It was refreshing to read this advice by McKinsey’s, “Retailers should bear in mind that the least effective thing to do during a downturn is to simply ‘hunker down’ and ‘weather the storm.’” (The McKinsey Quarterly, September 2008).
Taking decisive action to improve store performance is surely even more a necessity in times of turmoil. Whilst many retailers’ first reaction is simply to cut spending, periods during which consumers are actively reviewing their purchasing behaviours provide opportunities for savvy retailers to influence new decisions they’re making about what to buy and when.
This is the time not to run for cover but to identify investments that can deliver business improvements by retaining customers, acquiring customers or maximizing basket size. If cost reduction can be achieved in addition to these aims, even better.
With so much amazing technology now at our disposal, it’s an almost universal truth that there is always a better way to do things, so technology-based efficiencies is a fruitful place to look for performance-enhancing investments, specifically technology that’s been proven ROI effective for other retailers….in other words find out what works and then apply it.
The example of this I’ll look at is in-store digital shopper media; offering the magic combination of increasing revenue and reducing operating expenses, this is a classic case of a new technology maturing to the point where it becomes indispensable. This suite of solutions has the potential to transform your marketing activities at point of sale and improvements in content management and distribution technology, as well as reductions in hardware costs make the case for digital signage more compelling daily.
Yes, there are capital requirements in deploying a digital signage network but the upsides are many: let’s have a look at seven bebefits which hit home the hardest in these hard times:
1. Increasing basket size. There’s mountains of data now which shows the effectiveness of in-store signage. This shouldn’t come as a surprise, after all think of the billions that have been spent on point-of-sale material over the last century…well this is just better PoS with the added benefit that customers like it and respond to it. In a Nielsen survey of 1,000 shoppers, amongst those who had digital signage at retail, 42% said they would rather shop at a store with video displays, 68% of respondents said in-store messages would sway their purchasing decisions and 77% said it was a useful way to learn about products. Another report by Arbitron Research found that of those shoppers who have seen in-store TV, almost 30% made an unplanned purchase as a result. The latest aggregated retail industry data indicates an average sales uplift of 10% on promoted products with a resulting 2.4% increase in revenue. Major deployments have recorded average sales increases as high as 25% across advertised products (eg Sainsbury’s Convenience Stores, UK).
2. Maximizing average transaction. Retailers, now more than ever, are seeking ways to up-sell and cross-sell using targeted messaging in-store. Especially in retail environments where customers are less likely to engage a sales-person, in-store digital media provides a dynamic way to highlight product stories, pairings and accessories.
3. More efficient PoS at reduced cost. It seems crazy in this age to be cutting down trees, shipping the paper around the world, printing toxic inks onto it, road freighting it to all the stores, hoping the staff displays it correctly, then hoping they remove it at the appropriate time, paying them for their time to do both and finally throwing it in the bin! The potential for cost savings and increases in efficiency over traditional point-of-sale marketing materials is clear. Digital provides real-time control of in-store marketing on a site-by-site or hour-by-hour basis if required. It allows retailers to react to market conditions, changing campaigns on a dime without waiting for printed material to be produced and delivered or worrying about store compliance. It makes localised offers, information and pricing easy.
4. Improved yield from major media campaigns. So you spent millions getting into people’s homes via TVCs, online banners and video… only to have them arrive at the store with – and this is well established through research – no purchase preferences in mind! In order to maximize your marketing spend it’s critical that you support it in-store, and what better way to drive those dynamic video-based media campaigns right through to point-of-purchase than by using…a dynamic video-based medium. No, you shouldn’t simply play yourt TVC in store, but you should most certainly repurpose the same key images and concepts to re-inforce them and drive them home…to the cash register.
5. Communicating value propositions. With customers looking to save money without sacrificing quality, many retailers have developed a compelling value story. They’re communicating the attributes of private label products or reinforcing value messaging and are seeking to measure the effectiveness of their in-store messaging in real time to ensure the message is resonating with the right customers. Intersecting these messages with the shopping process of course is the most important way to tell the story. Similarly digital in-store media is great way to communicate the benefit of loyalty programs right where it counts – where the shoppers are.
6. Increasing ROI from ‘soft’ marketing initiatives. Sponsorships, Corporate Social Responsibility programs, community support initiatives – these are all great to strengthen the bond with customers but in times when few can afford to promote such initiatives in the broader media, how do customers get to hear about them? A few might read up on your website, but how relevant is that at the cash register? In-store digital media provides an engaging platform to convey this sort of information especially where dwell time is longer.
7. Revenue from 3rd parties. It’s said that WalMart has the USA’s 4th biggest TV audience through its digital signage network! And if you want to reach all those millions of eyees, you’re going to pay for the privilege – up to US$250,000 per week. Prior to installing their network, what was WalMart’s yield in the asset that is it’s customer base? Zero. Most retailers have an unrealized asset in their customer numbers. Even if you prefer not to open up your environment to third party messages of questionable relevance to your own offering, you may still be prepared to display messaging by the brands you carry, and to maintain relevance to your own brand the medium could be used for joint promotions.
Now is the time for retailers to act. Hardware costs are down and compelling leasing options make monthly expenses a small fraction of incremental revenue generated, guaranteeing a measurable ROI. For as little as a few hundred dollars per store per month, retailers can deploy in-store digital media to more effectively engage with customers at the point of decision and take decisive action to combat the challenges of decreasing footfall and more frugal consumers.
Look out for my next paper Measure Twice, Cut Once – a structured approach to getting started in digital signage