Hospitality and retail sectors are on the rise
The hospitality and retail markets are two of the hottest verticals right now, but what is driving this rise? Steve Montgomery ask those involved in the sectors to explain the reasons why.
The fast-growing hospitality and retail markets sectors are two of the most buoyant and potentially lucrative markets for AV professionals at the moment; and set to grow even more rapidly. According to AVIXA’s Industry Outlook and Trends Analysis (IOTA) market research, the retail sector generated around €17.2bn in pro-AV revenue globally in 2018, whilst the hospitality industry generated around €6.5 billion.
These two sectors are being given special focus by AVIXA. “While the total pro-AV industry is expected to grow roughly 5% over the next several years, sales to the hospitality segment is expected to grow faster: about 9% compound annual growth (CAGR) through 2023—making it one of the fastest growing verticals for pro AV,” says Brad Grimes, senior director of communications at AVIXA. “Moreover, pro-AV sales to the retail market are expected to grow more than 6% annually.”
To help the industry capitalise, there will be special emphasis on these sectors at InfoComm this year with focused sessions bringing AV suppliers and integrators, retailers and the hospitality industry together. “Conference sessions and workshops will allow AV professionals to learn what retailers and hospitality providers need from their AV technology solutions,” says Grimes. “And we expect retailers and hospitality professionals at the show; those users can learn from AV providers about the strategic value of AV solutions and get their imaginations going. Taken together, our industries can work to create integrated experiences that help promote and enhance retail and hospitality brands.”
The main objectives of deploying AV technology within both sectors are to increase brand recognition and upsell products and services. Brick and mortar retailers are fighting back against online resellers by turning retail environments into experiential venues using AV to create atmosphere and excitement. Many of the large brand names, Nike, Samsung, Audi, etc. are bringing their marketing resources into play to promote their products in shopping centres whilst still accepting that their products may be purchased online.
Many retail organisations and manufacturers, including Amazon and Apple, see the shopfront as a marketing channel to reach consumers. And for this they need AV technology: videowalls, immersive and VR/AR systems and interactive kiosks. “Displays provide much more than simple promotional visuals these days,” explains Keith Dutch, managing director, EMEA, Peerless-AV. “They serve numerous functions and act as tools that allow shoppers to interact within stores and gather relevant information.
“Navigating a shopping mall can be confusing, especially if shoppers are unfamiliar with its layout. To address this issue, kiosks with touchscreens are often set up near entrances to assist shoppers with store directory details and wayfinding. The kiosks also often allow users to simplify their shopping experience and include the ability to search for items, based on categories, such as type of clothing, size, style, colour, etc. If the product is not in store, shoppers can see similar alternatives or view stock availability and place an order.”
Huge visual surfaces help to draw people into stores. These mainly use LED technology often in flagship stores at present but likely to be rolled out further in the future. “Once inside, convincing messaging and advertising is offered with access to more detailed product information and insight via LFD screens,” points out Thomas Walter, section manager strategic product marketing, NEC Display Solutions Europe. “Sensor driven contextual awareness ensures engagement is relevant with touch technology offering an intuitive bidirectional interaction to drive purchase decisions. Sensor technology enhances the communication and is likely to increase in the future as ambitious campaigns become more targeted. The creative use of LFD alongside projection offers innovative ways to attract viewers with playful product presentation.”
New technologies are successfully and enthusiastically deployed: “A major barrier to outdoor display used to be the inability to use a conventional flat panel display anywhere outside a climate-controlled environment. Screens lacked the ability to survive extreme temperatures and were unable to withstand rain, humidity, snow, dirt and insects,” says Dutch. “Heat shortened component lifespans, while cold impacted LCD operation by expanding and distorting display frames. Fluctuating temperatures; a cool night warmed by the morning sun, created condensation that shorted out the electronics and affected image quality. Glare also affected the ability to deliver a crisp, clear picture. In short: there were some serious drawbacks and limitations to the technology.
“However new IP68 rated, high bright, outdoor daylight readable, displays are available that excel in the most challenging applications.” As a consequence outdoor AV is becoming more prolific in taking the message outside to the consumer, reaching them with targeted advertising and tailored messaging at every point of their retail shopping and dining experience.
The hospitality sector operates under a completely different model to retail but has similar objectives of brand promotion and increasing revenues from customers and it, too, benefits greatly from AV technology, although in different ways. There is a general requirement to provide high level core AV-IT service level to guests. “Hotels have to provide better-than-home technology to guests in order to compete in the market,” says Colin Farquhar, CEO of Exterity. “Guests expect to be able to connect their own devices into the in-room AV system so that they can watch their own subscriber services, like Netflix and Sky, using screen casting and mirroring rather than the hotel provided movie service. Business users need high speed connectivity for video conferencing and VPN connection too.”
Throughout the world, there is a considerable level of hospitality development in new hotels and resorts, which is providing a major opportunity to companies like Exterity. “Our current focus is on the Middle East and Asia Pacific regions with the rapid expansion of holiday, resort and casino facilities that is occurring now,” Farquhar continues, “Hotel operators are concentrating on providing more and better facilities in order to increase the spend-per-guest. That’s why there are so many more Michelin-starred restaurants and high-quality leisure and spa areas in hotels. Audiovisual technology is a great way to promote those services, in the rooms and common areas around the hotels and resorts.”
There are considerable opportunities for integrators and consultants to provide added value in both retail and hospitality markets. Brand owners and large retailers don’t necessarily have in-house AV or IT skills to develop and support enticing solutions. Their first point of call is often the specialist shopfitting companies responsible for refreshing in-store display stands and static graphic messaging in thousands of retail branches in very quick time. But these companies are often under-skilled in AV capability and not in the best position to provide advice. “Technology providers working in retail are not always AV specialists. While they can provide some level of digital signage at scale, for example, they may not be as well versed in more complex, experiential solutions that today’s retailers are seeking to engage shoppers,” points out Grimes. “Part of our role is to bring together creative AV technology designers and retailers to identify applications that can deliver excitement and better engagement to consumers in stores.”
Similarly in the hospitality sector, providers of hotel services do not generally have the level of capability and AV and IT knowledge held by AV professionals. Farquhar comments: “Although hotels that offer conference facilities may have some expertise, most don’t employ large teams of skilled IT engineers to operate and manage AV and IT services, and certainly not to create impactful content for distribution to guests. This opens up opportunity for third party service providers in both fields, particularly for local companies who can deliver information geared to local event and amenities, which would not be considered by a central hotel marketing team for a large hotel chain.”
There are also issues of guest privacy that need to be dealt with as more personal devices are connected into hotel networks. Data and device security must be ensured during connection and any personal information, including log-on to external services must be wiped when people depart.
Audio systems are an important element in customer engagement, particularly in the retail environment. “New research suggests that when sonic identities and music are used within an effective strategy and when used consistently, they are major drivers of purchase intent, whilst also creating brand differentiation,” explains Kerry Schofield, insights and business development manager at Sound lounge. “In fact, when measuring the purchase intent difference between pre and post-exposure of sonic logos and music, the propensity to buy grew to as much as 146%. That is a lot. Sonic branding is not a new fad or a trendy marketing tool. If everything the consumer knows and understands about your brand is reflected in what they hear it is significantly more powerful at communicating a brand message that will actually resonate with the target audience. And if the impact of the visual, brand values and music are perfectly aligned, the next time a consumer hears that track the first thing they will think of is your brand.”
AV companies are in a good position to take advantage of opportunities in these sectors. One of their most attractive capabilities lies in remote access and management of geographically widespread systems. David Fuller, senior director of product management for QSC, summarises: “Retail and hospitality chains are immediately interested when we mention the ability to remotely monitor and manage their AV equipment. This service is already in practice for content provision, but not yet common in monitoring AV equipment. We will start to see more demand these capabilities as they recognise the value of having real-time visibility of AV assets.
“As the market continues to see the value in remote monitoring capabilities, integrators that can offer this component in their managed services portfolio will have a distinct advantage; by helping their customers proactively respond to equipment failures while reducing AV support costs and increasing system uptime. Cloud-based applications offer these capabilities and offer the integrator an opportunity to generate ongoing revenue.”