Article

Digital displays in retail environments coming of age

Retailers are beginning to recognize and reap the benefits of using digital displays to influence shopper decisions.

July 12, 2010

Retailers are beginning to recognize and reap the benefits of using digital displays to influence shopper decisions.

Hopes and expectations about what this technology might do have turned to hard and exciting numbers. More and more retailers and brands are extending the consumer messaging traditionally delivered through broadcast, print and outdoor and getting it in front of consumers at the optimal moment – while they’re out shopping. Communication of the message during this final step on the consumer path-to-purchase, when done well, can have a powerful impact.

We’re in the early but very real stages of a fundamental shift that will see digital media, in its various forms, become an integral part of the shopping experience of the near future. Properly positioned and integrated display technologies will be part of the normal feature set of stores from the initial design stage — their purpose and functions an essential part of store operations, and aligned with complementary technologies such as mobile and internet.

Already, we’re seeing retail chains and brands investing in this technology, because many years of trial, and mostly error, are now leading to valuable insights and very positive results. And the hottest segment of the Digital Out Of Home (DOOH) advertising sector is retail.

Like most industries, the pioneers of digital signage and DOOH suffered a lot of growing pains. Digital display networks in retail date back to the mid 1990s; and of the many networks that were then created, few remain.

Those early networks had a long, tough hill to climb. The investor-backed operators assumed all the risk on capital and operating costs, and did venue deals with retailers who shared none of that risk and saw the promised ad revenue share as little more than found money. There was little strategic oversight; discussions between operators and retailers about how what was on the screen could impact shopper behavior — move the sales needle, so to speak — were rare.

In the absence of shared goals, and a media market that wasn’t ready for another new advertising medium, many of these early networks failed. Decommissioned or repurposed screens still dot the retail landscape.

A decade on, business models have evolved and new ones have emerged, technology costs have plummeted and capabilities soared — making digital display networks in retail not only viable, but an important strategic asset to both the retailer and the advertising community.

There are plenty of strong reference cases in the marketplace but one that invariably attracts notice is Walmart. The world’s most powerful retailer was an early adopter of digital screens through a third-party partnership with Premier Retail Networks. With TV screens suspended well above the walkways in stores across the US, PRN likened and sold the opportunity as a large, non-traditional broadcast TV network.

That model has since evolved, and Walmart now calls its own shots on the configured and relaunched Smart Network. Screens have been repositioned, and the marketing thrust has shifted from brand awareness and general advertising to targeted sales promotions. At the DSE show this past February, Walmart trickled out some numbers about the impact of this “re-considered” digital network.
 
Walmart calculated the following percentage increases in store departments which feature the Smart Network.
 
Sales lift by departments
Electronics – 7 percent
Over-the-counter – 23 percent
Food – 13 percent
Health/beauty – 28 percent

Sales lift by product type
Mature item boost – 7 percent
Item launch – 9 percent
Seasonal push – 18 percent
Price leadership (items on rollback) – 6 percent

That level of impact raised eyebrows, but really just confirmed and validated what’s been happening in the market for the last couple of years. The 3,600-site Canadian donut and coffee chain Tim Horton’s has made a digital feature screen as the centerpiece of its menu board plans for several years, directly influenced by the sales lift seen on food and drink items promoted through motion media.

Burger King in the U.K. is expanding its use of digital menus after seeing lifts as high as 63 per cent on promoted items in its stores. The fast food retail sector, probably faster than any other sector, has recognized the positive impact and several QSR banners are moving from testing to full deployments. One of the best known fast food brands recently placed an order for 12,000 displays, having been floored by the sales impact in its tests.

Brands are also now using digital directly to drive sales and be differentiated in retail environments cluttered by static print visuals. The iconic Canadian beer brand, Labatt, in 2009 tested custom-designed store fixtures that blended standalone merchandising space with a networked digital screen. Sales results were described only as eyebrow-raising, but were enough to furiously expand from a small test to more than 500 units. The brewer’s parent company, Anheuser-Busch InBev, is now quietly testing a matching program in the U.S.

The cosmetic industry has also been aggressively testing interactive digital applications as a means to combine their product knowledge efforts online with media that can educate and then influence buying right at the shop counter.

That interactivity is, as mentioned earlier, integral to the future. The market penetration of smartphones is growing rapidly, meaning shoppers have the ability to not only research products on the spot, but make their locations aware to online social media agents that can show pricing and availability of goods at nearby retailers. The ability to integrate screens, phones, barcode readers and store systems into a seamless experience will just grow in importance.
      
Business models are shifting as the industry gains more experience. We’re seeing hybrids of pure merchandising and audience monetization. We're seeing POS systems combined with handheld devices like iPads, allowing sales associates to bring the full weight of product knowledge, pricing and varieties right to the shopper in aisles. And we’re seeing a shift in the role and perception of DOOH advertising in retail.

Third-party networks have a stronger position through buying power. We’re seeing networks that are operating in retail venues dominating the DOOH spend in North America, with automotive, financial services and telecommunications by far the biggest categories. Retail locations such as grocery, pharmacy, c-stores and coffee shops account for almost a third of the DOOH media spending.

Packaged goods and entertainment brands will follow. They’re more cautious, and they like to test, but over time we expect these are categories that will also start shifting their dough to DOOH.

Graeme Spicer is the vice president of strategic partnerships for DOOH aggregator and consultancy Adcentricity. (Photo by Kai Hendry.)