The app economy moves in-store.
"See all of those sheets in packages on the wall?" one of our large U.K. retail clients asked me. "Now, look at that one bed on the showroom floor - whatever sheets we put on that bed will sell 10 times more than anything on the wall."
It was a great insight into a retail paradox; floor space is finite and precious - but customers buy more when they see products boldly displayed.
Unlike a physical store, real estate on a digital screen is infinitely changeable and can address many long-standing issues for retailers. In fact, it represents a shift in the entire way we create customer relationships. As marketing increasingly becomes about interactivity, not just incessant messaging, and brands move toward interactivity in mainstream digital media, the retail environment is beginning to mirror digital channels.
While most brick-and-mortar stores are missing out, a growing number of forward-looking retailers are embracing in-store digital as a way to bring some of the beloved elements of online shopping - reviews, feedback from friends, styling advice, etc. - into physical store locations. The bottom line: technology and user behavior are starting to intersect at in-store sales and there are great ways for marketers to take advantage of in-store digital retail, the new cousin to web-based e-commerce.
Use the Smartphone, Luke
Retailers might have been content to allow their in-store and online shopping operations to remain as separate experiences with minimal overlap outside of the product catalog had it not been for the rise of the smartphone.
As more and more shoppers began bringing their new smartphones with them to stores, they started doing their own research in the aisles, checking price, availability, color and size options, and more. Retailers noticed, and started looking for ways to facilitate (and benefit from) this behavior. A simple but effective campaign for Target allows users to text for product reviews. These tactics brought critical third-party web information to in-store consumers.
But while mobile in-store can be great, it's not without its challenges. The screen size of most phones makes it tough to get a great look at products. Connectivity (often bad in big stores) and cellphone data service in general mean that the experience can be slow or information not readily available.
Still, retailers have gotten used to shoppers wandering through their stores, eyes glued to the phone. They are zapping the occasional barcode but primarily they are circumventing the physical space to get the virtually limitless choices, brands, and prices available on the web. If you're a storeowner, this is a bad thing. Unless the shoppers in your store are using your app or your site, you're not controlling the environment - and chances are your guest is looking at competing products or sellers.
Since most consumers don't have your app, in-store gives retailers an opportunity to provide them with "life-sized" apps that combine the connectivity and interaction of personal devices with strong, physical merchandise appeal. Consumers who love their tablet and smartphone are now quick to interact with digital displays (a far cry from earlier pre-iPad installations where we had to use an "attract mode" to give users permission to touch the screens).
Recently Macy's launched Beauty Spot, a new idea in cosmetics retailing that allows customers to find products from various brands and categories by using an in-store touchscreen.
You can see in the short video below how seamlessly the touchscreen environment meshes with the physical product. This is a key insight: it's not an either/or tradeoff. Stores can use digital to amplify and accelerate product discovery, but there's a magic moment when e-commerce fails - when the consumer wants to actually touch the real item. If they're using Beauty Spot, they're already in-store, the product they desire is right there, and the final barrier to purchase has fallen.
The most audacious example to date is probably the Nike Fuel Station. Opened in London in March 2012, the Fuel Station uses a combination of augmented reality, motion sensing, and interactivity to encourage and document your movement, then match your particular gait - captured on an in-store treadmill - with the Nike products that would work best for you. What we have here is an end-to-end brand experience.
But the sweet spot for chain retailers is something that provides the right combination of utility, efficiency, and promotion - and lets cost-conscious companies deploy them broadly. One of my favorite examples is the Video Game Advisor project that my company created for Target, which is currently in more than 1,500 Target stores.
We started the initiative because research showed gaming becoming more relevant to the families that are Target's core audience, yet only 14 percent were buying their games in-store. Our answer? A touchscreen experience that lets users browse all of Target's games within a single 42" display.
In those early days of in-store digital, we had to create the interaction patterns out of whole cloth. Everything - from the height of the terminal to accessibility and the size and orientation of the LCD screen - had to be developed and tested.
While the environment is still relatively unformed, the hardware has made huge strides in the past couple of years as touchscreens and camera-based systems have vastly improved. But there's still room for improvement.
With Macy's and Nike leading the charge, and big backers like Intel providing hardware and software partnerships, the possibilities continue to grow. Here are some great ways retailers can push the boundaries on in-store digital.
Bring mobile into the mix. Out-of-home digital doesn't need to be in-store or mobile - the two can coexist. We often talk about mobile as the "click-through" for out-of-home. It's a great way to take the experience with you. Using geo-fencing and LuminAR, cooked up by the folks at the MIT Media Lab, allows consumers to hold a product up to an ordinary-looking light bulb that houses a tiny camera and displays product specs, reviews, and information about the product, all pulled in based on the image the camera captures.
Technology, consumer adoption, and retailer interest are quickly converging around in-store digital. In 2012, we're predicting a big spike as interactive out-of-home becomes a standard for retailers looking to improve their relationship with consumers.
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Andrew Solmssen serves as managing director of Possible's Los Angeles office, leading the firm's West Coast client teams and determining best practices for engagement management.
He previously served as managing director at digital firm Schematic, where he played a key role in developing some of the earliest advertising models for delivering broadcast content via the Internet. Andrew was also responsible for providing strategic guidance to clients such as Comcast, ABC Television, and NBC Universal in the areas of digital strategy, content distribution, mobile entertainment, and Internet TV. Before Schematic, Andrew served as executive producer at Web design and consulting firm Kaufman Patricof Enterprises.
A frequent speaker at industry events such as Digital Hollywood and CES, Andrew is also regularly quoted by business and trade media on the topics of digital advertising and technology innovation. Prior to his involvement in digital media, Andrew lived in Namibia as part of the Harvard Institute for International Development.
Follow Andrew on Twitter @asolmssen.
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