International sales increased an even faster 30%. The company also reported a record profit of $857 million during the second quarter and accelerated expansions ...
Stores are employing more web-based content, and targeting that content more effectively by time of day and shopper demographics.
When Systemax Technology Group CEO Gilbert Fiorentino first walked the aisles of CompUSA stores to learn more about the computer and consumer electronics retailer that Systemax Inc. had acquired in March 2008, he was struck by two things. A host of TV screens and computer monitors displayed pretty pictures or sat empty. And when sales associates were stumped by customers’ product questions, they often found answers using a web-linked computer accessible to staff.
Fiorentino knew customers were accustomed to finding the information they wanted themselves using the web on their own PCs. “These screens were sitting there and I thought, why can’t we get them connected to the Internet?” he wondered.
Why not indeed? While there are practical challenges, retailers are discovering the power of bringing web-based information to store shoppers, as CompUSA does in the initiative it calls Retail 2.0. And they’re no longer relying on customers finding a lone kiosk in the back of the store. They’re bringing video and interactive content to store shelves to provide the information consumers want when they want it-as they’re looking at, touching and considering a product.
And CompUSA isn’t the only retailer testing in-store digital merchandising. Wal-Mart Stores Inc. last fall started rolling out the Wal-Mart Smart Network to deliver video and other content to shoppers via more than 27,000 small, eye-level screens in more than 2,700 stores across the country.
Powered by a technology called Internet Protocol Television, the platform will allow Wal-Mart to deliver content-basically, advertising-on screens in targeted zones of stores, and to analyze shopper response. That installation is scheduled for completion in 2010, and Wal-Mart has bet $10 million in research and development costs that it will be effective.
It’s part of a larger retail trend called shopper marketing. That’s defined as “the employment of any marketing stimuli, developed based on a deep understanding of shopper behavior, designed to build brand equity, engage the shopper and lead him/her to make a purchase” in a 2008 report from Deloitte Consulting and The Grocery Manufacturers Association, “Delivering the promise of shopper marketing: Mastering execution for competitive advantage.”
The key is that it takes place in the store, at the point of purchase, and it’s more than just a static sign or display. Retailers and manufacturers are partnering with vendors of digital signage networks and services to bring to stores animated and video merchandising and advertising, delivered or remotely controlled via the Internet. The aim is to deliver more detailed product information or enable consumers to get help making selections without having to find a store employee, says the recent “Digital Outlook” report by interactive agency Razorfish.
The Internet in full
That’s exactly what Fiorentino had in mind when envisioning CompUSA’s Retail 2.0. Each desktop and laptop monitor and television screen in CompUSA’s Miami-Dadeland, Fla., store is connected to a dedicated computer that provides access to information about that particular product from the Internet. Additional stations are available in every aisle so customers can obtain information about products not associated with a screen-ink cartridges, for instance-bringing the total number of web-enabled screens in the store up to about 260.
Retail 2.0 gives store shoppers access to the same detailed information they can get on the web, including not only at CompUSA.com but at competitors’ sites, price comparison engines and, in fact, any content available online save adult content which is filtered. Early results from the Miami-Dadeland store, which last October was the first CompUSA store to be equipped for Retail 2.0, suggest that the initiative will pay off.
Though CompUSA has not released updated numbers, over an initial brief period after the store implemented Retail 2.0 it had a 20% increase in conversion on store traffic. CompUSA defines this as the volume of sales relative to the number of people who enter the store.
CompUSA has implemented Retail 2.0 in five stores and plans to roll it out to all of its 29 stores. Fiorentino estimates the cost of equipping each store for Retail 2.0 at about $100,000 in software, hardware and power costs. He notes that as an e-commerce company that sells computers at TigerDirect.com and consumer electronics at CircuitCity.com, among other sites, Systemax saved money by doing much of the work itself.
Content and ads
For retail chains without such Internet expertise, vendors have emerged ready to port digital merchandising into stores. Among them is EnQii, which provides digital signage and video content to manufacturers and retailers looking to promote sales and build loyalty in stores.
The content varies with the product. For example, a video promoting youth apparel might show young models wearing the clothes and play on a screen in the youth section of a store; another promoting skin care products might run in the cosmetics department. EnQii delivers and controls the content remotely via the Internet, says James Bremner, global marketing and accounts director, EnQii North America.
Bremner says that beyond targeting by store zone, content can be day-parted to target different kinds of shoppers who are in the store at different times. For example, foot traffic passing a digital screen located outside an in-store salon might be primarily mothers with small children in the morning and teenagers in the afterschool hours; each would be targeted with different content.
Costs run from $55 per screen upwards, depending in part on how much of the hardware Enqii provides and the complexity of content development. Because of the fixed, initial costs, Bremner says such projects are most profitable for retailers with 100 or more stores.
“If you can drive sales up across a hundred stores while employing economies of scale, and you can change promotions at the touch of a button without having to reprint like traditional signage, it can offset the costs and produce new revenue streams,” he says.
EnQii produced and delivered in-store digital merchandising for department store Dillard’s as well as Fred Meyer, a chain of supermarkets owned by Kroger, and McDonalds. Retailers measure success by comparing store sales lift with running times for digital content, he says.