Interactives Poised For Dramatic Growth

Examples of interactive point-of-purchase displays currently in use for a variety of products and services are featured as illustrations for this special report.Product marketers who have held back on examining interactive technologies due to cost may find that 1996 is a good time to catch up. Not only are costs falling rapidly, but so many new ideas are hitting the market -- with many more ready for introduction -- that it will be easy to be left behind."Interactive technology is becoming smaller, faster and cheaper," says Jim Burke, marketing director at Frontier Inc., Malvern, Pa., a maker of interactive products. "There are many P-O-P ideas in the marketplace now that we couldn't have accomplished five years ago. It wasn't that we weren't smart enough then, it's that there just wasn't the capability."Marketers already bewildered by the range of options won't receive a respite, P-O-P experts say. More innovations will soon be enhancing the wide array of existing options. These interactive technologies already cover a wide spectrum, including liquid crystal displays (LCDs), audio capabilities, interactive compact disks (CD-i), laser disks, videotape players and personal computers, along with touch screens, track-balls and other interface devices.Miniaturization ContinuesOne key area for advancement will come in miniaturization of existing components, they say. "Computer chips definitely are getting smaller, and that ultimately will affect hardware," says Jerry Hardy, president of Design Master Displays, High Point, N.C. Chips formerly measuring 0.38 of an inch square can now fit onto a 0.25-inch platform, he says. That means more power in less space. Adds Frontier's Burke, "Early programs involved many components -- video disks, speakers, wiring and many moving parts. Now data can be searched for and presented instantly with one component." One-inch monitors that can be incorporated into shelf-edge displays are also gaining popularity, but they require supporting hardware linked by wires.That capability at the top end is being matched at the lower end in LCD and audio units, says John Keck, vice president and national sales manager at Chesapeake Display & Packaging, Rural Hall, N.C. "Interactive units can be made so small and light they can be added into temporary corrugated displays," he says. "That kicks the price up, so you try to provide a message that lasts longer. It entices the retailer to keep it in the store longer and refill it a few times."Miniaturization can only go so far, most warn, due less to capability than to loss of impact. "You need to catch the customer's eye and provide identity," says Lee Holtz, director of sales and marketing at TEP Inc., Minneapolis, which creates interactive video units. The size of TEP's standard monitors is 13 inches, which allows the customer to "own" it while he watches, creating a personal one-on-one experience. However, because of retail space limitations, the company is also experimenting with a 20-inch monitor placed high, where shelf space is less valuable and angled down. This also allows more customers to see the presentation at once, drawing more attention.Another innovation in space preservation is also coming soon. "The use of flat monitors is right around the corner," says DMD's Hardy. "That will allow interactive units to fit into smaller spaces and even let them be wall-mounted."Data Compression Taking OffWhile compression of components may be reaching a strategic limit, compression of data has just begun, says Bob Chich, vice president of interactive services at DCI Marketing, Milwaukee. Standard PCs now provide three or four times the capacity of just a few years ago, he notes, and CD-ROM compression is gaining so much effectiveness that a CD can almost match the capacity of a standard 3.5-inch floppy disk. New encrypting methods are also speeding these enhancements. "We're now focusing our attention at DCI on new methods of advanced data-compression routines so transmission will be more economical."Transmitting compressed data will gain popularity as manufacturers and retailers begin to update existing interactive systems and expand their uses. Rather than shipping new software to each store, managers will download information off a satellite or phone feed and load it into their kiosk's drive. Tying this equipment into a satellite feed on a daily, routine basis will be difficult to coordinate, says William Carlson, director of product management at RTC Industries, Rolling Meadows, Ill. But once CDs offer the ability to be rerecorded -- and that, too, is coming -- sending information to the stores for regular updating onto the existing CD will be more commonplace.Networking Offers AdvantagesNetworked kiosks would offer the vendor additional advantages, says Frontier's Burke. "Early on, captured data, such as demographics or transaction totals, sometimes filtered back to the supplier on a quarterly basis," he explains. "Networking would allow the manufacturer to sit at his desk, call up a store and see the kiosk's results in real time."Connecting kiosks into the local store's own computer offers retailers advantages, too, notes DMD's Hardy. "The system can show the customer the current price and availability in that store of the products they're learning about," he says. "The goal is to help customers learn what they want to know quickly and consistently, and networked kiosks will do that."To translate customer desires into computer commands, most vendors acknowledge the superiority of touch screens. New generations of such products overcome the drawbacks of older video screen technology, such as smudged screens that projected a dreary image and interfered with the consumer's selections.One new product allows customers to access information through 2 inches of plate glass, allowing displays to be used through the display window while the store is closed. Even so, its high cost leads some marketers to consider a trackball, mouse or push buttons."Touch screens are good, but I anticipate the next step will come from voice-recognition technology," says DCI's Chich. "Trackballs and mouses also can be appropriate, but you've hit paydirt when the customer can talk to the system like he would a clerk." Advances are being made rapidly in this area, he notes. Ambient store noise doesn't affect the prototypes he's seen, and they are capable of understanding commands in several languages.Variety Spices FieldThe good news for marketers is that no one type of display technology appears to be taking over the industry. Laser disks, CD-i, LCDs and the rest all have their place, says TEP's Holtz. "The key is to meet the needs of the marketer and find the most effective way to express his message." Some see manufacturers combining technologies, including adding coupon dispensers to their kiosks.In fact, the lower-tech LCDs continue to gain popularity due to their shelf-edge capability, especially for SKU-intensive products. Marketers say these units can replace catalogs reliably and also qualify a customer's needs, selecting the proper product from the input answers to questions."Interactive LCD units are so accepted by marketers that they've almost become a commodity," says RTC's Carlson. "We're past having to spend two meetings explaining the possibilities. Now it's an exercise in applications and budgeting. That's a sea change from five years ago." (How one marketer is using these units is presented in an accompanying article.)Costs Are DroppingAdding to this growing acceptance are dramatic decreases in some price points. "Costs will continue to come down," says DCI's Chich. He's already seen PC components drop from $8,000 apiece to $2,000. That kind of reduction doesn't mean marketers will remain on the sidelines, hoping for further reductions, he notes. "At the point where they have to start making their decisions, $2,000 spent on equipment isn't that big of a deal," he says. "These kiosks have been shown to add sales that make up the costs. They essentially are electronic employees."Amortization helps lower costs too, notes TEP's Holtz. "These are long-term, permanent displays that retailers appreciate having in their stores," he says. "Creating a display that lasts one or two years spreads the cost over a longer period than other displays can offer."Software costs, particularly if the information needs to be updated occasionally, adds to the overall expense. But most vendors note that software production represents an insignificant percentage of the total budget, and some of these expenses, too, are coming down. In addition, a manufacturer's generic programming can often remain the same, with only new product shots or information inserted.Even so, explains RTC's Carlson, "A kiosk easily can cost $1,500 to $2,000 per retail point, and that's a barrier to use. Interactive units will continue to be cost-driven." Quantity discounts may offer some relief, he adds, but few budgets are prepared to cope with the costs that are required for a full-scale effort at a major nationwide chain.More Refined MessagesAs marketers experiment with the options, they are finding more effective ways to present their messages, says Chesapeake's Keck. "Messages are being tailored more to the individual retailer and product." In part, notes Frontier's Burke, that's because early feedback is generating more refined messages. "There is an art to analyzing the data received," he explains. "The feedback stream is growing and that results in better information. There definitely is a less gratuitous approach to the material now, with an overall more thoughtful presentation."The advantages of targeted interactive messages are not lost on marketers. The ability to provide consistent information no matter the level of the store's training program makes kiosks enticing. "In a retail market characterized by downsizing, re-engineering and cost cutting, the ability to assure 24-hour sales assistance to the customer is highly appealing," says Claude Dauman, vice president of account management at HMG Worldwide, New York. This is particularly true with bi- or multi-lingual displays, which are gaining popularity.Shoppers are becoming less resistant to using such devices, most experts agree. Led by bank automated teller machines, customers are now accustomed to being led through push-button directions -- and find the effort rewarding. The growing use of computers, e-mail and the Internet also makes computer displays less imposing, especially among younger customers."Some major manufacturers and retailers are not yet convinced that people really do interact well with computers on a broad scale. I disagree," says Dauman. "Consumers tend to feel less self-conscious, less inhibited and less pressured when answering questions posed by the computer. For that reason, they tend to be totally honest when answering those questions." Those consumer responses, he notes, "can be captured, stored and analyzed as needed."Will Retailers Take The Lead?With so many advantages but at such formidable costs, will more retailers take the lead to coordinate in-store interactive displays? By joining several vendors together on one unit, each manufacturer would pay less and convey his key information, and the retailer would benefit from serving his customer better with more varied information. Although a few chains, including Target and Menard's, are pioneering this effort, it won't be a flood, says RTC's Carlson."Coordinating vendors runs counter to the retailers' culture," he explains. "They buy, they don't sell. They aren't conditioned to pitch their vendors on this type of process." In addition, says Frontier's Burke, "Many manufacturers see an insurmountable obstacle in sharing information and space with competitors." (To see how one retailer is accomplishing this, see the accompanying article.)But for interactive displays to truly take off, some say, retailers will have to be the driving force. Basic costs for monitors, disk players and other hardware will remain high enough to pose an entry barrier for most manufacturers. Retailers also won't want a multitude of kiosks running in one department. Although hard to imagine currently, oversaturation could become a problem, just as with other types of displays.Regardless of what technologies lie ahead and who drives them into the stores, most vendors agree that interactive displays will grow in popularity as new ideas continue to enter the market at a rapid rate -- at least, a rapid rate for the P-O-P field. "This industry moves pretty slowly compared to many others," notes DMD's Hardy. "But we're still talking about major advances coming in the next 24 months."In part, that will be driven by the computer and communications companies, including Philips, Sony, IBM and Apple. They are expanding their capabilities, and display companies will be able to tap into that. "There are a lot of fields we're looking at for expansion, not just the retail field," says Hardy. College dorms and fitness centers offer two prime markets for informational kiosks, he notes.RTC's Carlson agrees: "The P-O-P market isn't big enough for these firms to design products for us. So we're really in the business of finding creative merchandising applications for technologies that aren't being designed for creative merchandising applications. We feed off the technologies they create for others. Because of that, I see many more advances coming in the next two years."

Interactives Poised For Dramatic Growth

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