what users did on that retailer’s site but perhaps others as well. I doubt any significant segment of the population will agree to allow that same level of data gathering on their behavior in brick-and-mortar stores regardless of what they are given in exchange.

Peter Fader

If the focal question asked “should” brick-and-mortar stores leverage in-store shopper data, then the answer is obviously yes. But the question really asks whether they’re ready to do so, and unfortunately for most retailers the answer is a resounding no. They can’t properly leverage their transaction log data, so forget about in-store shopper data. Retailers need to walk before they run: first figure out who’s buying what before you worry about who’s doing what. Given the disappointingly slow progress on the former, I’m not holding my breath for the latter. But I hope I can be proven wrong in the next few years.

Paula Rosenblum

This technology has been around for a while and it always seemed like a natural thing for retailers to do.

BUT … the store multiplier makes the task more capital-intensive than retailers are willing to bite into.

For what it’s worth, I don’t agree with the statement that “most retailers manage their business at a category level.” While this is true with regard to open-to-buy, in fact, some sectors are far more item-specific than others. The one that comes immediately to mind is shoes — right down to the color level. There are other verticals where the same is true. To use a grocery phrase, items are not “fungible” in most retail segments.

So while I agree that retailers should use insights in stores, I disagree with the reasons given. Sadly, it’s mostly all about the Benjamins and, secondarily, it’s about retailers’ inability to sift through the massive amounts of data that now threaten to bury them.

Lee Kent

While I agree that data is important, I believe retailers’ in-store efforts right now should focus around the experience. Often a customer shopping online is looking for something in particular while the in-store shopper may be browsing around for the “find.” Retailers should cater to that.

They should also provide assistance to facilitate the find. Those serendipitous moments can’t be replicated online.

For my 2 cents.

Liz Crawford

Sure, physical stores need to become expert at gathering and leveraging shopper data. But Chris Petersen makes a great point about shopper anonymity in brick-and-mortar retail. To be more competitive with digital environments, shops need to know who is browsing and connect that with who is buying.

To accomplish this, facial recognition technology or an RFID chip-type technology should be employed. The mere suggestion of this is enough to scare many pundits (and shoppers). However, let’s not forget that it was not that long ago that the very presence of video cameras was shocking. Now, those are de rigueur.

J. Peter Deeb

The technology to monitor shopper activity has been available for several years, unfortunately no retailer has taken advantage of it. I would be surprised if Kroger is not currently working on this.

Anne Howe

Research data shows that shoppers want two things desperately while in stores. One is helpful assistance and the other is compelling experiences. Delivering on these doesn’t take mountains of data, but it does take an understanding of the gaps shoppers feel and the specific categories where shoppers need help.

If brick-and-mortar retailers are not focusing in this area, they only have themselves to blame for the future. Shoppers will seek out what they want and leave slow-moving retailers in the dust. Look at Macy’s as they close stores and try to deliver better via digital. If shoppers decide Amazon is better online, they’re in trouble. If shoppers decide Nordstrom delivers better in real-life situations, they’re in trouble.


Zel Bianco

Brick-and-mortar stores definitely need to take advantage of any and all shopper data they can get. Increased data will alter category management and enhance it. With e-commerce going strong, they need to leverage any data they can and should be investing in better technology so they can better compete.

Christopher P. Ramey

Relevant data is essential. Winnowing-down the data to be useful is key and no small task. The opportunity is immense for retailers.

Perhaps the greater opportunity exists for major mall owners, such as Simon and Forbes and/or credit card companies to partner on a closer level with their tenants/clients.

The winners in retail will be the ones most able to manage executable customer data.

Dave Wendland
Data — in any business — is vital. What e-commerce sites have been able to do is adapt, respond and react to data in a meaningful, personal way. Brick-and-mortar stores cannot possibly respond in the same way across an entire enterprise of “physical” plants. But what could and should they do? First and foremost, use the data! There are far too many retailers who claim to be collecting data and amassing information — but too few turning that data into executional changes (I’ve often referred to these stuck-in-a-rut retailers as “establishment” retailers who are unwilling and/or too immobile to step outside their comfort zone). Next, stores must think beyond the four walls of their physical plant. The consumer shopping experience should not be confined to their brick-and-mortar operation but rather extend to omnichannel practices. That’s how consumers want to interact with a brand. Finally, stop bemoaning what the other guys have. Just because online can react more quickly to data does not mean they have the advantage. Why? Because they don’t have the ability to… Read more »