Use of Biometric Technology in the Retail Sector to Improve Security and Boost Sales

There are many potential areas in retail store operations, which can either be automated or their efficiency can be improved when implemented using biometrics. The retail sector has its own unique challenges and biometrics can help address some of them. Payments, security, analytics, marketing, advertising, personalization, automation, etc. are some of the aspects that can be improved using biometrics.

Biometrics is traditionally seen as a personal identification method that can also be used to lay security with physical as well as digital access control. Identity establishment (i.e. enrollment) and identification or identity verification are the basic functions of any biometric system and all other applications are implemented on these basic functions. For example, when a mechanical lock is integrated with a biometric device, it will unlock when the biometric system finds an identity match.

On these three basic functions, biometrics has been deployed in several applications, yet new and innovative use cases keep emerging. Biometrics is not always about identification or security, it can be used for convenience, analytics or to improve automation as well.

With the level of competition increasing day by day consumer experience management has emerged as a key differentiator between competing organizations in the retail industry. The use of Biometric identification systems has ushered in an era of prompt customized service, helping the customer to reap the benefits of technology and the organization to improve its bottom line.

The banking domain provides ample opportunities for the successful implementation of biometric systems. Already this system has been used by many banks to provide biometric-enabled ATMs that provide a highly secure environment for cash withdrawal.

The first step toward implementing biometrics is choosing a modality that suits your use case. Biometrics offers a large portfolio of modalities and not all of them suit a particular use case. For example, it would not be wise to use retina or DNA recognition to identify your customers or process payments.

Would you want your customers to dig into their wallets to fetch your store’s loyalty card that they are unsure about carrying? Or there can be a simpler solution that your loyalty program just needs a facial scan? Would you want your customers to sign credit card payment receipts at the checkout counters when several other customers are waiting in the queue or it would be more convenient (and secure) to have a fingerprint scan for payments?

Biometrics can eliminate all the problems associated with customer identification including friction, unnecessary formalities, the burden of carrying remembering things, losing or forgetting means of identification, etc. On top of that, it can protect your privacy as well. You do not have to say your phone number or email to fetch your record, which can be heard by other people.

Problems with these approaches are that either they reveal your personal information (e.g. phone number, email address, etc.) or make you carry something. If your store just gives you a registration number, it adds up to the list of things you need to remember. Some stores may not even register you as they may not be using your information for any purpose (e.g. marketing or personalization). These are usually small stores with a single location.

Larger stores with multiple locations may provide plastic cards aka membership cards, loyalty cards, shoppers cards, or any attractive name that makes customers feel special.

How do you identify repeat customers? Stores make use of different methods to achieve customer identification. A small store may just register you with your phone number or email address (which serves as a unique identifier). This store may have a unique number referring to the customer record for internal purposes, but would not burden you to remember that. Your phone number should be enough to fetch your relationship history with the store.

Biometrics can facilitate frictionless automated customer identification in the retail stores and facial recognition can be particularly useful in achieving that. A camera installed at the main entrance equipped with your store’s integrated system can automatically recognize the customer and start to process data and personalize his/her experience as long as he/she is in the store.

For example, this system can send welcome messages and special deals that will be ending in the next 30 minutes. Wouldn’t it surprise your customers if they stand beside a rack and the nearest display automatically shows a special offer customized for them?

The banking industry has already taken a big step in this direction by incorporating biometric technology in its IVR systems. This technology uses biometric voice identification to identify a customer. Once identification is done the customer detail like name, age, and other personal and banking details are pulled from the centralized database dispensing with the need to query the customer on their personal details. Besides improving the customer experience the biometric-based IVR system increases the efficiency of the entire system by reducing the average handling time for each customer leading to lower operation costs and a better bottom line.

As soon as the in-store biometric system recognizes a customer, it can send a list of frequently purchased items and when the customer taps on a particular item, the system may provide the location of the item. This feature would require retail stores to keep their product placement information up to date in their back-end systems so that customers are not misguided in finding their products.

Automated customer identification with biometrics can assist customers to navigate through the store and finding the products they may be looking for.

Retail stores, especially the large ones, can sometimes be more confusing than a maze. Navigating your way through racks and looking for what you want can be a challenge in itself. On top of that, if your retail store changes the location of items frequently it can be a more frustrating experience.

In the future, biometrics and AI together can make custom product designing a step further. With the rise of 3D printing, Artificial intelligence, and Big Data, intelligent software may be able to suggest products depending on your body or behavior. For example, if you are done trying a good pair of jogging shoes, your gait pattern and footprint can be analyzed to decide what types of shoes would be best for you.

While online retailers have been making use of AR (Augmented Reality) and VR (Virtual Reality) to “try” products, similar technology can be used by retail stores for finalizing customized products. Products such as designer clothes, and custom accessories that are designed on-demand as per customer preferences can benefit from this technology.

Retail stores that offer custom clothing, accessories, and customize items as per customer needs, can make use of biometrics along with AR and VR technologies before finalizing a product. Selecting products such as sunglasses, jewelry, clothes, etc. can be hard if they are not available to try.

The solution was underway testing in a fashion store and through the biometric tracking of customers, the store was able to identify some trends, such as Asian customers were entering the store through a particular door, so the store placed their products by that door, which would interest Asian customers.

An article published in The New York Times in 2011 reported that IBM had been working on an innovative retail solution that would enable stores to design their marketing and advertising strategy on the basis of customer behavior analytics.

Facial recognition technology can particularly be helpful in capturing data that can be used in performing biometric-based retail analytics. A surveillance camera feed can be used for this purpose. Identifying patterns such as customers checking particular products, time spent in particular sections, customers ignoring particular sections, etc. can help retail stores design their product placement as well as a marketing strategy.

Integrated biometric solutions for a retail store can generate a lot of data that can be used for retail analytics. In-store behavioral patterns of the customers can generate valuable data, which can be used to make strategic changes in marketing, advertising, product display, and personalization.

Biometric technology can also help the retail industry to improve supply chains by refurbishing only those goods that are in demand. Biometric devices at the entry can pull up the customers’ buying history from a centralized computer and send this information for immediate replenishment on a real-time basis. This helps in reducing wastage and increases the productivity of the supply chain management. Besides this obvious advantage, such a system helps in the implementation of a biometric computer security protocol which reduces the chances of pilferage and theft.

Biometrics technology in the retail sector can lead to more personalization and improve customer engagement. However, it can also be used for improving store security by replacing traditional security measures with biometric ones. It can replace traditional physical access controls, digital access control, and surveil people.

Though retail stores are known for giving customers the freedom to pick their products as they please, there are still areas in retail stores that must be restricted from customer access. Administrative area, back office, warehouse, etc. are some of those areas where a retail store would only want people with proper access rights to enter.

When you choose a biometric for your retail store, it can very well take care of physical access control. There are both fingerprints as well as face recognition-based access control solutions available in the market, which can eliminate the pitfalls of traditional access control measures.

Today’s retail stores are at the forefront of using information technology to process business operations. Running a retail store without a comprehensive retail store management system that includes components such as inventory management, vendor management, customer management, etc. can be extremely complex.

Most retail stores have IT systems that not only store business-critical information but also sensitive information such as customer details, payment information, etc. Security of these IT systems is generally handed over to passwords. Regardless of serving digital security since the inception of computers, passwords have their own pitfalls. They can be forgotten, shared, guessed, and even cracked.

Biometrics-based digital security can ensure that data is only accessed by an individual with proper rights. It also dramatically improves accountability as biometric identifiers cannot be shared with others.

Shoplifting is a problem that your retail store may come across frequently. Anyone trying to take items out of a retail store without paying for them comes under the definition of shoplifting. Retail stores use different techniques such as locking items, magnetic holders, wired grip holders, tags, labels, antennas, spider tags, etc. to deal with the issue.

These techniques come with varying degrees of efficiency. For example, attaching Electronic Article Surveillance (EAS) with the products is a common strategy to deter shoplifters; however, it becomes hard to employ for small items. Shoplifters can even find a way to steal items by removing EAS.

The annual retail theft survey report from Hayes International reports that shoplifting causes U.S. retail businesses $20 billion in lost profit annually.

Fortunately, biometric technology is not limited to laying physical access control or biometric login on computers. Employing biometrics to identify shoplifters can dramatically improve your anti-shoplifting strategy. Retail businesses do not have to implement biometric shoplifter identification systems separately. The same facial recognition system that can identify customers can also be used to identify shoplifters.

Employing biometrics to identify customers as well as shoplifters can not only provide a good return on investment but also reduce manual efforts required to do the job.

Facial recognition technology offers real help in this regard. Once a shoplifter is registered on the system, facial recognition tech can automatically raise an alert every time the shoplifter tries to enter the store. That is not all; there is video analytics software that can perform real-time analysis from the surveillance camera feed. The algorithm employed by this software is programmed to detect any suspicious activity such as customers picking an item and walking out without paying.

Video analytics software with biometrics to identify shoplifters can put the security of retail stores on autopilot.

Though biometric payments are safe and easy, some customers may still want to pay with traditional credit cards. For credit card payments, biometric signature verification can be used to improve payment security by automatically verifying the customer’s signature.

There are also biometric payment cards (biometric EMV debit/credit cards) for making payments. For this, the store has to have a compatible biometric card reader and tie-up with the card issuer for quick and secure biometric payments. These cards come with a tiny inbuilt fingerprint sensor and a chip that stores the fingerprint data of the customer. When the customer puts the card on the reader and scans his/her registered finger, payment is authenticated without entering any PIN or OTP.

There are many ways retail stores can leverage biometrics to improve payment security. Some banks and financial service companies allow customers to pay with the facial scans by collaborating with retail stores. Fingerprint-based payment solutions are also available. Santander, a banking and financial service provider in the United Kingdom has introduced a unique solution in which customers can simply pay with their voice using the mobile app.

The most striking benefit of using biometrics in the retail sector is that the single technology can take care of several aspects. As we discussed above, facial biometrics can improve customer engagement and personalization, on the other hand, it can also automate surveillance and security by identifying shoplifters. Taking it further, biometrics can also help improve and automate payments at retail stores.

With the use of biometrics, retail stores can improve customer engagement, personalization, and security and offer a futuristic experience that cannot be matched by eCommerce retailers.

Increasing the market share of eCommerce players is another major challenge to address for bricks-and-mortar stores. They have no option but to up their game and biometrics can help them with it. Retail stores offer a unique advantage of physically examining products for their look, feel, and usability, something that eCommerce stores cannot offer no matter what technology they use.

Today, the retail sector has been facing a multitude of challenges to keep its sales figures up. The growing number of retail brands and the cut-throat price war have been giving retail stores a tough time staying profitable.

Biometric technology is generally perceived as a personal identification method, primarily used for identification, authentication, and access control. Contrary to this common perception, biometrics can be used in a wide variety of use cases and not just identification/authentication. Identification, however, remains the core of any biometric deployment.