In a retrospective moment I decided to pull out an article that I wrote in early 2008 called Merchandising 2.0. In this article I predicted the following:

“If the remote control has spelled the death of advertising on television, then the cellphone ushers in the re-birth of advertising — as information — at retail. The cellphone is the new remote control of marketing, and this time it is our best friend.”

I go on to point out that the (now-called) smartphones will serve as a just-in-time information resource and support transactions anywhere, anytime for the shopper. As much as I was directionally correct in the influence of this technology on retailing, my predictions fell short of what today’s technology is capable of and how retailers are already reinventing the in-venue shopping experience. This piece attempts to examine how in-venue media is being used to drive positive change for both the shopper and the retailer. 

Let’s start with a high-level view of digital signage within the retail store. 

The “digital signage” moniker implies static and passive communications that has no precise contextual awareness. While the name has stuck, most everyone understands that the ultimate power of the digital sign is in delivering the right message, at the right time, at the right place. In other words, effective digital signage needs to be relevant to the viewer. You have to earn their eyeballs through the content before you can get any shopper mindshare. The watchwords to achieve that are relevance and recency. Just like there are differences between a cellphone and a smartphone, we can differentiate between a network with a standard playlist on the screen versus a network that employs software and methodologies to pinpoint messages to a specific screen location at a specific time of day … digital signage versus smart signage. 

With that in mind, if you are planning to invest in digital signage, make sure you look for a CMS (content management system) with the following list of “smarts” to make your network a success.

• Automatic placement, what we like to call non-deterministic programming of a unique playlist supported by content and location attributes (meta-tags). This, with a set of business rules, enables content to automatically find its way to specific locations with very few people managing the scheduling and publishing of content.
  
• Generate real-time content by utilizing open APIs (application programming interface) to feed various data in and out of the CMS to create content on the fly. A sampling of these sources includes external cloud-based data such as weather, news, sports, and shopper-generated information from mobile devices; and retailer enterprise data such as ePOS, inventory, pricing, merchandising and additional shopper loyalty data.
  
• Conditional playback functionality that can utilize the above data feeds to intelligently alter the playlist by adding or removing content in order to enhance relevance. For example, if a product on promotion becomes out-of-stock, then remove that promotion on the screen in that store. Or, if the local sports team makes the playoffs, then display “congratulations” and promote party foods or the purchase of a new big-screen LED. You get the idea.
  
• Utilize selective store staff to display relevant messages that drive incremental sales. A CMS should allow you to empower your store to manage the on-site messaging based on their experience and knowledge in connecting with the community, employee of the month, local sponsorships and charities, etc.

As I mentioned earlier, smartphones are a game changer, particularly in the retail industry. However, applications can be either a friend or foe to the retail store. Pricing and consumer report apps can turn a retailer into a physical showroom for the shopper as they touch and feel products that they will ultimately buy elsewhere. We need to know how to best utilize the smartphone so it’s no longer a foe. How can this ubiquitous device help you drive conversion, transaction size and loyalty?

First we must understand how smartphones are currently being used among shoppers and where our greatest opportunity lies. According to research done by both comScore and Forrester, four out of five consumers use smartphones to shop and an average of 22% of smartphone owners have used a shopping application in the past three months. Add to that, a fact uncovered by the CMO Council: 54% of North American consumers would consider ending their loyalty relationships if they were not given tailor-made, relevant content and offers. These statistics show that smartphones have a significant presence with shoppers yet phone apps need to be more targeted and offer greater incentives to encourage engagement.

Retailers should look for ways to interact with shoppers through web-generated applications that come up instantly versus downloadable apps that creates a barrier in adoption. Also, don’t rely too heavily on information or the novelty factor to earn high adoption among shoppers. The incentive or the entertainment factor needs to be significant enough to prompt shoppers to take out their mobile devices and engage.

If done correctly, smartphones can be an important and valuable point of in-store engagement between the shopper and the retail brand. To get there, let’s look at the potential interplay between the smart sign and the smart phone. 

Demand shopping is an interactive in-store experience that we have developed. Many retailers are talking about it and I believe it is a good example of what is possible in retailing. We are all familiar with the model. We have seen it used successfully in some of the biggest shopping brands such as QVC and Groupon. At its most basic level, it is the promotion of an item where there is a finite inventory that gets counted down both in units and time. When implemented in a store the promotional price can be driven down based on the number of shoppers opting in. Imagine a designer handbag is displayed on a smart sign with the starting price of $80.00 for the next 40 minutes. The shopper is instructed to scan the QR code, triggering a web-based app to appear on his/her mobile phone. The app prompts the shopper to sign in directly on a mobile web-page or they can connect through Facebook or Twitter. Once signed in, the shopper can tag the handbag which in turn drives down the price and sends a redemption code to their phone. Further, her friends can view the purchase and inspire a wave of similar purchases. As the number of shoppers who opt-in increase, the cost of the bag will decrease. Of course, the shoppers need to buy the item before the inventory or time runs out. As the image illustrates, items can be selected to be displayed on the smart sign based on a planned promotional calendar, end of season items or by flagging over-inventoried items.   

Other brand reinforcing experiences can be voting, trivia quizzes, and games. We have done all three and have inserted a few screen shots to give you an idea of what they can look like.







The last idea I want to touch on is taking a standard fixture in fashion retailing, the mirror, and changing it to create a more efficient and interactive experience with the customer. We have launched a product called DelayMirror that “reflects” an image back to the shopper with a three-second delay. In reality it is a digital screen with a mirror-like feel and a digital video camera mounted in the bezel; a media player controls the images. The shopper steps out of the dressing room in a new outfit, walks up to the DelayMirror, spins around and sees himself or herself in that outfit from the front, sides and back. Meanwhile, the “mirror” can then display accessory ideas such as handbags, shoes, and jewelry alongside the shopper. The shopper can then capture the image on her smartphone and share with her friends on Facebook, or any other social media site to get their opinions and feedback on the outfit.



This short piece has touched lightly on several areas, however I hope it triggers some thoughts on the power of convergence when smart signs, smart phones and social media come together in retail. The technology enables retailers to create experiences for shoppers that foster a dialogue between the retail brand and its customers, a dialogue that promotes loyalty, increased conversion and increase transaction size. 

In my last blog I spoke to the DSA accomplishments of 2010 and how the DSA is “creating ground cover and air support” for our members and industry, especially in light of the increase emphasis of buyers to implement converging screenmedia technologies such as e-commerce, kiosk, digital signage, mobile and social media. 

Therefore I thought it would be appropriate to now focus on why these technologies are quickly and dramatically changing the consumer and shopping landscape.

When Amazon launched 15 years ago, one of the things that grabbed peoples’ attention was their recommendation engine. When you logged on you were greeted with your name and got a storefront designed especially for you – based on your past shopping experience, likes and dislikes. And it worked. People bought more, and it created more loyalty so people bought even more, and a virtuous circle was born.

Since then the large branded 'bricks and mortar' retailers have been wondering how to recreate this experience in store. For example, when millions of shoppers walk through a brand name retailer such as Macy’s, can that retailer identify an individual when they walk into their store in Herald Square on one day and perhaps their store in Chicago in three months time? Can they tailor an offer for this shopper? Can they really differentiate themselves on more than the quality of their clothes, price or service?

Not so long ago a retailer would persuade their customers through a combination of TV, radio, coupons, print and in-store merchandising. There was no real thought of two-way communication - the only feedback loop from customers tended to be the returns desk in the store. Now a retailer has to think about reaching customers through dozens of means including:

Low Engagement
• Newspapers
• TV and Radio
• Coupons and Inserts
• Web Site
• Mobile site
• YouTube
• RSS Feeds
• Podcasts
• Blogs
• Digital signage in venues
• Streaming services
• Search optimization and marketing
• Email marketing
• E-Commerce booking services and shops
• Social networking sites (Facebook, Myspace etc)
• Twitter
• In-game broadcasts and transactions
• Downloadable mobile apps (eg Shopkick)
• Location Services (FourSquare, Facebook Places)
• Loyalty programs
• Interactive mobile sites (e.g. bar code readers, etc.)
• Active CRM (customer relationship management)

High Engagement

It's no wonder that many retailers are scratching their heads and wondering how to do this. The best ones are beginning this engagement and are realizing that attracting and keeping customers is now about having a conversation with them and not speaking to them through a megaphone about price and product features.

Most retailers remain at the top of this list with very few running the gamut of all these services (or frankly needing to). However the scale of the problem becomes apparent, as the most effective organizations will understand what these technologies mean and will also be able to deploy them effectively to build audiences and market to them thus becoming true multi-platform, multi-channel retailers.

Finally, the Holy Grail is to connect the offline to the online worlds. Retailers need to start thinking about who their customers are, what they like, what they dislike and tracking them on and offline. Thus, if Macy’s can track me as being on their catalogue list, their e-mail list, when I visit their Web site, when I visit their Facebook page and also, crucially, know when I have actually visited the shop in person, allowing them to make specific offers to me, it allows them to start a conversation with me that will build loyalty and get them to know me.

This is all expensive to do well. Organizations that want to do this will have to commit the resources, people and thought leadership if they want to succeed. Merely dipping their toes into these areas is unlikely to lead to any meaningful success.

So how does this become a reality? The answer lies in the clever deployment of integrated customer-facing technologies. Retailers have spent the last two decades upgrading their back-office technologies - ordering systems, inventory systems, EPOS systems, scanners, etc. This has created great efficiencies and increased profitability.

In the last decade retailers have begun to think about customer loyalty systems – mainly around card loyalty plans – and have started tracking customer behavior and buying patterns to make personalized offers. Where this has been done well - Tesco in the U.K. is a great example - it has lead to increased sales and loyalty.

In the last five years retailers have started putting in place Web sites with e-commerce capability and are moving toward being multi-platform. Finally in the last two years retailers have been moving into the social networking sphere with Facebook pages and Twitter accounts.

However there still remains a disconnect between the online and offline worlds. The link between these worlds - the mobile phone - is something that retailers are only beginning to grapple with today.

Many leading software solutions are currently pioneering the way in integrated retail digital signage. The platform should link into retail inventory systems to ensure what is being promoted is in stock and into POS systems to ensure correct pricing and to measure the impact of the promotions to allow a clear measurement of ROI. In addition, the assets used for digital signage can be reused on the Web and on mobile where appropriate, thus ensuring that retailers are providing one consistent branded face to their customers.

However, it is in the links with mobile where the platform becomes really interesting. Leading suppliers should be prepared to work with retailers in creating apps for smartphones that can be downloaded from the retailer's Web site or social networking site. The user enters a store and can use the smartphone app to interact with a digital sign in-store (by using the smartphone app to scan a barcode on the digital sign, for instance). This now allows personalized offers to be sent to the customer while they are in-store, creating stickiness and increasing sales.

These personalized offers have redemption rates of 20 percent to 30 percent, versus the two percent to three percent of traditional coupons, and can have a dramatic effect on sales. This proximity marketing in store works, and it is here now.

So how might it work? A store puts in place an advanced digital signage system. They run a signage network linked to their POS and inventory and can track the effects of promotions. A customer goes to the store's Facebook page and downloads an iPhone app. When they come into the store, the app prompts them to scan a barcode on the digital sign - thus creating a physical link between the customer and store. The customer can now get special offers in-store, see where products are located, fulfill shopping lists and so on. In addition, they can see products, photograph them and post them back to their Facebook wall to ask their friends for comments - a true conversation with the customer that will result in increased sales.

If you get a chance, check out the upcoming webinar on Customer Engagement Convergence.