Best Buy Weighs Consumer Moods in Broadening Promotions

Best Buy broke from its promotions’ traditional moorings in holidays and special events in launching a campaign last summer tied to mobility, Herzog said. The change was tied to a 13-month study Best Buy undertook with Communispace to canvas a 300-member “community” of Best Buy shoppers to gauge their moods and behavior each month. The findings included that consumers are more reliant on their mobile devices during the summer season, which prompted Best Buy to launch TV ads featuring a Best Buy “Blue Shirt” armed with Research in Motion’s Playbook in airplane, beach and canoe settings.

The addition of mobility-related advertising was the “biggest fundamental change” in Best Buy’s promotional strategy, but whether consumer behavior will be a factor again this year hasn’t been decided, Herzog said. “We put forward our recommendation” for 2012, but I don’t know where the customer is going to take it,” said Herzog. “Attitudes and behaviors within a given season can trigger a purchase need."

Another change has been the emergence of females as the “chief gift buyer” during the holiday season, which was reflected in Best Buy’s recent TV commercials, Herzog said. Best Buy’s 300-member consumer group is split equally between men and women with the latter “continuing to increase in importance,” Herzog said.

Communispace and Best Buy have been working the consumer group for nearly 5 years, gauging their interests through weekly questionnaires, said Kassandra Duane, director of client services at Communispace. The group members are each paid $10 a month to participate and provide input on products and other areas of interest to Best Buy, she said. Among the findings are that PC purchases peak in August amid the back-to-school season and hit a valley at the end of school year in May-June, Herzog said.

Best Buy is continuing to test its Connected World format in the Pittsburgh and Las Vegas markets in six and eight stores, but hasn’t expanded it, Herzog said. Best Buy was expected to extend the concept to 40 locations this year (CED April 15 p1). “We're still in the test and try mode and we're going to continue to revise it until we have it right,” Herzog said. “There is a lot research involved in this.

Best Buy executives conceded last year that the Connected World concept needed more fine-tuning. Some of the concept’s components, including a career sales track for store staffers, will expand to other stores, company officials said. But the entire format, which ties together six to seven retail businesses via an in-store network, will take longer to implement, Executive Vice President Shari Ballard said (CED April 15 p2).

In the locations tested in fall 2010, about 8,000 square feet were trimmed from the showroom and given over to storage and a hallway. The standard race track was replaced by a “runway” that crosses the middle of the stores and features three so-called “Experience” new technology tables, where content is rotated. Gadget and gizmo and Best Buy Mobile sections were pushed to the side and Connect Demonstration Stations were created to demonstrate Internet-connected CE products. In general, the Connected World format operates with 10 percent less floor space than a standard Best Buy store, but generates the same or more revenue, company officials said. When connection services like Napster, CinemaNow, DirecTV and cable are added to a store, the outlet produces six to 12 times better gross profit than one without.

National Retail Federation Convention Notebook

Amazon had the best customer service among all U.S. retailers, according to an online survey of 9,374 shoppers by BIGinsight whose results were announced Tuesday at the convention’s annual Retail Industry Luncheon. Amazon moved up one from last year’s NRF Foundation/American Express Customers’ Choice survey. Other retailers in the top 10 included Overstock.com at No. 4, QVC at No. 5, Kohl’s at No. 6, Newegg at No. 9 and Nordstrom at No. 10. The others in the top 10 don’t sell CE products. Consumers were asked which retailer they thought delivered the best customer service overall. “Today’s consumer has high expectations when it comes to their shopping experience, whether in-store or online,” said NRF Foundation Executive Director Kathy Mance. “The top retailers on this list found effective ways to win over shoppers not only with low prices, but also stellar customer service and value-added features such as unique mobile applications, free shipping and unforgettable in-store experiences,” she said. The survey was done in September. To develop a fair comparison, regardless of a retailer’s size or geographic coverage, the responses were compared to each retailer’s 2010 revenue to develop the overall rankings, NRF said.

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Intel is testing a 70-inch LCD as a digital signage system in five malls using a mixture of capacitive touch and gesture recognition, company officials said. Simon Property-owned malls including those in Austin, Texas, Dallas, King of Prussia, Pa., and Garden City, N.Y., are being coupled with a Hilton hotel in midtown Manhattan in offering up the Inwindow Experience Station that provides directory assistance, weather, theater listings and other services. The 70-inch display uses a Samsung panel built around NEC controllers, quad core i7 processor that operates at 2.6 GHz and a 250 GB solid-state drive, said Ed Stock, digital signage platform system architect. The Windows 7 system is built with Intel’s audience impression metric suite (AIM) that includes facial recognition technology to detect a consumer’s age and gender using the same optical camera found in Microsoft’s Kinect. The age and gender data can be used to tailor an ad to the customer, Stock said. Intel acquired AIM technology in buying CongoVision in late 2010. The display uses gesture recognition sensors from PrimeSense, which built its software into Kinect, Stock said. The sensors were used rather than PrimeSense SDK, which costs $2,000, Stock said. Inwindow Outdoor is developing much of the software for the display including the advertising platform, which landed HTC’s Scribe tablet as its first customer. The display connects to Inwindow servers for updates using Sierra Wireless’ gateways and Verizon’s 4G LTE network, Stock said. The pricing for the display wasn’t available, although the LCD alone goes for $10,000, Stock said. Meanwhile, Intel and Kraft also began testing in December Diji-Taste kiosks designed to dispense Jell-O and Cadbury chocolates using a 46-inch capacitive-touch LCD. The Diji Taste kiosks have three Intel Core i5 processors, 4 GB of RAM and use the same optical camera as the Inwindow display. Kraft is using the kiosks, installed at the Shedd Aquarium in Chicago and South Ferry Terminal in New York City, to test a new Temptations line of Jell-O targeted at adults. To identify customers, the kiosks use an optical camera, which shuts down if those 16 years old and under try to buy something, company officials said. The kiosks, which were launched in December, have registered 100,000 impressions, with Shedd Aquarium location being the more popular, an Intel spokesman said. The Diji Taste kiosks connect to servers using AT&T’s 3G network and can be updated using an iPad, an Intel spokesman said. The kiosks have room for 400 Jell-O containers or about 1,000 Cadbury bars, a Kraft spokesman said.

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Kiosk Information Systems will start a multi-store trial in March in the Denver area of Ink Box kiosks that dispense printer ink cartridges, Kiosk CEO Rick Malone said. The Windows and Intel-based kiosk has capacity for 220 new and re-manufactured ink cartridges, most of them priced between $25 and $35. The kiosks’ content will be split equally between new and remanufactured cartridges, the latter being supplied by Cartridge World, Malone said. Ink Box will be deployed at Denver-area specialty grocers and in the bookstore of a local university, said Malone, declining to identify those participating in the test. Ink Box also can dispense $2 coupons for used cartridges returned for recycling, Malone said. The kiosk, which contains new Canon, Epson, Hewlett-Packard and Lexmark ink cartridges, can be profitable on daily sales of 4-5 units, Malone said. Kiosk also demonstrated its StoreBot kiosk, which is designed to carry items subject to theft ranging from cosmetics to small CE devices, Malone said. StoreBot is available in modules, although it will likely be deployed in 12-foot displays, Malone said. The kiosk has a 22-inch LCD for selecting from more than 100 SKUs, company Officials said. Kiosk, fresh with funding from investors Alerion Capital and Peninsula Capital Partners, is embarking on acquisitions including those of company’s developing software and services, Malone said. Malone, who founded the company, is being replaced as CEO by Chief Marketing Officer Tom Weaver, but will continue in product development, the company said.