Whatever you’re looking for on the Internet—entertainment, a product to purchase, a connection to a community—in most cases, you’re likely to receive an overwhelming amount of results to choose from. These relevant search results are valuable to you… Or are they?

Published on : http://method.com/

More and more commentators are wondering if the tools we create to give us more choices—such as search engines—are delivering less variety, ultimately limiting chance discoveries and exposure to new ideas.

On the BBC’s The Culture Show, Aleks Krotoski recently examined the role of serendipity as an online commodity, questioning whether the Internet is as innovative as we think. She points out that computers have the unique ability to make valuable, unseen connections for us. Instead of maximizing that potential, our search filters keep us focused on only the most relevant information.

Alex explains, “We will never have the opportunity to bump into something truly new, because the machines are predicting our futures based on our past preferences, creating an infinite loop of cultural homogenization.”

The concern over the consequences of homogenized choice is not entirely new. David Byrne noted in his book Bicycle Diaries, that in many urban developments gentrification leads to separation, rather than integration, of different social and cultural groups. This separation leads to less collisions between ideas and the stifling of creativity.

David describes, “I think online communities tend to group like with like, which is fine for some tasks, but sometimes inspiration comes from accidental meetings and encounters with people outside one’s own demographic, and is less likely if you only communicate with your ‘friends’…”

Other commentators also question if recommendations based on a combination of one’s preferences, social profile, and history of consumption really offers new opportunities. In an article for Design Week,Steve Price discussed how the role of media retailers is changing in the age of the “Filter Bubble.”

“Google, as amazing as it is, can only answer the questions you ask it,” he states. “It cannot tell you which questions you should be asking. Search results and news feeds are all now influenced by engines that take as a point of entry all that they know about you and spit back the information they think you’ll want. What is on the screen when you open Spotify? Recommendations on new music based on its knowledge of you. What happens if you visit Rough Trade Records? You often leave with albums and music from artists you’ve never heard of, having heard it played in the store, or from talking to one of the employees who clearly live and breathe music.”

Concerns aside, the tech community seems to be moving in the direction of “smarter” recommendation engines. For example, The Filter founded by Peter Gabriel. These developments suggest we might soon see recommendations for vacuum cleaners based on one’s music tastes. For example, a robotic system called HyperActive Bob has been developed to anticipate customer behaviors in fast food restaurants. This includes correlating a customer’s type of car with what he or she might order, but this particular filter has failed to prove successful so far.

When the self-referential nature of media increases the speed of recycling ideas in film, design, music, fashion and global culture as a whole, what will it take to receive truly original recommendations? What can we design into user experiences that will allow for the unexpected?

Imagine the possibilities of using “dumber” algorithms that will allow us to be pleasantly surprised by serendipity wherever we are…and whenever we “don’t” expect it.

If you liked this article we recommend: http://youtu.be/9ZlBUglE6Hc

Alexander Grünsteidl & Nikki Roddy @ Method

As part of the 10×10 series by Method, we contributed the article “Changing Retail Currency”. It’s a companion piece to The AppLounge.

“Changing Retail Currency” is about the new role of the store, and the opportunities this creates for retailers.

Take a read: http://method.com/

As e-commerce continues to shape the retail experience, new and exciting opportunities for retailers and customers are emerging. The transactional value of the storefront has a different currency than the value that online shopping offers. We are witnessing a transformation in business models for retailers, opening up possibilities for more fluid and convergent retail experiences.

The article is build around 4 insights from different market sectors that have witnessed commoditisation and margin pressure in the recent past, and highlights a few cases that adapted successfully to new customer experience requirements.

01 Think Like an Editor

02 Learn from the Fashion Industry

03 Embrace Hospitality in Your Brand

04 Own Your Community Network

Method has co-published this piece with Fast Company’s Co.Design.

Check it out online here: http://www.fastcodesign.com/1662269/four-keys-to-surviving-the-future-of-retail

]]> http://digitalwellbeinglabs.com/dwb/changing-retail-currency/feed/ 0 http://digitalwellbeinglabs.com/dwb/the-applounge/ http://digitalwellbeinglabs.com/dwb/the-applounge/#comments Sun, 05 Sep 2010 15:23:29 +0000 agrunsteidl http://digitalwellbeinglabs.com/dwb/?p=608
A place to meet and discover great apps matched with accessories that fit your mobile life.

The AppLounge is a hybrid space, featuring a selection of well-crafted mobile applications and services. It opens from 15 September 2010, at 100 Wardour Street for coffee during the day and cocktails at night, encouraging people to discover and sample exciting new mobile and tablet applications, digital content, including eBooks, eMags, and useful online services. During the London Design Festival, the AppLounge will also conduct inspiring AppTasting events and AppHealth workshops.

This first-of-its-kind ‘pop-up’ space was has been designed to facilitate discovery, education, and engagement. The AppLounge is an innovative alternative to the traditional retail environment, converging the best of in-store and online retail experiences. This unique collaboration between Digital Wellbeing Labs, Method, App.itize.us, Spotspot, and D&D London, celebrates the best in contemporary design languages from around the world and aims to answer the challenges that retailers face as e-commerce reshapes the retail process and consumer behavior. Says Grünsteidl: “The value of the storefront is changing from one of transaction to experience. We are witnessing a transformation in business models for retailers which is opening up possibilities for convergent retail experiences. The AppLounge is a pilot store that aims to bridge the gap between the in-store and online retail experience. The space is designed to encourage customers to slow down, have a drink, and sample a variety of applications and accessories on display.” The Applounge serves as a conduit between producers and customers and is not necessarily involved in any transactions.

Conceived by Alexander Grünsteidl, together with a collective of design agencies and a hospitality group, the AppLounge proudly presents a new retail concept, bringing together hospitality and the latest in physical and digital products under the umbrella of Mobile Lifestyle. Mobile Apps, accessories and content, like music and iBooks are presented as collections that will enrich daily life and resonate with consumer lifestyles. The first Digital Lifestyle Showroom made its debut during the 2006 London Design Festival to critical acclaim. Grünsteidl has also written a thought piece on the topic of retail convergence, titled “Changing Retail Currency” for the 10×10 thoughts on design series published by Method.

The AppLounge is open from 15 September through to 2 October at Meza, 100 Wardour St, London W1, UK.

Hours of Operation:
Monday – Saturday 12pm – late

Location:
The AppLounge at Meza
100 Wardour St
London, W1F 0TN UK
http://www.mezabar.com

For more information please visit www.theapplounge.com

About the Sponsors:

Method
Award-winning product, service, and experience innovation firm Method proudly sponsors the AppLounge. Method designed AppLounge materials and lead execution, from the brand identity and mark to the website, in-store displays, posters, and promotional material. Additionally, Method has provided direction on marketing strategies, event production, and the retail experience.

Alexander Grünsteidl is the Senior Director of User Experience at Method, and the author of a thought piece for Method’s 10×10 series, “The New Retail Currency.” Learn more about Method and read Alexander’s 10×10 piece at www.method.com.

To get in touch with Method, please email inquiries@method.com.

app.itize.us
Jason Fields founder of app.itize.us is happy to have provided guidance and curation for the carefully selected applications and services available at the AppLounge. Find out more about app.itize.us at app.itize.us.

Spotspot Creative & Engineering
Spotspot proudly participates in the AppLounge concept development and design of the pilot shop. Spotspot creates interactive objects for public and commercial spaces that link physical and digital customer experiences. Learn more about Spotspot at www.spotspoton.com

Meza and D&D London
D&D London is the UK’s leading high-end restaurant group with an annual turnover of more than £70 million and 20 individual restaurants across London, including Meza in Soho, which plays host to the AppLounge this September. www.danddlondon.com.

Is the time right for the emergence of the Webfront showroom? A place that links the high-street to online retail but does not necessarily depend on traditional retail margins to be profitable. A space that allows you to discover products and services, follow demonstrations and then try them out for yourself. You then are able to order products or sign up to subscriptions directly in the showroom or postpone this decision to a later moment at home or on the road.We recently wrote in “The Last Click” article how business models for the high street have to change in response to online commerce and will give rise to new retail formats.

Ian Yolles of NAU discusses in the BusinessWeek article Retail2.0

“Of course, for many shoppers, online research of prices or customer reviews is the first step towards a store purchase. Others survey products in a store to decide which they want and then find the best deal online. In others words, for many consumers the Web and the mall are both parts of a larger shopping experience. “Nobody has really done anything to connect the dots and take discontinuity out of customer behavior [online and offline],”

Webfronts, coined and trademarked by NAU, are places which only showcase products and services whilst purchases are completed online and products then are shipped directly to the customer within a couple of days. These places have little or no merchandise for on the spot sales, in order to reduce inventory and distribution costs. Instead they offer hands-on demonstrations of services, or allow customers to try items, like garments, for size. Typically self service or managed kiosks are available to place an order online.

Over the past years quite a few instances of these innovative retail formats have emerged. But for various reasons many of them, after having been launched in a PR cloud of pioneering optimism, have failed to become economically viable.

It’s clear that these hybrid retail formats are not suitable for all types of merchandise and transactions especially in the FMCG and perishables sector, but then again, each sector is currently experimenting with internet integration.

We would like to understand why some hopeful integrated retail formats failed and others became successful, and how we can make this formula succeed in future development. There is only little data available but we can at least bring together a selection of examples to compare different emerging models and look at the pros and cons.

At the core of the debate on integrated internet retail innovation is the uneasy diversion from established, well proven, retail formats. These formats are based on common sales practices:

• Setting conditions for impulse purchases, by attracting customers with aggressively priced, loss-leading merchandise.
• Various forms of price perception manipulation based on artificial sales offers and staged price reductions that lead to price erosion of products. As recently reported in | Never-ending sales “have to stop” | BBC | October 2009 |
• Up-selling by applying perceived quality differences within a family line of products to obtain higher margins.
• Creating cross-selling situations that tempt customers to add more items to their shopping basket.
• Negotiate unique and exclusive products with suppliers that allows the retailer to command the price with the highest margin, whilst telling the customer you are offering better service by helping to select the otherwise incomparable product.

Retail is about only two things; sell more items with low margins or few items with large margins. The whole design of retail environments online or offline is based on these few principles.

Customer behaviour proves these business models to be very successful. Though at a time when consumption patterns are changing as we exit the industrial- and enter the information-society, we should consider different sustainable models to manage customer relationships. One form will come from the fact that the nature of connected products is changing value perception of transactions.

Customer expectations are driven by a whole range of psychological factors. We don’t know how much we can manage these motivations and delay for example instant gratification of an impulse purchase and supplement it with something else. It will be at the core of these hybrid retail experiences that service design solution will have to be developed to satisfy customer needs and keep shoppers returning.

The increasing dominance of some (global) brands have lead to the Flagship-Store, which in effect is more about maintaining a brand image and fostering customer relationship rather than promoting instant sales. The question is if department like stores and curated boutique sized shops can offer profitable services based on business models which link smaller scale producers to their customers without necessarily providing direct sales?

Here is a selection of different approaches to the Webfront retail format, some more explicit and others almost transparently interwoven into the existing context.

Starbucks and iTunes

Starbucks was already a very successful vendor of music compilations cds, when it hooked up with Apple iTunes, offering wireless access to the location’s playlist from within the iTunes Application on for example an iPhone. A customer can see the current song playing and download it for the usual price. In addition a free song of the day is given away with a purchase coupon. Each Starbucks location becomes in fact a Webfront for the iTunes Online Store. It demonstrates that music stores don’t need to look like “traditional” music stores.

Apple and Starbucks iTunes WiFi integration hands-on | endgadget | Nov 2007 |

Shazam

Shazam turns any location that plays music into a Webfront. The customer uses his/her phone to transmit a sample of the music playing in the space, to a server and receives details about the song, album and artist, including a link to purchase the song from iTunes. Dj Clubs, Bars, Shopping-malls, Cars all become locations that can act as instant Websfronts.

The store in this case is often formed by the social context in which music is consumed. The crucial question is if Shazam would be willing to share in the revenue as the location and time of exposure is known to the application.

NAU Webfront stores

Nau was an apparel company with an environmentally aware, sustainable mission, based around a disruptive business format. It aimed at fundamentally reinventing its relationship with customers. One of their many innovations was the design of their retail space, which they don’t call a “store”, but rather a Webfront. It combined the efficiencies of the Web with the intimacy of the boutique. At a Nau Webfront, one sample of every piece in the collection and every available size hangs ready for visiting customers to try on. The company encourages shoppers to use the Webfront just as a testing platform for the clothes. The central mechanism is a self-serve kiosk that transfers the online shopping experience to an on-site touch screen kiosk and encourages customers to have their purchases sent home, with the incentive of a 10% discount and free shipping. By running retail this way, Nau dramatically decreases the regular inventory required at its multiple physical locations, thereby reducing the impacts of freight and lengthy supply chains.”

summary articles:

In a Search for the Authentic, I found nau|TrendBites | Jan 2008 |

Leap Of Faith | Fast Company | POLLY LABARRE | Dec 2007 |

about the customer experience:

Nau in Chicago: an interactive, sustainable, apparel store | Team Kane Street | Sept 2007 |

Unfortunately the company had to close a year after opening after failing to raise the next level of funding, and is currently re-launching as a web only store.

Sustainable clothier Nau pulls the plug | Jerry Casey | The Oregonian | May 02, 2008

What Nau? | Good magazine | Luke O’Brien | October 2008

Analysts consider the failure after just one year of operation due to trying to reinvent too many retail practices simultaneously, whilst not being able to create enough storefronts and develop parallel sales channels to become profitable. We would be interested to learn more about how customer behaviour had changed in reaction to this new off-hybrid format. Apparently about half the customers, many more than the 10% predicted, choose to have purchases sent home. Although undoubtedly at the heart of the customer experience, the apparently pricey to develop website struggled to become usable soon enough.

Various technologies are being brought together to facilitate these new environments. A summary of these can be found in this The New York Times article | Thinking of Going Blond? consult the Kiosk First | March 2009 |

Intel shopping kiosk prototype with Frog Design video of the prototype

The question is not if we can make the technology work, but how far existing retail infrastructures need to be adapted, if the cost of implementation offers sufficient ROI and most importantly if it can be made acceptable to customers.

Oki-Ni

Oki-Ni has been operating a similar retail format before NAU, featuring temporary gallery type shopfronts in different locations.

Images of the Gallery Shop

Their concept is based on offering exclusive products sourced from global renowned brands to unique collaborations with a range of niche brands, combined with the accessibility of on-line retail. The physical gallery is a place where consumers can view and try clothes. These outlets don’t sell any of the products, which must be ordered directly from the internet for delivery within a few days. Interestingly these pop-up galleries are seen as temporary marketing tools “We always see the galleries as a springboard to the internet. They are a marketing push in each territory where people become aware of the brand but then are happy to go online. Once we’ve become established in a territory, the galleries are not as important and then our focus as a retailer is online,” says Paddy Meehan.

UK RETAIL: Window shopping with a difference at Oki-Ni. | Goliath | February 2005

eBay Drop Off stores

Initially hyped as a new successful business opportunity with low start-up costs and growing returns. The format is based on branded high-street locations which accept and manage items to be auctioned on eBay and share in any profits made from a deal. After few initial success stories, many franchises failed. It turned out that location overhead, services costs which included labour to research products, create suitable images to present an item online, and writing descriptions were too high in relation to the deal margins on most low cost auction items. At the same time some more expensive items like cars were prohibited unless the franchise would obtain specific trade licenses.

http://tradingassistantjournal.com/2008/03/ebay-franchise-drop-stores-why-they-failed/

Evans cycles

Evans Cycles makes use of in-store sales kiosks to aggressively expand business across London.

So called “Info Hub” kiosks are prominently placed on the shop floor and allow online browsing as a shared activity between staff and customer, ordering anything from their online catalogue and then have it send for pick-up at the store or delivery at home. Employing instore online sales kiosks allowed Evans to rapidly open new locations, even settling for smaller, less suitable shop properties, in close proximity to their competitors, whilst overcoming limitations of having not enough space to stock the complete range, and instead only displaying items suitable for the target audience at each location.

Evans Cycles buying options

Apple Flagship stores

Brand Flagship stores are in fact nothing but Webfronts. We always wondered how far for example the Apple Stores are designed to be Webfront locations. The Apple high-street stores are intertwined with the Online Apple Stores. They have been the game changers in the consumer electronics sector, allowing people to touch and tryout products before buying. It is claimed that Apple Stores have some of the highest retail turnover per square meter in the industry. But surely (even if we can’t prove it) the salaries of the numerous staff must be paid by more than just in-store profit margins.

“Retail Analyst: Apple Store Regent Street most profitable for size in London “To make £60 million a year from a shop of Apple’s size is absolutely phenomenal””

The figures in this analysis seem way over the top, but then again it’s within the range of the possible; over £150k average a day and £15k an hour. Lets assume they process consistently 100 paying customers an hour that would create an average spending amount of £150. Sure enough this calculation is to simplistic. It would be interesting to learn how sales are divided between core Apple hardware, third party products, software and accessories?

But what surprises me that although many have studied the Apple Stores since their first opening in 2001, no-one has been able to successfully emulate the formula. Even in London, the Nokia flagship store, across from the Apple Store on Regent Street, both, not quite incidentally, designed by the same company, Eight Inc. seems to completely miss the point. This showroom really can’t be more than an advertising space, in an environment when most handset sales are tied in with the service providers.

We wonder if it is about the presentation format, or about the choice of products which are out of synch with requirements in multi-channel customer relationships? Incidentally Microsoft just opened the first store this week copying many successful elements from the Apple formula.

It seems like this formula only works for brands that can offer a complete package; in Apple’s case, everything from hardware to software, to content. It makes us question if these type of stores actually can be developed in a different consumer sectors and with merchandise sourced from different brands without a core brand forming the central organising principle.

Perhaps the food sector can offer some insights?

Ocado the only way to shop for groceries.

Tesco, Every little helps and Tesco direct

We are really interested in the relationship between groceries bought the traditional way in Waitrose supermarkets and products ordered online. Or for the same reason how customers both shop online on Tesco Direct and Tesco.co.uk and Sainsbury’s online whilst having visited the comparable local supermarket locations. How much are the items chosen on the Webshop, depending on initial discovery on the physical shelf. On the other hand, how many products in the online shopping basket come from cross selling opportunities, for example by offering ready shopping lists based on recipes, which would have be difficult to realise on a physical shelf? How much is Waitrose a Webfront for Ocado.com? Instead most online discussions are about how much they compete on product ranges and prices.

http://en.wikipedia.org/wiki/Ocado

De Kijkshop

Just as a curiosity to include in this list is the 35 year old Kijkshop. (literally translated Look-Shop) A unique shopping format from the Netherlands. Initially the stores were located off main shopping locations but easy to reach by car. The shops were mostly designed with dark walls and flooring, with spotlights highlighting merchandise locked inside glass showcases. Each items was provided with extensive printed descriptions. Customers note down the product numbers selected items and pass them to a cashier. Merchandise is then delivered boxed up straight from the warehouse. When the the chain changed ownership a few years ago, a more conventional format, with products openly accessible to the customer, thought to provide incentives for impulse purchases, was tested in one of the locations. After failing to achieve the intended effect, the company has decided to remain with the proven format.

First was the announcement of the change

Kijkshop stopt met vitrineformule | Nieuwe eigenaar verwacht omzetstijging door ’open aanpak’ | Trouw | August 2007

Then came the “disillusioning” insight after a year of trials, that the original formula was still pretty effective.

Aanbod Kijkshop blijft achter glas | de Ondernemer | April 2008

Similar to Argos in the UK, the Kijkshop has increasing web presence, although it’s arguable how far the relationship with the high-street showrooms goes.

Wired Store Christmas Pop-Up

Here the well known magazine “Wired” lends its brand to endorse the selection of gadgets for a pop-up store during the holiday season. It is a yearly pop-up store in New York, “curated” by Wired staff, but as some commentators note, more likely driven by lucrative sponsorship deals. It’s a place where you are actually able to touch products you otherwise only encounter in blogs and magazine articles. A range of advertorial events and charity games are hosted on site during this period. Customers don’t purchase directly but from internet kiosks around the store. Items are then shipped to their homes in time before Xmas. The main aspect of this format is similar to Oki-Ni but to the level that Wired only takes a fee from sponsors to offset the cost for product placement and does not take a percentage of the sales revenue. The inaugural Wired pop-up store sold $9 million worth of merchandise,65 gadgets in all, and attracted 14,000 visitors. As such the Wired store becomes a trusted mediator between companies and customers.

related articles:

photos of example products in the store by Digital Lifestyles

Wired Magazine Becomes Holiday Retailer | Phil Wahba, | Special to the Sun | November 2006

Some critical notes by PFK.com

Sample Lab

The obvious conclusion to where contemporary business models, in acknowledgement of the relationship between the high street and online retail, are heading is the Japanese Sample Lab franchise. It’s a true try-vertising space where potential consumers, called try-sumers come to test and experience products for free, before buying them elsewhere. The model evolved from the mostly unwanted, in-your-face free samples, offered at inopportune moments in the street or whilst browsing in department stores. The business formula is build on product placement and includes demonstrations in a stylish but neutral environment creating a unique retail experience. Customers become members for a nominal yearly fee. At each visit they can try everything on display and then take 5 items home. Before being able to return to a store try-sumers are requested to fill out a questionnaire, either on the spot or in their own time online or on their phone. Companies who place products will receive information from in-store surveys and at same time will gain wider awareness of their products and services by word-of-mouth, spread in the social network of the Sample Lab members.

It is an alternative to the free-samples, often packed with print magazines, now with a vanishing role in competition with content on the internet. The model is probably best oriented to FMCG products but we are wondering how far this could be stretched to introduce online services and for example specific mobile phone apps. In the case of some consumer electronic products it has already proven to be a suitable place to gain exposure with people that otherwise would not be inclined to visit their a brand flagship stores related to the product. “…By renting lab space, Sony was able to put Playstations into the hands of women, many of them for the first time…There are a lot of people Sony can’t reach with their regular promotional events. Sony marketing thought this would be a way to access customers who normally wouldn’t visit game software shops or electronics stores…”

It’s All about the Freebies | American Way | Ethan Rouen | May 2009

A Trip To The Sample Lab | Nightly Business Report | March 2008 |

Conclusion

This is only a small selection of the most prominent cases exploring hybrid business models, combining brick and mortar and online retail. It will require more than just placement of CRM technologies within existing retail environments to achieve customer acceptance, what we call a new Culture of Use, and satisfy underlying consumer needs. The question still is how far places on the high street need to evolve to adjust to these changes and what completely new formats will arise. What mechanisms draw people into shops on the high-street, compared to access to stores on their mobile phone in their hand? How can we create enough stickiness that people want to return to destinations on the high-street?

E-tailing – has the revolution arrived? BBC January 2009

High street reaction to online march too slow, says George Davies Retail Week September 2009

In recent months two large European retailers announced that they were to close down extensive digital signage networks across hundreds of shops. What has happened to this much anticipated technology and what was the outcome of the initial marketing drive?We put together 2 use cases of Karstadt in Germany and Tesco in the UK:

Use case Karstadt Instore TV

September 2007: Karstadt press release  and   Karstadt Does Digital Signage

The German retailer Karstadt is to install an average of 45 flat screens in 52 of their top stores. If that is the case then 1 million customers could be reached daily…. The retailer plans to invest tens of millions in an “Instore TV” system. All 52 subsidiaries will be equipped with up to 45 big-screen LCD displays on which company products and commercials by partners will be broadcast. Wolf anticipates that the constant stream of multimedia will attract more customers to his stores. He also expects they will stay longer and, naturally, buy more.

March 2008: Karstadt Instore-TV mit konzeptionellen Schwächen   (Karstadt Instore-TV with conceptual weak-points) 

In this article the writer describes how a lack of follow through on the promise, breaks the whole experience. Instead of having dedicated messages, based on monthly changing themes, attached to specific location related to a particular product, video clips seem to pop up in random places, or all places simultaneously, eg an ad for Philips LED lamps shows up in the Jeans department. Another example is the lousy placement and integration of the displays in the overall concept of the stores. There is usually some broken monitors somewhere. The length and type of messages contained in the clips. Lack of opportunity to sit down and “consume” some of the messages. In fact he notes, he seems to be the only one watching. 

September 2008: Karstadt legt Instore-TV auf Eis (Karstadt puts Instore-TV on ice)

The article notes that the Instore-TV had aimed to promote lifestyle messages directly at the Point of Sale. The idea was to combine information produced by the brands related to the products on display and combine these with regularly changing in-house themes. 8 million Euro had been invested so far with an estimated return of 40 million Euro.

resume: from the outside it looks like a case of bad management communication across different layers within the organisation that led to not getting buy in from all parties involved and resulted in a confused implementation.

… and another use case Tesco:  Tesco TV later renamed Tesco Screens

March 2004 : Tesco TV launches adverts as you shop (source: independent.co.uk)

… Tesco TV will be available in 300 of the company’s 850 stores by the end of this year. Around 50 screens will be fitted in each of these shops in a move that will cost about £20m … A whole new channel, called Tesco TV, will provide consumers with the company’s own promotional material, as well as advertising from third parties, such as shampoo or petfood suppliers … The channel will also offer shoppers “helpful hints” on things like foods recipes and babycare, as well as news and weather updates. The television sets in a particular aisle will show material of relevance to the products available in that part of the store …

March 2004 : Small screen, big profits? Tesco leads the in-store revolution  (source brandrepublic.com)

… With the roll-out of its in-store television system this month, Tesco is hoping to circumvent the time lag and memory lapse problem by hitting up consumers right at point of sale…

… The screens will be in “zoned areas”: a power aisle (the central aisle from which all other aisles are accessed); the grocery aisle; health and beauty; beer, wine and spirits; home entertainment; counters (for instance the delicatessen); and the café. Each TV will show information that is directly related to the products in its area…

At  the time, the first sceptical voices were noticed: … you simply can’t just put up a screen anywhere and expect consumers to engage or advertisers to advertise … “You have to have a very well thought- out client strategy … “I’m very worried when I see new companies within the market putting up screens and not thinking if they are reaching the right target audience.” …

January 2006 : Tesco in-store TV falters over lack of advertisers (source brandrepublic.com )

… Major advertisers are understood to be unhappy about the network and have cited the placement and intrusive nature of screens as problems to be addressed … The original intention was for Tesco TV to divert revenue from TV advertising. But its sales house, JCDecaux, was forced to slash its rate card by 30% in early 2005 following poor take-up…

January 2006 : Tesco’s digital signage advertising network may be struggling (source: wirespring)

An excellent article analysing the Brand Republic notes.

The key points are yet again poor implementation on detail level;

Placement:  … Tesco analyzed their store traffic patterns when deciding where to place their digital signs, but traffic patterns can only tell you so much.  They might give you an idea of where shoppers tend to walk and where they frequently linger, but they won’t tell you which direction they tend to look (you can speculate to some degree, of course), or what other visual clutter is in the area.  Maybe the screen placement interfered with the shopper’s march through the store or their ability to search for products.  It’s also possible that there are simply too many screens in place and the overall effect is more harassment than promotion.  After all, Tesco TV’s 40+ screens per store is quite a bit more than most retail media networks employ…

Content: ...Bright colors and blinking messages might be attention-grabbing, but it can also grate the nerves after a while.  JCDecaux’s own content guidelines recommend creating spots that are 10 seconds long, with sound.  The cacophony of multiple screens running different clips combined with the rapid visual changes of several 10 second ads swapping out might have overwhelmed some customers…With regard to content, there are virtually limitless ways to make attractive, eye-catching segments that soothe and suggest, not chafe and coerce. 

The article concludes that Tesco should not give up, face the challenge, learn from its lessons and conduct some “solid” experiments, implement changes, before hopefully launching some successful digital signage applications in the future.

May 2006: Signs of the times: digital signage industry    (source : canadianbusiness.com)

 U.K. grocery chain Tesco, however, is a great example of a digital signage screw-up. Tesco installed screens in half its 100 stores. But the program has been temporarily suspended: “Too many screens, in less than optimal locations,” … Research indicates shoppers look at digital in-store screens for an average of 2.5 seconds. The medium may be the message, but it better be clearly on display…

This is the most significant business analysis i’ve read so far;

Mr Spicer, DW + Partners, suggests digital signage’s power has nothing to do with ad revenue. Instead, he thinks retailers should use this strategic tool “to drive consumers into purchasing categories they weren’t going to consider, like higher-margin private-label products.”

July 2007: Tesco TV to become Tesco Screens   (source: digital signage news)

… management group’s realization that digital signage isn’t like TV, it’s like POP displays, and their changes in relation to this have yielded spots that have driven advertised products an extra 5-25% … (dooh :- ) )... “You can forget about the idea that the audience is going to put anything like the cognitive effort they put into a 30-second TV spot when they’re in-store,” though he did note that “referencing a pre-existing TV spot is fine.” …

…Too many others would have simply pulled the plug and written off the network as a giant capital loss, but Tesco recognized that while the potential of the thing was still good, there was a problem with its execution and management. From the looks of it, the significant steps they’ve taken to try and fix them are starting to pay off…

… And then, half a year later, news came that Tesco was about to remove the Tesco Screens from their stores.

February 2009 : Kinetic View: Tesco TV To Close: The End Of An Era?  (source: dailydooh.com)

… It didn’t matter about the location; the concept of screens above head height, running TV-style content, with sound, to people on the move in focused ‘shopping mode’ in the busy, distracting, crowded supermarket environment is flawed” … However much Tesco may have been able to leverage big brands to spend, ultimately the effect on sales was going to be measured. If the brands that trialled the network had got the sales uplifts they wanted, they would have invested in numbers … The costs of the network infrastructure and the need for bespoke programming made the service uneconomic for Tesco…

Interesting is that this article is written from within the industry and still advocates digital signage networks without offering concrete examples of services that have created a measurable ROI. I believe there must be successful examples and I am looking forward to experience them myself.

March 2009 : Dunnhumby says Tesco screens were getting old (source : screens.tv)

As reason for removing Tesco Screens from the stores Dunnhumby (the content management group for the screens) was quoted: “The decision has been taken as much of the equipment is reaching the end of its operational life”

March 2009 : The failed strategy that drove Tesco TV  (source: marketingmagazine.co.uk)

… Five years on, and Tesco has finally pulled the plug on the service, subsequently renamed Tesco Screens, leaving its stated ambition of attracting 5% of TV ad revenue seem rather hubristic …Tesco [launched] Tesco TV in 100 stores and invested in 5000 widescreen TVs that were suspended from the ceilings of the aisles – or retail zones – showing a mixture of relevant editorial and advertising. The network’s selling point was that it had a reach of 27% of all supermarket shoppers, equating to 200m shopping trips a year…

quotes: 

…’If you put a screen where people don’t look at it, showing content that requires people to be still, it doesn’t work’ …

…Another downfall was the assumption that advertisers would run the same ads in-store as on TV. This seemed to be predicated on a misconception that consumers had the same level of engagement when shopping as they did in front of the TV at home…

…Sound was also a major problem – early anecdotal evidence suggested that some shoppers and Tesco staff found the ads an irritation, perhaps not helped by the frequency with which they were shown…

…Given that Tesco Screens was trying to attract brands’ TV budgets despite in effect being an outdoor retail medium, there was also confusion over which pot its sales agent, JCDecaux, should target…

… the real issue was that consumers weren’t interested in the first place. ‘If consumers had really liked the service and it had driven sales, agencies would have found a way to make it work.’ …

The conclusion is that Tesco hastily developed the in store TV network without having fully understood, nor experimented sufficiently with prototypes to learn from customer behaviours before rolling out the service. 

It seems there are plenty of companies out there still selling the same digital signage approach to unassuming marketing managers at different companies, that have not learned, or are not familiar with these examples. It’s interesting to see that the digital signage industry’s reports on the failing of these cases is rather meager, compared to the announcement of yet another grand marketing scheme, when it all initially kicked off.

And now we are going to look out for successful implementations based on measurable ROI’s … Who and What has been watched Where? Any suggestions are greatly appreciated.

Post Scriptum : Freeview porn appears on Tesco TV screens

In the next few years we will see various types of consumer electronic devices all look like thin black boxes being defined by the size and proportions of the displays that characterise their shape. In traditional retail settings it will be increasingly hard to sell these products based on some imperceptible quality differentiations related to “improved” display or audio qualities.When towards the end of the last century products started shrinking in response to the miniaturisation of components , the old mantra “form follows function” didn’t work anymore. The outer shape of products used to be dictated by the arrangement of the internal functional components. But once mechanical components were replaced by electronics, there was not much left to follow.

In the early eighties a few designers made some last critical statements about the disappearance of the physicality of products. A good example was the radio in a bag by Daniel Weil, clinging on to components that soon were rendered invisible.

Radio in a Bag, 1982, Daniel Weil

In the eighties postmodern philosophies were brought into play to justify shapes that indicate how to interact with products. Designers sought an explanation of functions in the semantics of form, making products understandable and easier to use. Different approaches were applied to instill meaning into new behaviors enabled by electronic and soon digital functions.

One of the best examples was the Phonebook prototype by Lisa Krohn and Tucker Viemeister, which won the Neste Forma Finlandia price 1987. It is a digital phone based on the principle of a file-o-fax , combining functions like a basic phone, an address book and an answering machine. Each function is accessed by turning pages exposing only the required interface elements for each application. In retrospect these products were longing for a past, not ready for a future yet to come.

Phonebook, 1987, Lisa Krohn & Tucker Viemeister

Extreme design-sketches emerged in the quest for form at consumer electronic corporations around the world. Most impressively a personal sound system player, created during a workshop at Philips Corporate Industrial Design, in the shape of a head, called Beethoven. The expression of the design went beyond the pure functional requirements of the audio system. The mouth was to hold an audio cassette. The ears were to adjust the volume, in place of the eyes was a display, the hair hid the loudspeaker, the power switch looked not unlike Harry Potter’s scar.

Beethoven, personal audio system, Philips CID, 1980. image: past tense, future sense; bis publishers 2005

One outcome of this quest was the unexpectedly successful Philips Roller Radio, which stood out from the boxy, tech looking, metall finished appliances common amongst consumer electronic brands in those days. This radio was explicitly designed to appeal to the youth market. The loudspeakers were clearly separated from the main body holding the radio tuner and cassette player. The handle expressed portability. The back revealed bulges underneath which the batteries fitted. The bright colors and shiny plastic finish created a distinct youthful contemporary look and feel. As the story goes, the initial proposal was refused several times by top management, who couldn’t believe that such a radically different approach could sell beyond the required quantities to break even. The development team managed to secure initial orders in opposition to the opinions of management and  production began. Against all odds, sales soon exceeded the wildest expectations.

Roller Radio, Graham Hinde, Philips Corporate Industrial Design, 1981….and later versions from the Moving Sounds series,

Link kindly provided by picasaweb.google.com/vedodesign

Soon a next generation was created to jump on this success. Interestingly the second Roller Radio, a basic restyling exercise of the original, turning the cylinder shaped speakers into spheres, didn’t manage to continue the success of the first. Instead of applying this new thinking to a wider range of products, Philips lost the initial momentum they had created. Their competitor  Sony was more successful at capturing this new design spirit, creating a line of products that lasted well over a decade around the ranges of My First Sony in bright primary children’s colors, with expressive interface elements, and the Sony Sport series based on highly visible yellow hues and a rugged look and feel, products that could withstand a rough handling. One of the main decisions was to sell these products outside the common consumer electronic retailers and place them in toy and sports stores, where they could be discovered within the context of their intended use.

My First Sony, mid-eighties

Philips soon followed suit, with the Moving Sounds line, in stark yellow with brightly coloured highlights, trying to catch up in the niche they had created in the first place, but failed to keep innovating. In the end Philips never really managed to sell these products outside the established consumer electronics markets.

A decade later, with the arrival of the tiny MP3 players, opportunities for expressive physical design shrunk together with the smaller spaces left for cover art, when music media moved in succession from vinyl sleeves to CD cases and almost vanished with various digital audio formats distributed over the internet. For many years diminishing form factors and the improved portability were sales features in their own right. But as mentioned in another post ,  once the design passes a critical minimal size, one has to design around the only requirement left, in this case that of the battery.

In recent years we see products converge at two ends of the design spectrum. On the one side we find the rationalized multi-functional devices, which, like a chameleon, will change their skin to adapt to whatever context they are required to operate in. On the other side we find highly expressive appliances, quite often devices with a singular functionality, providing an entertaining one-liner for marketeers to create advertisement buzz. One of the best recent examples in this category is the Sony Rolly.

Sony Rolly, MP3 robot, 2007

The Sony Rolly is a robotic loudspeaker accessory  that can play MP3 files, streams music wirelessly via bluetooth and can be programmed to react to the music with colour changing LEDs and motion created by its wheels and ear-like sound reflection flaps. These are the products that tell a simple story, display astonishing behaviours and are easy to sell … it’s oh so cute! But it’s hard on the shop floor; these products require constant attention from a sales assistant, even when they are placed under a transparent dome by the entrance to the shop. On the other hand, once you are shown a sample, their expressiveness is so infective, that they almost sell by themselves.

Things look different at the other side of the spectrum. These products have typically an almost square shape, with few physical controls and are defined by what occurs on their displays. When their displays are switched off, as it often happens on the sales floor, there is little story to tell. When the first digital photo frames appeared in the late nineties, till well into the first years of the popular Philips and Kodak digital picture frames, around 2005, it took retailers quite some time to realize that it would be a good idea, to take a sample of a frame out of the box and have it actually switched on in the shop. When we had the dwb pilot store in 2006, we were amazed to find most retailers across Europe to have hardly any working displays in their stores for customers to experience.

Things radically changed in 2007. When the iPhone arrived in the shops, over thirty five working units were placed on the display tables in the Apple flagship store on Regents street in London. People walked in to the Apple stores to just try the iPhone and form their own opinion. Customers came to see and touch the iPhones themselves, they were amazed by the physical behaviors build into the graphic user interface, sliding windows with a flip of their fingers, page movement mimicking physical inertia, tilting the device in all directions to move virtual glass marbles around the screen. Most mobile service providers at the time (an still these days), were showing only non-working phone dummies of different brands lined up along the walls of their high-street stores. I still have the feeling that retailers are almost afraid, apart from having their samples damaged, to show the awkward interfaces that contradict the hype created in the advertisements which promote new features in each successive new phone evolution.

By now many companies bring many, virtually similar products to the market. Switched off they are almost indistinguishable. They behave quite differently under the hood.

Apple iPhone, Samsung F700, LG Prada, RIM Blackberry Storm

Computing and display technologies have reached a level of maturity that almost any product can be created out of a choice of the same set of components. The cheapest and least risky option, offering most flexibility for consumer electronic manufacturers, is to produce different appliances assembled  from the same components. These products are only set to perform particular functions once they leave the manufacturing floor. Either the functionality is locked into the product’s firmware or the user can install the desired functionality at a later stage. The introduction of cheap precision touch displays and photo realistic graphical user interfaces has taken functional flexibility even a level further. These products are the result of so called rationalisation of the manufacturing process, wrapped in neutral, often black frames, holding an LCD or other display in one of the common formats. Software will make these devices behave in any way the market requires.

It’s similar to the eighties, when United Colors of Benetton created white jeans as blanc canvasses in the manufacturing process, which then were coloured only at the last moment, to suit the demands of a particular geographical market. In the same decennium was rather costly to adapt consumer electronic products to fit market requirements . An appliance platform, for example a portable cassette player like the Walkman, retained almost the same configuration of  internal components for a few years, whilst the outside was restyled on a regular basis like a dress following the fashion of the day. Tooling costs to create the molds for the outer shell and the cost of distribution, generally required sales guaranties of at least hundred thousand units in the low to mid price segments.

iPhone skins

Now the dress is the software that creates the look and feel of the application on the surface of the display and can be exchanged at a moments notice. Development, production and distribution costs have diminished and prices can now be calculated on very different business models and in direct response to market opportunities. Little work, apart from the detailing of the back of the display and the specification of materials, is left for traditional industrial designers to do.

Tilt, shake and other interface mechanisms have emerged out of the research labs, offering alternative physical experiences, instilling a whole new sense of excitement in designers. The Wii and iPhone, and before the iPod click wheel, have created a popular introduction to gesture based interfaces, demonstrating responsive feedback behaviours, applying “natural” physical effects like flipping and inertia, similar to the ones we are accustomed to in the real world, to improve usability expectations of an interface. Minority Report type interfaces, perhaps not the most desirable, which till recently have been confined to experimental prototypes in labs, are now appearing in professional applications. We are just waiting for a few more years until the prices become low enough, that we will see them feature in consumer interfaces. As new “cultures of use” emerge we are creating opportunities to form a language of gestures, similar to the conventions of “right-clicking” and standardised keyboard shortcuts. Currently designers are coming to grips with requirements to design affordances into these gesture based interfaces which indicate how to interact with them.

These products featuring behavioral interfaces wont sell in closed boxes on shelves in supermarkets. They may be demonstrated in videos, but in the end the most convincing way to be introduced to these products is to experience them for real. More about this in another post.

At DWB we are investigating how we can create innovative physical environments to discover, learn, subscribe to, and/or purchase these new breeds of software dresses and behaviour based products. We are interested to create retail conditions in which innovative physical consumer electronics type devices can be introduced to potential customers. Conditions that normally cant be found in large “pile’em high, sell’em cheap” type retail environments.

related articles:

The state we are in …

It’s time for new “features” ?

The magazine Popular Mechanics has since the beginning of the last century traced the development of “Faster Bigger (and Smaller) and Better”. It was predictable each year on year that products would become more powerful and offer  increasingly sophisticated or quantitively more features that could literally “feature” in and advertisement campaign. The point is reached that customers can not differentiate any more in the quality of the display or the depth of sound. It was an easy sell when displays went from black and white to colour, or when the cost came down of a desirable feature that only years earlier was affordable to professionals or the most dedicated geek, the so called “early adopter”.

Now it is time to start thinking, albeit late, what products and services we need to develop that can tell a marketable message, that have enough value which people are willing to pay for… and how these products and services “feature” on the sales floor?

In their words:

The 6 Technologies That Shaped 2008

Hardware- and feature-wise, cellphones have hit a plateau. The battle of millimeters in a rush to be the thinnest phoneis largely a thing of the past, and just about any hardware-based feature we want is now standard. That’s why, these days, a smart phone is only as good as its applications.

This is the new battleground for mobile technological supremacy, with stores such as the iPhone’s App Store and the Android Market leading the charge, and new entries from Palm and (coming in March) Blackberry close behind.

Just because a feature wasn’t thought of in a boardroom doesn’t mean you can’t enjoy it. All it takes is a good idea and a standard development kit.