Our Thinking

Published in Dawn, Aurora, March – April, 2010

Over the last decade broader socio-economic changes, including growth in the urban middle class and disposable incomes have given rise to the modern retail sector in Pakistan.  There has been a marked decrease in traditional ‘kiryana’ stores, an increase in general stores and the emergence of new formats such as superstores, malls and retail chains to cater to the increasingly time-compressed consumer^[1].

Even a few years back, the concept of in-store marketing did not exist in this country. Yet today due to the fragmentation of traditional media and the tremendous clutter of information assaulting today’s consumer, stores are emerging as a viable alternative to the challenging mass-market advertising environment. They’ve quietly become a hotbed of advertising activity as more and more brands, big or small shift to in-store advertisement, providing effective and direct communication to the customers.

“Currently all our marketing activities are sponsored by our suppliers. Roughly speaking [instore marketing] accounts for 2 to 5% of Makro’s revenue. Instore marketing also include Makro-mail, which is fortnightly published and distributed to top 5000 customers as well as to all concerned suppliers and stakeholders.” said Salman Zafar, Asst. Category Manager at Makro Pakistan.

Research indicates that over 70% of decisions are made in-store or at the ‘First Moment Of Truth’^[2] which is why marketers are increasingly seeking ways to control what ad messages their customers see and what information they access for making purchase decisions increasingly through digital media – one of the primary digital vehicles being used in-store is Digital Signage, one of the staples of modern trade outlets.

Through the use of Digital Screens / Retail TV and Interactive Kiosks, marketers are increasingly targeting consumers looking to learn about new product offerings, recipe ideas, advertised specials, etc. Fast Moving Consumer Goods brands in food, dry food and non food segments are most active industries in this space and actively use digital signage to differentiate their brands and provide customers a break from the rather mundane shopping experience.

Amongst the innovators in this category, has been Dalda Foods Pvt. Ltd. Recently in Ramadan, they launched an ‘Activation’ across Karachi, Lahore & Islamabad using Digital ‘Wheel of Fortune’ Interactive Kiosks. Using touch screens to provide instant play, software to control the inventory and multimedia to add excitement to their consumer offer (play and win on buying 10 KG of Dalda’s products), Dalda added entertainment to an otherwise mundane activity and the results of the activity backed their decision. In an otherwise crowded marketplace, these kiosks helped Dalda to differentiate from all the other brands out there using traditional formats.

Similarly, a high-end beauty products company utilized this medium to interact with their customers too. Using motion sensing technology called ‘Eye-Sense’ developed by Tuesday Digital, the digital characters would call out to the passerbys and get them to interact with the screens and products of the company. Aside from FMCG, PSO has also setup digital screens at its pumps, whilst banks such as Standard Chartered are experimenting by setting up live kiosks at their branches to give their customers a demo of their online banking facility.

These companies are not the only ones. Realizing the gains from going digital, retailers too are jumping on this band-wagon. Originally viewed as a potential incremental revenue stream and a way of sourcing more marketing rupees from brand manufacturers, digital instore formats are now also being seen as a way of differentiating the shopping experience and promoting their own offerings.

“Currently digital signages are not there in Makro, but yes Makro has plan of introducing them in future. In-store media can provide us with an effective way to increase revenue, both through higher average shopping baskets per customer visit and increased customer loyalty in terms of number of visits and what they regularly purchase while in that store during each visit”, Said Salman Zafar.

Aside from Digital Signage, another digital medium which is growing is the use of Mobile technologies in the retail environment. ‘BlueCasting is a relatively newcomer to advertising but stands to greatly change the way we market. The pioneers in this field are Mobilius who have developed ‘BlueStorm’, a proximity marketing tool which aims to engage the consumers. Using the technology marketers can broadcast pictures, audio, video and text within a 100m radius ensuring a very innovative and cost effective way of spreading the messages across thousands of people who visit these outlets. Since it’s fully mobile, BlueStorm” can be used to reach out to customers for special promotional campaigns like distributing redeemable coupons. It can also be utilized to organize promotional game shows such as treasure hunt at exhibitions/shopping malls or anywhere else, thank customers on exit and get instant feedback.

The future of this format is only expected to be bright. If the experience of Thailand is taken as a benchmark, one can expect that by 2010, modern formats particularly large supermarkets, hypermarkets, and convenience store chains will have captured about 25 per cent of the total retail market, and most of the middle and upper class markets. At the same time, one can expect that the number of outlets per thousand population would decrease from the current level of about fifteen down to ten. It is expected that the share of total retail sales held by both traditional kiryana and general stores would decrease from about current levels of 95 per cent to 50 per cent.^[3]. Marketers are taking note.

“I think “the last mile” is becoming increasingly important even in Pakistan as categories go back towards commoditization with an endless supply of brands and the consumer lost between their choices. Especially for intangibles like telcos where data is the only thing that the consumer buys, it is much more convenient to deliver interactive ways to select and change package plans on the go”, said Tamseel Alvi, Brand Manager, Zong.

He continued “Retail is surely becoming a key “moment of truth” in terms of delivering brand experience. In terms of dedicated brand outlets, franchises and more so our customer support centers are becoming more like experience centers rather than just a sales outlet. In the rural sector, our mobile customer support centers are taking the retail outlet directly to the consumer”, Tamseel Alvi, Brand Manager, Zong

With the falling price of digital media gadgets and flexibility in content creation that only digital technology can offer innovative store technologies now allow grocery retailers to give consumers what they want: time and money savings. This is just the start of what digital can do for marketers and retailers.

“Retailers must make the jump to a totally integrated closed-loop model. To maximize return, retailers must deploy a macro system which seamlessly connects all in-store digital marketing with their POS and loyalty database systems [and if they don’t have any, they should start thinking about creating them] and in-store activation devices that connect customers in real-time to the retailer’s systems. What I’m talking about, is CRM applied at the store level. We call it transactional media, because it involves bringing together all the in-store marketing pieces in a coordinated customer-centric fashion to enhance the in-store shopping experience for consumers, increase sales transactions and build loyalty for retailers. What’s intriguing about this model is that by better serving their customers, retailers and brand marketers better serve themselves”, said Salman Abedin, CEO, Tuesday Digital.

As digital media  increasingly prove their effectiveness  — To retailers by turning their communication vehicles into steady revenue streams and to advertisers through better reach and targeting — the flood of interest and money will disrupt the status quo. This change will affect nearly all in-store marketing players, from agencies to retailers and everyone in between. Those that embrace the disruption stand to benefit the most.

[1] Mr. Jawaid Abdul Ghani, Consolidation In Pakistan’s Retail Sector.

[2] Source: POPAI, Point of Purchase Advertising International (POPAI)

[3] Mr. Jawaid Abdul Ghani, Consolidation In Pakistan’s Retail Sector.