Digital Retailing Busy Season, and Digital Merchandising Projects

Author: Bill Gerba on 2004-09-19 00:41:18

My blog entries have been a bit less frequent these past few weeks, as the busy season at WireSpring has just begun. It's traditionally crazy here from just after Labor Day until Christmas, but after a very active summer period (much more so than in the past), I had wondered if we wouldn't see the traditional 30-40% up tick in year-end business that we've come to know and love. After only one week I can safely say that any concerns I may have had were completely unwarranted, and retailers this year seem to have a hungry appetite for all things digital retailing, and in particular, digital signage.

Regardless of whether a growing economy, a more discerning consumer base, or a general dissatisfaction with traditional advertising is to blame, retail chains and consumer product manufacturers are becoming much more open about their digital retailing ambitions, with many creating formal proposals for integrating new technologies like narrowcasting networks and interactive kiosks into their existing store display and POP advertising plans. Additionally, high-profile deployments by companies like Borders Books and the Home Depot have been making enough noise to attract the attention of store designers and retailing experts everywhere.

What we have come to see in the very early years of this new industry is that it follows a cycle based on both retail patterns and corporate spending patterns. Even though the vast majority of retail sales are made in the 4th quarter of the calendar year, most of these companies set their budgets during the previous year, including the portion set aside for in-store advertising and retail display fixtures (the part the kiosk and digital sign projects typically fall into). While smaller companies, consultants and start-ups don't really adhere to this policy, nearly all of the retailers and consumer product manufacturers do.

To make the situation even more confusing, no large company would consider doing a rollout of such technology without doing some kind of beta test at one or more location. However, while the money for a full deployment most often comes out of some part of the fixtures or in-store advertising budget, funds for a beta test often have to be scrounged for, often out of the IT budget, since capital expenditures for computers, screens, and networking equipment are required. Thus, bringing a project to fruition often involves (a) working with the marketing group to identify the need and establish a plan, (b) work with the IT or technology group to budget for and deploy a beta, (c) go back to marketing with the results of the trial to identify the time to initial ROI, and finally, (d) take the (possibly revised) plan and a budget for full rollout to management for approval. With management approval you'll need to add lots of extra steps with both marketing and IT to work out the details of the deployment, but by that point much of the hard work has been done already.

Thus, if you work for a company that you think can benefit from digital retailing technologies and you want to champion a beta test, it's important to involve all of these parties early on. Wait too long to get your IT folks involved, and they may feel like their budget dollars are being controlled by the whims of marketing people who want to add more work to their already busy schedules. Likewise, pitching your plan as a technology project to the IT staff will virtually ensure that your marketing people won't want to touch it with a 50-foot pole. The key to success with any digital retailing project is to work with both halves of the equation -- be diplomatic and facilitate communications between two groups that might not be so familiar with working with each other.

Disclaimer: Not all companies have this sort of problem. Some firms really have it together, and have no problem with complex projects that span multiple groups or divisions. However, it has been my experience that if there's going to be an internal hang-up over a digital merchandising project, it's almost always due to politics between these groups. Your mileage will vary.