Customer-Facing Technologies: Enabling a New Generation of Pinpoint Marketing

The following is reprinted with permission from the Digital Screenmedia Association (DSA). For more information, go to http://www.digitalscreenmedia.org.
Consumers are more versatile than ever, better informed and often acting less than loyal to brands. They want to buy at the best price and expect excellent service from retailers. Traditional mass marketing is losing impact in a world in which customers are confronted with thousands of advertising messages daily. Newly empowered customers have nearly unlimited access to information on products and prices through the Internet and mobile devices. And they use this information, even if they continue to shop in brick-and-mortar stores.

Retailers will continue to invest in technologies that allow them to reach their customers more individually and efficiently across all channels. These customer-facing technologies comprise online and mobile applications, as well as in-store solutions, such as kiosk systems, electronic shelf labels or digital merchandising equipment.

Retailers Will Invest in Digital Merchandising

Use of digital media for advertising and information purposes has become extremely popular in public spaces and customer areas, such as malls, restaurants, banks, petrol stations and retail stores. In some cases, digital media were installed simply to create a specific ambience in a store or a mall. The use of this technology is showing significant growth rates inside as well as outside of the retail space. In the world of retail, digital merchandising solutions so far mostly support promotions or new product introductions, provide more detailed product information, or help to create an atmosphere that engages customers and enhances the shopping experience.

Many retailers are still experimenting, trialing different options of implementation and business cases. The most common business model is based on selling advertising space and time to suppliers of consumer goods brands or other third parties, which allows the system to practically pay for itself.

Tesco shut down its network of 5,000 screens across 100 stores five years after launching it.

A Look at Tesco’s Failed Digital In-Store System
Tesco, one of the pioneers of in-store TV, began using screens in its stores in 2004. Five years later, Tesco shut down the network of 5,000 screens across 100 stores because the equipment was “outdated and energy inefficient.” But instead of another green initiative, this decision was more likely a general problem of the in-store advertisement market in Europe and the U.K. In truth, Tesco TV wasn’t living up to its expectations and always had a lack of advertisers. Even Tesco’s famous in-house consultancy and data analyzer, Dunnhumby, which tried a turnaround with taking over responsibility for Tesco TV in August 2007, failed with a new concept.

The end of Tesco’s network changed the way the retail industry discussed digital in-store media. Other major European retailers were also complaining about not enough investments of brand manufacturers into digital in-store advertisement. For Tesco, advertising sales didn’t even cover the expenses of the network.

How Walmart Set Benchmarks With its Smart Network

In September 2008, U.S. retail behemoth Wal-Mart presented a revised in-store media concept to agencies and marketers. The Wal-Mart Smart Network was the result of two years and U.S. $10 million in research and development used to identify the optimal locations, applications and programming for reaching the millions of consumers who visit the retailer’s stores each week. Wal-Mart completed the chain-wide deployment in early 2010.

Wal-Mart is the first retailer in the U.S. that has rolled out a next generation of in-store media that is supported by a flexible, open enterprise platform powered by Internet Protocol Television (IPTV) technology that allows the retailer to monitor and control more than 27,000 screens in more than 2,700 stores across the country.

One pillar of the Smart concept is the so-called Triple Play. In a first step, a welcome screen greets shoppers entering the store. Department screens, mounted only a few steps away from the products show content related to the category. Finally, smaller end-cap screens at each aisle provide customers with the final piece of information needed to make a buying decision.

All of the content on the Wal-Mart Smart Network is customized and designed to deliver product information to consumers at the point of decision, when and where they need it. The network deploys response measurement and message optimization technologies to enable delivery of the most relevant content to shoppers — by store, by screen, by day and by time-of-day.

Rewe Group commissioned T-Systems to deploy a digital merchandising network to 480 German supermarkets.

Europe Follows Suit

So far, European retailers have been less successful in deploying a similar business model. Some retailers may not be big enough to attract enough advertisements from the manufacturers. More importantly, FMCG manufacturers in Europe have been slow to recognize digital in-store media as a relevant marketing platform. This is changing, as powerful retailers began initiatives and started negotiating this topic with suppliers.

For obvious reasons, most retailers prefer a business model in which the digital signage platform is paid from advertising revenues. Nevertheless, some smaller independent retailers have been investing in this technology without securing income from third parties. They are looking to differentiate themselves from competitors using screens to enhance their own brand image and their customers’ shopping experience.

Digital merchandising screens enhance the shopping atmosphere at an Edeka store in Aachen, Germany.

In conclusion, a large number of trials and different types of implementations can be observed in the European market. In many cases, retailers are deploying a mixture of promotions, product information, image- or ambience-creating content, supplemented with news and weather forecasts or local information and advertising. Production and compilation of content is expensive and in most cases outsourced to specialized service providers. Some of these agencies have been developing specialized content related to local markets or specific segments. These offerings are also enabling small and independent retailers to participate in the trend.

Images via Planet Retail Ltd.

Copyright © Platt Retail Institute 2012 and reprinted with permission. All rights reserved. See the entire PRI Resource Library at http://www.plattretailinstitute.org/library.