In Store Retail Displays Stir Up CE Channel
Mass retailers are moving to change their consumer engagement processes with the introduction of new in-store displays which are paid for by suppliers a move that has upset some distributors.
While big brand suppliers like Samsung, LG, Toshiba and Telstra have welcomed the move some suppliers are not happy telling ChannelNews that they don’t have the margins to pay for” in store displays, catalogue advertising and in some cases floor space”.
Scott Browning the Marketing Director at JB Hi Fi claims that consumer electronics marketing today is all about “consumer engagement” and that to be successful retailers have to change their engagement model.
“Our in store staff have to be able to demonstrate a product as well as have knowledge about a product and an in store displays allows us to range products in a way that we can not only show the product but in many cases show how a product works”.
He cites headphones as a category where the introduction of new in store displays for brands like Beats, Skull Candy, Sennheiser and Bowers & Wilkins have led to “significant” sales increases.
The introduction of working headphones connected to music along with the positioning of a mirror right next to a headphone is now standard in most JB Hi Fi stores.
Samsung Australia claims that their in store displays which they refer to as “Paragons” have delivered significant increases in sales because products are linked with products that consumers trust.
Philip Newton, the vice president of consumer electronics at Samsung Electronics Australia said “When we range a camera or a PC or an audio product on one of our displays that is next to a Samsung TV the consumer is more likely to trust the brand. Many Australians watch a Samsung TV of an evening and they trust the product and the brand so when they go into a store and see another Samsung product they are likely to buy it because it is associated with a brand that is trusted”.
Currently Samsung is planning a major new retail drive with new point-of-sale “Paragons” to be placed in leading retail chains complete with a “Samsung ambassador” on hand to answer customer questions, explain products and train in-store staff.
The stands will be stocked with tablets, smartphones and computers, large-screen TVs and Samsung’s new home theatre range.
The concept was first trialled in Harvey Norman Auburn before being rolled out into 70 stores across Australia in 2012. Now the original 70 stands will be retrofitted and Samsung has plans to have the new Paragons in 200 stores by the end of the year.
It will start next week, with stands in some JB Hi-Fi, Harvey Norman, Bing Lee and Good Guys stores.
The concept has some parallels with Apple’s in-store installations in retailers including Harvey Norman, Myer and David Jones, in some cases staffed by Apple employees. Toshiba at its recent new product launch also revealed plans for in-store consoles.
The move which is costly has led to increased sales for both distributors and manufacturers. Geoff Mathews the CEO of Convoy the distributor of JBL, Monster, Bowers & Wilkins and Harman Kardon products said “We have invested significantly in working with retailers to deliver in store displays and we are reaping the benefits. Originally the displays were costly but we have worked on our displays and we have been able to lower the cost while improving the display to include interactive capabilities by working with Chinese manufacturers who are able to deliver a cost effective solution”.
Three distributors who are currently range products at Harvey Norman and JB Hi Fi told ChannelNews that the move by retailers to “demand” in store displays was “costly” and that the margins were not there to support “this type of marketing”.
One audio distributor said “mass retailers want suppliers to pay for everything from the marketing of a product to now having in store displays, some are even asking us to pay for floor space. This is not sustainable for smaller distributors and it will lead to several products disappearing from the Australian market. It will also drive consumers to overseas web sites”.
“Australian retailers don’t want to take any risks, stock is supplied as sale and return and they want us to now invest in displays which have to be changed on a regular basis.”
Another distributor said “Some retailers are pushing all the risk and the marketing onto distributors who don’t have the marketing resources or marketing knowledge to compete. We are distributors who take the risk on a product selling after we have taken the risk of importing the product. Retailers need to invest more of their money in the marketing of a product; they are demanding bigger margins while asking us to take all the risk”.
Scott Browning said “In store displays suite certain brands, we recognise that some distributors have to go back to their manufacturer to try and get marketing dollars to support an in store display. The big manufacturers are not treating their displays as a co-op funding cost, it is coming out of their above the line marketing budgets because they recognise the value of engaging with a consumer in store”.
He added “Apple raised the bar both in their own stores and with their retail partners like JB Hi Fi, their products are engineered as part of the design process so that they can be left on for in store display purposes. Today people have an expectation when they go into a store and what we have to do is merchandise a product in a way that we get a per square metre return. Our rents are not coming down so it is important that we work to maximise a return for both JB Hi Fi and our partners, we are working to get a balance that is right for both parties”.