The retail sector is going through hard times, and that is causing a slower than expected take up of in-store AV. Paul Milligan explores the reasons behind this reticence.
It’s no secret that the retail sector has found it tough going in the last few years. Economies across EMEA have fluctuated, and the dominance of Amazon as a platform means it has a stranglehold on where our shopping dollars are spent. When you add the disruption caused by the recent pandemic, which saw many shops close temporarily only to never re-open, it explains why our high streets and shopping malls are full of empty units.
With less money going in the tills of physical stores, investment on AV tech has suffered. In truth, that investment has been underwhelming for more than a decade now, and shows few signs of improvement. Could this be because we as an industry haven’t found the right formula yet for AV in retail? Or are there other factors, such as a lack of time given over to the design phase in order to get the right result, or a lack of understanding on our part of what the client really needs for their business? Or does it stem from an innate conservatism from retail clients to commit to in-store technology, when they would rather have shelf after shelf of product out on the floor? We gathered a panel of experts of ask why take-up has been so slow and if we can fix it.
Would they agree the take-up of AV in retail has been a letdown so far? “Maybe the pro-AV industry was a bit naive to believe every retailer would roll out dozens or hundreds of screens. The old style integrators, who are just ‘hang and bang’ did not really understand the right processes, and they’re a little disappointed,” explains Florian Rotberg, managing director from invidis consulting.
“The adoption of AV technology in the retail sector is still hindered by the slow recovery of the retail industry overall. No part of the market has been unaffected, as high street stores, shopping centres, and retail parks are all struggling with low foot traffic and retaining customers. Until we can demonstrate the benefits of AV for the everyday retail store, the adoption of AV technology will continue to progress at a slower pace than desired,” says Mark Bracken, business development integrated solutions from distributor Polar.
Things need to change adds Matthew Drury, sales and marketing director from signage consultancy firm Saturn Visual Solutions. “It has been a little bit of a letdown. I do find it surprising that most other industries on the High Street have moved to a more exponential model, but retail has been left behind. We do a lot of work with the service, leisure and food sectors with embracing new technology, and they’re all in. For some reason retail shopping stores, both food and clothing etc, seem to be lagging behind.
The experience is probably the same as it has been for the last 20 years.” And this point is a crucial one, and one the industry should be repeating to its clients in the retail sector over and over, as this viewpoint from Loek Wermenbol, retail strategy director from system integrator First Impression audiovisual, makes so vividly; “We have to redefine the role of the physical store. If you are still doing the same as you’ve been doing for 25 years you can basically close your stores in five years, because there will be other brands, newcomers who will take your place.”
Has the take-up been poor because we haven’t really found the right formula for AV in retail installs? The winning formula is quick and simple says Paul O’Reilly, owner and CEO of integrator Vivid Digital Retail. “Clients expect displays to be readily available, competitively priced, quick to install, and easy to use. They often anticipate that once the deal is closed, these systems should be up and running within days, despite the complexities involved in setting up digital signage.”
The formula includes AV, but not exclusively, and that’s partly the problem says Peter Critchley, UK CEO of digital spaces integrator Trison. “The AV industry thinks that it’s an AV related formula and it’s not, it’s content strategy, its storytelling, it’s understanding the journey and the mission. It’s thinking about a demographic and the content you’re going to show, and when you’re going to show it, and the context of that content.”
Floor space has always been a traditional counterpoint to AV in-store. Typically, a touchscreen or videowall being installed will mean stock is removed to make way. Do retail clients still need lots of convincing to hand over floor space to technology? Over the last 18 months to two years, Graham Little, head of display, Samsung UK has seen a shift. “Real estate was always the crux, cost per metre is the challenge here and how do they get a return for that spend. Now we’re seeing retailers understand that it’s an experience when people are in store. If you look at all of the data, if people spend longer in store they spend more money, so now they understand they need to invest, and floor space is becoming less of an argument.”
If physical stores are struggling, is investment in AV technology one of the first things that gets dropped from future budgets? “A certain part of the market will say we’ll sweat our existing estate and our existing environment, and we’ll make do as best as possible,” says Little. “But in the last five to six months we’ve seen really large RFPs from big retailers looking to invest on a mass level. They recognise they have to do better because that’s the only way they’re going to encourage people back in-store.” Rotberg is in agreement because, “Boring stores have no future, there’s no question about it. Shopping on Amazon is the fastest way, but it’s the most boring thing in the world. It’s very efficient and you will never beat that.”
The frustration for the AV industry is that the right technology is available now says Drury, products such as shelf edging displays, RFID for lift and learn possibilities, AR enhanced mirrors where shoppers can put virtual clothing ‘on’. “It all exists now, but they have a more conservative nature so haven’t adopted those.” Money and logistics are also factors here he adds: “A lot of retailers are very large, with multiple stores, and it becomes very complex and expensive to start incorporating technology across a really wide rollout.”
Are we guilty as an industry of not putting forward the case for AV to engage customers, or to drive sales (or both) well enough at times? “It’s the classic conundrum of ‘do you really want to go down the road of ROI?’. Would you ever exhibit at a trade show if you shared the ROI?” argues O’Reilly. Retailers will only justify spending on AV technology once we emphasise its importance and benefits rather than on how it works and what is possible says Bracken adding, “This is a problem we’ve created ourselves.”
Just putting in a videowall doesn’t solve anything adds Rotberg, especially “if you don’t know how people move through a store. Everyone has gone digital, it needs to add something to the customer journey, and lead to [sales] conversion. Some integrators are still trying to sell a product, but they’re not understanding what the needs really are and to design something which fits the purpose of their client’s customers.”
One of the central elements in this entire issue is time. To get truly successful projects off the ground, which will drive more investment in AV tech, do we need to spend more time on the design element than we currently are? Or do we have our hands tied by customers saying, “I want it finished in 3 weeks”. There’s a broad lack of understanding of how complex it is to fully design and implement a project says Critchley: “For the sheer number of touch points we would need to have within a business to ensure that it’s successful, it’s an engineering project, it requires structural engineering elements. Often it requires a bespoke steel manufacturer, often the IT team needs to be fully engaged. And sadly, that doesn’t always happen.”
The rush to get projects completed is still happening confirms Drury: “Usually after waiting three months for an update you’re told you’ve got two weeks to deliver it.” And in doing that, it will affect the overall finished project he adds. “The best thing you can do at the very start of the process is educate the customers as much as possible, to tell them that to do this it’s going to take X amount of time. That conversation happens way down the process sometimes, and at that point it’s almost too late to make the revisions that you want or to say actually you’re not going to get the return you expected.” It’s hard not to extrapolate that this is the real reason why investment in AV within retail projects hasn’t reached the levels we would all want. Integrators are not being given enough time to design, the jobs are done quickly (as per the client’s demands) without the proper planning, and the subsequent results are disappointing, because of a lack of comprehensive design and planning, which then stalls future investment.
Over the last five years the AV industry has seen the rise of the As-A-Service model, could a Hardware-As-A-Service model work especially well in retail because store owners would not tied to one piece of kit for five years+, and could theoretically change kit based on changing promotional requirements? In theory it makes a lot of sense, but the practicalities of getting a financial model that would work for a system integrator make it tough. “Yes, it can be done, but it’s not as easy as it looks because there are big numbers involved for an AV integrator,” says Wermenbol. “If you switch out kit, what is actually going to happen to it? Is that still on the bench somewhere to integrate elsewhere with the same retailer? Is it going in the bin? Is it going to be sold? Is it going into rental stock? All those costs will have to be included in a model like that.”
Not having the significant financial muscle behind you will make it a tricky proposition, which could leave the door open for other industries to swoop in. “What does it mean for the smaller players and predominantly pro-AV integrators? The vast majority of them are too small for that and they have the wrong mindset,” says Rotberg. “They’re still looking at boxes with licences. This is the reason why the big IT integrators are coming into the market. They’re leasing companies and they know exactly how to play the game.”