Retail goes digital

The Canadian grocery store environment is going through a major period of transition. Aisles that were previously obstacle courses made up of floor stands and case displays are now shopping-cart friendly. The retail theatre of the late 1990s and early 2000s has fallen to the wayside in favour of a less intrusive buying experience.

Within the next three years, marketers who haven’t mastered new, evolving or yet-to-be introduced retail media will find themselves struggling to build their brands at retail level. More dollars are being spent in the retail environment than ever before, with Walmart, Loblaw, Sobeys and Metro all declaring “clean floor” policies or clutter-free aisles. This is the strange dichotomy playing out right now. Basewrap and end-aisle header cards will be as foreign to the next generation of marketers as cassette tapes are to the iPod generation. Yet the available tools to actually communicate at retail level are becoming increasingly scarce.  Retailers are attempting to limit the amount of messages a shopper sees for an overall better shopping experience. Marketers beware: retailers are taking back the store.

Loblaw is testing a new smart cart program with a system called Concierge. To help reinvent their CRM communications, the Metro banner has enlisted the help of U.K.-based Dunnhumby. Walmart is reinventing the Canadian “Walmart TV” to be more in line with the far superior and more successful “Smart Network” in the U.S. It is also embarking on a major initiative called “Project Impact,” which includes a dramatic decluttering of the aisles and a limit to the number of in-store shopper communications. Without a doubt, this is the rationale for the recent push behind the company’s improved digital signage. Here’s a closer look at two emerging technologies.

Walmart U.S. Smart Network

Unlike its predecessor “Walmart TV,” which was unproven, untracked and unsuccessful, the new “Smart Network” turns that all around. Two years of research plus an estimated
US$10 million in development, this technology boasts one of the most promising retail technologies seen to date. Screens for this in-store network are located in three key areas: the store entrance, categories (for example, home cleaning aisle) and end caps—all delivering individual product messages. What makes the network unique are the “smart” functions and features.

Walmart has identified an ideal length of communication within each location, number of messages and length of messages delivered.

Also, individual stores can customize messages to take advantage of local nuances. For example, if a region is expecting three days of rain, the entrance screen can alert consumers to an umbrella display.

The network is linked to the point-of-sale system. Walmart can identify what times and days of the week specific communications were the most effective. The timing of individual brand communications can then be adjusted to ensure that the messages are going out at the right time (versus a pre-programmed time). While the vendor won’t receive more spots based on the analysis, it will gain the benefit of ensuring maximum effective viewership.

Screens at product level are touch-screen equipped so that content can be created as interactive, if beneficial.

And Walmart provides vendors with a complete post analysis, which allows them to assess the effectiveness of their spend and the return on their investment.

While much of this functionality seems intuitive, this network is the first of its kind and it represents a huge step forward in the ongoing challenge of quantifying retail as a viable communication medium. Although executives at Walmart claim the motivation for the Smart Network was to simplify and improve the shopping experience, advertising revenue is what makes the system viable. A two-week program will cost advertisers several hundreds of thousands of dollars. With this type of investment ROI will ultimately determine exactly how smart this network is.

Concierge Smart Cart

This is a new technology developed by Springboard, a Canadian company. Sylvain Perrier, COO at Springboard Retail Networks Inc., describes a typical Concierge smart cart user experience: “My wife prepares the weekly shopping list on the retailers website and pre-orders the deli meats to be ready at 7 p.m. tonight. At 6 p.m., I receive a text message from the retailer indicating that our deli order will be ready in one hour. After work, close to 7 p.m., I go to the store and grab a Concierge-equipped shopping cart. I scan my loyalty card and my shopping list is downloaded to the screen located on the cart. As I’m shopping, I go to the wine section of the store, use the on-site kiosk to select a great wine, and a cheese is recommended, along with a recipe. I add the recipe to my favourites and the cheese to my list. The cheese automatically shows up on my list on Concierge and from home, my wife can print the recipe. After I leave the store, a thank you message pops up on my phone, thanking me for my visit and provides me with an offer for my next visit.”

How close is this to reality? I tested the Concierge system at Bloom Grocery store (a subsidiary of Food Lion) in Fort Mill, South Carolina. I found it did all that, and more. The system is actually connected to your personal shopper profile, based on your loyalty card data. With this information, you are made aware of specials and features on the items that you purchase most frequently. This also opens the door to custom offers for individual shoppers as loyalty rewards. The cart has several other features: a scanner so that items can be checked off your list as you shop; a product locator that will direct you to the correct aisle; and a GPS locator that alerts you to specials as you pass them.

To appease the vendor community, advertisements appear in a clickable action bar that brings you to a product page describing the product and ingredients. To deal with the issue of produce that can’t be scanned, there are self-serve scales that will print out a barcode for your produce items. The cart will also soon have a quick pay feature whereby the shopper can simply swipe their debit or credit card at the cash register to check out without having to unload it. Of course, with anything new there were a few glitches.

For example, the Loblaw Concierge system repeatedly deleted my shopping list as I tried to enter it online (this now appears to be fixed). And the Bloom system was unable to recognize an impulse purchase from a clip strip (a jelly spreading knife). Both of these small challenges were ultimately overcome.

So what do people think of the system? Reactions were divided along age demographics. In general, those under 50 were more enthusiastic about the system and actually used the functionality. Seniors, meanwhile, tended to be less interested in what the system had to offer them.

Here are a few things to recognize about these emerging retail technologies:

> They’re here to stay. Retail has changed and like it or not, we are living in a time of transition in the retail environment. To ignore the upcoming technologies is not an option. These are the media that you will have to communicate with, ideally for the greater good.

> They represent an immense opportunity for both retailers and vendors. No longer will vendors have to create programs eight months to a year in advance and hope that they are relevant when the cardboard POS hits the store. Digital content can be created to take advantage of current market situations at a fraction of the cost. Initial creative development may cost more but the increase will be insignificant compared to the savings recognized from reducing traditional POP signage.

> The rules of communication don’t change. Just because you have the ability to communicate via a digital screen at store level doesn’t mean shoppers are interested in seeing your commercial. See “Fraser’s 5 Rules for Communicating at Retail” on my blog, RogueRetailGuy.posterous.com

> Don’t panic. The world is not changing overnight. Companies should devote some time to understanding what’s available now and what lies ahead to stay on top of shopper-marketing trends.

Ultimately, it all means that the retailer is taking control of the shopper relationship, which makes good business sense. Retailers have better access to their shoppers’ buying habits than most manufacturers will ever have.

However, each of these efforts will fail without the dollars and support of the vendor community. The relationship is symbiotic, with each needing the other to succeed. And while vendors shouldn’t be naive enough to believe that participation in these programs will be optional, the onus is on both sides to ensure that information is shared and learning is applied to future programs.

Michael Girgis, president and CEO, Onestop Media Group and current chair, Canadian Out of Home Digital Association, one of Canada’s premier out-of-home digital providers, says: “All the tools are at our fingertips. What remains consistent is that the message is the medium. An understanding of what can be done, a willingness for change and an integrated and multi-platform strategy will set the leaders apart from the rest.”