Drinking Digital from a Fire Hydrant at NRF15
When 35,000 people attended the National Retail Federation “Big Show 15” in New York, the busy conference and trade floor were all about “digital.” Delegates had a buffet of options to make multi-channel happen – along with its imperative omni-channel, the integration of multiple channels to create a customer experience expressed consistently at various touch points.
“Bricks are the new Black” declared Bill Simon, former president of Wal-Mart U.S. in noting that e-commerce is peeking because it lacks the sensory experience of shopping and the immediacy that in-store buying provides while describing that online mirrors the previous paradigm of catalog shopping. “Brick and mortar stores are at the emotional and financial center of retail,” said Bal Dale of JDA Software, a primary provider of retail application systems. James Curleigh, EVP and President, Levi Strauss & Co reflected the thoughts of delegates saying, “stores are at the heart of the shopping journey, impulse buying as well as semi- planned and wish-list purchasing. The key is more productive stores and technology is the tool that needs to be applied to reinforce the brand and the purchase experience”.
Some important announcements and key insights related to digital signage were offered during NRF15.
The 12th annual Store Systems Study by NRF, IHL Group and Retail Information System News reported on its survey of digital investment trends by the largest retailers. 65 percent of respondents have revenues exceeding $1 billion annually, with 16 percent between $500 million and $1 billion and 19 percent under $500 million. Vendor opportunities exist as store count increases by 3.2 percent and remodels increase by 3.1 percent. In a 1000 store chain, this means that digital signage can easily be designed into the store experience for 60 new and remodeled locations annually.
In-store digital budgets (the typical source of digital signage trial/innovation) will increase between 2.6 percent and 3.8 percent for large retailers. Digital signage is the second largest area of planned investment with 29 percent of large retailers increasing their spends in this area, following only payment terminals in which 49 percent will increase their investment. 12 percent will buy in the 12-24 timeframe and a further 8 percent indicate investment plans 24-36 months from now. 31 percent of specialty retailers said they will make a digital signage purchase in 2015. The study reflects that the deployment timeframes on enabling technologies such as point-of-sale, mobile devices, inventory visibility and analytics software ranges from 10 to 11 months after purchase.
34 percent of respondents to a Shop.org 2015 survey said that merchandising was one of their top three priorities after mobile 58 percent, omni-channel 45 percent and marketing optimization 38 percent.
Michelle Garvey, CIO of ANN Inc., the parent Company of the Ann Taylor and LOFT brands said, “I used to say, ‘Don’t bring me a solution that is looking for a problem,’ but digital is moving so fast that it now makes sense to have some funds in reserve that can be used for testing approaches that would appear to provide value.” She added “during testing the intention should be to assess possible value at minimal time and investment. Then, based on merit, project budgeting can be provided for that initiative over other options.”
Provider profile at NRF15: Stratacache dominated trade show floor presence from a digital signage standpoint in hosting a digital media pavilion area and a presentation by SportChek on digital merchandising. Intel, Hughes, AvNet, Toshiba, NEC, Scala, ComQi and Four Winds booths were also constantly busy.
Samsung, LG Innotek, Wincor Nixdorf, Displaydata and others promoted electronic shelf labels (ESL) using e-ink, with LG Innotek being the only ESL provider to display a small form shelf level video display as part of it ESL offering.
Lexmark used NRF15 to announce its digital signage offering which extends its Publishing Platform for Retail offering based on AccessVia that has been in use in retail stores for more than 25 years, for 25 languages, in 60,000 stores in 55 countries. Message composition and presentation on digital displays is based on the AccessVia authoring and management platform for in-store static printing.
1,400 people downloaded the “Dynamic Media in Retail” guidebook released by BUNN during NRF15. This
47-page how-to guide is the fourth in the guidebook series by BUNN following Digital Signage for Food Services, Banking and On-Campus. Guides for content and analytics are also available.
Analytics were part of every presentation as retailers wrestle with swimming in a sea of data, while trying to derive insights and actionable intelligence within the multi-channel environment toward more fully integrated omni-channel and a more personalized shopping experience. “We are seeing, and it can be further expected,” noted Thomas Opdycke, CEO of DS-IQ, “that an upgraded merchandising approach will also deliver new metrics that, until digital merchandising, have not been relevant.” Simon noted, “digital media supports the math model of retail and that personalization of messaging is just being respectful of patrons.”
Returns are the biggest single supplier to retailers explained Jeff Roster, vice president of research of Gartner Research, adding, “returns are the ticking time bomb of multi-channel.” Reducing returns and messaging to patrons at the store return counter offers important advantages.
The Purchase Journey: “The role of the store is to activate relationships,” said Tony Bartel, CEO of GameStop which uses digital extensively in generating $9 Billion in annual revenue through 6,600 stores. “The Store is where the magic happens,” he noted.
Paul Reid, vice president of operations of FGL Sports (parent of DIGI award-winning SportChek), echoed this in presenting how “in focusing on the in-store experience we have been able to double performance through digitally-enabled stores”. He said, “We realize that we are competing with and have to align with the experiences of entertainment, increase the importance of destination and improve our places with ambiance.” The SportChek success is based on the quality of in-store experience, bringing more chances for engagement, targeting suggestive selling through data and seamless integration of in-store and through dot-coms.
Alison Kenny Paul, vice chair U.S. retail and distribution at Deloitte told delegates “Channels will disappear because that is not how consumers behave. They regularly cross-over making journey tracking and attribution very difficult.” In providing a list of digitals “Do’s” she advised that:
- One digital strategy does not fit all products or locations or store format. For example, digital has twice the shopper influence in electronics stores over general retail.
- Digital must serve customers needs at the moment and place of purchase.
- Branding must be consistent throughout the in-store, online and mobile shopping experience.
Tim Tang of Hughes reflected the sentiment of digital media reflected by many at NRF15, saying, “place-based media activates in-store purchase and can be attributed to that conversion. The complexity of the purchase journey that includes online and mobile means that the retailer must gain the sale in-store and can up-sell and cross-sell while adding to the experience through the digital display medium. Marketing investment decisions are becoming more difficult to make, so a medium that makes sales happen is key to success. An attribution model that discerns the value of applying any specific marketing device is the next plateau. Retailers’ understanding of their patron’s path to purchase and their insights related to traffic and conversion serve as the basis for investment.
Lyle Bunn is an independent analyst, adviser and educator in North America’s digital place-based media industry. He has been named as one of the 11 Most Influential people in the industry. Lyle@LyleBunn.com