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February 2008

Dear Customer; Please come inside - Thanks Mgmt.

On my way home from skiing this weekend I stopped in a small town called Dillon to fill up on gas and this sign at the pump caught my attention.The hunter orange sign was offering a 5 cent discount to anyone willing to pay for gas with cash. Unknown_3 Now, I don't usually carry cash and the convenience store ATM fee would have cost far more than the dicsount I could have recieved, so I ignored the offer and payed at the pump with my credit card. But it got me thinking about why they were pushing such a significant discount. Is it because convenience stores are trying to cut down on the transaction fees credit card companies charge, up to 7.6% according to NACS. Or is this some sort of an invitation to draw pump payers into the store? According to a 2006 convenience store case study done by Envirosell, 46% of those who purchase gas don't even enter the store. With a tightening economy and rising gas prices many consumers may opt to just pay at the pump and leave. When you are paying more attention to your wallet things like energy drinks, chips, pop and gum all seem like "luxury" items. And in a business where the sale of gas accounts for such a small precentage of their profit, convenience stores need a draw to get people back into the store. Are c-stores hoping for an impulse purchase of things consumers are less inclined to buy if they aren't within reach? In the current state of the economy we plan on seeing more taticts like this executed by c-stores.

Paper or Plastic?

If you've ever felt alone and without a friend, like nobody understands you and the world is out to get you, remind yourself: things could be worse. You could be a plastic bag.

Plastic bags suffer disdain rarely known outside dog catchers and tax collectors. Global consumption of non-degradable plastic bags is estimated between four and five trillion each year. The vast majority are never recycled and wind up in landfill, sewer systems, oceans, lakes and rivers. They are known jokingly as the National Flower of South Africa their ubiquitous discarded presence. The clog waterways, choke marine animals, and take 1,000 years to decompose. What's more, the thoughtless use of plastic bags deepens our reliance on foreign oil: to produce the global supply requires 17 billion gallons of oil annually. (Source: San Francisco Chronicle; Worldwatch Institute)

Targetbag The problem is, plastic bags are such a common part of our lives that individuals have a hard time conceiving the ruinous effect on the environment. Using plastic bags is one of the few things nearly every human on earth has in common, young and old, rich and poor. Severe, large-scale cultural change seems to be the only way to reverse the trend of plastic bag abuse.

Several countries, including South Africa, Rwanda, Bhutan and Bangladesh have banned non-recyclable plastic bags outright. Individual cities like Paris, Mumbai and San Francisco have recently initiated bans. Progressive countries like Australia, Taiwan and Singapore are considering drastic bag reduction programs.

One of the most successful plastic bag reduction initiatives comes from Ireland, where in 2002 the government legislated a tax on plastic bags at the register. Within weeks, plastic bag use dropped by 94 percent, and people began adopting reusable cloth bags. But then something unexpected happened: carrying a plastic bag became a stigma akin to wearing a fur coat. Irish people became generally more mindful of the role of the individual in creating global change. England is considering a similar tax. (Source: New York Times)

In the United States there are no broad measures in the works, though individual cities have taken their own initiatives. Los Angeles, Boston and Phoenix are considering bag reduction proposals. New York City may soon require stores that distribute bags to recycle them, although this is a pale compromise to an outright ban. A national bag ban would be an excellent statement of environmental leadership but in our legislative system is almost certain to never see the light of day.

Unfortunately, paper bags aren't an environmentally friendly alternative: their production generates 70% more air pollutants and 50 times more water pollutants than plastic bags, and take up nine times as much landfill space. (Source: USA Today, Environmental Protection Agency)

What, then, are environmentally conscious Americans to do?

Bags_2 For Retailers, the options are many. Some are adopting biodegradable bags made from corn starch or other organic components, but these are relatively expensive and unreliable: a cardboard box corner can create a small tear that will cause the bag to fail and groceries to fall. Many stores offer a credit to customers who bring their own bags; Whole Foods is planning to raise the credit from 5 to 10 cents per bag and plans to stop distributing plastic bags completely by year's end, instead offering 99-cent reusable cloth bags at checkout. Other retailers offer heavy-duty plastic bags that shoppers are encouraged to reuse; still others promote recycling programs that transforms used bags into heavy-duty wood plank replacements for commercial decking and park benches.

For the Shopper, the best option is to choose neither paper nor plastic, but to bring your own bag, box or backpack to shop. Many retailers now offer durable, inexpensive reusable bags; in some places, these bags are even fashionable. Even the best of us will occasionally forget to bring our bags, and in such cases, use as few bags as necessary and make a promise to recycle the bags you bring home. Encourage your favorite retailers to make plastic recycling available. Above all, follow the green mantra: Reduce, Reuse, Recycle.

(reusable bag images, clockwise from left: King Soopers polyurethane bag; Lunds/Byerly's compact cloth sack; reusable plastic bag from The Coop Advantage, open and compacted)

Sony vs. Toshiba in the Battle for HD DVD Supremacy

Like competing samurai clans, Sony and Toshiba's corporate rivalry is the stuff of legend in Japan. Their most recent public conflict came to its conclusion today following Wal Mart's announcement to abandon Toshiba's HD DVD format in favor of Sony's Blu-Ray disk technology.

Bluray_3Both technologies offer a significant advantage in their ability to store up to six times more data than traditional DVDs, enabling more content and higher resolution for today's HD television monitors. Analysts think Sony's retail success with PS3, based on Blu-Ray technology, was the factor that ultimately favored Sony over Toshiba.

Wal Mart's announcement was not the first strike against Toshiba, but it was certainly the decisive one. Last May, Time Warner announced it would no longer support titles on both high-definition video formats, choosing Sony Blu-Ray as its format of choice. This was the tipping point. Like the VHS vs. Beta wars of a generation ago (which, ironically, Sony's BetaMax format famously lost), it was clear that the world needed only one standard. Supporting two standards may in theory create competition but is ultimately inefficient. Retailers have neither the desire nor the shelf space to carry two technologies that do the same thing, be they DVDs or the hardware that reads them. When Netflix and Best Buy announced their support of BluRay earlier this month, it was clear the battle was waning; Wal Mart's announcement made Sony's victory complete.

The announcement leaves not one, but two losers. The first is Toshiba, having spent millions developing this technology, leaving them no choice but to move on to the next battle. The other losers are Early Adopters, who pay a premium for buying first-generation technology, and sometimes pay the price for supporting the wrong brand.

For Early Adopters, however, there is a silver lining. Since Wal Mart's announcement, the price of HD DVD disks has suddenly dropped by half. Buy now - supplies are limited.

Ikea - 1 to 1 with Shoppers

Here is an interesting in-store device that comes via Unplugged.  Spotted at Ikea in Seattle was this Mobile Kiosk where you register to recieve product info. and coupons. 

IkeamobileWe all know that non of us can live without our cell phone anymore and it's role continually changes. No longer just a means to call home now it's your weather reporter/news aggregator/social networker/information hound.

With Ikea it can be a tool to know when the newest products are available in-store, and a mechanism to deliver digital coupons so you can save cash.

What is also interesting about this technology and the use Ikea is making of it is that it delivers a relevant brand-to-individual consumer (1-to-1) communication - 'Since you bought a couch last month, how about this coffee table to go with it?' - rather than a brand-to-masses communication - the usual 'Hi everyone, here's all of our stuff'. So it becomes a great brand use of data and the deigital medium in the retail space. But is it cool, or will it be annoying to get these texts about a new sofa once a week?

- Contributed by Brian Crawford

Fresh & Easy - Las Vegas

When you think of Las Vegas, you think of bright lights, glitz, glamor and a bit of excess.  That was definitely not the case when I walked into my first Fresh & Easy store.  But I have to say it was quite re"fresh"ing and definitely easy to navigate! So I guess the store lived up to its name. Picking up on a post from September 2007 about some of the factors that will make this a success in the US, we offer some observations from this particular visit:

- Key differentiation strategies appear to be (in no particular order):  sustainability, freshness/healthy food, ease of shopping & everyday low pricing (no loyalty cards or coupons).  You definitely saw all of these delivered on, even before you entered the store (i.e. front row parking for hybrid cars and even golf carts.  Yes, golf carts. We were in Vegas after all!)

Hybrid_cars

Golf_carts - Limited space and lots of private label (50% of their inventory), which will make large consumer packaged goods manufacturers a bit nervous.  Will other grocers follow suit?

- There was no POP or promotions; packaging is the primary marketing tool for any brands allowed in.

They are definitely capitalizing on a trend that  Iconoculture have identified - that of "grocery-getters" with whom one-stop shopping is the elusive holy grail. Shoppers are starting to scrimp more than splurge (less eating out) and are time starved.  Tesco's answer: pre-made meals at a great value. 

Shoppers are also becoming choice fatigued and want their choices edited. Tesco once again answers by only carrying private label and just the category brand leaders. (One of the success factors of Tesco's small format stores in the UK).

And lastly, people are not cooking as much but are more sophisticated about eating.  Tesco once again provides a solution by offering fresh, organic healthy options that are quick and easy.

After visiting 4 of the 5 stores, it was very apparent that EVERY store followed the exact same format and delivered a consistent message, not typically what you see from other grocery retailers.  And I have to say that the best part of the store visit was when one of the employees gave the "ladies" each a bouquet of flowers (for free!).  After all, they have a strict freshness policy and I guess these flowers were past their 3 day shelf life.  Regardless, it made my day!

- Contributed by Tina Cline

How much of our shopping behaviour is pure habit?

As a relatively recent arrival to the USA, my family was put through some major changes to their lives, one of which was a change in how we undertake our weekly grocery shop.  We came from a city where we had shopped on-line for most products, including weekly groceries, for the last 5 or so years.  The convenience of having what we ordered delivered to our door within a two hour time slot is fabulous.  However, we moved to an environment where that is no longer a viable option, having instead to drive to a supermarket and walk the aisles. (And as I am at work most of the time, I confess that my role in this activity is now non-existent!)

We were discussing this with friends the other week though and I was amazed at quite how quickly my wife had fallen into a pattern of behaviour that, when we thought about it, is driven purely by habit.  Very quickly she fell into a new routine - she uses the same supermarkets, walks the aisles in the same order, buying the same brands, on the same day of the week at about the same time.  It's clockwork.  She doesn't even particularly like one of the supermarkets she uses - it is cluttered, cramped and not the nicest environment.  Yet there is little incentive to change going there, and when I asked her about why if she is not that impressed, she doesn't go somewhere else, she hadn't really thought about it. It's just part of how she lives her life now.

So how much of our shopping behaviour is actually driven out of habit? How sedimented do we become with regular purchases like this?  How much more difficult is it to change our shopping behaviour than to establish it?  When was the last time you thought about and changed how you shop? 

And what impact would a change in the store environment have on our shopping basket? I guess the impulse to act is not that great for my wife, but how much better could shopping be (and how much more money a supermarket, in this case, might extract?) if they could break down this cycle of habit? What could the store and/or brands be doing to make this a better experience, to help her discover new things and make it interesting?

Radiohead - Pay What You Want

Radiohead_2

When the British band Radiohead Radiohead proudly announced it had dropped its record label, EMI, it seemed to mark the beginning of something very different within the recording industry. Later in October, reinforcing that a change was forthcoming, the band announced that a new album would be available only on their website for downloading (no iTunes and no physical CD).

However, the biggest surprise was yet to come.

On October 10, fans of Radiohead, anxious to download their latest CD (In Rainbows) online, were struck by an interesting posting when they went to “checkout”. In the box where one would normally see the standard music pricing was a single question mark. Clicking on the question mark led to a screen that read, “It’s up to you.” Clicking on that led to another message: “No, really. It’s up to you.” Customers were invited to pay whatever they wished – and nothing appeared just as acceptable as something.

Bob Lefsetz, American music industry critic and consultant to major record labels talks about the importance of Radiohead’s actions:

“It’s not like Radiohead’s living in a different world. But they’re playing by a different rulebook. One that says the money flows from the music, that people have to believe in you, that you’ve got to treat them right.

Radiohead460_2

So what were the results of Radiohead’s “let the purchaser decide” approach? How did shoppers respond? Did their fans treat Radiohead right and reciprocate on their honest gesture?

With an estimated 1.2 million downloads during the first two days - 62% opted to pay absolutely nothing.

All of which may have prompted the bands next surprise. In December the band ceased allowing online downloads of the CD on their site and alerted fans they could now purchase the album through iTunes.

The Minority Report takes a step closer

The February 2008 edition of MediaPost had a short article about an interesting technology that was shown at the 2008 International Consumer Electronics Show that took place in Las Vegas recently.  It's a technology that moves us a step closer to a world portrayed in the film The Minority Report - that scene where tailored, targeted outdoor ads are delivered to John Anderton (the Tom Cruise character).


The technology, called the Reactrix WAVEscape, has been developed by two silicon valley companies - TYZX, a 3-D Imaging company and Reactrix, a point-of-sale display company. It uses a 3D camera mounted atop a display and it can capture movements, gestures and at some point in the future, speech.  The system can then mainputale the image (and everything else it captures) on the screen, morphing it with whatever you like.  So it sounds like a Nintendo Wii for the advertising world!

Reactrix_wavescape

While the report claims the technology is at an early stage, you can see how it could be used in an in-mall or in-store environment (or anywhere there is high traffic) to create a bit more fun for people to play around with ads. Maybe some games for local stores, with promotions and coupons as prizes?  And it is not too big of a leap to see how we could get to The Minority Report biometric recognition to talk directly at (with?) you.

- Image from gizmodo.com

In-store brand experiences

A great piece from Springwise about a Florida based extreme sports store called Adrenalina that has put a wave riding machine in their store so you can try out surfing products right there in the mall. Very cool idea.

Adrenalina_2

A system called FlowRider creates an artificial wave with high pressure water jets on to which you can launch yourself and see how different boards perform (it's the same system you see in cruise liner ads).  No matter your level of competence you get to put on a small show for other shoppers who get to watch your capabilities through the glass walls.  I guess that would be extremely entertaining!

The equipment, the first installation of its kind in a retail environment, also allows the store to create a community with surfers by holding events and giving them an environment in which to hang out and try product, thus cementing longer-term relationships while giving new people the chance to taste the surfing lifestyle.

This type of brand experience and retail theatre is a great way to engage both those in a brand or lifestyle community, and those outside.  What will be the next sporting area to provide the chance in-store o experience that activity now that this exists, Dick's Sporting Goods have their climbing walls and every self-respecting golf store has a virtual driving range?  The transference of this idea into other categories and retail formats is also something we expect to be seeing more of in the not-too-distant future. 

Did You See That Great Commercial Last Night?

As I was running errands on Super Bowl Sunday I realized I didn't feel the usual rush to get home.  This was not because I'm not a football fan, but rather because I knew if I missed the first couple of commercial breaks, I could see them online at any number of websites on Monday.  Some of the spots that aired during the game even directed you to their web site.  This got me (among others) thinking, what is the future of TV and TV advertising going to look like with the Web?  Apple's iTunes has fundamentally changed the music business, will another application do the same to TV?

Fortunately, The Atlantic that arrived in my mailbox a few days later had a great article addressing this topic.  Michael Hirschorn begins his article with Apple changing the way we buy music and he quickly transitions over to TV, noting he works in the industry.  He raises some interesting points, primarily that TV should be around for the long run, but that it is up to the TV industry itself to change the definition of TV if they want to remain players in both content and distribution.

23240200 In the short term, bandwidth limitations will prevent satisfying web based video offering for anything but short form videos, such as TV spots.  In the long term, TV networks need to bring more Web functionality to TV rather than invest in creating more bandwidth online.  With the switch to digital and HD broadcasting herein the USA due in 2009, the next generation of TV's could begin to include Web applications in their hardware.  The options are varied and appealing - from being able to click from an ad to a retail site to purchase a product (the next generation of shopping channels) to being able to access any movie or any show for a fee to watch at your leisure (the next generation of on-demand services).

I agree with Hirshorn in his wrap up ... will the future look like TV with more interactivity or the Internet with TV included?  The debate will go on, but the future of a billion dollar industry is up for grabs and whoever figures out how to make it simple and intuitive for Joe and Jane Consumer is going to be the big winner.

- Contributed by Todd Cameron
Image courtesy of Jupiter Images

Good packaging design is Eternal

Walking through Whole Foods the other day, there was a group of people standing at the end of an aisle looking at a display of products.  Obviously, such behaviour always intrigues. They were looking at a display of bottled water (alas they had dispersed before I was able to get a picture of them). The display is for a brand new to me, called Eternal.

Eternal is an artesian water that is sourced from New Zealand. What had caught the eye of this small group though was the design of the packaging.  The label is on the back and is viewed through the bottle of water.

Img_0300
This has a magnifying effect on the logo and supporting copy and, because of the way the light refracts through the water, the typeface appears to shift in shape and size.  It looks very cool.

This is a truly artful example of using your in-store assets to capture the attention and imagination of your audience.  As we know, packaging is one of the most powerful mediums a brand has, and one the brand is in total control of. Its impact is great both within the retail environment and out, and this example demonstrated really nicely how it can be used to raise awareness of your brand and how to engage shoppers (and the group did walk off with a couple of bottles in their basket, which helps reinforce the point). Img_0301

So many other brands that sit on a shelf could learn a lesson from this and do more with their packaging to engage the shopper and create a buzz in retail for their brand.  So how could you re-think and re-conceive what your packaging does for your brand? How can you use packaging to convey something about the role your brand plays? Does your packaging manifest anything about your brand's beliefs? Or your brand's behaviors?  Perhaps, like Eternal, it should.

Your Shopping Cart Powered by Microsoft

Ms_cartA number of recent articles, here is one, covered the announcement of Microsoft's partnership with MediaCart and Wakefern Foods (ShopRite) to deliver interactive shopping carts into ShopRite stores. Working at a retail focused agency, it is always interesting to see investment in our arena by major media players, e.g. CBS buying SignStorey.

Along with the creation of Nielsen In-Store and P.R.I.S.M., these types of announcements bring increasing credibility to the industry and attention to the power of in-store marketing. Further, this represents a marrying of online technology (Atlas) and an in-store vehicle, which shows a very positive evolution of thinking.

However, all that excitement aside, I have a certain amount of skepticism about the success of this vehicle. I think for a select group of early adopters, it will be embraced. But for many shoppers, are they really ready for this? 

Grocery shopping used to be simple; go to store, get cart, put stuff you need in it, sometimes there were signs that told you what was on-sale.  Now, you can enter your shopping list online before you go, it'll download to your cart computer; and tell you about specials on a contextual basis when you hit the right aisle. As a marketer, again, think this is fantastic. Love the blend of technology and context to deliver truly targeted ads. However, I'm just not sure your average shopper will think they "need" all this, but that's just my opinion. Time will tell.

On a side note, (and I owe this to a colleague at another in-store company) what happens when carts are stolen? Your average shopping cart costs something like $150 (i looked it up). What happens $1,000 shopping carts start disappearing?  How are retailers going to feel about losses in that arena on a daily basis?  I mean this in all seriousness, and would love to hear how the deals are configured and if they account for loss like this.

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