Special Report: Retail

NEW YORK Retail chains aren’t just about shopping anymore. Today, they’re also about entertaining and educating consumers. And as they utilize technology, including Internet, kiosks and other options, to bond with customers in new, alternative ways, retailers are assessing their marketing efforts, looking harder at what works and what doesn’t—and putting the big bucks they devote to network TV under a microscope.

“Successful retailers are building diverse multichannel positions that provide a positive customer experience that is seamless across different channels,” says Pat Conroy, national managing principal of Deloitte’s Consumer Business practice. “They also are developing more consumer touchpoints and translating single transactions into broad and deep relationships through brick-and-mortar stores, Web sites, warranties, financing, loyalty clubs and other programs.”

The North Face, for example, has outfitted stores with kiosks developed in conjunction with Microsoft that offer animated views of its high-tech products and videos of athletes using them. Wal-Mart this spring rolled out, via Premier Retail Networks, an in-store TV network of more than 100,000 flat panels, delivering product messages tailored to select departments. Bloomingdale’s recently installed interactive mirrors in its flagship New York store, allowing shoppers to e-mail images of themselves as they tried on outfits, part of a trend that’s come to be known as “social retailing.” Of course, stores continue to embrace Internet, as consumers keep flocking to the medium for shopping and information.

As retailers morph into the stores of the future, it is only logical that they expand their marketing beyond traditional channels, in favor of those that allow them to target demos and engage them in a true back-and-forth.

But while TV remains a one-sided conversation, it remains an important part of the marketing mix for retailers, say those who follow the sector.

“TV is still one of the most efficient ways of reaching a large group of people,” says Zain Raj, chief marketing officer at EuroRSCG, Chicago. “It’s not going away. But the share of spending on TV is shrinking.” A decade ago, he noted, TV made up 70 percent of a retailer’s integrated marketing plan. Today, it accounts for 35 to 40 percent.

“Retailers want two-way conversations with consumers,” he says. “Consumers are seeking something that excites them in a dialogue.”

David Dennis, president of SBC Advertising, says network remains a powerful part of a retailer’s advertising arsenal because of its reach and effectiveness.

“With retailers, TV has traditionally driven traffic to the stores, giving shoppers a reason to visit the store,” he says. “Now consumers can experience the brand on the Internet as well. TV can drive customers to both places.”

Data indicates that retailers still believe in the power of TV. According to Nielsen Monitor-Plus, they spent $8.5 billion on all TV last year, including network, cable, syndicated, spot and Spanish-language channels, up 5 percent year over year.

J.C. Penney this past February launched its new brand positioning, via Saatchi & Saatchi, New York, with an integrated campaign of TV, print and Internet. The TV spots reached 41 million viewers during ABC’s Academy Awards telecast, when the campaign was launched. In the weeks that followed the Oscars, the spots reached 88 percent of women aged 18-54 more than 12 times on average, according to the company.

Wal-Mart, likewise, is using TV to tout the lines of apparel it carries. “Our strategy this year is telling our fashion story around the essentials, and that is how we will move forward,” says spokeswoman Linda Blakley.

The best media plans, according to SBC’s Dennis, are those that create synergy between TV and Internet. The agency’s campaign for Big Lots this past holiday season encompassed TV ads that drove viewers to the discount retailer’s site. “Retail is always very intense,” Dennis says. “You have to prove yourself every day.”

So do their TV ads. As Heather Malenshek, senior vp, group strategy director for DDB, Chicago, puts it, “These days, we are being held to higher standards in terms of what advertising has to be. It has to be much more engaging. It has to be much more grounded in consumer insight. It has to be much more relevant in order to get people to watch it.”

Even with all the alternatives, network will remain a must-buy for players in the competitive retail category, Malenshek suggests. “New media certainly is a really good part of the mix and continues to be added in,” she says. “But it’s not in replacement of, it’s in addition to TV.”

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