BENTONVILLE, Ark. — Wal-Mart Stores is eager to reap marketing rewards from its participation in an industry consortium whose goal is to measure in-store audiences at the category level, and produce a standard metric for store traffic, a Wal-Mart executive told SN.
“Retail is becoming a medium,” said Wal-Mart's executive vice president and chief marketing officer, Stephen Quinn. “This will help us measure it like we measure TV and other mediums.”
Wal-Mart joins Kroger, Albertsons and other retailers — covering about 38 banners and 184 stores — participating in Phase 2 of an effort designed to create a standardized store-traffic measurement model. Data will be collected at participating retailers in about 400 categories. Retailer participants represent the nation's leading high-sales-volume chains. Collectively they account for 67% of national all-commodity volume in food, drug and mass channels.
Called PRISM (Pioneering Research for an In-Store Metric), the initiative is planned to lead to a new syndicated in-store measurement service from The Nielsen Co. by 2008. The service would operate much in the way that Arbitron does for radio or Nielsen for TV by measuring the reach of marketing campaigns conducted at retail. Phase 2 follows a 2006 pilot involving 10 stores and 63 categories.
Along with Wal-Mart, Kroger and Albertsons, retail participants include Safeway, Meijer, Stop & Shop, Kmart and Walgreens. Manufacturer partners include Procter & Gamble, Coca-Cola, Miller, Kraft, Unilever, ConAgra, General Mills and Mattel.
An in-store measurement metric is needed because consumers have changed the way they shop, Quinn said. Rather than just relying on traditional brick-and-mortar stores, shoppers can now order products over the Internet, from TV and via other methods. Due to media fragmentation, they also have more choices in terms of when and where they receive advertising messages.
At a time when 70% of purchase decisions are made at the shelf, the store as a marketing medium is growing in importance. But retail trading partners cannot fully market to shoppers because the store as a medium isn't currently measured.
True, certain store-level data is available, such as point-of sale information like basket size and value. But retailers and manufacturers don't have a clear picture of key consumer behaviors. They don't know, for instance, which aisles are visited, which products are seen but not purchased and which marketing tools engage shoppers and spur a purchase.
“Right now, we know how many people walk through Wal-Mart's doors, but we don't know if you walked through our sporting goods department,” Quinn noted.
PRISM could provide much-needed information about in-store shopping behavior, purchasing patterns and marketing effectiveness.
Doing so would be quite a marketing feat in light of the vast consumer reach available in-store.
“We get 120 million people in our stores a week,” Quinn stressed. “We'd have to buy a lot of [advertising during] Super Bowls to get that kind of reach.”
Key to the research is the fact that Wal-Mart, long known for keeping its sales information under wraps, is providing store-level data.
“This represents an opening up on our part in order to move the industry forward,” Quinn said.
Wal-Mart's participation demonstrates the value of using retail environments for brand-building, said Peter Hoyt, executive director of the Skokie, Ill.-based In-Store Marketing Institute, a four-year-old organization that helps brand marketers, retailers, agencies and others strengthen retail marketing. The Institute is spearheading PRISM and recruited all the participants.
“Wal-Mart's level of cooperation is huge,” Hoyt said. “I don't think this would succeed without it.”
On Sept. 27, the Institute will provide an update about preliminary findings from Phase 2 during a panel discussion at its annual expo in Chicago. Steve Bratspies, Wal-Mart's marketing senior vice president; Sandy Douglas, president and chief operating officer, Coca-Cola Co., North America; and Bob McDonald, P&G's COO, are scheduled to be among panel participants.
Hoyt said PRISM has the potential to pump millions of dollars into retail to enhance the shopping experience.
“This will provide new motivation to create a more interesting environment for shoppers everywhere,” Hoyt said.
Dina Howell, P&G's marketing/global operations general manager and another key figure in getting PRISM off the ground, agreed.
“If we can turn the store into a measured medium, it makes it easier to plan our overall strategy of how to reach consumers,” she said.
The PRISM model predicts consumer reach by category, area of the store and retail format. To do so, store traffic in various parts of the store is being analyzed with infrared sensors and manual audits at various times of the day. Both mechanisms are supplemented with Nielsen store-level demographic information.
Measuring traffic in this way is necessary because category sales are not a direct indication of traffic, said Howell.
“A lot of times, you may go to the shelf and don't find what you need, or the aisle is so cluttered that you leave,” Howell noted.
Nielsen developed a new group called Nielsen In-Store specifically to bring PRISM to life. The yet-to-be named syndicated service planned for 2008 will be able to provide customers with a better idea of how to reach their target audience at specific retailers.
Under one example, it will enable a manufacturer subscriber to the syndicated service to run a promotion with, say, a retailer in the Northeast, involving endcap displays, in-store TV and shelf talkers. Nielsen would then project which subset of stores meets the manufacturer's needs and provide a corresponding estimate of the audience available, said Nielsen In-Store global managing director George Wishart.
What's more, media agencies, which have not played an active role in-store because of the lack of a metric, could advise their clients better in terms of how to execute in-store marketing campaigns.
“Companies will be more willing to invest in higher-quality displays and other tools,” Wishart said.