It's all going to be on VIP face value

Being seen, recognized and greeted instantly by shop assistants with a big grin used to be a privilege for VIP customers. Going the extra mile, a startup in Shenzhen is developing a camera with facial recognition technology, offering a new experience for shoppers in future.

"Our camera can match a face that's detected with the image logged in a store's member data base and quickly tell retailers a customer's identity using a smartphone application," says Ding Xiaogang, founder and chief executive of Shenzhen Xiaozhou Technology, which has secured investments of tens of millions of yuan to date.

If successfully applied, the technology can considerably upgrade the overall consumption experience, he promises.

With the development of artificial intelligence, face-reading cameras are being widely used in security systems but, according to Ding, getting it done in the retail industry is another story and is much more difficult.

"In a security system, we could use suspected recognition," he explains. "That is the camera only needs to detect a few suspects and the police can check on them one by one."

But, for the retail business, it demands accurate recognition, stresses the 36-year-old entrepreneur. "It would be awkward if a shop assistant greets a customer with the wrong name."

"Nonetheless, we can still guarantee the accuracy rate of hundreds or even hundreds of thousands of people in the member data base. We're still working on ways of improving that figure to millions."

Facial recognition technology is developing rapidly on the Chinese mainland and has begun penetrating people's daily lives. It's now applied in unlocking the latest iPhone X, aircraft boarding and making payments. Retail titans like Walmart, Amazon and Alibaba have invested heavily in developing the technology.

Research company MarketsandMarkets expects sales of facial recognition equipment to hit $6.2 billion globally by 2020.

Li Zhengwei, production director of data service provider Talkingdata, said retailers used to rely on shop alerts to observe customer behavior, but are now turning to IOT (Internet of Things) devices.

Nanjing-based Suning Commerce Group - one of the largest private electronic product retailers on the mainland - has developed a smart camera empowered by AI technology and has applied it at some 1,500 stores, according to Xu Hongping, vice-general manager of the group's research center.

One of the key functions of these cameras is to locate a customer's position, and this has profound influence on a shop's layout, says Xu.

However, a major concern over the wide use of such technology is data security. Ding explains that the data they've collected is based on customers' virtual identity.

When a client decides to become a member of a brand, he or she would usually provide telephone numbers, email addresses and a surname. Such information makes up the virtual identity of a client, on which all of the customer's consumption behavior and other data collected by Ding's camera are based on.

Established in 2014, Shenzhen Xiaozhou Technology has been focusing on developing smart cameras and a data management system for retailers. Their hit production is a camera to count the number of people passing by or entering and leaving a store by recognizing their heads and shoulders.

Chief Marketing Officer Yin Xiongzhou says the digitalization of the retail industry is developing very slowly as many retailers are still relying on reports from staff at each store to collect operating data, and the accuracy and update rates of manual records is relatively low.

He says big data analysis is crucial to proper management decisions, especially when retailers face sluggish growth, and the company's technology can help retailers lift sales by an average of 3 to 5 percent.

The startup also claims that the accuracy rate of its traffic-calculating camera is as high as 95 percent, and more than 50,000 stores have been equipped with their devices on the mainland, in particular, the clothing industry in which the company has the largest market share.

But, Yin admits that retailers' acceptance of the new technology was low in 2016, resulting in unstable sales for the startup. "The number of our employees had to be cut from 70 to about 25," he recalls.

Sales, however, began to pick up this year, especially after business tycoon Jack Ma proposed the "new retail" concept in March. "Although most retailers have yet to figure out the 'new retail' model in detail, they're more willing to invest in new technologies," says Yin.

About 100,000 stores have agreed to use the company's product this year - double the number of clients in 2015 and 2016.

grace@chinadailyhk.com