Next week, at the National Retail Federation's 94th Annual Convention and Expo in New York, attendees will have an opportunity to see "X05," described as the "ultimate in in-store design."
Featuring solutions "to increase consumer interest though changes in the physical store," X05 will display the latest innovations in fixtures, graphics, sound, lighting, visual merchandising products, flooring, signs and more.
As they say, it's not your grandmother's store anymore.
In food retailing, one of the design elements cropping up at a growing rate is electronic media in the form of in-store televisions and a wide array of digital signs. Retailers are testing and deploying these devices to enliven the shopper's experience while influencing purchasing decisions. More than just a rapid-fire succession of commercials, the most successful marketing content engages consumers through presentations of useful information.
The good news is that the systems are more affordable. "Initially, when digital signs were introduced, people were excited. But when they tried to install them, they were expensive and there was not enough content available for them. So the early [return on investment] was not compelling," said Ray Burke, professor of marketing at Indiana University's Kelley School of Business.
Yet the cost of these signs has dropped dramatically, Burke noted. "A 50-inch plasma screen can be purchased for $3,000 and installations have become easier because many signs have built-in computers and wireless Internet connection so the content can be pulled directly from the Internet."
In an effort to achieve the perfect balance of promotions and entertainment, Pleasanton, Calif.-based Safeway is testing different digital technology applications, including some home-grown ones, in 15 to 25 stores, according to Don Kingsborough, president of Safeway marketing services. Applications include full video television technology, as well as liquid crystal display (LCD) screens that present more "static" content. Safeway already employs a separate 15-inch point-of-sale screen where loyalty shoppers can learn about offers thy can pursue on subsequent visits. "We're trying to get a feel for general consumer acceptance relating to how much is too much when it comes to commercials," said Kingsborough. "We don't want to overwhelm customers by just broadcasting ads.
We are trying to provide them with information about products in different parts of the store that is specific to the section that they are in, like information regarding health and beauty aids in that section."
Although Safeway hasn't made any definite decisions in regards to future rollout plans, the retailer seems to be on the right track.
That's because studies conducted by Prime Consulting Group on behalf of Point of Purchase Advertising International (POPAI) show that digital technologies have the most influence over sales when it comes to breaking down information related to complex products, according to Doug Adams, president of Prime Consulting Group, Bannockburn, Ill.
"Based on our studies for POPAI, complex categories benefit tremendously from educational information," he said. "Products related to hair care, cough medicine and vitamins are surrounded by complexities, and consumers don't know what to choose. A 15% to 25% increase in sales can be realized when consumers are aided with information that breaks down complexity and helps consumers select the right product."
Not all recent tests of in-store media have panned out. For instance, 47-unit United Supermarkets decided not to extend its six-month, multi-vendor test of four digital marketing screens conducted at its Colleyville, Texas-based Market Street store last year. As part of its pilot, flash and movie images were projected onto screens mounted on poles hanging from the ceiling to promote center store products.
Customer surveys showed that Market Street's vendor-funded pilot received positive customer reaction. Still, the retailer decided to remove the screens from the store and put future installation plans on hold, according to Dan Sanders, chief marketing officer, United Supermarkets, Lubbock, Texas.
"The technology seemed appealing, but we chose not to extend the pilot due to extenuating circumstances," he said. "Although we were pleased with its performance, we weren't prepared to spend the money required to install the screens in our other stores."
A number of food retailers, especially some of the mega-chains, are installing in-store TV screens in their stores to entertain and market to their endless stream of shoppers.
Wal-Mart Stores was one of the pioneers in this area, offering the Wal-Mart Television Network since 1997 on screens throughout the store. The Bentonville, Ark.-based giant reaches a whopping 138 million customers each week on more than 100,000 in-store television screens broadcasting a mix of promotions and entertainment, said Karen Burk, spokeswoman, Wal-Mart.
With a weekly audience that dwarfs the 89.9 million viewers who reportedly tuned in to last year's Super Bowl, Wal-Mart is able to garner considerable advertising revenue for the 15- to 30-second commercial spots sold through advertising partner Premier Retail Networks (PRN), San Francisco. Wal-Mart also exercises control over some of the content in its broadcasts.
"Where else can a customer do their shopping, learn about upcoming events, food safety tips and new merchandise, see a concert or watch a bass fishing championship?" asked Burk. "We've found that our customers respond positively to the network as it adds to the unique shopping atmosphere at Wal-Mart."
In an effort to make its network even more customer-friendly, the retailer recently began installing additional television screens at customers' eye level throughout about 100 stores, said Burk.
"The monitors placed at eye level are mounted over or onto a store structure, such as a counter or wall, to allow easy eye-level visibility, but also to allow a safe format to prevent accidental shopper contact with the monitor," said Burk. "Some monitors may also be placed above a product display."
U.K.-based grocer Tesco may have taken a cue from Wal-Mart when it began broadcasting Tesco TV, a combination of advertising and programming, on screens in 100 stores late last year, with plans to install screens in 300 stores by 2005. The retailer averages more than 16 million shoppers each week.
The content varies from commercials provided by Tesco's suppliers to Tesco's own content, as well as the SkyNews around-the-clock news channel. Programs are transmitted to Tesco stores via Hughes Network Systems Europe (HNSE), Amsterdam, on its two-way satellite broadband platform.
Seven channels of programming are available for broadcast, allowing the retailer to target content to specific store areas. Tesco employs about 20 large plasma and 20 LCD flat panel display screens in the stores.
"Tesco is always driving to maximize the in-store customer experience," said Bill Pennell, media and revenue generation manager, in a statement. "With this solution, we are providing more information to our customers directly at the point of sale. For our suppliers, this creates a genuine opportunity to better communicate with their, and our, end customer."
No Cost at ShopRite
Premier Retail Networks has made in-store TV attractive to food distributors like Wakefern, an Elizabeth, N.J.-based cooperative, which has installed 15-inch televisions at the checkouts of 140 of its ShopRite member stores.
"Right now, installation [of televisions at the checkout] costs nothing for the retailer," explained Natalie Egleston, general manager of the supermarket networks for PRN. "Plus, [supermarkets] share in advertising revenues." PRN handles installation and maintenance of the system that delivers content to the stores via a satellite feed.
Wakefern began its pilot of the system last March, rolling it out to additional stores in October, said Karen Meleta, a spokeswoman for Wakefern. Broadcasts include segments from PRN partners, such as the Food Network, Discovery Health, Oxygen Network and In-Style magazine.
The advertisers seen on in-store networks are not necessarily consumer packaged goods companies seeking to drive sales. Ads are often designed to influence bigger-ticket purchases made outside the store. With an average checkout wait time of 7.4 minutes, those marketers have a chance to make their pitch to a captive audience, noted PRN.
"Every month, 90% of the entire adult population passes through a supermarket checkout," said Egleston. "Of them, 74% are women who make or influence over 80% of all primary buying decisions, including travel, electronics, home improvement, autos, finance and more."
Because TV chatter has been a problem for checkout installations attempted in the past, PRN's system leverages targeted sound technology that ensures the audio reaches only the ears of shoppers.
"A number of years ago, Ted Turner had the checkout channel, which ran a continuous loop of advertising," said Indiana U.'s Burke. "It didn't work because it tended to distract the cashiers and drove them crazy."
PRN uses directional audio technology that transmits sound through a screen that faces shoppers coming into the line, related Egleston. "It works like a funnel and the cashier cannot hear it. In the past, they would get annoyed with all the sound and turn off the screen."
Pathmark, Carteret, N.J., another PRN retail partner that piloted the network last year, found the televisions useful and decided last month to expand to 142 stores.
"Offering PRN's in-store television network to our shoppers at our checkout lanes supports our commitment to providing a superior shopping experience by providing helpful information," said John Derderian, executive vice president of Pathmark, in a statement. "We believe this innovative medium will enhance the customer's experience.
"Pathmark has tested PRN's network at select stores, and over 90% of our customers perceive this to be a positive program offered at the checkout."
Although marketing systems can prove valuable to customers, retailers must consider just how much of their store they are willing to offer to advertisers.
"If you start selling out advertising space, you may lose control of what is in your store," asserted Burke. "You don't want the same message in your store as the competition's. You have to make sure that the messaging supports your brand."
Floating in Space
Supermarket lobby attractions usually consist of gumball machines and mechanical rides that may fail to evoke excitement in patrons over the age of five, but a planned pilot of 3-D HoloVision displays in the top three Midwest supermarket chains could change that. Placed in supermarket lobbies, the HoloVision touchscreen display units, from Provision, Chatsworth, Calif., will promote products by projecting full-color, high-resolution 3-D images that float in space. U.K.-based Tesco has also deployed the system in aisles (see picture above).
"Images like these really grab you," said Stu Brannon, chief advertising officer and executive vice president for Encore Associates, San Ramon, Calif., Provision's sales and marketing agent. "The unit will project an image 10 to 15 feet into space, and it will also be used to dispense coupons."
Provision, which rents space for the units in supermarkets, handles all the maintenance of its PC-based system remotely. The vendor is also responsible for selling the ads, which change weekly.