CONSUMERS, SHOPPERS OR JUST PLAIN PEOPLE?

Steve Schildwachter's recent piece deserves wider play so I'm posting it here.  As we think about influencing behavior in-store, it's worth recalling that we're dealing with people with varying degrees of Retail IQ, different tools, e.g., smartphone, and a variety of shopping goals.

RETAIL AS THEATER

   Imagine attending a live performance of some great play or musical.  Many things make it great.  The script must engage the audience.  Actors must know their lines, hit their marks and play their parts well.  The theater surroundings themselves must be comfortable, sight lines clear, lighting and sound right, seats comfortable.  Costumes and props matter, too.

   Stores are like theaters, don’t you agree?  The products are the scripts and actors the staffs.  The store environment is like the theater building itself.  Costumes are the packaging.  And the props?  They are what our industry provides to “set the stage,” to highlight the action and to help make the entire experience compelling.

   Consumer packaged goods (CPG) companies want their products to have a good, long run.  When they bring together the right Product, Price, Promotion and Place – the proverbial Four P’s of the marketing mix – magic happens.

   Display and store fixture designers and producers play a pivotal role in two of the four P’s: Promotion and Place.  If shoppers are drawn to a product, can find it easily and see it attractively presented, the probability of purchase increases dramatically.

   When the show must go on (and we know that it must), great displays play a part in the mix.  Marketers that miss this critical point don’t play well in Peoria and have short runs.

MEASURED v UNMEASURED

POP as a medium has long had a chip on its shoulder.  Marketers, retailers and producers know that it moves product but it's never been considered a "measured medium" by the advertising community.  As brands and retailers strive to connect with shoppers, where better to do so than where 92% of the money is actually spent:  in-store!

The accompanying article today from Ad Age highlights the growth of "unmeasured" media relative to traditionally measured media.  People want a return on their advertising and promotion investments.  We had a client ask about this just last week.  They knew from matched store tests that they got a 29% increase in product sales in stores where they used our custom store fixtures v stores with stock fixtures.  To both our client and us, the measure of any medium is the impact on sales.

THE IKEA MAZE

I got a kick out of this article and thought you might, too.  There's really little that's truly revolutionary about what this Big Box does - grocery stores have used the "racetrack" for years, after all - but recognizing the psychology involved helps us understand both how we shop and how we sell.

NOT JUST METAL BENDERS

   The Tusco Display story started over 60 years ago when we printed advertising signs.  Producing the metal substrates on which the signs were printed came next and we became metal benders.  Along the way, the business morphed into industrial sewing, stadium seating, storage tanks and eventually the production of permanent displays and store fixtures.
   Today, we produce products in fiberglass and various plastics, we work in wood and laminates, and we even dabble in fabrics and graphics.
   We still bend lots of metal, of course, to produce displays and fixtures as well as everything from aluminum fire truck doors to stainless steel control cabinets, tandoori ovens to bingo machines.  But the heart of what we do is far more than cutting, bending, welding and coating metal.
   We are mental benders.  We help consumer packaged goods (CPGs) companies – many famous name-brands – effectively present their wares in retail environments throughout N America.  We help them connect with shoppers.  We influence stores to carry products and shoppers to buy them.  We help shoppers find what they need and want.  We understand, design and produce to meet the needs of the CPGs, their retailer partners and shoppers.
   Understanding how people interact in-store, how they approach purchase decisions, how they are attracted or not attracted to products in stores is far more of what we do today than simply printing signs or building shelves.  Tusco helps create in-store inspiration.

IN-STORE MATTERS

   The Point of Purchase Advertising International trade association has conducted some major new research in at-retail shopping behavior.  In spite of the advent of on-line shopping, smart phones and loyalty programs, one surprising fact emerges:  people still make the majority of their purchase decisions in the store.
   POPAI’s 2012 Shopper Engagement Study hired a respected research firm, supported by major retailers and global brands, to determine how American shoppers actually grocery shop.  Using sophisticated technology and in-depth analysis, the study finds that “today’s in-store decision rate has reached an all-time high of 76%.”
   Does this suggest that we don’t know what we plan to buy when we go shopping?  Of course not.  Instead, it documents that most of us make many decisions while in the store.  Perhaps we switch package size or brand, perhaps we generally plan to buy something but specifically decide when we’re in the aisle.  Whatever the case, what happens in-store matters. 
   The message for marketers and retailers alike?  If you don’t put your brand on ‘display,’ you’re less likely to put your brand in the shopper’s basket.  It’s the “point of purchase” for a reason – and we have proof.

RETAIL EVOLUTION

   When we think about how retail continues to evolve, many people fixate on e-tail vs retail, clicks vs bricks, digital vs analog.  Though Amazon no doubt gets a lot of attention in places like Bentonville AR, more than nine out of ten dollars are still spent in stores.  Bricks click in part because they never stop changing.
   Dollar General has opened some new DG Market stores that offer fresh food as well as their standard stuff.  Drug chains are doing the same, especially in areas underserved by grocery stores.  RiteAid has announced that they’re revitalizing all of their 4700 stores this fiscal year.  NYC drug chain Duane Reade (part of Walgreens) is transforming their 250+ stores, too.  Gap is brightening their stores – and seeing results.  JCPenney hired CEO Ron Johnson away from Apple store last year and is making sweeping changes to their stores, pricing, merchandise and almost everything they do. 
      We live in a dynamic, ever-changing world.  Retail knows that it adapts or dies.  Changing a store’s footprint or location can be costly, time-consuming and difficult but revitalizing the floor plan, graphics, lighting and fixtures to upgrade, refresh and revitalize can work well and quickly.
      Effective at-retail marketing may change the perception of any product or brand and determine success or failure.  Same goes for retailers.

What Advertising Actually Works?

Advertising Age just published an article entitled Young Consumers Switch Media 27 Times An Hour. In it, the author writes: "It's every advertiser's worst nightmare: consumers so distracted by a dizzying array of media choices that they no longer notice the commercials supporting them. And its time might be closer than you think. A recent study found that consumers in their 20s ('digital natives') switch media venues about 27 times per nonworking hour - the equivalent of more than 13 times during a standard half-hour TV show."

Marketers are flummoxed. If these consumers aren't consuming their ad messages, if they surf away, avoid or - horrors! - ignore the messages, how can they be reached by marketers? Here's a thought: reach them when they want to be reached. Reach them when they are in search-and-buy mode. Reach them in-store.

Marketers who invest in the only space where the money, the motivation and the products co-exist tend to sell more product. Duh.

Three Observations on 2011 Retail

Others will comprehensively comment on chain closings, product hits and misses and results by various categories and specific retailers. Instead, here are a few observations on the year just past.

1. It was a good year. Overall, retail sales grew 6.5%, according to the US Dept of Commerce. That’s the best growth in over a decade. Holiday sales grew 4.1%, more than the 2.8% predicted by the National Retail Federation as recently as Thanksgiving. Auto sales contributed significantly by jumping 10% in 2011. Consumer confidence grew after several years of severe weakness.

2. ZMOT matters. Both consumer packaged goods (CPG) companies and retailers recognized that the “zero moment of truth,” when people search, seek opinions of others and explore purchase options before even going out to buy – online or in-person – is crucial to success. You must win the ZMOT before the first moment of truth (at the store) or the second (when the consumer uses the product). ZMOT gained great currency in 2011.

3. Bricks meet clicks. For 15 years, people have forecast the end of bricks-and-mortar stores at the hands of the Internet. That’s hooey. Shopping remains a visceral, social and even entertaining activity that meets peoples’ needs. Smart phones, QR codes and mobile marketing only made the retail experience better in 2011.

The Evolution of Shopping

Remember when “making a phone call” meant using a landline to call another landline? Today, many people don’t even have a landline and finding a payphone is almost impossible.

Shopping is going through a similar and profound transformation, too. Though 91%+ of all consumer purchases are still done in a bricks-and-mortar store, increasingly people are using new devices (e.g., smartphones) to “shop” even when they eventually go to a store to actually “buy.” Some stores are using mobile technology in their stores to bring the Internet to the aisle. Don’t find your size on the rack? Let’s find it on a virtual rack elsewhere and have it shipped to your home before you leave the store.

Back in the 1990s, some predicted that stores would soon be obsolete as our gifts, clothing, even groceries would be magically selected and delivered to our homes, closets and pantries. Such predictions persist today. Instead, I believe that we’re seeing successful stores become more and more vital, technologically-enabled and capable of delivery great VALUE in multiple ways, including: lower distribution cost; entertaining, exciting, even alluring environments; exceptional customer service; convenience; instant gratification; and unique products.

Great stores provide great value. Part of that value proposition is the displays, fixtures, graphics and layout of the store, things at which display and fixture companies excel.

OCCUPY AISLE STREET

I haven’t slept well in weeks. Colder weather and unfriendly natives have dampened my spirits. Is it really worth it? Ever since I decided to camp out in the aisle of (name your least favorite store here), I’ve teetered between feelings of accomplishment and despair. We’ve been hassled by store security but, hey, this store is open 24-hours and I know my rights! Can we make these people listen? Don’t they know who we represent?

We are the 70%! Study after study confirm that, on average, shoppers make decisions on exactly what they will buy while in the aisle and at the shelf. We are the decisions made on what deodorant to buy, what brand and size ketchup bottle we purchase, what flavors of juice boxes we pack in our children’s lunchboxes, what style and package size of toilet paper we take home.

Marketers would rather we weren’t so loud. Why can’t we go home, let TV ads and radio spots and newspaper inserts and internet pop up ads work their magic? They’d rather we were invisible because we’re hard to track, difficult to define. Many of them just don’t know what to do with us.

But some people listen. Some people know where to put their marketing dollars. It’s right here. On-shelf, near-shelf, end of aisle, in the aisle. We are aisle violators and we won’t be denied.

Clicks v Bricks

Do "clicks" now get the same level of respect that "bricks" do among retailers who have both traditional and online retail assets? That's a question posed by Allison Enright in her Sept 21, 2011 column in InternetRetailer. Frankly, I think that she asks the wrong question.

Whether it's a catalog or a kiosk, a website or a store aisle, a phone app or a direct-response mailer, they are all THE point of purchase. When a retailer starts parsing sales between channels, their brand and their message can get lost.

Worry less about how shoppers access you. Instead focus more on being the same responsive, enabling purveyor of what shoppers want when and where they want it. That's point-of-purchase marketing. As shoppers click away in the aisle, the difference between clicks and bricks grows smaller and more irrelevant with each passing day.

WHERE'S THIS ECONOMY HEADED?

In the wake of a shaky summer, the US consumer confidence index has reached its lowest point since 1980. Though mortgage rates are at a 60-year low, few houses are selling and many people are still coping with home values below their mortgage values. News reports today claim that the American family income has dropped for the third year in a row – to roughly 1996 levels (in inflation-adjusted terms).

Things are tough out there, right?

Yet, many area manufacturers continue to hire and invest in their businesses. Tusco Display recently opened a new facility in New Philadelphia. In a Tuscarawas County Chamber of Commerce survey of 43 of our larger manufacturing concerns, 26 of them plan facility or workforce expansions. And we’re on the cusp of a natural gas boom here that will bring many new businesses, people and dollars to our regional economy.

Why the disconnect? It’s two-fold. First, people are still hurting from the Great Recession of 2008-9 and feel insecure. They lack confidence to take risks, e.g., switch jobs, buy a home, start a business. They are playing things close to the vest. They’ve learned from past excesses.

Second, both federal and state governments are making many changes that make us uneasy. From ObamaCare and debt ceiling brinksmanship to SB5 and restructuring state agencies, change makes people uneasy. We like stability and predictability, things in short supply these days.

Times will improve and we will not see a repeat of 2008. Until people see it, feel it and believe it though, our lack of confidence will impair our ability to take advantage of the opportunities before us. At Tusco Display, we’re moving forward with confidence.

Energy

Consider what the your body does in an average 24-hour period: Your heart beats 100,689 times. Your blood travels 168 million miles. You take a breath 23,040 times, inhaling 438 cubic feet of air. You eat more than three pounds of food, drink about three quarts of liquids and lose almost a pound of waste. You speak 25,000 words. You move 750 muscles. Your nails grow .000046 of an inch, your hair .01714 inch. You exercise seven million brain cells.

And you wonder why you feel tired sometimes?

In-store marketing fixtures grow weary over time, too. Just as surely as your body’s working, so do those displays, those endcaps, those power wings and POS signs. They get thumped by carts, scraped by products, worn by cleaning, and faded by UV light but still they soldier on, communicating with any passerby.

When they start to look tired, it’s time for a refreshing. It might be a new sign, replacement of parts or the complete replacement of the unit. Displays and fixtures work hard. Keeping them looking their best requires investment but it’s money well-spent.

Innovation

According to a recent Harvard Business Review, Procter & Gamble is developing a "new-growth factory" to combine the best features of Edison's labs and Ford's assembly lines to deliver fast, far-reaching breakthroughs. That's helped the company's innovations hit their profit-and-revenue targets 50% of the time, up from a 15% a decade ago, and executives say they expect innovation-driven revenue to double again in coming years. "We know from our history that while promotions may win quarters, innovation wins decades," says P&G chairman and CEO Bob McDonald.

The custom display world understands innovation: it's what we do every day. Finding effective ways to cost-effectively attract the attention of shoppers that leads to purchase requires new thinking, new materials, new techniques and new insights on every project. As marketing-at-retail professionals, we embody innovation - or we are out of business.

Extreme Couponer: Friend or Foe?

Today's Ad Age includes a special report about the rise of extreme couponing and posits that those who coupon the most - so-called Enthusiasts - are a marketer's "worst nightmare." REALLY? I don't think so.

According to the excellent statistical presentation in the report, 13% of couponers accounted for 70% of all 2010 coupon redemptions. These folks are tactical masters but far from a nightmare.

If anything, marketers are their OWN worst nightmare. Coupons can be effective tools for generating trial purchases. If the brand lives up to consumers' expectations, couponing can lead to brand switching and eventual loyalty just as surely as sampling does. Brands and retailers that continually rely on coupons to goose their numbers, however, are simply sacrificing margin for top line results as they teach shoppers to only buy "on deal."

Coupons can work when properly executed. Coupons can also work against the interests of the brand and the retailer when abused. Don't blame the crafty shopper; blame the lazy marketer.

The Ultimate Engagement Vehicle

Not long ago, awareness was king. Eyeballs were all the rage in the early days of Internet marketing. How many impressions could you make with a given ad or promotion and what was the CPM?

Today, engagement rules. Definitions vary but generally revolve around getting some connection between the prospective buyer and your product or service.

No medium creates engagement better than in-store. No other medium puts the person, product and predisposition to purchase in closer proximity. A new study by iVillage/SheSpeaks shows that women are increasingly using online resources to scope out deals, read reviews and preshop before heading to the store. Once informed, they visit stores to more effectively use their time in finding and acquiring exactly what they want.

Want to close the sale? Do a superior job when your prospective buyer is closest to your product and predisposed to buy. Knock their eyeballs out at the point-of-purchase.

Do Stores Still Matter?

I'm an unabashed fan of shopping in stores. I enjoy the hunt, the thrill of seeing new wares presented in new ways, working with knowledgable and engaged sales consultants - whether a high-end clothing purveyor, the deli manager or the grocery checkout clerk - who enjoy helping me find what I need or just plain want. And I know that I'm not alone.

Stores play a pivotal role for shoppers and marketers. It's the playground where we meet one another, learn what common interests we may share, meet one another's needs and exchange things of equal value - my money and your product - and thereby each feel enriched.

Though study after study show that 70% of all purchase decisions (including unplanned purchases, generally but not specifically planned purchases, brand switching, SKU switching wihtin a brand and the like) are made in-store, this does not guaratee success for any given store, chain or channel.

Look no further than music retailing. How has Apple changed how music is sold? This infographic shows how the entertainment retailing industry has undergone a sea change. Gone are the Tower Records and Camelot Music stores that once dominated music retail, rolled up into the money-losing FYE chain. Once music could be distributed digitally and downloaded legally one-song-at-a-time, the need to buy "albums" in a store diminished. The same is happening with movies and games. Blockbuster was once king; it's no longer jack. I wouldn't buy stock in Gamestop today for the same reason: digital delivery will eventually rule there too. Even Coinstar's redbox juggernaut will eventually fall into decline.

But, until you can deliver Rice Krispies, angora sweaters and automobiles digitally, retail will remain crucial to the successful and cost-effective distribution and purchase of most consumer products. And Tusco Display will keep helping bring marketers and their shoppers together in the most persuasive and pervasive advertising medium ever invented: the retail store.

Ultimate Target Marketing

Does anyone remember One-to-One Marketing? Don Peppers and Martha Rogers pioneered the concept when they introduced their book, "The One-to-One Future," about 20 years ago. Great book - and an even better idea. The kernel of the book: technology allows us to replace mass marketing - one product for the many consumers - with personalized solutions for individual consumers.

This has come to pass, for instance, with Amazon recognizing you, knowing what you've purchased in the past, knowing what others who bought the same book have purchased and suggesting books (or music or whatever) that might appeal specifically to you. Mini Cooper will economically produce a car to your exact specifications. Nike will do the same with shoes. Michael Dell made a living - and a fortune - doing the same with PCs. Through my shopper loyalty card, my local Buehlers grocery store prints coupons based on my buying patterns. That's 1:1 marketing, enabled by cheap, ubiquitous technology.

Now, mobile marketing promises to deliver the same kind of individualized attention with coupons and other promotions that happen in-store or even right in front of a particular product. Pretty cool.

Even with all of this one-to-one attention, the shopper often still prefers to see, touch, smell and otherwise sense what they're buying. And it happens in a store where 93% of all consumer purchases still occur. Technology will make marketing better, more focused and more individualized with each passing year but, at the end of the day, turning shoppers into buyers is the name of the game. And the point-of-purchase is where it's played.

Store Back

Ad Age featured an article April 14 on the renewed focus that P&G places on what happens in-store and on-shelf. Global Brand-Building Officer Marc Pritchard - P&G has the coolest titles, don't they? - requires that all marketing ideas first prove that they will work on-shelf.

Why the at-retail focus? Because the point-of-purchase remains the most powerful advertising medium in the promotion of packaged goods. Really. The article cites a Nielsen study that found that "in-store marketing clearly beats TV as the leading medium creating awareness of new package goods in the U.S. and five other key developed markets." About 50% of survey respondents cited in-store as their source of awareness of new products vs only one-third who cited TV.

Packaging plays an essential role in product success but so does display and placement. You could have the greatest product since sliced bread but if it's not noticed in-store, it won't be purchased in-store. Getting it right in-store is make-or-break, kids. P&G knows that. Do you act like you do, too?