Tuesday, February 9, 2021

In-Store Media and Merchandising: The Digital Renaissance Cometh

Barrows "Connected Store" endcap units

Let's talk about digital in-store media.

More specifically, the future of engaging shoppers digitally inside physical stores to make their shopping experience smoother, more productive and delightful, while also seizing the opportunity to serve them advertising and promotional messages sponsored by brand manufacturers.

It was a big week for Walmart’s media business. The world’s top retailer rebranded Walmart Media Group to Walmart Connect, expanding search and display media offerings on its owned digital properties and announcing a partnership with The Trading Desk to create a new DSP utilizing Walmart’s first-party shopper data to drive media performance outside of the retailer’s proprietary sites.

A couple of days later, it announced the acquisition of Thunder technology and IP and the launch of a self-serve ad platform targeted at small and medium-sized advertisers.

But the most notable move revealed in these announcements was Walmart’s focus on introducing innovative in-store media solutions and experiences.

Top consumer-goods retailers investing in state-of-the-art digital media capabilities is nothing new – all major players, including Walmart, Target, Kroger, Albertsons, Walgreens have built formidable in-house media businesses powered by their unique access to consumers’ basket-level purchase data.

But those investments have primarily focused on established digital media channels, such as online digital display ads, email, social, and mobile marketing. Pursuing high-scale digital engagement with customers in their brick-and-mortar stores had thus far fallen outside of the scope of in-house media teams, and had instead been left up to category managers, merchandisers, and third-party marketing vendors to figure out and activate.

As has often been the case in the past, Walmart is blazing a new trail in the industry. Walmart’s specific focus on in-store digital media solutions is likely going to help move this relatively underdeveloped media channel forward and transform it into a mass medium that can rival the scale and relevance of all other traditional and digital mass media.

The physical store has a unique role in the consumer shopping journey. It has always been considered the most important point at “the bottom of the marketing funnel” – the place where shoppers make the ultimate product and brand decision and convert from purchase intent to actual buying.

But physical stores, especially those run by large food and drug chains, which attract massive numbers of shoppers multiple times per week, are increasingly recognized as a highly attractive “top of the funnel” media channel, where advertisers can reach millions of consumers to build brand awareness and generate interest, and do so more efficiently and productively than on other mass media.

Given the broad spectrum of marketing objectives that advertisers can achieve inside the store, the digital in-store renaissance Walmart will usher in with its announcement will likely lead to the emergence of two distinct digital engagement models: a media model and a merchandising model.

Future success of these business models will be driven not by their convergence, as has been attempted many times in the past two decades, but rather by their clear separation and delineation into two different propositions for both shoppers and advertisers.

In-Store DOOH
Digital screens are proliferating in and around physical stores. Even at slow-to-digitize grocery stores and pharmacies, there are now screens in the parking lot, screens at the entrance, screens at checkout, digital menu boards, overhead screens throughout the store, even screens at the cooler doors in the frozen section and on benches outside the store.

Supermarkets have experimented with TV screens for a long time – with only limited success. The most prominent example has been Walmart TV Network. It was first created in 1998 and then relaunched in 2005 as a network of 42” high-definition LCD monitors across almost all its 2,600 locations. At the time, it was touted as the “5th largest TV network” in the United States.

It was relaunched again in 2008 as “Walmart Smart Network”, refocusing its content away from TV-like entertainment programming to offering useful shopping information interspersed with brand advertisements. In last week’s announcements, Walmart once again flaunted the “150 million weekly visitors” to its stores and digital properties.

Today, there are players, such as Grocery TV, Adcorp, and Impax Media (recently acquired by Velocity) who have attempted to create large networks of digital monitors across numerous grocery chains. But by and large, these networks have not lived up to the promise of becoming credible and compelling alternatives to traditional mass media or the large digital platforms where the lion’s share of advertiser media budgets is still allocated.

The key to in-store media succeeding at scale is to embrace the digital out-of-home (DOOH) media model, and to make in-store screens – especially those that offer little additional utility to shoppers in the store – an integral part of the larger DOOH ecosystem.

DOOH has been one of the fastest-growing digital media channels in the past few years. There are several major reasons for that, driven by both consumer behavior and technology innovation.

For one, consumers’ attention is so fragmented across a multitude of screens, devices, and apps, that TV and online ads no longer offer sufficient and contextually relevant coverage for advertisers to reach and engage their target audiences at scale. So interconnected OOH screens – surrounding consumer audiences anywhere from roadside billboards to bus stops, gas pumps, elevators, and ATM machines, to mention a few – offer valuable incrementality to the reach and impressions of traditional mass media.

DOOH has also benefited from the rise of mobile technology and Internet of Things (IoT) sensors that have allowed this medium to offer advertisers much richer and more deterministic measurement of its audience reach and engagement, thus convincing marketers to allocate more of their media budgets to DOOH vehicles. The rise of programmatic DOOH, powered by key players, such as Vistar Media, has been another contributor to the success of this growing medium.

With the right investments and partnerships that deliver scale and measurability, in-store DOOH could become a massive network of digitally connected screens and in-store touchpoints that will eventually be fully integrated into the high-volume, high-velocity digital media networks all major DSPs and media buyers rely on. It could unlock a vast new supply of addressable, measurable media audiences on par with TV networks and the top digital platforms that today capture the majority of advertisers’ media dollars.

Connected Merchandising
Beyond deploying in-store screens as digital billboards that flash advertisements to the millions of consumers who shop at grocery stores every day, the truly exciting opportunity retailers like Walmart have is to utilize digital technologies to significantly enhance their customer’s shopping experience.

Walmart TV was predicated on a pure media model that just aimed to attract millions of eyeballs to content that had little or nothing to do with what shoppers were doing in the store. When Walmart relaunched it as “Smart Network” in 2008, the main idea was to reorient the screens away from playing TV programs and commercials to delivering more focused messages in core departments, such as grocery, health and beauty, and electronics, as well as directly advertising items featured on endcap displays.

Digital tools – including in-store screens, sensors, and interactive devices – can help retailers create delightful customer experiences and run their stores more efficiently and sustainably.

After all, the main purpose of the physical store, the reason consumers still pick themselves up and go to the grocery store, is the shopping experience that is so hard to replicate online. We go to physical stores to see and touch the real merchandise, discover and try new products, and get ideas and inspiration from the energy and atmosphere of beautifully merchandised, well-run stores.

Merchandising is the heart and soul of retailing. It is no coincidence that category managers and merchandisers are the most influential and powerful players in retail organizations. Bringing the products, the brands, the shopping journey to life inside the store is the high calling of all retailers. To conjure the magic of brick-and-mortar retail, merchandising professionals turn to visual displays, product features, in-store events, sampling, and promotions.

Digital tools – including in-store screens, sensors, and interactive devices – can unlock previously unimaginable possibilities both to create amazing customer experiences and to run the stores more smoothly, efficiently, and sustainably.

These digitally enabled in-store solutions are less focused on the opportunity for mere eyeball impressions and are engineered entirely with the customer experience and the merchandiser’s job in mind. They focus on specific categories, touchpoints or use cases throughout the store, looking to unlock incremental value for shoppers, product manufacturers, and category managers.

A great example of digitally enhanced in-store merchandising solutions is the suite of connected multimedia displays delivered by Barrows, a 30-year veteran of in-store visual design with offices around the world. The Barrows “Connected Store” merchandising displays, which include endcaps, freestanding units, and in-aisle hotspots, are engineered for scale and efficiency, but also custom-designed and built to deliver superior visuals and delightful shopping experiences.

The digitally enabled units are built with a standardized shelving and hardware skeleton, which can be re-sleeved with custom-designed graphics and decorative fixtures for every brand campaign. The digital screens and proximity sensors offer dynamic, relevant content for shoppers, rich campaign analytics for brands, and real-time restocking and sales tracking capabilities for retailers.

Another example of a digital in-store solution very much designed and engineered for a specific category and shopping use case is the digitized freezer doors activated by Chicago-based startup Cooler Screens. Their innovative solution converts normally unexciting frozen and chilled aisles into a bright wall of attractive digital displays that not only showcase better the products inside the refrigerated unit, but offer dynamic pricing, promotions, consumer ratings, and engaging videos and animations. The units can sense whether stocks inside the refrigerators are running low or products are misplaced or improperly merchandised.

With the right focus on customer experience and functionality, retailers have the opportunity to deploy an array of digitally enabled in-store display, merchandising, and shopper utility touchpoints – similar to those by barrows and Cooler Screens – that will be custom-designed for their stores and their brand, and will add tremendous value by creating visually delightful, digitally enhanced, highly engaging experiences, while also driving measurable sales lift and category growth.

With the rise of digital in-store media and merchandising solutions, Walmart and all major consumer-goods retailers have the unique opportunity to not only reach some of the largest and most relevant audiences any media network could aspire for, but to also offer unrivalled value and delightful shopping experiences that foster meaningful long-term connections with their customers.

The key is not to figure out how to blend media and merchandising into one digital vehicle, but rather to activate the two digital engagement models separately – one focused on reaching large audiences and delivering incremental impressions, and one aimed at making in-store shopping as pleasant, easy and fulfilling as possible.

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