How Technology Is Changing the Rules at Retail

Reaching consumers is both easier and more complex as outreach options proliferate. With the growth of cable and satellite, TV channel availability has more than tripled since 1990. And while traditional vehicles are still vital, more immediate and ubiquitous media are taking a hold. Online and mobile video viewing is exploding and time-shifted TV is growing.

Market-leading retailers are learning to embrace new media technologies, incorporating them into the promotional arsenal even as paper coupons enjoy a resurgence of interest. Everyone’s feeling the pinch from a volatile economy and looking for ways to conserve. As a result, manufacturer-driven coupon redemption in the U.S. surged nearly 10% in the fourth quarter of 2008, according to Inmar CMS Promotion Services.

For the year ending February 2009, Nielsen determined that more than one-third of dollar sales at food, drug and mass merchandiser stores were sold on promotion in the U.S., accounting for some $133 billion excluding coupons. Inmar determined that, while manufacturer FSI coupons represent roughly 80% of redemptions, manufacturer online coupons comprise the fastest-growing subset.

Web wise
Online merchandising is beginning to make inroads at many retailers, although for some, web pages often mimic the layout and look of printed weekly feature advertisement inserts. However, many manufacturers—especially those in the health and wellness field and discretionary categories like carbonated beverages and candy—are taking full advantage of the web’s highly engaging interactivity by featuring sites with games, e-cards, activities, videos, commercials, recipes, ring tones, personalized planners, and clubs that include special discounts and reminders.

In a recent U.S. study, Nielsen measured more than 200 digital ad campaigns which averaged a 32% sales increase, $1.1million hike in short term incremental retail sales, 157% return on investment, 18% boost in penetration and 14% surge in the buying rate. Impressive results all, signaling the strength and potential of visually-exciting, content-rich, interactive digital media.

Niche players like Dollar General keep their online outreach focus narrow to enhance impact, addressing just three primary areas on their web site: pets, easy meals and store brands. Others take a different tack and adopt the posture of trusted friend and resource like the Walgreens monthly Wellness online newsletter and news service covering everything from drug interactions to seasonal health challenges to caregiver support forums.

Retailers had best hone their electronic marketing chops quickly. Waiting in the wings to take a bite out of brick-and-mortar grocery sales are two companies that excel at marketing online and are hungry to expand into food: Amazon and AOL.

Getting personal
Food Lion’s Bloom format encourages consumer engagement via Breeze kiosks that feature handheld scanners that enable consumers to scan and bag as they shop, see a running total and speed-up checkout. Freestanding Breeze info displays allow shoppers to check prices, retrieve shopping lists, find and print recipes, and even generate bar-coded price stickers for random weight items.

Ahold’s Stop & Shop chain deploys self-scanner and kiosk technology in many of its stores to enhance consumer convenience. Shoppers enter stores, place their deli orders via a kiosk, finish the rest of their shopping and pick-up their custom order at the deli counter, without having to queue in line.

Ukrop’s Super Markets developed the Savings Spot to leverage the value of its frequent shopper program. Valued Customer program members insert their card into the kiosk, and seconds later, it dispenses as many as eight product offers reflecting individual customer preferences based on prior shopping history.

Simply mobile
With the declining performance of traditional media outlets like newspapers, marketers are exploring emerging vehicles which operate on mobile platforms such as social networking, texting, video and tailored promotional codes and coupons. The iPhone opened up a whole new world of more than 25,000 applications covering every interest and need—from budgeting to calculating tips to bill paying to shopping. Skeptics waiting to see if iPhones will catch on should take note of the fact that Apple can boast more than 800 million downloads and counting.

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