If you've ever been to a Pier 1 Imports, you'll know the type of store that I'm going to talk about. It's perhaps 6,000-8,000 square feet, geared towards females age 20+, and filled with thousands of trinkets and doodads that nobody actually needs, but that sell well by catering to consumers' sense of style (and disposable income). But unlike Pier 1, these stores carry products whose names have dots over a bunch of letters and weird slashes through the O's. That's right, this time we're going to Scandinavia to look at a digital signage pilot that proved its mettle this holiday season, and is gearing up for an expansion.
Unlike the past two deployments we looked at (see my articles on dynamic signage in a grocery store chain and a digital signage pilot in a soft goods retailer), this one was much more subtle and less grand in scale. Instead of opting for a store-wide network of digital screens, the chain decided to try and maximize their bang-for-the-buck with only a single bank of plasma screens behind the one cashier's area. The store's layout (which I was told was fairly typical, but not the only layout that the chain used) featured the cashier's island towards the back wall of the store, lined up with the center aisle. Entrance doors at the front opened into a smallish landing area which led to the center aisle, with narrower aisles against the walls to the left and right. The products displayed were smaller things like tableware, vases, bookends, etc. along with the furniture (chairs, trendy-looking sofas, armoires) that they were placed on. Shelves of trinkets (and other attractively priced, high-quality merchandise, I'm sure) lined both side walls. Overall, the stores were quite attractive, bright, and had that pleasant cinnamon/potpourri fragrance that so many female-oriented stores seem to feature these days.
Behind the cashier's island was a wall that (depending on the store) contained posters, a single plasma screen, or a 1x2 (landscape) plasma array. The screen content varied between pure branding materials (lifestyle clips interspersed with the brand logo and colors), and pricing and information on advertised specials, loss leader products, and the like. The screens showed full-screen content, which was nice, crisp, and brightly colored, and blended well with the store's overall brand theme. The text was composed of large, high-contrast letters, and I was told (by somebody who speaks the language) that there was a call to action designed to drive sales. One of the project managers then told me this anecdote:
The branch manager had requested content to promote a poorly-selling line of inexpensive tableware. The product was relatively undifferentiated from some name-brand alternatives, which were selling well (at higher prices but lower net margin for the retailer). The project team responded with two new 15-second content segments advertising the product and noting its price, availability, and relative location within the store. Over the next month, sales of the product were tracked, and afterwards compared against another store which had the digital signage network, but did not carry the ads for the tableware. The result: the store showing the ads had an over 500% increase in sales of the advertised product. Most of this was cannibalistic (in other words, sales of this line of tableware came at the expense of other similar products), however there was an overall uptick in sales for that category (it was much smaller, around 6-8%). From the retailer's perspective, they had accomplished two key goals: selling more of their high-margin, private labeled brand, and growing the aggregate size of the segment. Of course, this was partially at the expense of the other (non-private label) supplier, whose sales were reduced in the process.
These findings suggest that digital signage should be looked at as a strategic part of a retailer's in-store merchandising plans. In other words, the technology should be viewed not only as a way to improve sales performance in general (which is a somewhat nebulous goal), but also as a tool for shaping sales distribution by category and meeting specific goals and targets. In this case, the signage served as a way to liquidate stock of a poorly-selling product line. It's too bad that the chain didn't experiment with using static signage at another location to accomplish the same goals, but it seems that a lot of installations take a fairly lax attitude towards experimental controls.
Still, the retailer is quite happy with the overall performance of the digital signage pilot, and expects to expand the deployment to the rest of its locations this year as part of a larger plan to upgrade the store's brand image. And actually, that brings up a good point. We're all obsessed (well, at least I'm obsessed) with ROI. I love to see that cause-and-effect relationship and know what kind of value I'm getting for my money. But for a lot of consumer retail chains and CPG manufacturers, brand equity, image, and in-store experience are still very important. Thus, many store chains are happy to devote a portion (or all) of their screen time to showing purely branding-related content, because it improves the look and feel of the store environment. And while it's hard to say what effect (if any) showing branding content on an in-store television network has, many brand managers and visual merchandisers seem willing to treat the indirect positive effect on the store environment as a sufficient return on investment, even if there are no specific numbers to back it up.
While it doesn't cater to my need for ROI, this practice seems to please a number of retail chains using digital signage today. The visual merchandising managers and store layout designers at these companies are smart, educated, and they understand their own corporate brands and marketing strategies better than I ever will. In the end, that's good enough for me :)