Kroger Advances In-Store Network

Cincinnati -- Kroger, the nation's largest supermarket chain, began fine-tuning its plans for an in-store broadcasting network in November with two fully operational test stores near its headquarters. Through the test stores, Kroger senior management and network operators at the In-Store Broadcasting Network (IBN), Salt Lake City, hope to gain feedback from advertisers, store staff and shoppers that will help shape their nationwide rollout to more than 2,500 stores this year. P-O-P Times visited one of these stores and spoke with the director of the system, discussing content issues and how the medium affects P-O-P.Called "Perfect Media" by IBN, the system's patent-holder, the network combines in-store television with in-store radio for customized advertising. Soundless video clips on a network of strategically-placed LCD and plasma screens will complement radio content, and radios will back off when the televisions are audible, to minimize in-store confusion. The Kroger rollout has been in the planning and selection stages for two years.Although in-store television networks are not new, the architects of the Kroger plan claim that they are looking at the medium from a different angle. Encouraging advertisers to see the network as more than another option for in-store advertising, the In-Store Broadcasting Network points out that this program delivers an opportunity on par with traditional radio or television buys... with the added perk of reaching a consumer with wallet in hand."What I think people are realizing today is that Kroger is a media company," says Evan Anthony, corporate vice president of marketing and advertising. "And we deliver more reach and frequency than the largest television or radio station in this country. Retail outlets are realizing the same thing. It's a very effective reach; it's a very cost-effective reach. It just has to be measured."Now that the reach can and will continue to be measured using the recent technology of the Portable People Meter from Arbitron Inc., New York, IBN posits that the in-store network could offer a solution to a modern broadcast media problem. "There's too much ad-avoidance now; you can't get an audience, a true audience, delivered now the way you could years ago," says Lon Von Hurwitz, president, sales and marketing of IBN. He explains that the network will be sold in a fashion similar to the cost-per-thousand basis for broadcast media, rather than along the ROI measures common to P-O-P. "When an audience is inside a store, they can't avoid us, they can't turn us off."That fact alone, however, is not enough to guarantee that shoppers will pay attention to the network's programming. Anthony says his biggest concern is whether the content is relevant to the customer. "I don't want [the network] to become background noise." He expects advertisers to tailor their programming according to their target audience and message, and Kroger and IBN are using research, including this in-store testing, to ensure that the system is technically geared to deliver the most impact.The current plan includes different channels playing targeted advertising and additional content in grocery, health and beauty, pharmacy, deli and checkout areas. The test stores are helping determine the most effective number of screens for each area, but ultimately the size and layout of the individual stores will indicate what fits best.The physical design of the network will also take shopper behavior into account. Large screens are situated in open spaces, but smaller screens placed in the aisles themselves will aim to draw shoppers off the main "racetrack" and into new territory. Speakers in sensitive locations confine sound to a particular area to avoid distracting nearby customers or store employees. And, although advertising space on most of the channels will be limited to brands sold in Kroger, content played at checkout will feature advertising for non-endemic products, such as automotive or home entertainment offerings, that are pertinent to customers about to leave for home.Although IBN does not take responsibility for rearranging merchandise or displays within the store to correspond with network advertising, the company encourages Kroger management at the store level to pay attention to the content being played, and to merchandise products to their best advantage.According to Anthony, no one involved expects to see in-store broadcasting replace traditional P-O-P materials. "It's a different strategy," he says. "Every time you do something to market a product, this is just part of the plan."Networks in the test stores will be completely de-installed following their trial, and the company will begin a round of IT-specific feedback with a group of 10 stores in Houston, where the nationwide installation of the in-store network is scheduled to begin, according to Von Hurwitz.Most programming, including ads, will be delivered in segments between seven and 30 seconds long, to fit a busy shopper's attention span. Programming will include paid advertising spots, Kroger promotional content, and what Von Hurwitz terms "interstitial content.""We have non-sponsored information that's purely about things relevant to the department of the store [where the channel appears]," says Von Hurwitz. For example, he says that the company will use licensed content from the Good Housekeeping Institute archives, which have been re-formatted to fit the network. The integrated messages will deliver ideas and advice about topics such as menu planning, time saving, cooking techniques and at-home beauty care.IBN plans to work with advertisers and their agencies to create new content specifically for the in-store network, geared toward an on-the-go, point-of-purchase audience. Since ads designed for television will need to be re-formatted to fit the network's specifications, Von Hurwitz and Anthony hope that brand marketers will opt to create new content altogether."The customer wants to know, OK, I know we've got ketchup, but what do you want me to do, other than buy it? How's that going to work in my lifestyle?," says Anthony. "In-store media gives you that opportunity to really drive your reach and frequency with somebody, give them a relevant message and build a relationship with that customer. That's what you want, anyway."Because the networked system can be managed from a central location down to the individual store level, the system offers the opportunity to add time- and location-sensitive programming that may interest shoppers, says John Morgan, director, research and analytics, at IBN. For example, he says, the network could display allergy alerts by zip code, as soon as the information became available.The network will allow for extreme customization in advertising, says IBN CEO Rob Brazell. An advertiser could, for instance, choose to buy impressions "only when it's colder than 40 degrees," if the advertiser is selling a cold-weather product. "That's the real value proposition of in-store media," he says, "the ability to optimize [a message according to point-of-sale information]. You can't do that when you're dealing with a consumer sitting on the couch."

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