The Reimann Comment

Der Reimann Kommentar

DIY stores on the way out of

Eckhard Reimann (ERCM), Oberursel ( 2007-09-12 16:05:50)

Driven by a ever more strongly becoming competition in a more and more global market surrounding, retailers are today forced to look for new ways to win new customers. The traditional marketing tools such as price, selection and location are no longer sufficient for differentiation in relation to the competition. And therefore successful retailers change turn into solving the customers' sales experience, the increase of  sales in the stores and the customer loyalty by innovative ways for satisfying the customer needs. However only a small, but increasing group of innovative retailers constantly tests a multiplicity of new techniques e.g. the employment of mobile devices or digital media in the stores - under the criterion to offer to the customers new possibilities of coming with the retailer into contact - as a recent example in Germany the METRO Group with the Extra Future Store in Rheinberg and the RFID Innovation Center in Neuss can be mentioned.

The retailers know only too well that the consumers are differently constituted today than in former times: they are better informed, more clever and more fastidious. They have even access to a lot of information and do know exactly, how they can to use them for their advantage - and thus press the prices and profit margins in the retailing. Beyond that customers are today more comfortable and more independent. Many would like to unimpairedly search products and automatically pay. In addition, at the same time also customer loyalty decreases. All this leads to the logical consequence that the retailer must motivate its customers very much more strongly than so far in order to spend money - and that in his store.  He does reach that however only, if he knows his customers and his needs and if he knows, which of his advertising messages do respond the customers at all, i.e. if he argues seriously with the secret dreams and unexpressed longings of humans. In addition an interior view is necessary in order to understand who they are and about which they dream - and a kind of "dream management" in order to understand the customers and their dreams. Only then he is in a the position to adapt his product assortment, his shop and his sales strategy to the individual desires of the customers. That also presupposes that he must concentrate apart from activities for reducing the costs on an increased productivity of his employees by a more efficient workflow via the access to real time data as well as the development of the know-how of his employees by need-oriented "Just in Time" training courses. Above all it is to be guaranteed however that buying will become for the customer to an experience and that the motivation and interaction with the customer during the entire purchase process will stand in the center - and that finally innovative technologies have to be used, which make this possible for him. Successes of so some retailer are based on the fact that they "romantisize" the market - to transform a purchase-stroll into an adventure, into an experience.

The investments connected with the technology expenditure must naturally obtain a value which lies over the invest­ment costs. In cases, where the deployment of technology results in efficiency gains in the logistic chain of product availability, the question is relatively simple to be answered: it comes to substantial personnel discharges during the stock movement; product availability gaps are relatively time near avoided by the avoidance of medium breaks and thus additional sales are obtained. With the technologies, which facilitate the customer buying, it has a primarily sup­por­ting character in the main processes of the procurement of products and works above all efficiency-increasing and accelerating. In cases, where a high emotional commitment of the customer and on the other hand a high service and consulting authority of the dealer are necessary, the technologies make a valuable contribution for the customer loyalty and differentiation. The possible discharge of the personnel by technology creates time for consulting and service achievements at the customer. The technology advantage lies here less in cost savings, but rather in generating additional turnover potentials by further consultation. At the point of sale now a much more intensive contact to the customer can be developed, than classical communication could carry it. Target group-oriented displays (Digital Signage), electronic advertising pillars or kiosk terminals increase the period of the customers spent in the shop and thus the chance to increased purchases.

a10_1In view of the multiplicity at products and the solid advertising flood, which became according to POPAI Benelux a proper "promotion terror", makes the consumer increases his purchase decision already at home and only approximately 70 per cent in the shop opposite still 80 per cent in the year 1998. Websites, search engines, online advertisement, email and consumer portals won in all phases of the purchase process strongly at influence, from the first attention up to the final decision. Most strongly European consumer trusts with their purchase decisions however in the advice of friends.  Nevertheless the deployment of interactive in-store technologies increases more and more for the efficient communication with the consumer. Thus modern commercial marketing with Dynamic Instore Merchandising (DIM) receives a new term and is considered as one of the new Emerging Business of the next years, if it concerns to publish efficiently correct contents at the right time in the correct sur­roun­ding field. Visual merchandising and sales promotion get a new intelligence by thought out software solutions directly at the point of purchase /point of sale. Which technology is presently deployed in the stores and will be used in the future, can be seen in this diagram.

In the past years the retailer have enormously invested into various technologies on store level, most of it aimed at the point of sale, if one refrains from instore servers and portable "inventory terminals". Kiosk terminals and Digital Signage are with 30 per cent each the most important in-store media - in addition, self checkout terminals become also ever more important with over 20 per cent. An inquiry of "display & design ideas (ddi)" in the year 2005 therefore resulted also in a very high satisfaction with the in-store technologies - e.g. 61, 9 per cent are very content with LCD screens and video walls, 51.6 per cent with interactive kiosk terminals, 48.6 per cent with digital signage and 43.1 per cent with self checkout terminals. After some years with high risk and only little "return on investment" kiosk terminals crossed now finally the Rubicon,  i.e. they reached the point, at which they became for the multi channel and customer loyalty strategies of each retailer a factor which cannot be excluded any longer. Like that for 62 per cent of the asked retailers kiosk terminals are important or even very important for their business.

The do-it-yourself market in Germany stands before a clearing process. Already today Germany is surfeited with DIY stores. And nevertheless nearly all operators intend to open new, large stores. On the other hand a reduction of the spaces would be meaningful for at least 30 per cent. All large German DIY chains set in the fight for the customers on the same conception - more stores, larger stores and above all ever more discounts. Especially the larger stores with their partly difficult-to-understand offerings very often confuse the customers. The typical German DIY store has today ten times as many articles available on four to six times larger sales area as still in the year 1985. Therefore it is necessary not to diminish the freed personnel capacities, but to invest into a better customer advisory service, because the employees can use only about 5 to 10 per cent of their activities for really active selling - about 40 per cent are used for internal logistics.

a10_2Residential properties presently search competent consultation for over 52 per cent with a craftsman, with larger modernization programs this portion is even still much more higher. Only about one third however turns to building and do-it-yourself stores. If on the other hand the building and DIY markets would succeed to offer a competent consul­tation and to accordingly bring this also home to the consumers, a by far larger portion of the residential properties could be induced to go to the DIY market already in the phase of the information search. Good and above all competent consultation becomes also here one ever more crucial competition factor; because posters and advertising signs hanging down from the ceiling don't be noticed at all by the consumers in contrary to video promotion and remar­kably arranged display. Since the trend to building and living is supported by numerous TV broadcasts like "living according to desire", now this desire for implementation of individual living ideas proves quite as a chance for the building and DIY stores; because Do-it-yourself (DIY) is young and trendy.

With some markets therefore in the meantime a mentality change was rung in with the walking on of new ways. Since the necessary "super-salesman" does not exist, who arouses interest, knows customer's requests, perfectly represents products of each manufacturer, knows as well pro and cons of the products knows - and, if he is needed, also is always available, new instruments have to be used - e.g. electronic media. Thus one finds often video systems in the shelf, which for example describe to the customers the handling of a tile adhesive or video systems with touch functions, with which for example the customer can call up special sticking guidances for bathroom tiles. Ever more become generally accepted however interactive kiosk terminals, with those itself the manufacturers, the brands differentiate from the competition at the point of sale.

The selection of wallpapers usually takes place on the basis of thick catalogs, which are very heavy, need much place and are not always actual. Here kiosk terminals can carry out remedy. Thus at the beginning of the year 2007 the Big Apple Wallcovering, Inc. began to electronically and multimedially arrange the process of  selection and ordering with the introduction of its "No More Books" kiosk terminals in US retail chains and to "revolutionize" it as so to speak: the customer selects the wallpaper fitting for him by entering his desires and conceptions into a search machine. It is also possible to calculate, how many wallpaper roles one needs.

a10_3In similar way also Benjamin Moore & Co goes forwards, which sold its colors so far over a network of 4.500 independent specialist shops in North America, and it now doing also via so-called "Color Station" kiosk terminals. The customer can select its colors likewise at the kiosk terminal by means of the "Personal Color Viewer" software and can take also a sample for trying out at home. With the "Color station" Benjamin Moore & Co goes there where the customers are, where they buy also different living furnishings. Therefore women became also the most eager users of the "Color station". Also BEHR Paints, one of the largest manufacturers of colors in North America, sets already since 2003 on "ColorSmart" kiosk terminals, in order to make the selection of colors for customers as simple as possible.  The customer can select from thousands of colors and let them indicate on walls or ceilings in spatial examples. Beyond that the "ColorSmart" gives recommendations over color tones, which are finally printed out as photos in genuine colors and can be brought to a store sales associate for further consultation. The terminals which are a component of the The Home Depot's "Color Solutions Center" led to a large customer acceptance and helped to substantially improve the instore buying experience.a10_4

The success of these color terminals led also to the fact that Pittsburgh Paints set up about 210 similar "Color Visualizer" terminals in the shops of Menards starting from March 2006. Here women are again especially addressed: the touchscreen in the center of the "Grand Distinction" color center shows women in eight different personality typologies from traditionally over romantically, festively and solemnly up to "casual" and sportily. If the customer selects now the type, which describes her best, she keeps from the extensive data base the colors  which should fit for her best - shown as high polish photo by the example of a wall in a room. The Meffert AG is one of the prominent manufacturers of colors, lacquers, flashes and building protection producers in Europe. Together with the BASF AG with the "Color Maker II" a POS Tinting / mix machine system has been developed, which tones with an innovative technology colors, lacquers, glazes and dry construction materials directly locally in the building and DIY store. The new a10_5system follows thereby the trend for immediate toning of products directly in the store and has besides a perfect appearance to the POS. Customers can now select directly at the terminal in the DIY store their color, mix them and directly carry them forward. At the trade fair "Practical World 2006" this system has therefore been awarded with the customer service price of the Bundesverband Deutscher Heim­werker-, Bau- und Gartenfachmärkte e.V. (BHB)  in the category "Innovation".

But not only colors and wallpapers can be visualized at kiosk terminals, but also marble and other kinds of stones. Thus for example the American Stone Inc. set up in June 2003 in the sales rooms of their dealers kiosk terminals, which were called "The Workshop", at which the dealers themselves and also the customers could let themselves show all possible design options and thereby could make themselves an optical picture of the conceivable forms. These terminals led thereby also to a increased revenue.

a10_6Luxury Bath Systems (LBS) has used kiosk terminals in order to demonstrate customer interactively how unusally and fast, i.e. on only one day, one could make the renovation of the bathroom and how it would look like afterwards. This terminal installation showed the customer not only how the installation of the new bathroom runs off, but brought them also statements of customers about its experiences made with Luxury Bath Systems. These terminals were deployed in shopping centres, showrooms, places with high visitor frequency such as banks and supermarkets for the winning of new prospective customers and also new franchise taker.

a10_7Another application of kiosks in the The Home Depot stores came from the Henry Company, manufacturer and supplier of a multiplicity of products for building roofs, energy, approach road ways and appropriate accessories. At the "Ask Henry" kiosk systems employees and customers could inform in detail about Henry's of products and services and above all could also receive tips and guidances receive which they need for their purchase decision - e.g. calculations over the quantity of the necessary materials, guidances regarding the correct proceeding with the installation or repair of roofs, ways, etc.. on the basis of so-called "Can-Do Guides", "How-to" videos and check lists as well as pointing out of possible alternative products.

a10_8Jewson is prominent in UK as supplier for building materials with 550 building stores. Since the end of 2001 there has been deployed in all Jewson & Graham stores an overall covering Digital Signage network on which the "Jewson TV" is presented among other items. Beside the "Tesco TV" this belongs to the largest Digital Signage projects in England. In each of the stores two screens are installed: one aims for the information of the customers and prospects, the second for the training of the employees in the back office. For a long time this concept was singular for UK's  DIY market. Especially the "employee facing" system met with large aacceptance with the various vendors who booked corresponding advertising times at a fee, in order to increase awareness and knowledge of their products to store employees, who in turn will be more likely to recommend them to customers.

The list of interesting kiosks solutions in DIY stores is still substantially longer, although most unfortunately not yet to be found in German building & DIY stores. Further information you will shortly find in the "MediaCityReport - with multimedia media on the overhauling trace ", the most extensive and so far singular study about the best practise of Kiosk Terminals and Digital Signage all over the world.„MediaCityReport"- the extensive study about the practical deployment of kiosk terminals and digital signage all over the world.