At-shelf is still ‘show time’
By Ed Stone, [email protected]
You’ve read the stats. Fifty percent to 70% of buying decisions are made in the store, right in front of the merchandise. Turning that around, only 30% to 50% of your sales are “in the bag” at the moment the customer walks through the door.
To get that customer to your doorway, you carefully located your store, selected the right merchandise, organized the aisle flow, bought the 30-second spots, printed the colorful tabs, tailored your storefront architecture and prepared your store associates. Every step was fastidiously branded, conveying a coherent, consistent image that was focus-grouped within an inch of its life before you began the long and expensive journey to burn it into the consciousness of your target audience.
The customer — busy, distracted and mostly undecided — enters your store. The theme-matching wayfaring signs point them in the right direction. And then…
Several hundred signs, each little more than a sterile-chrome-framed price tag, nearly obscure the merchandise from that undecided consumer. Yes, the merchant did what he thought best for his department, within the signage options available to him. In fact, all of the merchants did that — without a coordinating overview that would rein in the “Buy me, I’m low priced!” panorama that looks more like whitecaps on a confused sea than a carefully planned brand statement that escorts the customer through the buying decision.
Elvis and your brand seem to have left the building
You may not have noticed. After all, it happened over a period of time, one small step at a time. At each step, you had a nice, comforting reason to justify it. You had to make it easier to execute. You had to reduce costs. You had to be sure the advertised price agreed with the price file. You had to move faster. It was tricky to manage signage for different geography and demographics. Over time, it lost your brand and became a large, vanilla price tag. Or rather, several hundred large, loud, vanilla price tags.
When did you come to believe that your brand could stop at the door? When did you decide it was all about price? How did you come to believe that 500 price-shouts are better for you or your customer than that enthusiastic brand voice in which you have taken so much pride and invested so much?
Focus on brand versus price
Enter the undecided customer. Aisle after aisle, the chrome-framed price-shouts make their impression. They DO impact the customer. Style, feel, texture, tone, image, visual impression and impulse are all pushed to the background. Flooded with those whitecap price numbers, they go into “left brain” mode and fire up their mental calculators. They go “mathematical” on you. Your signage invited them to do just that.
What does it cost? How much less is that one over there? Did I see one for less across the street? How much do I have to spend? How much have I already put in the buggy? What time is it? The numbers. More numbers.
Now, we all know that price is a part of every retail transaction. Customers need that information and they take it into account. But customers also need confidence in making their purchasing decisions. They get that through information about the sterling qualities of each purchasing option you are providing them. And that information is set in place by your branding.
Those last 3 ft.
So how did we wander away from our brand in the last 3 ft. between customer and merchandise, where it was most impactful on the consumer and on our P&L? We had those reasons, didn’t we? Not anymore.
All the world’s a stage
Retail promotional signage is more complicated today, isn’t it? It requires collaboration that includes your vendors, merchants, marketing specialists, pricing staff, advertising coordinators, translators, operations and store environment. You have to organize and communicate. What worked in the ’90s will not work today. You have to achieve customer impact, centralized branding, management of your total promotional signage “real estate”, time-to-market, pricing accuracy, reduced administrative burden, localization and assortment clustering for demographics and regulatory environment, bullet-proof in-store execution and helpdesk support for marketers and stores.
The retail environment no longer affords us the luxury of throwing overhead dollars at brute-forcing these time-sensitive crucial functions. You must have a fully integrated and automated system to obtain control, economies, speed and impact. That system must span the functions of creation, approval, pre-press, printing production, kitting, logistics, store support and total process visibility to management. That brings you to a choice: build it or buy it.
To build or to buy, that is the question
The first option is often not an option at all. Merchandise logistics and reporting consume most retailers’ IT departments. Graphic design, real-time proofing and electronic interfaces for pre-press, printing, kitting and distribution of localized signage are not their usual milieu. CIOs are skeptical about building something complicated, and unfamiliar — particularly when the task is defined by right-brain cross-functional marketing staff. If you need convincing, call a meeting of your marketing staff and ask them to draw a basic workflow diagram of your current promotional signage process on the whiteboard.
The second option — buy it — is the prevalent choice. The reasons are many. You have a faster startup and lower costs because the solution was designed to meet the core of retailers’ requirements and the basic platform cost isn’t borne by a lone user. The software/system provider has experience in asking the right questions of the right people to configure your custom workflows, access permissions and business rules. They know how to do discovery that doesn’t waste your time. The best providers will even reengineer the process when they find steps that made sense in 2002 but are no longer relevant. They arrive on your doorstep knowing that your workflow and business rules are unique to your organization and they’ve already designed their core software and operating processes for rapid customization.
The “buy it” option takes you to yet another decision. Buy-and-install in your data center (this takes you back to some of the downsides of Option One). Or the alternative approach, the hosted application. With the latter, your system provider hosts the service and deploys your custom application via a secure web interface to all of the parties who require access. Your IT group has no installation and support burdens, and you have a single vendor accountable to you for all facets of promotional signage operations.
For branding control, your provider will create a library of templates from your graphics staff’s designs. Constraints are programmed into each template so that selected users can have many creative point-and-click options, while other users are safely kept on the tracks. A supporting database will control signage by limiting each department to the approved signage types and quantities. No more shortfall, glut or outright wrong signage.
A fully integrated system — the secret of success
Bear in mind that ordering and proofing are only the first steps. For speed, your provider should integrate all of the services that are required, including pre-press, lithography, color digital variable printing, wide- and grand format printing, kitting and shipping. This complete integration eliminates hand-off points, delays, foggy accountability and excess freight costs. Your signage order cut-offs can be as late as five to 10 days prior to shipment.
Cost effectiveness? Your merchants already negotiate promotions with merchandise vendors. Which of your vendors would balk at paying $1.50 per store for a colorful, branded sign in that last three feet between customer and product? A provider who offers a fully integrated system for centralized management and execution of promotional signage should invoice your vendors directly for the cost of signage promoting their product, within agreements between retailer and vendor. For large retailers, a small premium may be added to the vendor’s price that covers all operational costs of the system.
With today’s marketing technology and complete integration of promotional signage services — from centralized branding, through ordering, proofing, production, distribution, setup by the store associate and direct billing of your merchandise vendors, there is no reason to tolerate the vanilla price shouting. It’s time to come back home to your brand.
Ed Stone is senior VP continuum a Charlotte, N.C.-based provider of integrated promotional signage services to national and international retailers. He can be contacted at [email protected] or 866-728-2465.
Walmart to be exclusive retailer of ‘How to Train Your Dragon’ toys
Walmart announced that its new, exclusive toy line based on DreamWorks Animation’s upcoming feature film, How to Train Your Dragon, will be available in stores on March 1. The collection, created by Spin Master, will feature action figures and dragons, Viking play sets and role play toys ranging in price from $5 to $30.
“It was a year ago this month at Toy Fair when Walmart, DreamWorks Animation and Spin Master first came together to discuss the possibility of creating an exclusive line of toys around this film,” said Laura Phillips, VP toys for Walmart U.S. “We are excited to bring the family adventure to life through play, and moms will be excited by the great quality and value that we are offering.”
How to Train Your Dragon will be released in theaters on March 26.
Winn-Dixie 2Q sales, earnings down
JACKSONVILLE, Fla. Winn-Dixie Stores reported that net sales in the second quarter were $2.2 billion, a decrease of $74.5 million, or 3.3%, compared with the same period in the prior fiscal year.
Identical-store sales, which exclude stores that opened or closed during the quarter, decreased 2.9% for the second quarter compared with the same period in the prior fiscal year.
Net income in the second quarter of fiscal 2010 was $2.1 million, or 4 cents per diluted share, compared with net income of $16.1 million, or 30 cents per diluted share, in the second quarter of fiscal 2009. According to the company, the decrease in net income was due primarily to a non-recurring gain on an insurance settlement of $22.4 million ($13.8 million net of tax, or $0.25 per diluted share) in fiscal 2009.
Winn-Dixie chairman, CEO and president, Peter Lynch, said, “The challenging economic environment and deflationary pressures continue to impact sales for the entire supermarket industry. Despite negative identical store sales, we are pleased with our overall operating execution during the quarter. In particular, we maintained our gross margin rate through effective management of our promotional activity and reduced our operating expenses.”
Lynch continued, “It is clear that consumers remain very cautious with their spending, which has influenced our sales across the chain, primarily with respect to overall basket size. However, we increased transactions by 4.1% in our first-year offensive remodels compared with last year, and our customers are continuing to respond positively to the changes we are making. Given the prevailing economic conditions, we will continue to be prudent with our capital spending and will selectively remodel a total of 60 stores in fiscal 2010 in locations where we believe we can generate the highest return on our investment.”