THE STORE IS THE MEDIUM 2004-05-10 (1)

AMANDA WEEKES / Additional reporting: John Dawson / Michael Garry

Retailers spend millions on media advertising and direct marketing to reach their shoppers but, as pundits have often observed, the store itself may be the best vehicle of all for communicating to shoppers.

"Realistically, the majority of people don't make their buying decisions until they actually get into the store itself," said Barry Wise, Wise Retail Consultants, Flower Mound, Texas, who consults for Epson America and Sweda. "These retailers spend a lot of money on data mining to know who their customers are, but then fail to touch them once they get into the store."

That's beginning to change as more retailers explore the new breed of in-store technology designed to communicate with shoppers at the checkout and throughout the store. Several options have emerged, including in-store television, digital image projection, flexible electronic displays and Web-based signs.

Regardless of which in-store technology option they choose, retailers are trying to "empower the stores to execute the communications in the most efficient way possible," said Dean Sleeper, chief executive officer, AccessVia, a Web-based sign provider in Seattle. "All of these communication opportunities for the retailers to their customers are identical, with the exception of what device they publish on."

In some cases, retailers can also use the in-store communications systems to generate ad revenue from manufacturers.

As with many other technology applications, Wal-Mart Stores, Bentonville, Ark., has been ahead of the curve with in-store communications. Wal-Mart has been running the Wal-Mart Television Network for the last eight years through San Francisco-based Premier Retail Networks (PRN), which produces and delivers the content.

The programming, which differs for Wal-Mart Supercenters, includes information on everything from nutrition and available products to cross-merchandising promotions. Satellite broadcasts are transmitted to servers in each store.

"We use the WMTV Network to support in-store initiatives," said Danette Thompson, a Wal-Mart spokeswoman. "We try to leverage that along with WM Radio to communicate relevant information to customers at any given time."

Wal-Mart uses between eight and 12 monitors to play the same programming throughout the store, with variations in the pharmacy and electronics sections. "As Wal-Mart continues thinking about the store's role in the community, we are challenging ourselves to provide relevant content in each store," said Thompson.

PRN also has a partnership with Kroger-owned Ralphs, Compton, Calif., delivering messages via DSL to TVs in the checkout area at 100 stores. PRN sees the checkout as a fruitful spot for its messages. Consumers spend an average of 50 minutes a month waiting on line at the checkout, according to Mike Quinn, senior vice president of marketing, and general manager of grocery for PRN.

"Unfortunately for most grocers, that hour spent in line is a negative," said Quinn. "Our goal is to turn it to a positive for the retailer. So we say to them, 'You've got an opportunity to talk to every single one of your customers, every month, for almost an hour. Let's do something with it."'

Currently at Ralphs, PRN is promoting the chain's private-label items through commercials seen only in the store. The commercials will often show someone talking about a specific product found in the store, on that day, at a certain price, said Quinn. The ads will also provide a map of the store with directions to the product.

PRN also helps develop other sections of a store, such as pharmacy, video, deli and the photo lab. "Our goal is to find the place where people are slowed down and are a captive audience," said Quinn.

In addition to obtaining a communication vehicle, retailers stand to generate revenue through PRN. While PRN's financial arrangement is different for each of its retail customers, which include 5,700 stores operated by mass merchants, clubs and supermarkets, the general formula is that advertisers pay PRN, which in turn pays the retailer for running the programming. PRN reported that it delivers 185 million impressions every month across its network.

Across the Atlantic, at least two major tests of in-store TV are taking place. In April, Tesco, the leading supermarket chain in the United Kingdom, kicked off a 100-store installation of Tesco TV, following extensive tests. The TVs feature ads, health and beauty tips, recipe ideas, news and public service announcements. Reports last month revealed Tesco saw a 10% boost in sales for 62 brands involved in the tests.

In another example, Spar, the U.K.'s largest convenience store operation with some 2,700 stores, achieved encouraging results from its six-month, six-store trial of in-store promotional TV. The trial was run by the IQ Group with eye-level screens of various sizes throughout the store, including an 8.4-inch shelf-edge model.

According to POPAI (Point of Purchase Advertising International) Digital, which sponsored a research project around the Spar test, "The general brand messages on screen achieved average sales increases of 10%, while price promotions reached 24% to 25% [gains]. Interestingly, advertised items sustained an average 15% post-promotion increase."

Simon Fisher, Spar advertising manager, said he is "very happy with the response from customers and staff." Spar is talking to suppliers to estimate their level of interest for a continued rollout.

Other stores are using a different approach to in-store advertising. Last December, United Supermarkets, Lubbock, Texas, launched a six-month, multi-vendor pilot of digital marketing screens at one of its Market Street stores in Colleyville, Texas.

Four screens, mounted on polls hanging from the ceiling, were installed around the store, two as large as 16 feet by nine feet. Both still and moving images are displayed onto the screens by projectors, initially emphasizing center store promotions for private-label products.

Epson provided the screens and projectors for the United test, while Sweda provided content management software. United controls all content development. "This allows us to transmit relevant, customized digital messages to specific stores and places in a store," Dan Sanders, chief marketing officer for United, told SN earlier this year.

Epson has also developed a new projection technology that will display a moving image onto glass, such as at the storefront, said Wise. The glass has to be treated with a clear film, and the projected image looks like a flat digital television screen.

In addition to video systems, retailers are investigating accompanying audio technology for the store. United is looking at adding audio to its pilot in the form of "audio spotlight" technology that focuses a "beam of sound, like a flashlight" to minimize noise in the store, Sanders said.

At Ralphs, the PRN checkout TV system includes an audio component that "adjusts ambient noise" so that messages are heard just by the shoppers on line, said Genet Garamendi, PRN's vice president, corporate communications.

Good Old Signs, Web-Style

For most stores, signs are still the preferred method of communicating with shoppers, but the Internet is providing a new way for stores to generate their signs.

For example, AccessVia's Web dSign software enables stores to access -- from chain headquarters through a company intranet, or from AccessVia through the Internet -- pre-designed company sign templates. The store then adds its own information and prints out the signs, without having to wait for the company headquarters to design and print the signs.

AccessVia has an agreement with over 150 retailers, including Safeway, Kroger, Supervalu, Wild Oats, and other retail formats.

Wild Oats recently began using the Web dSign technology in all of its stores. "We were amazed at how quickly we had the site up and running," said Jeff Sobeck, director of store systems at Wild Oats, in a prepared statement. Stater Bros. recently started using AccessVia's technology to print all signs and labels in its stores, too.

Sleeper, AccessVia's CEO, contended that signs remain the easiest and most effective way to communicate with the customer. "Where in 'Retail 101' does it say that it's a good thing to have customers standing in a corner staring at a computer screen, unengaged from all the rest of the products and the retail experience?" he asked.

Certain products, such as vitamins, can benefit from providing additional information via signs, Sleeper said. Yet when it comes to motivating sales, technology almost never trumps a good sale, he stated. "Let's be honest. Frequently, the primary motivation is 'a monster of a good price today."'

Kodak's Cheaper ESL

ROCHESTER, N.Y. -- Electronic shelf labels (plastic modules that electronically flash prices at the shelf) have been around a long time, but their cost has thus far limited industry adoption. Kodak here is developing a new, flexible display technology that it claims will result in ESLs that are a lot cheaper than current models, as well as larger electronic displays.

The technology is based upon polymer dispersed cholesteric liquid crystals (PDChLC), which use the basics of traditional LCD technology but at a very low cost, said Chris Johnson, business segment manager, display and components group, Kodak.

In addition to ESLs, the technology can be used to create thin, shatterproof signs that require, at most, a watch-size battery. They can be twisted and shaped to create an eye-catching advertisement for the retailer, said Johnson. "These signs can be used in a number of exciting ways in a retail environment." Kodak is in the development stage, and expects to have pilots running by next year, he added.

Another use for the technology could be in the video department. Kodak has already developed a small, flexible display screen attached to a video cassette that allows retailers to display the due date of the video. The screen is programmed to display the due date at the point-of-sale. Said Johnson, "This lets the customers know exactly when they need to bring it back, and the retailer gets less late returns."