Harrods continues to profit from its in-store digital media strategy
Harrods was an early adopter of in-store digital media and continues to use it as a revenue generating tool with third-party advertisers a key element of the store group¬ís profitable model. By Glynn Davis
Ahead of presenting at the Retail Bulletin In-store Engagement Conference 2012 in London on July 10th Guy Cheston, media sales director at Harrods, runs through his thinking on using digital media in-store at the world-famous department store.
“Although I feel we were quite pioneering with our digital installations, and our most recent one sets a new benchmark, you have to try and stay ahead of the game as technology advances fast. Because obviously what was suitable five or six years back goes out of date quickly,” he says.
The present arrangement involves 170 digital screens located in high footfall areas – notably around the escalators - running on eight different networks. Each network has its own playlist of content.
The big advance for Harrods has been a move away from operating single screens towards multi-screen ‘video walls’ of which it operates two. They are each made up of 16 screens – with each wall having its own playlist.
What makes the Harrods digital signage strategy different, according to Cheston, is having third-party advertising as the primary content on the screens, which generates revenues. “These are predominantly adverts of brands in-store, which drives customers to their concessions. We get a return on investment from these ad sales,” he explains.
The screens are also used to support third-party promotions Harrods runs in-store that he says could involve the displaying of the new Aston Martin or a promotion for Thailand. These could then be linked to window displays and on-page advertising to create a mixed media campaign.
Other retailers including Tesco have also used a third-party advertiser model but Cheston says they have largely failed because “the big difference was that they put huge resources into the programme content whereas we re-format existing content”.
This content is predominantly ads from luxury brands and although they typically invest large sums in photo shoots for magazines Cheston says they are not as good at focusing on video content. “We’ve not yet seen great creativity with content from them. Digital screens are just a medium and the challenge is the cost of great content and to convince the brands to do more interesting ads. They need to create amazingly impactful ads,” he suggests.
Cheston accepts that Harrods also has the advantage of being a single store whereas other retailers like Tesco have large store estates to manage. “We put big investments into the fabric of our building and the screens become part of the experience, whereas when others have done it the screens have just been hanging off the ceiling.”
What has changed in the world of digital screens is that Harrods and others originally did contra-deals with screen manufacturers in order to get the technology at little or no cost, but Cheston says the model has moved on whereby Harrods now buys the screens: “We need greater flexibility on having the best products.”
This works well for the company, as does the gradual reduction in the unit cost of such devices. But what has increased is the cost of service and maintenance of the technology, which is required on an ongoing basis.
Another challenge is simply keeping up with technological advances as he says digital signage moves on very quickly and there is “always a desire for the sharpest screens”. He suggests 3D will be the next move onwards and also NFC and there is the increasing focus on interactivity.
Cheston says the latter has not been a part of the Harrods infrastructure because the store’s screens are located near escalators where customers are moving. “It would be difficult to even scan a QR code as they go past a screen when they are moving up to the next floor.”
But he is fully aware that these changes are happening: “Hand-held devices are part of the future - and there will be payment methods on phones soon – as well as interactivity with physical signage. We’re looking closely at it but we have no definitive plans on this at present.”
For full programme details and registration, click here.
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