NRF: Stu Armstrong on in-store digital media

At last week's NRF 98th Annual Convention & Expo, EnQii president and Digital Signage Association president Stu Armstrong gave a talk on the strengths of digital in-store media for retailers. Here is an edited transcript of his presentation.

Since the advent of the first in-store TV network earlier in this decade, much time and talk has been given to finding the right model for digital signage at retail. Early designs have brought about mixed results. Much of the criticism came from shoppers who either resented more ads being pushed at them or, at the very least, felt it was a nuisance.

Many of these early in-store TV models weighed heavily on funneling some above-the-line brand advertising dollars into retailer coffers. And to avoid conflicts with co-op and trade dollars already tapped from supplier brands, many of the ads were from brands not even sold by the retailer and therefore out of sync with the shopper's mindset. Do I really want to see a car advertisement when I am buying my groceries? I think not.

While advertising revenue remains a viable consideration when retailers design their in-store TV network, programming it should not be the dominant reason for its existence. And when it's done, brands should be selected that are relevant or entertaining to the shopper. For example, if a major pet-supply retailer ran a trailer for the Disney release of "Beverly Hills Chihuahua," I am confident shoppers would see that as an enhancement to the shopping experience.

Before I get into my top eleven reasons for a retailer to implement a digital in-store media network, let's look at what has contributed to this trend: Wal-Mart & Tesco TV.

Both retailers deserve a lot of credit for being early movers in this area. The experiences gained, with a few bumps along the way, have made the path smoother for future implementations. Over the last year both retailers have launched next-generation designs that have incorporated several key modifications.

• Lower the screens to get viewing down to shopper sight-lines.
• Evaluate the shopper journey and place screens in locations where they can easily be seen.
• Place merchandise in close proximity of the screens so shoppers make the connection and it can better influence the purchase decision.
• Manage the audio so that the soundtrack is shopper and store employee-friendly.
• Align length of media spots to complement shopping traffic, emphasizing brevity with 5-second spots in traffic areas.
• Present content that focuses on the shoppers' mindset, needs and demographic.
• Invite shoppers to purchase promoted products with strong call-to-actions.

Now with the road ahead having been traveled by several major implementations that have helped define best practices, retailers can now approach this shopper marketing and communications medium with greater confidence.
 
So whether you are taking the plunge with a full rollout or designing a pilot to test the performance within your environment, I encourage you to consider the following benefits. Then design the implementation and content programming to generate the results you want to emphasize.

1. Enhance the shopping experience
Shoppers vote with their feet; a positive and enjoyable shopping experience helps to develop a loyal patron. When digital in-store media is properly executed, the shopper reaction is very positive.

According to OXT's (Online Testing Exchange) July '07 Study, digital signage catches the attention of more people than any other comparable advertising medium and was found to be more entertaining than any other except TV.

According to Arbitron Research (9/04 Study), more than three-quarters of retail video viewers find the screens helpful, 42 percent of retail-video viewers would prefer to shop at a store that has video displays versus one without.

2. Increase in-store conversion and product sales
Retailers are in the business of selling goods, plain and simple. Digital in-store media networks are now proven to move the sales needle. Many studies from researchers such as OXT, The Platt Retail Institute, Forrester, Nielsen and Arbitron now empirically show the influence on sales.

According to Nielsen Research (9/06 Supermarket/Grocery Consumer Behavior Study), "68 percent of those surveyed said in-store messages would help sway their product purchasing decisions. Further, 44 percent said they would switch a product they previously intended to buy for one being featured."

According to Arbitron Research (9/04 Study), "Nearly a third (29 percent) of retail-video viewers have made an unplanned purchase after seeing a product featured on the in-store video display."

3. Build your Store Brand
To counter the "sea of sameness" between competing retailers, many are putting increased emphasis on their own store brands. In-store TV can be a powerful communication and promotional medium to convey the in-store brand essence and value.

4. Reduce perceived wait-time for customers
Whether it is in a check-out, pharmacy, or service desk queue, or simply waiting for your wife to try on another blouse to go with a new skirt, no one is a big fan of waiting. If you can reduce perceived wait time you win. According to a study done by BTV+, "Virtually every use of digital signage display generates ... a 40-60 percent reduction in perceived wait time."

5. Drive traffic to your Web site
Leveraging both the in-store and Web-based shopper touch-points, "clicks and mortar," to drive sales and loyalty is now an essential part of many retailers strategies. In-store TV is a digital on-ramp, an opportunity to introduce to your shoppers your on-line presence and promote cross-channel engagement.

6. Strengthen relationships with your community
Narrowcasting capabilities of this medium enable you to pinpoint unique messages down to the location (and even more granular day-part by screen). Take advantage of that by serving up content that connects at a local level. This can be as simple as local news, weather, college and high-school sports, and community sponsorships. Put some teeth into your "we are a part of the community" messaging.

7. Reduce point-of-purchase expenses and in-store clutter
Clutter and environmental conservation are two issues that often go hand-in-hand, and retailers are grappling with ways to ensure shoppers get their messages while not having their stores look like a used car lot on President's Day. Digital media that attracts more attention than static signs can help to clear up those aisles while lowering the costs related to printing, shipping, in-store compliance and disposal. It also supports more frequent and targeted messaging, which is not practical with traditional static signage.

8. Improve employee communication and training
Retailers are very aware of the high cost of employee turnover. One of the most formidable challenges retailers face are 80-120 percent turnover of in-store personnel. The cost of hiring and training combined with the cost of poor customer service is enormous.
 
Retailers realize that they can "sweat the asset" of a digital in-store media network to improve employee communications and lower turnover rates. Off-hour programs can pay huge dividends: daily team messages, customer service and sales techniques, career profiles, product safety and recall information, and straight-forward training content that support the store manager. Some retailers are even looking to their supplier community to sponsor training; for example "Speaking to shoppers about pet nutrition brought to you by Iams," making them a revenue generation source as well.

9. Strengthen your mobile marketing/loyalty program
Retailers are addressing a new breed of shopper. A shopper who has ready access to all sorts of information, who can stand in your store and do competitive price comparisons or look up consumer product reviews on their mobile devices. Their shopping list, their coupons — virtually everything — can be accessed via that mobile device.

Conversely, you can reach them with useful information such as promotions, event updates, and last-minute over-inventory blow-out sales through this device. However, there is a delicate line between annoyance and attraction when it comes to a device that is regarded as highly personal as a person's mobile device.

Therefore, people need to explicitly opt into a program. Like e-commerce, digital in-store media can be a powerful way to promote adoption and begin to grow that highly coveted mobile marketing list of shoppers.

10. Influence inventory and supply chain efficiencies
One of the most powerful benefits of this media is the ability to do just-in-time messaging and leverage its ability to drive incremental sales to move over-inventoried product at the specific store level. Take, for example, women's apparel. When the next season's fashions are due, last season's line starts to make its way toward the back of the store, getting markdowns along the way.

Pre-markdown, heavy-up promotion of that line in the stores with excess inventory results in selling more product at full margin. This also applies to product over-inventoried at the distribution center, using the digital in-store media to pull product through the supply chain.

11. Generate new revenue by selling advertising space
Why 11? Because where one to ten address core retail operating and promotional considerations, this point is outside of a typical retailer's traditional competencies. It is also not for everyone; retailers with all store brands or a heavy emphasis on their brand and shopping experience may feel that any level of advertising fights with their marketing and décor.

For many, the right model is a hybrid that brings in appropriate and viewer-minded advertising. When it is done right in can be a powerful incremental revenue generator. Studies are showing that out-of-home video advertising network spending in the U.S. reached $1.28 billion in 2007 and is projected to reach $3.22 billion by 2011. Do it right and you can get a piece of this action. Do it wrong and your shoppers will have a piece of you.