Keeping an eye on things the web way lets retailers know who’s minding the shop
By Kurt Peters
Retailers have long known that having a video camera in a store is a great security device and helps keep the clerks a little more alert. But the drawback to having a closed-circuit TV system or a videotape system is maintenance. Especially in small stores where a manager might not be on duty all the time, the retail organization would have to rely on the clerk to replace the tape in the camera every few hours and to make sure the camera is operating properly. And if the tape runs out—whoops! Who knows what might have happened while the tape was out?
Now a group of vendors of digital video technology is hoping the web will change retailers’ approach to video monitoring. “Most retailers have closed circuit TV cameras, but most aren’t taking complete advantage of the technologies that the Internet offers,” says Mike Tobin, vice president of marketing for Eyecast Corp., which offers retailers the ability to monitor their in-store video cameras over the web.
The shift
The Eyecast system—which is running about 600 cameras—links a retailer’s cameras to a small box in the store and from there to a phone line and then to the Eyecast IBM mainframe in Herndon, Va., which hosts Eyecast’s web site. Any time of day, managers from a retailer’s headquarters or division office can log onto the password-protected web site and see what the camera sees.
The server also archives the images, all date and time stamped. So if the viewer wants to see what was happening at a specific time, the viewer can type in the date and time and watch the exact desired moment.
Besides Eyecast, providers of such services include OrtegaInfo Systems of Santa Clara, Calif., BroadWare Technologies of Cupertino, Calif., and iMonitoring.com of Mountain View, Calif. They are in the right place to take advantage of a shift in how businesses are using streaming media, says John Parker, senior analyst in multi-media and content infrastructure with Aberdeen Group. “We are seeing a shift from streaming in entertainment to streaming in the enterprise,” he says.
Emerging companies
BroadWare’s system links cameras to the web in the same way Eyecast does. They feed into servers on the East Coast or the West Coast, although BroadWare plans to position servers near customers as the client base grows. Ortega’s cameras feed into its client’s own web hosts. iMonitoring maintains the videos at the retailers’ site.
While retailers have used video technology for a long time, its migration to the web is new. Eyecast, for instance, has been in business only since 1998 and installed its first web-based video system in the middle of last year. Ortega has only had such installations in the U.S. for one year and in Asia for two, says Thomas Stoker, senior director of marketing and business development for Ortega, which is also only 3 years old, although its predecessor company dates back to 1993. BroadWare is launching its web-based offering on April 4 and has been running beta tests in three locations, one of which is a single-site specialty sports retailer.
A number of factors have come together to make the market ready for this technology. “The compression algorithm has gotten better, the bandwidth has gotten better, the browser and media technology have gotten better,” says Mark Olson, vice president of marketing and sales at iMonitoring, which is close to deals with a drugstore chain, a paint store chain and an eyeglasses retailer.
While Eyecast is selling its system as a management tool, retailers primarily have used video systems for security purposes—and they continue to do so with the web-based video. “It’s a really good tool, especially when employees know that they are being watched,” says Paul Akhavan, general manager of Pappillon, a six-store chain in the Washington, D.C., area that sells neckties and men’s accessories. Using the Eyecast system, Pappillon was able to nab a dishonest employee, he says.
Replacing the manager
Pappillon operates stores of 400 to 600 square feet, usually staffed by a single employee. Often that employee has a key to the store after only a few weeks of training. Having a camera on-site that management can view at any time helps Pappillon manage its employees without having a manager in the store or hiring someone to make the rounds of the stores. “A good salesperson in a store like ours can make or break the store,” Akhavan says. “This allows us to see if our clerks are courteous, if they are greeting customers when they come in the store, if they’re doing suggestive selling and giving information to the customer. Then we like to see if they’re doing things like straightening out the ties when there are no customers. This gives us some peace of mind.”
Pappillon paid a $2,000 set-up fee and pays $350 a month per store. Eyecast customers pay $50 to $400 a month per store for cameras that record at five frames per second at the low end up to 30 frames per second. Set up fees typically are $400 to $700 a camera. All equipment is owned and maintained by Eyecast so retailers take no risk with equipment. “If it breaks, we replace it at our own expense,” Tobin says. Eyecast’s system operates over any phone line, but typically is linked to a DSL. The camera feeds into a device on site that converts the camera signal to MPEG-4, a moving picture standard. While Eyecast archives the videos at its own location, it also has redundant storage of up to seven days at the retailer’s site. Eyecast is backed by a $30 million investment led by ComVentures and New Enterprise Associates.
Akhavan says the video system has allowed Pappillon to avoid having a manager in each store, saving the company $30,000 a year plus benefits per location. Now a manager can oversee a number of stores by using the video system. Pappillon tells all its employees that the camera is there and is on all the time. “It’s not a secret,” Akhavan says.
In addition, Pappillon was happy to let a third-party company manage the video system. Akhavan says the company tried managing a video system itself, but found it too cumbersome. The problem was that with a videotape system, the company shouldn’t trust an employee to change the tape. But having someone travel from store to store just to change the tapes is inefficient and expensive. On top of it, the videotape system was not an efficient way to monitor employees’ activity, because someone had to rewind the tape and watch it if management suspected an employee of wrongdoing. “We spent a lot of money putting in video and after a while we just gave up on it,” Akhavan says. Furthermore, “With streaming video, the quality has been much better.”
Multiply and prosper
Parker says the shift to MPEG-4 technology is very promising for Eyecast, as is a deal that Eyecast has with Sony for Sony to be a re-seller of the Eyecast technology. Sony will sell its cameras to retailers with the notation, “Powered by Eyecast.” Eyecast also has partnerships with Sensormatic and SecurityLink. Among Eyecast’s clients are Sunglass Hut, Panda Express and shopping center developer General Growth Properties.
The company already is in its second generation of product, notes Andrew Johnson, vice president and principal analyst with Gartner/Dataquest, and its cameras have recently increased their capacity from one frame a second to five and can handle as many as 30. “One frame a second is good enough for security, but not for doing market research or for management purposes,” Johnson says. “They seem to be on the leading edge of technology.”
To some, this whole approach may seem similar to webcams, which are small web-linked monitors that send moving images to a web site. But Tobin says webcam technology is not suitable for the uses that Eyecast is targeting. Webcams are not scalable, cannot be controlled remotely and cannot pan, zoom or scan, Tobin says.
Security vs. marketing
Any company wanting to tap into the market for web-based video used for management purposes faces a number of challenges in the marketplace. For one thing, there are already as many as 7 million cameras placed by security companies. And while those companies know security and don’t know marketing, Johnson thinks they won’t simply watch someone use the cameras for marketing, then add security applications. “Some of the dealers will surely gain the capability to sell to marketing organizations,” he says.
In fact, BroadWare and iMonitoring will be selling through security dealers. “Enabling security dealers to offer value-added services for management purposes is very attractive,” says Ray Kaupp, BroadWare’s vice president of marketing. BroadWare is well aware that security dealers may not know how to sell the other applications of the video system and so is preparing sales material that the dealer’s sale reps can use when pitching the system’s benefits outside of the security uses.
Furthermore, there are all kinds of companies that provide online information to retailers and other businesses, such as live monitoring of heating-ventilating-air conditioning or of other building automation systems. “How long will these big companies that put in HVAC systems sit by and not want a piece of this market?” says Ortega’s Stoker.
The advantage that Ortega brings to a system is that it links into other building systems, he says. “We deal not just with the video but we talk to other systems as well,” he says.
Johnson also envisions tension between a retailer’s security staff and the marketing staff. For one thing, there’s sure to be some turf jealousies. For another, he argues, security managers may oppose having too many people know where the cameras are located, how they work, when they’re turned on and off. “Part of a good security system is that it’s not fully understood by everybody,” Johnson says.
The camera never sleeps
Like any other new technology, though, this requires that a retailer make changes in business procedures. And until the technology is more widespread, no one knows what those changes might entail. “It’s tough to anticipate all the factors that go into something like this,” Parker says, “the set-up, deployment, training support, having somebody inside to work all this stuff.”
While some have raised privacy as an issue with these cameras, industry observers downplay those concerns. For one thing, retailers tell their employees that the camera never sleeps. And as for customers who are caught on video: “Most people can relate to being in a retail situation where the service is atrocious,” Johnson says. “Most people think, If the person who owned this store only knew what was going on. Now they can know.” l
kurt@verticalwebmedia.com
