Article

Walmart and the dawn of retail digital signage

A former Walmart executive gives the history of the chain's digital signage network, and looks into the future.

May 4, 2010 by Christopher Hall — writer, self

When former Walmart vice president Michael Hiatt delivered this morning’s keynote address at Screenmedia Expo Europe 2010 in London, he talked about "The Dawn of Dynamic Retail: How Walmart upgraded its signage network and discovered the power of customer relevance."
 
And while it was an interesting primer on the history of digital signage in a retail setting, it also became, in the last five minutes or so, an equally interesting glimpse into the future of retail digital signage.
 
Hiatt, now principal for Dynamic Retailing LLC, says the future for intelligent retail digital signage will see signage networks like Walmart’s intelligently tied to outside factors, e.g., the weather, that will cause automatic adjustments to digital advertising on the network.
 
Imagine a retail digital signage network that automatically starts advertising cold drinks like Coca-Cola when the temperature or forecasted temperature rises above 80 degrees Fahrenheit; or a network that automatically starts advertising sunscreen three days before a weekend that’s forecasted to be sunny and warm. And imagine those networks also tied to mobile interactivity and social media.
 
"There’s a roadmap of where we want to get to," he said. "And that’s part of the roadmap."
 
Walmart, Hiatt says, was one of the innovators in digital signage, starting its own network back in 1993. The company was leading-edge on retail digital media, he says, which is unusual given retail’s general tendency toward late adoption.
 
With a reach of about 140 million store visitors per week, Walmart initially marketed and sold space on its in-store screens as a broadcast medium. From a gross rating point viewpoint, he says, Walmart is the fifth largest network in the United States, right behind the "big four" of ABC, CBS, Fox and NBC.
 
But eventually Walmart saw the need to shift its approach, and brought in Hiatt to revamp its digital signage strategy to become a communications platform for the store.
 
"The biggest problem for us was it wasn’t helping our customers," Hiatt said. "We really had a decision to make. We were either going to pull this all the way out or completely reinvent it."
 
As the retail giant began focusing on what it saw as its three core strengths — good prices, quality products and easy shopping — the in-store digital signage was seen as a way to improve the shopping experience and make shopping easier, Hiatt says.
 
"If anything didn’t fall into one of these three areas, it was gone," he said. "We would be the group that helped make Walmart a better place to shop."
 
Studies show that about 60 percent of in-store purchase decisions are unplanned purchases, Hiatt says, and that time, like money, plays an important role in shopping decisions. With shoppers spending about 40 minutes per visit, Walmart saw that if it could help shoppers shop more efficiently in that amount of time, it could increase basket size and customer spending.
 
After about a year looking at the issue, Hiatt says, "we had an epiphany."
 
"This sounds like a no-brainer…but it really wasn’t," he said. Walmart realized that, instead of looking at its signage network as a broadcast network, it needed to make sales lift the key performance indicator. "We would use sales lift to drive all the decision making."
 
And as Walmart began improving its signage network, with better screen placement and improved targeted ads — the right ad at the right place at the right time — with the focus on the customer, it began to see sometimes staggering lift in both single item and category sales.
 
By examining smaller sales lifts, analysts could see, for example, which ads had better returns running at certain times on certain days, part of what Hiatt calls network optimization.
 
Part of that optimization process also involved what he calls the three C’s of context, content, and concert. The context of the ads has to be well thought-out, the content of the ads needs to be strategic and the brands, retailers and network operators (when the retailer and network aren’t the same entity) have to work in concert, he says.
 
With screens that show the outside temperature along with ads for cold or warm drinks, or ads that show frozen pizza or other dinner ideas alongside a clock showing how close it’s getting to five o’clock, Walmart says its Smart Network helps shoppers and improves its point-of-decision sales. And, Hiatt says, the chain’s end-cap screens average a 64 percent sales lift.
 
"This is where it really starts to do tremendously well," he said. "Once you do that it really becomes a machine for growth."