Thursday, June 21, 2007

Home Depot focuses on retail experience

The AP notes that in the wake of former CEO Bob Nardelli's resignation, the Home Depot will be shifting strategies a bit to sell off its Home Depot Supply business (catering to professional construction companies and contractors) in order to free up some cash, buy back some shares, and focus exclusively on its retail stores.

While both the AP story and the original press release are unclear about how some of the estimated $10.3B from the sale will be used in-store, recently the company has been criticized for poor customer service and challenging store layouts, especially in contrast to rival Lowes, who has made great strides in both of these areas. I'd thus expect to see a wave of hiring (there's never somebody in an orange apron around when you need them!), hopefully some improved wayfinding signage and maybe even a planogram change, and there's even the possibility to install some retail media services or interactive kiosks to provide supplemental services.

Tags: Home Depot, retail experience

P&G to commit $2B to retail-marketing efforts

As Advertising Age announced a few days ago,

Procter & Gamble Co. is preparing to give some $2 billion in retail-marketing funds a seat at the same table as advertising.

The company is partially consolidating its marketing groups to put retail-marketing strategy under the same marketing directors who oversee brand teams instead of under the group that manages the sales force. Once the new system is introduced, general managers or marketing directors who find a brand responds better to trade marketing than consumer marketing will be able to shift more funds in-store. This should make for a more genuinely discipline-agnostic P&G.

The move aims to answer questions that long have dogged package-goods marketers: who should control the tens of billions of dollars spent on trade promotion -- often the largest part of the marketing budget -- and how to make those dollars work in the same strategic plan as advertising and consumer promotion.
Analysts estimate that Procter and Gamble spends over $2 billion a year on trade marketing, which is about twice as much as the entire digital signage industry generates right now. Of course, if you were to throw in all POP displays and merchandising the market is quite a bit larger, but a $2B addition is still extremely significant.

While there's no reason to think that 100% of that amount will be channeled in store -- after all, there are lots of other techniques like direct mail, online and event/promotion that could be successful -- given P&G's past indications that in-store marketing techniques (like digital signage) are becoming increasingly important it's probably safe to bet that we'll see some new things in-store from them (literally).

Here's the real question, though. If P&G is successful with this new plan, how/when will we find out about it? And will there be a cascade effect, where other major CPGs suddenly jump in and start redirecting large portions of their advertising budgets?

Tags: P&G, in-store marketing, marketing at retail

Saturday, June 16, 2007

Dressing up the lowly gift card

In the course of reading this little article in PROMO Magazine, I started to think about the process of purchasing a gift. These days, pre-paid, branded gift cards are a huge business You can buy a branded gift card for virtually any retailer, get instant personalized gift cards using custom photography, and number of variations on that theme. While the PROMO article looks at the use of new and better packaging to dress up gift cards so that they're more suitable for gift-giving, I approached the process from the other end, thinking about the steps somebody might go through that would lead to the purchase of a gift card as a gift.

Let's face it. A lot of people still feel like giving a gift card is just a cop-out. Even those people who hate shopping for gifts, or don't know the recipient particularly well. I think perhaps we've all gotten the impression that a gift purchasing experience should either be a) amazingly easy (in the case where you know what the perfect gift for somebody is), or b) excruciatingly difficult (as if the expenditure of time on your part is going to be translated into that gift, and the recipient will immediately know how much you care due to this).

The industry's response has been to add personalization capabilities, prettier graphics, and more graphical choices. This gives the shopper the ability to either a) immediately find the perfect gift card image, thus satisfying the "it should be easy" condition, or b) spend hours flipping through a catalogue of gift card entries, or even better, use some custom photos and graphics to make a unique card himself, thus satisfying the "it should be hard" condition.

I actually think there's another part to the process, though, and that's the retailer's obligation to present the card as a valid gift. Again, new packaging does address some of that. By making the cards festive and interesting, there's an implicit understanding that the item being purchased needs to be special, not just a piece of plastic. Catering to those who don't catch the implicit vibes, lots of stores have started to feature the cards prominently at checkout aisles and on endcaps in order to make sure that everybody knows that they're there in the event that even after all that hard shopping, the shopper can't find that perfect gift and has to "settle."

But while they've certainly improved their displays since the gift card really exploded a few years ago, I still get the feeling that they're relegated to second-class status when it comes to store design. Hanging pegboards and flimsy cardboard displays are hardly a great way to showcase a high-margin, nearly universally-acceptable product, but few retailers that I've seen seem to agree with me. You know you're going to be selling these things forever, and they don't take up a huge amount of space. Why not build in some great-looking permanant displays to merchandise them like the high-margin items they are?

Saturday, June 09, 2007

Bringing online shoppers back into the store

Dave Polinchock over at Brand Experience Labs wrote a little blurb on a company called NearbyNow, who has the formidable task of encouraging online shoppers to make purchases in-store. They do this via a combination of web-based marketing and advertising (including optimizing retailers' web sites), traffic generation, and a bunch of analytics software to monitor progress. The general idea is that even if shoppers can already look for discounts, sales and coupons online (and they do), there are still a host of reasons for shoppers to actually complete the purchase process in the bricks-and-mortar world. Given how easy it is to buy just about anything online and have it delivered to the doorstep these days (I did about 75% of my Christmas shopping online last year -- Amazon free shipping rocks!), it's getting harder for many retailers to articulate their benefits over purely-digital shopping.

That's where NearbyNow comes in. From this article in the St. Pete Times:

"We're adding a Google-style product search that makes mall sites relevant to how people shop today, " said Dunlap. Follow-up surveys found one in 10 shoppers who used NearbyNow said it influenced an ultimate purchase. One in 100 tried to reserve something.

Reserving stuff, though, is hard to pull off.

Some chains can handle queries by e-mail directly to and from each store. Most do not. So NearbyNow telephones each store from a Kansas call center. Some store clerks will check the racks, some won't. Some will hold products for a customer for 24 hours, others won't. NearbyNow promises a response within 90 minutes, but the average is 20 minutes.

Westfield pays nothing for the NearbyNow hookup. But all of its stores and mall kiosks get a free text listing of what they want summoned for product searches.
This is clearly a logistical play as much as it is a tech play, and from just these few paragraphs it's pretty clear that a lot of retailers don't yet grasp how important these kinds of services will become as the Internet shopping experience continues to improve. Still, we're a long ways off from the time when we can strap into a virtual reality suit and navigate products just as we do in the real world. Until then, bricks-and-mortar retailers will continue to have a significant advantage with any product line that does best in a try-and-touch instead of a show-and-tell situation.

Tags: NearbyNow, store experience, advertising

Thursday, June 07, 2007

Raft of new inventions promise wireless power, interactive packaging

While most of the new companies and individuals that we've worked with these past few years have been skilled, educated and competent, every once in a while we'll get a call from somebody who -- knowingly or not -- asks for the impossible. Not low pricing impossible or new software development impossible. I'm talking about real law of physics-breaking, time-travel and unicorns impossible. Of all the crazy and inane-sounding requests, my favorite has to be the demand for wireless power. Of course such a capability would be a great boone at home, at work, and of course... in the retail store.

Well, if a bunch of researchers at MIT get their way, I may soon have to poking fun at people and instead start learning about wireless power infrastructure. That's right, they can light up a 60W bulb from 15 feet away with no wires, and there's a good chance that the enabling technology (which uses finely-tuned magnetic fields to deliver the power safely across short distances) will find its way into the consumer sector in the coming years.

As if that wasn't enough, Swedish researchers have identified a way to bring interactivity to static posters and packages by laminating a conductive polymer to standard heavy-duty posterboard. As New Scientist notes,

The billboards are made almost entirely from paper materials, making them cheap to assemble, and easy to recycle, says Gulliksson. "We've used the roll-to-roll methods used by industry to process paper materials."

To make the paper surfaces interactive, the team screen prints patterns using conductive inks containing particles of silver that overlap, allowing a current to flow.

The interactive billboard is made in layers with a 3 centimetres thick back layer of Wellboard - a kind of extra-strong cardboard - forming the base. A sheet of paper screen-printed with conductive ink is placed on the base, with a second sheet carrying the billboard's design placed on top.

The middle conductive layer is connected to a power supply and simple microelectronics that play, pause and rewind sounds when the correct sensors are triggered.

Touch sensors are made using a fine pattern of conductive lines in which the current flow is altered when a hand touches it. Laptop computer touchpads use the same principal.

Speakers are made by printing electromagnets out of conductive ink and stretching the paper over a cavity like a speaker cone behind the billboard. The electromagnets vibrate in response to a current, creating a sound.
Touch- and sound-enabled posters are only the beginning, though. Once the process is perfected, I'd expect this kind of technology to quickly find its way into POP displays and even product packaging, where it could add both novelty and utility to an area that could use some excitement.