An interesting press release came over the wire last week. SCOPIX, a company that offers video analytics solutions for retail, announced that retail veteran Verlin Youd has joined the company as Senior Vice President Sales and Marketing. I’ve known Verlin for a number of years, going back to the early ‘90’s when he held the position of Portfolio Executive Retail Software at IBM. Most recently, Verlin worked at SAP as SVP Global Trade Sector, and before SAP was at Motorola and Symbol (VP Industry Solutions) and Systech Retail (VP of Solutions and Marketing). So it’s safe to say that the veteran knows the industry.

The (half joking) question that came to mind is, “what’s a guy doing in a place like that? “ Video analytics was a technology that made a big-splash entrance onto the retail scene in the early 2000’s, only to get tangled in its own hype and the relative immaturity of the parts that needed to be brought to bear to make a solution. In the early going, new-generation digital video analytics companies often sought to get an in with retailers by making the case that old analog CCTV video surveillance systems were in need of replacement, only to find that in the grand scheme of things, replacing those systems wasn’t real high on retailers’ to-do lists. In our 2007 case-study report (Digital Video Surveillance Technology 2007: Security, Loss Prevention and Beyond), RSR partner Steve Rowen wryly noted that “most retailers have already invested large amounts in CCTV, and need assurance that digital video will maximize their existing systems and, even while still in its infancy, hold the potential to do more. “

Since that time a lot has changed, and the potential to do more is being realized. Network technologies are increasingly fast, robust, and affordable, the cloud really does work, and network attachable digital cameras can deliver high-resolution imagery very cheaply. Finally, of course, the analytic software has been applied to specific business cases, thus making solutions. And as RSR studies have repeatedly shown, retailers want solutions, not technology. For example, Scopix solutions focus on the sales floor — customer experience and merchandizing execution, certainly areas that are the center of retailers’ attention now as they try to get the store in sync with the richness and ease-of-use that non-store digital channels have to offer (what RSR has called the omni-channel challenge).

But the best way to get a sense of the readiness of the technology to deliver real solutions is to ask the people who have bet their careers on it, and so RSR reached out to Mr. Youd to get an answer to our question.

Why Now?

What happened, and why is the time now for video analytics? “It’s a few things as I think about it, “ said the veteran, “first the maturity of the technology to deliver the solution. When I did my due diligence for this job I learned that the IP camera technology industry’s average growth is anywhere from 20-30% over the last couple of years, and in fact the two leading companies (Ed. Note: Axis and Panasonic) in that space are growing at 40-50%. Additionally, there are now more than a dozen different manufacturers of the technology. “

So, the camera technology has improved (as anyone with a smart mobile phone can attest). But is it also true that the old loss prevention-oriented analog systems are just so old now that they have to be replaced? “I’m sure there’s some of that, “ Verlin commented, “but the other piece is the compelling value that IP can bring versus analog. Analog by nature requires human viewing, but because we now have IP cameras we can provide a more efficient solution, so that humans be focused on actions rather than data gathering. “

The technologist continued, “That’s the camera side of it. The other side is the ability through a much more mature environment to deliver software-as-a-service through the cloud. We now have proven, stable, mature, economical cloud technologies that allow companies like Scopix and others — salesforce.com is a good example — to deliver commercial grade applications reliably and consistently. “

So, the Tech is There — What About the Need?

What makes retailers willing to listen to a pitch about video analytics’ capabilities now? Verlin:

The world of e-commerce has actually helped us out. Retailers have developed an expectation of gathering metrics solely related to customer interactions. In a ‘clicks’ world, that’s quite powerful and quite readily available in terms of ‘who clicked on what’, dwell times, and then directly correlate that information to sales. They’ve become dependent on the metrics and data that that provides. None of that existed in the ‘bricks’ environment. And so all of those metrics that you get out of a ‘clicks’ environment we are now delivering in the ‘bricks’ environment — a set of metrics that have never been delivered previously around the customer view of engagement and service and the customer view of in-stock or out-of-stock, or the customer view of merchandising compliancy. We’re focused on revenue growth rather than loss avoidance. “

There’s no question in RSR’s collective mind that retailers are ready to hear about revenue growth as an outcome of bringing the store into the omni-channel value proposition. But is any one segment more ready than another? Verlin chuckled at the question;

This is one of the questions I asked myself as I was looking at opportunities and deciding which way to go. One of the things that impressed me is that there’s tangible interest in video analytics from very different retail segments- big box specialty, home improvement, grocery, and even convenience stores. There’s real data (that proves the efficacy of video analytics in retail), not just someone’s opinion or assumptions. “

Are You Ready to Rumble?

In Youd’s experience, there has rarely been a time when the interest in a technology is quite as high as is retailers’ interest in applied video analytics. For those technology solutions providers that really can deliver on the promise, their big challenge might be the result of their success in convincing retailers that the time is now. Retailers don’t like to run dual-mode operations. Once a decision is made to operate in a new way, whether it’s a new format, a new process, or a new system, they move very quickly from skepticism to impatience, and want the solution everywhere as quickly as possible.

This is only exacerbated by the fact that consumers are now driving the need to re-integrate the store into the omni-channel value proposition. As we noted in our December 2010 report, Pandora’s Box? The Impact of New Technologies on Retail IT, Retail Winners certainly understand that rapid consumer adoption of new technologies… is forcing us to ‘go faster’. This doesn’t merely apply to the adoption of new technologies in and out of the store, but to the store itself, and particularly in ensuring that the customer experience in the store is every bit as good and as enjoyable as on the web or on a smart mobile device.

Video analytics solution providers had better be ready.