2. Shopper behavior in the fresh department. 3. The Basics of In-store technology. Appendix B: Content Administration
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1 A Guide to Visual Merchandising in the Fresh Department Table of Contents 1. Introduction 2. Shopper behavior in the fresh department 3. The Basics of In-store technology 4. Adapting the Retailer marketing process to in-store promotions 5. Case study: Product merchandising in the Meat & Seafood department 6. Recommendations Appendix A: Functionality of Content Management Systems Appendix B: Content Administration Appendix C: Resources and Noted Research
2 Introduction / Overview 1. Introduction Visual merchandising and the use of digital signage in grocery retail is exploding. Video monitors presenting information, entertainment, and promotions to shoppers are pervasive. Retailers are using content management technologies to deliver marketing strategies more targeted and more distributed; whether creating an integrated brand experience in the store, or for category and product merchandising. The technology opens the door for affecting shopping behavior and delivering more effective marketing in the grocery store. Nowhere else is there a better opportunity for retailers to influence the purchasing decisions of its customers than in the fresh department. Fresh food counters offer a unique opportunity for in-store marketing. Besides the cashier, the fresh departments are an important touch point between the shopper and a store associate. Research shows that the fresh department has the highest density of shoppers in terms of traffic and time. The shoppers are a captive audience, typically waiting over two minutes as they make their fresh purchase. Visual merchandising at the fresh food counter places the message at the point-of-purchase while shoppers are making buying decisions. The technology to deliver digital signage across a grocery store network adds new complexities to the IT infrastructure. Retailers must select the right technology partner to project manage, rollout, and support such networks over hundreds of locations. But the keys to successful visual merchandising lies in the marketing processes and how the network is utilized. This white paper provides retailers with guidance for implementing in-store, fresh department marketing programs including the following elements: Statistical analysis and current research on shopper behavior in the fresh department Overview of available digital signage technology to deliver in-store promotions Retailer marketing processes for managing content Case study results from in-store promotions in the fresh department Recommendations & lessons learned from digital signage projects Marketing communications technical resource information 2
3 2. Shopper behavior in the fresh department A. Overview Fresh product departments are among the highest traffic areas of the grocery store. Research confirms that not only do shoppers travel through the departments but spend longer periods deciding and choosing their fresh selection. The customer who is waiting to be served at the fresh counter is a captive audience for the retailer s marketing communications. Today s grocery shopper is more open to in-store communication and marketing messages. Consumers expect to have access to better in-store information on product choice and quality. Typically at the beginning of the shopping experience, messaging and promotions placed in the fresh departments are more likely to affect shopper behavior throughout the store visit. Empirical evidence shows that up to 70% of the shoppers market basket are impulse purchases. Neuro-science research on shopper behavior concludes that in-store marketing can create a positive experience, which positively effects buying decisions. What grocery shoppers are saying about the store experience: 60% say the shopping experience is very important 47% feel merchandising displays are very effective in influencing purchase decisions 43% want more product comparisons 43% want more information on product quality 37% feel merchandising displays are very effective in influencing brand decisions 32% say in-store communications are very effective 27% say out-of-store advertising is very effective Miller Zell 1 3
4 Shopper behavior B. Fresh Department the hotspot for store traffic The store map below illustrates areas of shopper traffic patterns and density from the grocery research firm, Sorensen Associates. The shopper mapping is determined based on time spent in a given area of the store using shopping cart position tracking devices. In terms of shopper traffic, blue zones represent dead zones and red zones indicate hot spots. Sorensen Associates summarized the analysis with the comment, 80% of shopper time is focused on the 20% between the (store) entry and checkout. 2 Sorensen Associates 2 C. Shopper Buying Behavior both rational & emotional Until recently, it was thought that consumers decisions were made rationally, driven by needs and price-value objective decision making. But recent science has shown that most purchase decisions are actually made subconsciously. Noted researcher and retail expert, Achim Fringes, coined the phrase neural merchandising in linking neuro-sciences with marketing methods to influence buying behaviors. Fringes research has found that positive sensory stimuli increases activity in the reward and desire centers of the human brain. By creating a positive store experience, retailers can form must-have feelings. In a recent interview, Fringes commented, Purchasing is always linked to making decisions. I have to decide what to buy, and my final decision is influenced by emotions all neuroscientists agree on that. And emotions are also at the heart of my memories and my motives. What neuro-merchandising does is to bring these emotions into the retail environment and to provide a context for them. Fringes findings confirm that targeted in-store marketing activities can produce a positive emotional response in areas of the store and create a series of shopping experiences for the customer. Beyond the need to purchase, these experiences subconsciously trigger a shopper s desire to buy. Achim Fringes 3 4
5 D. Waiting at the Fresh Counter a captive audience Fresh department research has determined that customers purchasing from the fresh service counter of meat, seafood, cheese, bakery, or deli spend an average of 2.8 minutes being served. This period of time at the fresh service counter creates a unique situation providing a captive audience for marketing. Time studies were completed on the waiting patterns of shoppers in fresh departments. Various retailers participated in the study with observations completed at fresh counters. The studies showed consistency in the time spent by shoppers waiting to be served and the transaction time (being served). The following scatter plot shows results for the range of times for shoppers waiting to be served. 4 Queue vs Wait Time Wait Time (Seconds) = Lost customers due to wait time No. of Customers in Line Note: Shopper research is representative of typical fresh department performance. Results will vary with store formats, shopper demographics, time of day, seasonal impact, and other factors. Average wait time (queue to be served) = Average transaction time (being served) = 0:28 seconds 2:20 seconds Total average time at fresh counter = 2:48 seconds Customer tracking indicates that 64% of shoppers have to wait to be served at the fresh counter. While waiting to be served and during the customer service process, 76% of shoppers focuse their attention on the fresh counter, store associate, and service counter scale. This is a logical result as fresh products are generally sold by weight and shoppers are interested in the transaction; the calculated price and product information. Eye-level displays receive the highest attention within the first 3-5 seconds of entering the area. 5
6 The Basics of In-store Technology 3. The Basics of In-store Technology A. Overview Digital signage networks in retail 5 The use of digital signage and digital place-based advertising is exploding in all segments of retail. Digital place-based advertising refers to consumer advertising moving out of traditional home media (TV, newspaper, weekly shopper) and moving to new digital media (monitors, kiosks, mobile phones). Global retail spend on such networks and systems is estimated to be approaching $2 billion per year. Digital signage technology is still a new, emerging market. There are many, small, new players entering the field and frequent mergers and acquisitions. Finding a stable technology partner will not be easy for retailers. Digital signage networks are generally defined as centrally managed promotional content and distributed display networks. Promotional content can include advertising, information, or entertainment. It consists of three main elements to complete the solution: Centralized Content Management System software application to facilitate and distribute content Digital signage elements, including display monitors and network devices Marketing process to create content Typical digital signage network architecture Player Display Broadcaster Server Display TCP/IP Central Server TCP/IP Local Server Player Player Display Display Agency Server Mgmt SW Display Player Display Mgmt SW Player Display Venue Digital Media 6 B. Content Management Systems (CMS) Content Management Systems (CMS) are software systems used to control the content displayed on PC-based displays in retail environments, including LCD/Plasma displays and fresh counter scale displays. Normally, the CMS is a central web-based application which determines the media content to be displayed, how often it is to be displayed, and on which set of in-store player devices. Functionality of the CMS typically includes; Content preparation, Scheduling, and Data management. (See appendix A) 6
7 Software Enterprise Implementation 7 Retailers must decide how best to implement the CMS application across the enterprise. There are two accepted approaches: a.) a self-hosted enterprise application, b.) Software as a web-based service. CMS solution providers can generally adapt to either architecture. 1.) Self-hosted Software application Retailer IT manages an enterprise application and all necessary IT infrastructure to support it. (e.g. servers, network bandwidth, service patches, security, internet access) 2.) Software-as-a-Service (SaaS) Retailer purchases a use license and the application is provided as a service delivered via web browser over the internet. The software application provider is responsible for IT infrastructure and scalability of the solution. C. Digital Signage Elements 1. Monitors / Displays In-store monitors are becoming pervasive in retail space. LCD, plasma, or traditional CRT-type TV s, retailer's typically specify commercial grade electronics with ruggedized housings, better cooling systems, and ceiling mount configurations. Advantages of monitors: Large, high definition images and modern looking Flexibility in location, positioning, and messaging Cost effective alternative to printing and maintaining in-store signage Disadvantages of monitors: Generally ceiling mounted, out of the line of sight of shoppers Single purpose devices Pervasive, becoming unnoticed, like wallpaper 2. Device Players Standard flat-screen monitors require a smart device to connect to the network and manage display information. Device players are typically dedicated PC s for driving content to the in-store displays. Players require retailer IT support and integration to the in-store network. Content Management Systems (CMS) applications install player software with each in-store display to manage content updates and monitoring. 7
8 The Basics of In-Store Technology 3. PC-based Counter Scales in the Fresh Department The service counter scale continues to fulfill a traditional retail role of weighing fresh product, price look-up functionality, and printing a label. The devices have become more sophisticated and have the advantage of being integrated to the Retailer in-store infrastructure. Price and item information is downloaded via wireless (wifi) interfaces and improve the ease-of-use for fresh department operators. A technology revolution has occurred on the fresh counter over the last few years as service counter scales are moving to open-platform PC architecture. Acting as a productivity workstation for the fresh department, PCbased scales are providing enterprise-wide access to marketing alerts, department procedures, and connecting to fresh item management systems. Retailers are just beginning to take advantage of the technology and the endless possibilities for process auto mation and shopper marketing. With the power of a PC in the hands of a store associate and in front of the shopper, it is a logical next step to use the service counter scale as a promotions media platform. Advantages of PC-based scales: Positioned at shoppers eye level and at the point-of-decision Multi-purpose device, integrated device player and network connectivity Cost-effective alternative to printing and maintaining in-store signage Disadvantages of PC-based scales: Limited to positions on the fresh counter 8
9 4. Adapting the Retailer Marketing Process to In-store Promotions A. Marketing Objectives Unsuccessful pilots of in-store promotions fail most frequently due, not to the technology, but to a lack of integration and acceptance in the retailer s marketing process. Clearly articulated objectives for visual merchandising and in-store promotions will define the ownership of the promotion content and the retailer marketing processes to support the on-going program. There are typically two primary objectives for in-store promotions: 1.) Experience / Branding Focus is on reinforcing the retailer brand and the shopping experience. Branding promotions are driven by retail corporate marketing and brand managers. Content is normally managed by in-house marketing teams or corporate agencies. 2.) Product Merchandising Focuses promotions on specific categories or product lines. Measureable objectives are defined from sales lift targets. Commonly used with private label brand marketing. Promotions are often coordinated with weekly shopper promotions. Commonly managed by category management and the merchandising teams. B. Marketing Process Example, product merchandising Adding in-store promotions to the marketing mix will add additional work steps for category merchandising personnel or contracted agencies. Proper personnel training and process design can insure; organizational acceptance, minimize additional work to as little as a few hours per week, and ensure program success. Typical process for managing in-store marketing: Corporate Marketing Category Merchandising Marketing Communications Category Merchandising Category Merchandising Brand ownership Promotion planning Creative design Content management Measurement Defines retailer branding guidelines Graphic, design messaging rules Promotional campaign plan Categories, product lines, supplier lines, Co-op marketing identified Internal or external agency Campaign creation Test market, focus group, piloting Scheduling, distribution, updating Content tracking Campaign performance CPM, reach, impressions 9
10 Adapting the Marketing Process C. Content Management Process Using the Content Management System (CMS) requires adapting graphic design elements to the system that structures playlists and distributes content out to the remote devices. Most CMS applications provide easy import functions for agency created promotions and corporate marketing standardization. Ensuring that graphical content will correctly display and run on a variety of devices requires careful preparation of image formats, resolution, and standards. (See Appendix B) Spot Creation Messaging Import advertisement Add graphic images, flash, dynamic content Use templates Build Playlist Promotion sequence Drag & drop spots in sequential order Copy & paste playlist frames Targeted Distribution Location, Timing Assign playlists to stores, regions, departments, devices Set playlist timing calendar, daypart Note: Content management process defined based on Fresh Look Content Management Solution, but may be provide framework for general requirements 10
11 5. Case study results: Product Merchandising in a Meat & Seafood department 8 A. Overview A regional, high value grocery supermarket chain wished to boost sales in the Meat & Seafood departments. They also wanted a new, innovative way to extend their established brand experience with minimal impact on internal resources and infrastructure. The Category manager and IT director co-sponsored a pilot project to test the effectiveness of in-store marketing right at the point of a customer s decision by putting a digital promotions solution on the meat / seafood service counters in three of their stores. The retailer selected as a technology partner to provide the Fresh Look Content Management Solution and PC-based, UC Professional service counter scales with large promotional displays. B. Marketing objectives Category management intended to test effectiveness of in-store digital promotions to enhance the traditional use of an in-store, printed, weekly shopper. The category merchandising team duplicated promotions from the weekly shopper to the promotional screens on the service counter scales. Each week, Fresh Look CMS broadcast 3 to 5 promotions per week based on items chosen from the retailer s printed weekly shopper. Promotions for meat & seafood category items and cross-selling items were included in the test. Pilot target measures for sales lift of 10% or greater would be considered an excellent result. C. Marketing process Category Merchandising selected 3 to 5 promotions per week from the weekly shopper ad schedule. Artwork for promotion spots were provided by the retailer s marketing department in order to meet branding guidelines. Signoff and approval of promotion spots were received prior to automated distribution out to individual stores and scale devices. Using common graphic design elements, the additional in-store promotions added approximately 1 2 hours per week in additional work for the marketing department. 11
12 Case study results D. Test methodology The performance measure for the pilot program was to compare items promoted only in the weekly shopper to items also promoted on the service counter scales. Sales growth of promoted items in the 3 test stores was compared to sales growth of the same items in the 22 control stores. The pilot involved a total of 9 service counter scales, 3 in each Meat / Seafood department. The pilot program began in late 2009, with the weeks leading up to and including both Thanksgiving and Christmas excluded from the test results. Also excluded were results from the top two performing control stores and bottom two performing control stores for each promoted item. E. Results Same item weekly sales were compared between the test stores and control stores. Based on 13 weeks of data, the In-store promotion was shown to have delivered +11.5% sales growth above controls stores with only weekly shopper promotions. After the pilot test and over an additional 33 week period, sales growth performance continued to average +13.2%. Subjective results were positive, as well. Department managers confirmed that the service counter solution was creating sales lift. One noted, [Customers] are asking our associates about promoted items all the time. Category management experimented over a 2 week period with service counter promotion of items not offered in the weekly shopper. The In-store promotion delivered an average of +48% sales lift. 12
13 6. Recommendations The following points are a checklist of recommendations and considerations to improve the likelihood of a successful in-store, fresh department promotions program. A. Marketing Objectives Determine primary objective Experience / Branding or Product Merchandising promotions. Agreement to measureable success criteria. Recommended target for product merchandising = +10% sales lift over control stores. Select objectives for Experience / Branding In-store solution more information, more product comparisons, easier access to information. B. Marketing Process Integrate in-store promotions program with current weekly shopper or branding programs. Leverage existing images, messages, videos content etc. to ensure seamless marketing integration Improve buy-in with merchandising / marketing. Process design to minimize increased labor on internal staffs. Actively measure performance of campaigns: e.g. POS comparisons, CPM, reach C. IT Infrastructure Selection of CMS application legacy systems or new application suited for in-store digital signage networks. Determine software implementation - Self-hosted applications or Software-as-a-Service Position in-store displays for maximum reach with shoppers: In the fresh department counter, eye level, on the fresh counter. D. Technology Partners Identify technology supplier with system design capabilities and expertise in enterprise integration. Identify supplier experienced in large store network rollouts of in-store infrastructure with local support. Select a digital signage supplier that brings stability to a new, emerging technology. E. Keys to Success 1. Physical placement eye level, where the shoppers are focused 2. Visual quality uncluttered, appealing, adding to the experience 3. Messaging relevance to the shopper, integrated with other media 4. Part of the marketing process content integrated into current merchandising / marketing processes 5. Educate & inform the store associate supporting the message 13
14 Appendix Appendix A: Typical Functionality of Content Management Systems Content Management Schedule & Data Management Content Types & Providers Functions: Content creation graphics, videos, messaging, templates Ad Management gathering, managing ads to fit venues and conditions Live content managing feeds, scaling to fit Interactive content creating content and logic for interactive displays and kiosks Multi-zone fitting differnet content into zone windows in the display Updating Real time or scheduled updating content, such as price and availability. Often times, updating can be done remotely via web or phone. Internet RSS feeds and SMS are two examples of ways to send content to displays Functions: Scheduling content setting up different streams or content to play at specific times Triggered content setting up to play based on certain triggers, such as the presence of people, alerts, specific conditions measured by sensors Updating updating of schedules, potentially remotely via web or phone Tracking activities metrics on how sign is used and interacted with Ad tracking metrics on ads displayed and interacted with Content tracking Digital Rights Management of content shown on displays Types: Advertising graphics, videos and messages Information Business specific information such as events, location, times, availability Entertainment News, weather, scores, stock, traffic, directions, etc., includes live action feeds from events, local or national broadcasts Sources: Internal communications departments Braodcasters traditional television/radio Cottage industry content creators that produce content to sell to anyone Network operators operate a network of digital signage Advertising agencies Aggregators Digital Media 6 14
15 Appendix B: Content Administration Note: Recommendations are based on system requirements for the Fresh Look Content Management Solution, but may be provide a framework for general requirements. Picture file formats: TIFF GIF BMP JPG PNG Presentation file format: PPT Movie file formats: AVI MPEG FLV A. Overview Content Management Systems (CMS) is software used to control the content displayed on PC-based displays in retail environments, including LCD/Plasma displays and scale displays. Normally, the CMS is a central Webbased application which determines the media content to be displayed when and on which set of in-store player devices. The displays can be operated either in full-screen or split-screen mode. On service counter scale displays, the legally required weighing data always remains visible at the top edge of the screen. B. Content Scaling It is important to remember that the Fresh Look Player software scales the media content. This means that media content does not have to be generated exactly in the indicated pixel resolution; only the aspect ratio has to match. The software takes care of converting the material to the exact pixel count. However, the production of precisely adjusted content typically results in sharper results with higher performance. C. Codecs The Fresh Look Player application uses carefully selected software components ("codecs") to optimize the display output for various types of digital media files, as described below. Inclusion of a customer-specific codec to increase the displayable formats is available upon request. 15
16 Appendix D. Suitable Media Formats 1. Static images Static images (photos, graphics) can be displayed in the following formats. For best results, the resolution of the image should match the resolution of the screen: JPEG BMP GIF TIFF PNG Images should be reduced in size to approximately the size required for the spot prior to uploading into the CMS system. 2. Presentation programs (PowerPoint) PowerPoint files are displayed with PowerPoint Viewer 2007 by default. This program is free and is installed on many Device Player PC s. The PowerPoint files should be set to play automatically (i.e., they should not be waiting for mouse clicks). 3. Video formats Typical CMS Device Player software adjusts video material to the screen type. This only pertains to the resolution and not to the aspect ratio. This means that videos in the format 360x768 will be displayed correctly in a screen window with the resolution 800x450, since both formats have an aspect ratio of 16:9. Videos with a different aspect ratio are displayed with black bars. For optimal results, the aspect ratio of the video should match the aspect ratio of the screen (or, in case of split screens, the aspect ratio of the corresponding screen segment). Caution: 16:9 videos sometimes are in the format of 4:3 videos with a black bar at the top and bottom. When such videos are played in a 16:9 window, the system will not recognize that the actual aspect ratio is 16:9 and the video display will show additional black bars on the left and right. In that case, the video display appears minimized. Note that videos typically are displayed without sound on in-store monitors. Pilot testing received generally negative results when sound was added to the store environment. The following video formats are normally supported: MPEG1 MPEG2 MPEG4 WMV (recommended codecs: WM Video V9) MOV (recommended codecs: Sorenson3, H.264 up to version 7.6) AVI (recommended codecs: XviD, DivX, On2 VP6, Intel Indeo) Flash video (recommended codecs: on2, Sorenson) Note: For performance reasons, WMV, MPEG2, and MPEG4 are preferred formats does not advise the use of full HD-format (1920 x 1080) videos, since this resolution cannot typically be displayed and negatively impacts bandwidth. 16
17 4. Animations in Adobe Flash Just like videos, animations are displayed on the full screen regardless of their resolution, provided it is in the correct aspect ratio. For optimal results, the screen resolution and the resolution of the animation should match. Note: Service counter scales with promotion screens are subject to certain performance limitations. Flash applications should therefore comply with the guidelines below to prevent the content from stuttering. We advise reviewing the content on a test scale prior to release. Simultaneous animations only on 25% of the screen area Avoid several semi-transparent levels in animations Simultaneous animation of text on no more than 15-20% of the screen area As a rule of thumb, animations should occupy no more than a quarter of the screen area. Several animations with this maximum size can be switched in sequence. Flash is supported up to version 9. Flash is primarily used for the display of dynamically transmitted data (news, weather ). Additionally, please note the following when working with Flash files: The duration of a flash video is determined by the number of frames in the _root timeline. The number of frames in the root timeline must match the time for which the flash video is to be visible. The Flash video may not download any external elements (such as other swf files, images, videos, sounds etc.). Exceptions to this rule can be implemented by modifying the CMS Player software on the host PC (e.g. for RSS feed) For the proper display of a Flash video, one of following two conditions must be met: The _root of the Flash video must include a movie clip with the name "mask." This movie clip must include a (transparent) rectangle that exactly matches the size of the stage. The bounding box of the Flash video must exactly match the size of the stage. The Flash video must be in *.swf format and may not be compiled as a projector. 17
18 Appendix Appendix C: Resources and Noted Research 1. Store Brand Equity and Incremental Sales, Miller Zell, Managing Store Traffic for Maximum Profit, Herb Sorensen Ph.D, Sorensen Associates, Achim Fringes, Retail Process Analysis, Ms. Kelli Berner,, Digital Out-of-Home Brand Planning, SeeSaw Networks, Digital Signage: Still a young industry, Digital Media, SaaS vs. Self-hosted systems, Digital Signage Insider, Fresh Look pilot, U.S.A.,
19 Notes 19
20 For more information Mettler-Toledo AG Im Langacher CH-8606 Greifensee Tel Fax /2011 Mettler-Toledo AG Global MarCom Switzerland
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