the impending in-store marketing revolution - WPP.com

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Continued from page 5With this kind of fine-grained data, says George Wishart, the head ofNielsen’s in-store division, retailers can adjust store layouts and staffinglevels accordingly. Although retailers think they know how to positionproducts in a way that will maximise sales, says Peter Hoyt of theIn-store Marketing Institute, “the science of adjacency is not a science.”With P.R.I.S.M., he says, the gut feeling that peanut butter should beplaced on a shelf next to jam in order to increase the likelihood of acombination purchase can be tested directly against sales data.“Shoppers are not just being monitored by cameras andsensors — sometimes speech is recorded, too.”Best Buy, a big American consumer-electronics chain, takes this astep further. It uses Brickstream’s BehaviorIQ cameras to collect dataon its customers’ behaviour patterns and has used this information todivide them into five customer types — young technology enthusiasts,suburban mothers, affluent early adopters, family men and smallbusinessowners — who want different things. Each group is thenprovided with an area of the shop designed to meet their needs.As the technology improves, it is getting easier for other retailers todo the same sort of thing. VideoMining, for example, a spin-out fromPennsylvania State University, uses a combination of video camerasand software to capture and analyse thousands of hours of footage ofcustomer behaviour. As well as providing information about customerbehaviour, the firm’s software can also determine each shopper’s sex,age range and ethnic group with an accuracy of around 80%, says JeffHershey of VideoMining. The result is an “activity map” which can helpretailers to identify the factors that drive higher sales. The system can evenbe programmed to detect the characteristic behaviour of shoplifters.Inevitably, all this raises concerns about privacy. Counting customerswith motion sensors as they enter a supermarket is one thing, butsorting them into social or racial groups using video analysis is another.Mr. Hershey responds that none of the footage or information aboutindividual shoppers is stored. Besides, says John Greening of theMedill School at Northwestern University, customers are generallywilling to give up some personal information if they feel they are gettingsome benefit in return. Rather than seeing customer monitoring as aninvasion of privacy, he considers it a means of making shopping a morepleasant experience for “time-compressed” (i.e., busy) consumers.These systems, he says, are “not a matter of Big Brother,” but rather ameans of gaining insight and “understanding motives.”LISTENING INShoppers are not just being monitored by cameras and heat sensors,however; sometimes their speech is being recorded, too. Recordant, anin-store monitoring company based in Atlanta, provides shop assistantswith digital-audio recorders, to be worn around their necks, whichrecord all their conversations with shoppers. At the end of each day therecording devices are plugged into special docking stations and therecordings are uploaded to Recordant’s headquarters for analysis. Itssoftware trawls the recorded dialogue for particular words or phraseswithout the need for any human input in order to provide accurateinformation on employee performance and customer behaviour.BRICKSTREAM MAPS A SUPERMARKET’S HOT SPOTSRecordant says that trials in 40 locations have proved the value of thetechnology: one retailer was able to show that there was a 300% increasein sales of products recommended by shop assistants to customers.By providing precise measurements of this kind, the technology allowsretailers to refine their training programmes and evaluate the effectivenessof promotions. They can even collect “competitive intelligence” byprogramming the system to search for the names of rival retailers, saysChris Etter, the chief executive of Recordant.Unlike systems based on video cameras or sensors, Recordant’stechnology is required to notify customers explicitly that theirconversations are being recorded. To this end, the recording devicesinclude a small video screen which displays a message informingshoppers what is going on. Mr. Etter admits that both employees andcustomers have expressed worries about privacy and have shown someresistance to the devices. But he likens this to the initial disquiet over therecording of customer-service telephone calls, something that is nowwidely accepted. Besides, he says, the system can provide protectionfor employees who get involved in disputes with fractious customers.As useful as customer-tracking systems may be for exoneratingharassed staff or minimising shoplifting, however, their primary objectivesare clear. In an age when traditional “bricks and mortar” retailers facestiff competition from online merchants, any means they can use to getcustomers into their shops and buying as much as possible is seen asa worthwhile investment. Long before the advent of e-commerce, Wal-Mart’s founder Sam Walton set out his vision for a successful retailoperation: “We let folks know we’re interested in them and that they’revital to us — ’cause they are,” he said. Customer-monitoring systems areunderlining just how interested, and just how vital.6© Copyright © 2007 The Economist Newspaper and The Economist Group. All rights reserved.
Alive onArrival Publishedin Nov./Dec. 2007BY CHRIS HOYT, HOYT & CO.SCOTTSDALE, ARIZ. — In its October 1st edition, Advertising Age— that bastion of thinkers that has long held that retail is “tactical”and therefore awfully pedestrian — actually published an article onshopper marketing on the front page. The article acknowledged — inso many words — that retail may now be emerging as a new, legitimatebattleground for building share, extending equity and increasingloyalty. This breakthrough, if we interpret this article correctly, may beattributed to three things.First, the P.R.I.S.M. initiative promises a standardized, syndicatedmeasurement model to evaluate in-store consumer reach, therebyenabling advertisers to benchmark these results against moretraditional forms of advertising and communications investments.Second, the line-up of companies supporting the P.R.I.S.M. initiativevirtually guarantees industry-wide acceptance (assuming the resultsare verifiable). These not only include many of the top players in theCPG industry today (Nielsen, P&G, ConAgra, Campbell’s, etc.) but —significantly — no fewer than six top advertising agencies.As Renatta McCann, CEO of Starcom MediaVest Group North America,declared: “Shopper marketing is a new medium as important as theinternet, mobile or gaming.” That’s quite a statement from a segmentof the industry that formerly viewed retail as virtually invisible.Finally, the leadership of Procter & Gamble — the company that startedit all — and the company that is in so many product categories, isforcing its competitors to get good at shopper marketing just to stayeven. To satisfy Wall Street analysts who thought P&G was graduallywhittling down its traditional advertising expenditures, the companyannounced in September that it would now treat in-store marketingexpenditures as traditional advertising expenditures and, to that end,restated 11 years of advertising investments.Based on this, the indications are that P&G is currently spendingapproximately $500MM per year on its shopper marketing initiatives— an investment we know the ROI-based company would not makeunless the results were better than traditional alternatives.The bottom line, as Advertising Age points out, is that shoppermarketing is now growing faster than internet advertising, doublingsince 2004 and on a pace for a compound annual growth rate of awhopping 21 percent through 2010.This simply confirms a Reveries.com finding in one of the surveysit did on this subject last spring, in which 84 % of 167 respondingcompanies reported that they expected their shopper marketingbudgets to increase over the next three years — a remarkably highand unusual number.STAKEHOLDERS ALIGNFor once, all key stakeholders have a vested interest in making itsuccessful for each other. Retailers view shopper marketing as themeans by which they can increase customer loyalty through relevancyand therefore the mechanism by which they can differentiate inmeaningful ways on a non-price basis. This is clearly working forcompanies like Safeway, Kroger and Best Buy.Manufacturers view shopper marketing as a clear way to establish ameaningful competitive edge — more specifically, as an opportunityfor significantly better targeting of the shopper in an environmentwhere they know they will be able to reach (or “touch”) 100 percent oftheir target consumers at least 2-3 times per month (or more!) everymonth of the year.In addition, shopper marketing offers suppliers the basis for truecollaboration with retailers on levels previously unheard of, as bothwork together to identify, segment and activate the shopper. With theadvent of P.R.I.S.M., advertising agencies can no longer afford to turnup their noses at retail as manufacturers begin to use P.R.I.S.M. resultsto reallocate marketing spending into those media that deliver thehighest ROI — and now this will include retail. Those in the forefrontof this, like Starcom MediaVest, will clearly prosper as manufacturersstart to seek out agencies that have made it a priority to become “bestpractitioners” with respect to retail advertising and communications.Continued on next page7
Page 2 and 3: an update on groundbreakingefforts
Page 5: Watching as You ShopRetailing: Big
Page 11 and 12: “Shopper marketing is a new mediu
Page 13 and 14: Wal-Mart, P&GSee SalesThrough a Pri
Page 15 and 16: C“ ompanies consider shopper mark

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