Suit Your Shelf

If you want to see one of the reasons why shopper marketing has been carving off an ever-bigger slice of the marketing pie, just compare the number of weekly shoppers at major retail chains with the number of Americans who tune in to top TV shows. Take Dancing with the Stars and American Idol, for example.While 21 million people waltzed over to their sets to watch an average episode of Dancing last year, and Idol. cast its spell on still more (35 million for the season finale), those audiences pale when compared to the crowds that pack the aisles of the big-box retailers. Costco, Walgreens, Safeway and Kroger boast weekly shopper counts of 20 million, 30 million, 44 million and 68 million, respectively. Passing through the revolving doors of Wal-Mart locations across America each week are 150 million people.Now consider this: While TV's audiences have been fragmented by the addition of hundreds of new channels, retail has been concentrating its consumer base via consolidation. Ten to 15 years ago, the top 10 retail accounts of the typical packaged goods manufacturer represented 20 percent of sales. No more, says Peter Hoyt, executive director for the In-Store Marketing Institute. "Due to consolidation and the rise of megachains," he says, "those top 10 customers now represent as much as 80 percent of sales-more, in many cases."It's the confluence of these economic forces over the past decade or more, says MEC Retail partner David Sommer, that has allowed shopper marketing to truly come into its own. "The dynamics have changed, and now the one place you can still aggregate a mass audience is in-store," he says. "That's a big media buy, and if you hit shoppers with an ad message, 'This is relevant,' you'll get a response that can be measured via a sales lift."No wonder, then, that shopper marketing (the in-store appeals that take the form of shelf talkers, end-aisle displays and the newest: in-store video networks) is getting more attention than ever from retailers, manufacturers and ad agencies alike. According to a study by the Grocery Manufacturers Assn. and Deloitte Consulting, the number of manufacturers and retailers that have significant shopper marketing organizations of more than 20 people has jumped from 29 percent in 2007 to 60 percent in 2008. The study also found that over the next three years, in-store marketing activity will grow at a higher rate than any other marketing tactic. A Booz & Co. survey of consumer packaged goods marketing executives found that 95 percent plan to either maintain or increase investments in retail store media."Companies know the battle will be [won] or lost in-store," explains Tonya Collins, customer planning for OgilvyAction. "The amount of resources companies are putting into shopper insights is increasing. They are making internal commitments, shifting funds and talent."Formerly the domain of promotional agencies before the term "shopper marketing" supplanted older monikers like point-of-purchase marketing, media agencies are now creating specific units devoted to the specialty. "Our role is to develop best practices across the shopper continuum, connecting what is in-store with what is out-of-store and to make sure all the media comes back to the shopper," says Danielle Bottari, svp and director of shopper marketing for MediaVest's new shopper marketing unit.One of the first shops to devote significant resources to shopper marketing was Mediaedge:cia, which in 2006 purchased marketing consultancy Retail MediaLink and created MEC Retail, which today works with both consumer packaged goods clients (Dr Pepper Snapple Group, Colgate-Palmolive, Campbell, Energizer, Mars) and retail/QSR clients (Citibank, AT&T, Pizza Hut) to integrate in-store digital signage into the communications planning process. In 2008, MEC doubled its revenue and projects 50 percent growth for 2009.Others have since followed. Ogilvy Group consolidated several practices, including shopper and trade marketing, experiential marketing, digital activation and retail design, to create OgilvyAction in 2007, focused on what it calls "The Last Mile," to help brands connect with consumers close to the sale.Among OgilvyAction's clients are consumer packaged goods companies SC Johnson and Unilever.As recently as last fall, MediaVest, which worked with Wal-Mart to roll out the retailer's next-generation in-store network called Walmart Smart Network, formalized a dedicated unit to shopper marketing. In addition to Walmart, Mediavest works with Procter & Gamble, which was doing shopper marketing years before the rest of the industry, as well as clients such as Coca-Cola and several Kraft brands.Wal-Mart's move to roll out the industry's next-generation in-store digital network could signal a growing trend in shopper marketing towards in-store media -- specifically, video networks. Though such networks currently are only a $500 million business, that's likely to change now that the world's largest retailer has sunk $10 million into it. According to Richard Fisher, president of Wal-Mart's video-network provider, PRN, "Wal-Mart was a true inflection point in the industry."Powered by Internet Protocol Television, the Walmart Smart Network represents a new paradigm by offering a precise level of targeting not before available. Instead of relying on older, analog tools like prerecorded callouts and projecting displays that merely barked product details at passing shoppers, the optimal placement of WSN screens creates an interactive and dynamic dialogue between the shopper, the store and the merchandise.Programmers can control content, advertising and merchandising down to a single screen to provide a calculated mix of product information and marketing messaging when and where the shopper will be most receptive to them. Ironically, the new technology figuratively returns shopping to the old days when fresh-faced clerks -- who knew every item in the store -- helped customers make their choices.In the past, most in-store networks didn't have the precise targeting capability afforded by IPTV. Many networks simply ran repurposed TV ads on indiscriminately placed screens. But now, says Clint McClain, senior director of emerging media for Wal-Mart, "We've built a network tailored to the way consumers shop our stores, delivering helpful, custom content closest to the point of decision. This isn't a simple push medium; it's a radically different approach that is singularly focused on what the shopper needs. Up and running in 300 stores, Wal-Mart is aiming for chain-wide deployment in 2,700 stores by early 2010."With Wal-Mart committing to its network and putting money and time into it, other retailers are saying this must be real. They are newly intrigued by it," adds Virginia Cargill, president for CBS Outernet, which operates networks for 10 grocery retailers plus GameStop and Foot Locker. "Retailers realize it's a way to communicate with the shopper right there."While shopper marketing may look a lot like TV, looks are as far as it goes. The key difference is that while TV spots target consumers, in-store video targets shoppers. The content's primary purpose is not to build brands, but to create a more attractive shopping experience and close the sale, right there on the aisle."Wal-Mart realized you have to take the word 'TV' out of it," Hoyt explains. "In-store there are other priorities and the level of engagement is different. The proper use of the medium is as dynamic signage. It's there to distribute and sell product."Although there is a lot of buzz surrounding these latest in-store shopper marketing strategies, there's still an ailing economy driving decisions. That could cause companies to pause before jumping into the newer in-store networks and rely on the tried-and-true shopper marketing tactics."Companies know what they did last year and what results they got. They aren't radically shifting, they're dipping their toe in the water, because at the end of the day, they're holding dollars that are accountable to sales," says OgilvyAction's Collins, who predicts there will be "another rise in coupons. Companies know America is making hard decisions."

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