Monday, June 28, 2010

Cruel, unusual and effective?

In our assessments within retail stores, we often see the actions of shoplifters through our video cameras. Though shoplifting is not typically on the list of behaviors we look to capture and code (we only half-kiddingly say our cameras are placed for the business purposes of good - like pinpointing barriers to the sale and identifying new opportunities to increase performance and the customer experience), it’s an activity that is impossible to ignore. These shrinkage incidents have become so prevalent, in fact, that we’ve developed an expertise in the observable assessment of how dishonest people behave when they’re in a retail environment—often in interesting ways that suggest an earnest attempt to look honest. This is, of course, its own tell.

The old rule of thumb that potential shoplifters get spooked when approached by an associate (unwilling to look them in the eye, for example) stays true — but not always. We’ve seen a new breed of brazen behavior that almost reads as sociopathic: chatty, superficially charming customers who show no fear in front of associates, almost “selling” themselves as a way to throw off the scent or any hint of wrongdoing, like they’re just that jovial long-lost friend coming across the lease line.

But if certain stores have their way, even these wily coyotes might take up another hobby. The New York Times reported yesterday that a number of stores in the region which cater to Chinese immigrants are now adopting shoplifting procedures borrowed from mainland China retailers. Essentially, if you’re caught, the stores seize your identity cards, and you pay the retailer a steep fine (up to hundreds of dollars) in return for getting your cards back and to insure your picture does not get displayed on a prominent wall of shame for all to see. While there are a host of civil liberty issues at play with these tactics (it would be hard to imagine chain stores playing this style of hard ball), it will be interesting to see if retailers do adopt more aggressive approaches to the problem.
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Monday, June 21, 2010

Science of the Churrascaria

If you’ve visited Chicago recently, you may have bumped into the burgeoning churrascaria movement—where at last count four of these Brazilian-style steakhouses manage to thrive within a five-block radius. They’ve splashed themselves over cities and suburbs alike, beckoning diners with an all-you-can-eat concept far removed from the buffet chains and those sometimes frightening strip mall Chinese joints. If you haven’t been, the different churrascarias are remarkably similar. $50 gets you dinner, which includes an over-the-top salad bar (think prosciutto, hearts of palm, smoked salmon, and artichoke hearts—not cottage cheese with pineapple chunks) and at least a dozen varieties of steak, chicken, lamb and pork—all brought to your table on giant skewers and sliced to order by servers dressed in gaucho garb. Cheese bread is brought to your table first (irresistible, but the centerpiece of a fill-you-up-early-fast-and-often consumption strategy on the part of the house). Dinners are accompanied by equally rich whipped potatoes and plantains. Patrons can select the salad-bar only, generally about half the price. But nobody goes for this option (it’s less than two percent of all diners, which may seem low, but since the show is all about the meat, not a complete surprise).

For what are higher-end restaurants, it’s an amazing formula to behold, and works on a broad volume of business. Where you might think the table of 10 college-aged guys would eat the place out of house and home since there is no end to the high-cost food offerings as long as you continue to want more, such a table doesn’t cause a ripple. In fact, restaurant managers and chain executives of these places never look at the behavior of individual tables—they’re looking at the 2,000-odd covers per week per store. They want to make sure 32.5% of guests order dessert (who are these people?), that the average tab per head stays constant at $67.50, and that there’s no variability across days and weeks when it comes to per capita meat consumption (2.25 pounds per). In fact, they’re quite happy to seat “we’re-going-to- stuff-our-faces-and-get-our-money’s-worth” revelers since, in the end, they’re outweighed by lots of customers (especially women) with dramatically less robust appetites—especially after a few helpings of cheese bread and mashed potatoes.

Volumetric understanding of real customer behaviors in situ is the secret to any business. Much can come from the hands-on experience of retailers, store operators and restaurant execs who discern important patterns and lessons over time. One way we’ve been able to help them drive business to greater success is to be their eyes and ears across multiple locations, days, day parts, and weeks, with video and audio enabled behavioral analytics—giving them deeper looks and insights into the bricks-and-mortar realities of their stores. There’s no doubt a reality-driven behavioral segmentation study of customers on premise is a meaty treat—no matter what business you’re in.
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