Kroger Advances In-Store Network

So, another article about another in-store network and here's what the teaser had to say:

P-O-P Times sat down with Evan Anthony, Kroger's corporate vice president of marketing and advertising, to discuss rollout plans for an ambitious, integrated network that will turn the nation's largest supermarket chain into a "media company." (Emphasis mine)

So, let me tell you how I feel about this. Kroger -- you're a grocery store, not a media company. You sell groceries. That's what you do and how you make your money. Groceries. Not media, not real estate, not movie rentals or DTC pharmaceuticals. You don't seel bonds or insurance policies. You sell groceries. You can use these things to generate additional revenue, but you're never going to become a media company. And, if you need to sell media in order to make money due to declining grocery sales, then you need to get out of the grocery business!

Although in-store television networks are not new, the architects of the Kroger plan claim that they are looking at the medium from a different angle. Encouraging advertisers to see the network as more than another option for in-store advertising, the In-Store Broadcasting Network points out that this program delivers an opportunity on par with traditional radio or television buys... with the added perk of reaching a consumer with wallet in hand.

"What I think people are realizing today is that Kroger is a media company," says Evan Anthony, corporate vice president of marketing and advertising. "And we deliver more reach and frequency than the largest television or radio station in this country. Retail outlets are realizing the same thing. It's a very effective reach; it's a very cost-effective reach. It just has to be measured."

Hmmmm, not sure how this is looking at the medium from a different POV. Sounds like the same, wrong POV that everyone else has about in-store TV. And let's be clear -- no one is looking at Kroger as a media company. They think you're a GROCERY store.

Now that the reach can and will continue to be measured using the recent technology of the Portable People Meter from Arbitron Inc., New York, IBN posits that the in-store network could offer a solution to a modern broadcast media problem.

And yes, another rant about this! (You'll be reading lots more about this in our Measurement Manifesto.) Reach & frequency is not a valuable measurement tool in store. Who cares about reach & frequency -- you're in a grocery store. Of course you're going to have reach & frquency, but who cares? And the PPM only measures that people walk past something, not that they care or pay attention. And once again, let me say. Who cares that you've walked past an ad???

And here's one of my favorite statements by people creating programs that no one really wants:

"There's too much ad-avoidance now; you can't get an audience, a true audience, delivered now the way you could years ago," says Lon Von Hurwitz, president, sales and marketing of IBN. He explains that the network will be sold in a fashion similar to the cost-per-thousand basis for broadcast media, rather than along the ROI measures common to P-O-P. "When an audience is inside a store, they can't avoid us, they can't turn us off."

So, let's once again be clear about this. Advertising based on the fact that you can't turn it off IS NOT A GOOD ADVERTISING MEDIUM. That’s what got the industry into the situation we’re in now and why no one likes us. They don’t like us continually forcing our advertising on them.

And just a little collections of gems from the rest of the article:

"Although IBN does not take responsibility for rearranging merchandise or displays within the store to correspond with network advertising, the company encourages Kroger management at the store level to pay attention to the content being played, and to merchandise products to their best advantage." Let me get this straight. Are they suggesting that the merchandise should be moved based on where the monitors are and not that they should be putting the content on the monitors based on where the merchandise is? How backward is that???

"The customer wants to know, OK, I know we've got ketchup, but what do you want me to do, other than buy it? How's that going to work in my lifestyle?," says Anthony. You know, sometimes, I just use a bad example when I’m trying to make it a point, but I always try to identify it as a bad example. But ketchup? KETCHUP??? “What do you want me to do, other then buy it? How’s that going to work in my lifestyle?” It’s ketchup, it doesn’t really work in your lifestyle. Well, unless you’re part of the Ketchup Advisory Board.

"In-store media gives you that opportunity to really drive your reach and frequency with somebody, give them a relevant message and build a relationship with that customer. That's what you want, anyway." And you don’t build a relationship with anyone when you start by talking about the fact that they can’t avoid you. You can't think reach & frequency and relationship building at the same time. They usually, in fact, work against each other.

So Kroger, if you want to make more money, then create a better shopping experience. Whole Foods doesn't have an in-store network (well, hopefully they don't!) and their square foot income is double yours. I don't mean to be so hard on Kroger, but folks let's start the new year off right.

Yes, it's time for companies to figure out what business they're in and then do that business really well. You may remember this article (Experience Manifesto: An Identity Crisis for Supermarkets - New York Times) from earlier this year:

Traditional supermarkets, caught in the middle, are struggling to survive. And the pressures on them may only intensify: Wal-Mart and Whole Foods have ambitious expansion plans, and Target says it wants to become a big player, too.

"For the past several decades, stores have been run in a way that benefits the store and the company's bottom line," Ms. Johnson said.

By contrast, she said, the new store concept "was born from what the customer wants: to take the hassle out of grocery shopping.

"Bloom stores - there are now five, all in North Carolina - feature a quick-stop area in front for shoppers who just want eggs and milk or something for dinner. Traditionally, supermarkets have placed such high-volume items at the back of the store in hopes that the journey may inspire other purchases.

"Why have we played these games with customers?" Ms. Johnson asked.

The new stores also have wider aisles, lower shelves and no candy at the checkout aisles, to cut down on temptations for children. Ice cream is at the front so it is less likely to melt before reaching home.

Ms. Johnson and her team have also banned promotional displays from the aisles, saying that they generate nice fees from vendors, but clog cart traffic. "Taking them out is a scary thing for a retailer to do," she said, "because it's revenue and they're designed to drive impulse sales."

Christina Minardi, head of the New York-New Jersey-Connecticut region for Whole Foods, said she doubted large chains would be able to replicate the appeal of her company's stores. "It's a lot more than paint and new lighting," she said. "We have developed a whole culture here."

And it's a lot more then just throwing up a bunch of monitors and pretending that you've suddenly become a media empire.

Link: IN-STORE MARKETING INSTITUTE .

Comments

[Laura Davis-Taylor]

I agree with your points.

Selling store networks based on the Media/Revenue equation alone is setting us up to create more UNWANTED marketing noise. For lack of a better word, I think it's a lazy strategy...sell the media message and build an ROI around incoming media revenues and that's all they are accountable to. Nowhere is the shopper accounted for!

My deep fear is that Madison Avenue is going to get a grip on this medium in search of the ever-elusive eyeball and we're going to end up with a circus in retail stores. I do believe that the networks can indeed have a positive play within these stores, but it's not a media play. It's a customer experience play. And, who is ultimately going to ensure that they are planning and executing enjoyable content that is built around customers and enhances their shopping experience is a real challenge.

I don't pretend to have that answer...but I think it's possible if the right consituents come together and build the business/content strategy responsibly around that precious shopper.

[James Tenser]

I think you may be missing the essential point here. Advertisers are not just buying jaded eyeballs (reach and frequency) when they purchase in-store media. They are purchasing an ability to boost sales levels in the retail stores - known as lift in the trade. And they are buying better relationships with their retail hosts.

Retail stores are communications environments for a variety of brand messages, ranging from instant coupons, to in-store radio, to the pictures on packages. The folks at Procter & Gamble know this full well - try reading up on the company's "First Moment of Truth" activities. It's all about influencing behavior at the store shelf.

Lift is measurable and in-store media outcomes may be empirically tested by comparing matched stores. If you think like a media planner, this is harder to grasp.

[Brian]

Good Article - Check out some of our automotive content online at www.GOontheROAD.com

[Chuck Woo]

You are out of touch somewhere with reality!

Your words: Kroger -- you're a grocery store, not a media company. . . And, if you need to sell media in order to make money due to declining grocery sales, then you need to get out of the grocery business!

They have a captive audience and can prove that instore advertising increases sales by 9 to 26%. How can you tell a billion dollar retailer not to utilize media to their advantage? That's un American to tell a company, trying to compete in the market to give up.

You miss some key points. Thank God Kroger doesn't listen to you!

[David Polinchock]

Chuck:

Thank you for your comments, but I disagree with you. I didn't suggest that they shouldn't use media as a sales tool. What I suggested is that they shouldn't be calling themselves a media company. Because, no matter what they say, they're not a media company. They're a grocery store. Really, that's what they are. People go there to buy groceries, not to watch the Kroger Network. And the fact that retailers continue to talk about their audience as "captive," they will eventually drive their audiences away. Bloom, Whole Foods and other grocery stores are doing well without forcing commercials onto their customers. As we say all the time, either the consumer is in control or they're not. I didn't think the Kroger announcement showed they respected their audience.