2022 Will Be The Year That Accelerates A Multi-Billion Dollar Shift Into Retail Digital Signage

The first of my 2022 Retail And Retail Technology Predictions was about a retail technology that we know quite well, that 2022 Will Be The Year That Accelerates A Multi-Billion Dollar Shift Into Retail Digital Signage. You can read the detailed analysis below, and I will continue to document the stories in 2022 that validate the trend.

Calendar Of Supporting Stories On In-Store Digital Shift And Industry Consolidation

1. Raydiant, a leader in on premise digital experience acquires Sightcorp, an AI-powered platform for physical audience demographic segmentation, sentiment and behavioral analysis (1-17-2022)

2. Winterberry Group estimates that spending on retail media marketing in the U.S. doubled from $20 billion in 2020 to $40 billion last year (1-24-22)

3. Walmart revealed its new concept store noting a shift from convenience and value being sacrosanct to a concept called “Time Well Spent” and includes digital screens in pets to guide shoppers to service and “lift-and-learn” signage in shavers. (1-27-22)

4. Tesco’s Dunnhumby has launched a Retail Media Platform called Dunnhumny Sphere. It features AI that touts the ability to predict the propensity of shoppers to buy specific products that apparently double ad conversion and return-on-ad-spend (ROAS). (2-28-22)

5. Walmart signs with SES-imagotag to provide electronic shelf labels to its stores. Huge validation of electronic shelf labels and smart shelves. (3-14-22)

Retail Prediction 1: 2022 Will Be The Year That Accelerates A Multi-Billion Dollar Shift Into Retail Digital Signage

With supply chain challenges easing up in Q2, focus is switching back to the in-store experience.  And yet throughout the store we still have static, expensive and cumbersome fixtures and signage.  2022 will be a big year for digital transformation in-store.  But there are a couple catches…

Retail digital signage generally sucks.  There I said it (and I have said it before).   I think its current incarnation is often the banner ad of retail – and thus it has the same popularity.   That said, banner ads are big business online and they are soon to become big business in-store.   It doesn’t make sense that only 1% of digital media spend occurs where 85% of retail transactions occur (and an even greater proportion of profits and shopper loyalty).

Advertising experts know that the most valuable media is that which targets the bottom of the funnel such as retargeting ads, cart abandonment, cross-sell/up-sell or anything that optimizes conversion. Media advertising executives are beginning to realize that those opportunities also exist in-store – if only retailers create and activate those opportunities.  And they are indeed! 2021 was the year that every retailer seemed to offer a digital advertising network online offering a combination of ad inventory and proprietary customer data for targeting (Kroger / Albertsons / Macy’s / Ahold / Target / Walmart / CVS).  2022 will be the year that we start seeing similar in-store advertising networks in store.

The challenge to the advertising model is that building out the network is capital intensive.  So vendors like Quotient and Cooler Screens are offering to build it out for free for long-term revenue share.   And so with free subsidization and new revenue generation unlocked, you will see retailers go big this year and you will see a flood of advertising dollars come in.  I believe this is a multi-billion dollar shift over the next 2 years.  

But will activating all this programmatic advertising that is the banner ad of retail improve the shopper experience or distract from it?  The top two biggest problems with digital signage is 1) that customers tend to ignore it because it is interruptive and 2) It’s intrusive to the customer experience and frustrates customers.

This led me to ask the important question of who decides the future of digital in-store (read the full article here)?  Will the leaders at the brand and retailer be the media / advertisers or merchandisers / shopper marketing folks?

A Non-Advertising Model Of Retail Digital Signage Driven By Shopper Marketing And Customer Experience Design

There is a different vision, one in which digital is more about shopping tools that add to the shopping experience.   Walmart and other retailers are redesigning stores from the ground up to be more like airports and malls, friendlier for navigation with guided tools at every turn and integrated into mobile.  In this world, shopper marketers and in-store experience designers will lead the digital revolution with a focus on improving the unified commerce experience and increasing both conversion and loyalty.

Here are some of the key trends to look out for in 2022 facilitating the digitization of the store:

• Retail smart shelves are coming, finally. Digital signage will have to be shopper-aware and product-aware like Perch to deliver useful and contextual information, not interruptive promotions and distraction attention grabbers like banner ads to drive 5-10x engagement and 30-130% sales lifts.  Trade dollars will flow to “phygital” shopper marketing as brands realize that in-store story telling mandates the same digital content they have online at the product level (see chart where #1 category for budget increases of 5% or more is shopper marketing ) that they can’t rely on retailers to do that or even worse, just let their products sit at the shelf.

• Rising labor costs are flipping the economic ROI of electronic shelf labels (ESLs).  Companies like Pricer, which have seen heavier adoption in Europe where labor costs are already high, will start deploying in the US. It’s a massive investment for retailers, but Best Buy Canada was the North American canary in the coal mine.  

• Retailers will use these to better convert in-store customers to omnichannel through QR code, NFC and native app connectivity.  While this kind of can be done now, there’s a reason you haven’t seen a single QR code case study in usage in retail yet.  New mobile apps will help navigate through the store, to the product, and back to online in novel ways this year.  And the ROI will be there with usage volume.

• 2x increase in number of screen touch points in-store that are tools oriented - Dynamic wayfinding, category level information, event and product promotions, BOPIS locker screens, return kiosks and much, much more.  We are seeing supply chains free up for screens.

• 5G, which we predicted would explode in 2021 will be ubiquitous in 2022, with retailers like Walgreens lighting up 9,000 stores at a time.

• Sensors, sensors everywhere.  Digital touch points will be embedded with more sensors than ever to use for continuous optimization.  Will we finally get visibility to the data desert in-store and overturn well-accepted shopper marketing norms with new data-driven insights?  We hope so!

To capture the massive opportunity across multiple capabilities, expect 2022 to be a year of consolidation to achieve network scale and new sensor and analytics capabilities to compliment traditional digital signage. It’s going to be an exciting year.