With soaring gas and food prices, many consumers have to cut back in order to make ends meet. Will they forgo the family vacation or take one closer to home? Will they eat out less and brown bag it more? But more importantly, will they skimp on holiday spending, and if so, which retailers will suffer most? Although the state of the economy is definitely a downer, the upcoming holiday season may not be.
“Obviously,” states Jason Goldberg, VP marketing, MTI, a provider of merchandising solutions for CE/Imaging retailers, “we’re not in a very good economic climate, but consumer electronics in general has weathered the storm far better than most other product categories. What tends to happen in tight economic times is consumers telling us they’re going to spend considerably less on gifts than the year before. But in practice they spend very close to what they’ve spent in the past.”
However, he notes, consumers tend to spend bigger bucks on gifts that will bring more joy to the people that are closest to them. “What that says is the marquis items in the digital imaging category have an important role to play in the holiday season.”
“Electronics will continue to be strong compared to other retailers such as apparel, toys, and furniture,” reiterates Jeff Green, president and CEO of Jeff Green Partners, who says he’d be surprised if CE/Imaging sales were off even by 2%. “I think the discounters and value-oriented big box stores are going to fare better than other retailers come the holiday season.”
Trained to Sell
“(The holiday season is) going to be all about price,” predicts Green. “(Retailers) have to start discounting sooner, which they’ve already done the past few years (which consumers now expect). Once you do that, you can’t go back. And this year’s going to be that much harder.” Green also says there’s been a big shift from specialty retailing to value retailing. “Value is not only price but it’s also breadth, depth and quality of the merchandise vis-a-vis price.”
So what, if anything, can retailers do to insure their piece of the holiday pie? According to Associates Interactive (a provider of training programs for retailers in the CE space) CEO and founder, Bob Richardson, knowing how and who to sell your product to is key.
It’s important when selling cameras, notes Richardson, to understand the difference between the customer and the person they’re buying the gift for. “There is a tremendous amount of features available on cameras these days and many of those features don’t necessarily apply to everyone. Being able to differentiate who’s going to be using the camera and how, and then recommending the right solution for the actual user of the camera is key. Sales associates must be able to persuade the buyer of the camera that it’s going to be a useful gift and not an over-purchase.”
Typically, he notes, associates focus too much on megapixels. “If you ask a retail associate what’s new in digital cameras, the first thing they’ll tell you is they’ve got a great new X-megapixel camera. Anyone that really knows how cameras are used knows that megapixels above a certain point are pretty much irrelevant. But they focus on it because it’s easy for them to say this camera is better than that camera because it has more megapixels.”
Richardson suggests that salespeople show customers the highest priced, highest megapixel camera in stock (to set price expectations). Then talk to them and learn how they plan to use the camera—perhaps recommend a lower mega-pixel unit and things that will really make a difference in their picture taking experience such as a better memory card or additional accessories that lift their overall imaging experience.
“As a cross sell that’s a much better opportunity and a better way of giving the end user a camera with a better experience (for the same amount of money) than selling them a higher megapixel camera. There are other accessories that go with the camera too and I would try to bundle as many of those things together as possible and show the value of all those items.”
Also, says Richardson, be careful about examples you use when selling a camera. “Travel is often an example an associate will use when talking about why a camera is beneficial – ‘When going on vacation you can do this and that.’ Instead, talk about family events and how the camera is an entertainment device that can be used all the time,” states Richardson. “Show them what they can do with the photos right now. Show them how they can involve the entire family in the process and what they can do with those images as an activity. It’s much more relevant than how they’re going to use the camera on vacation, especially if they’re not going to take one.”
Finally, says Richardson, spending time and getting to know a customer is an opportunity to create a long-term relationship. Customers that feel they can come back with the camera if it’s not working, or if they have questions, etc., are more likely to continue doing business with you. This relationship also makes it very easy to sell them services down the road. “If you’re just a more personable kiosk, then the value proposition isn’t as great if you have a personal connection. And it’s the associate that makes that connection,” concludes Richardson.
Wynit’s Executive Vice President, Pete Richichi was optimistic about this year’s holiday sell saying, “Even in a down-economy, people are still taking pictures. While the upcoming holiday season will not be without its challenges, some great opportunities will present themselves to retailers that plan accordingly.”
With regard to the right sales approach, he added, “The first and foremost key is to offer add-on and up-sell accessories for products that are driving key categories. DSLR sales have been carrying the growth of the digital camera sector. When a customer makes an investment in a DSLR, the next step is to accessorize with lens kits, cases, mounting hardware, and especially high-speed memory. Don’t forget the printing. Make sure your customers can come to you for special size prints, as well as to buy a printer for home use.”
Live Displays Increase Sales
When selling product, displays work wonders, particularly around the holidays. “There’s a huge increase in sales every place a retailer takes product out of what I call ‘product jail,’ which is that glass display case,” states Jason Goldberg, VP Marketing, MTI (provider of merchandising solutions). Goldberg says retailers need to make products available for consumers to try/interact with and allow them to shop in a quasi self-service mode.
“Some consumers want to discover products on their own while others want the expert sales advice of associates. Even those that want the expert advice often feel overwhelmed when they first walk into a store or department. They want to gather some basic information before they start asking questions,” explains Goldberg.
“A lot of retailers—mainly self-service retailers such as Best Buy, Target, Wal-Mart, and Office Max—have moved their product out of product jail and tethered them for customers to try. They also provide electricity so consumers can turn on the cameras, see the screens, the menus, etc.
“What’s interesting,” says Goldberg, “is we think of those environments as being difficult when it comes to finding knowledgeable salespeople—and that is true. Even though it’s difficult to get help, just taking the product out and letting people interact with it dramatically increases sales. A number of those retailers cited a 20 to 30% lift in sales when they migrated from the glass case model to the live product sale model.
“The demo is going to be key because new small, sleek camera designs belie their capabilities,” adds Fred Towns, Senior Vice President, New Age. “Today, even the smallest cameras are full featured and need a great demo program (cameras up and running on the floor). Also,” states Towns, “be sure to demo output and show how simple it is to get a high quality print from today’s cameras. Show consumers it’s not so intimidating. So many people believe they need to go through a series of software applications to get a great print, which isn’t the case.”
Today, thanks to the Internet, consumers are able to get a lot more product information before they hit the store. “Best Buy did a somewhat frightening study that showed 50% of shoppers that spent more than $100 in the store had researched the product online before walking in the door,” says Goldberg.
“The problem with that is the retailer wants consumers to discover new product when they walk into the store. If consumers have made detailed purchase decisions before getting to the store, how does the retailer get them to make other unplanned purchase decisions? The simple answer is, retailers need to give consumers tools and the ability to get all that rich product information they’re accustomed to getting at home, in the store.
“Sales displays—digital merchandising tools—such as a video stream that’s next to the product that provides information to help consumers make a purchase decision can do a couple of things,” states Goldberg. Since they are sku-activated, the information on the screen changes to talk about the specific sku customers are holding in their hand. “That’s really powerful because even though that camera sku isn’t very high margin, it can get consumers excited about the up-sells (accessories—case, batteries, etc.) they should be buying with that sku.”
Plus, the display tool can promote services and offer free trials, etc., if the customer buys the camera. “The ability to do suggestive selling that’s tied to the product the consumer has in hand is really powerful.
“These sales tools that are super useful for the self-service customer are equally useful for the sales assistant’s experience,” adds Goldberg. “When the sales associate helps the customer, the product info is still on the screen. It prompts the sales associate about the key points they should be making and reminds them to suggest services and accessories that go with the camera. It’s like a PowerPoint presentation when there’s a sales associate present, and it provides a self-service experience when there isn’t.”
According to Goldberg, these techniques work across all consumer segments whether using digital merchandising tools or static signage that shows pictures of customers using digital imaging products in different ways. “So often in small independent stores there’s no signage and the consumer is left to guess how the store is organized.
“You’ve left the customer that wants to graze for the first 5 minutes of their shopping experience in the dark. My message to those retailers is you need to accommodate the self-service customer, the know-it-all customer, and those that want help but want to start with a short period of self-discovery.”
It’s also important to maintain those displays. “With cameras, the display is a big portion of what sells that product. A display that’s broken or a camera that’s missing sends the wrong message about your commitment as a retailer to the camera,” states Richardson.
Customer consultations are also important. “In a holiday season where there’s going to be a lot of price pressure, smaller retailers have to demonstrate additional value because they can’t necessarily match the ads out there for cameras that are being sold by the pound. They have to demonstrate they have more to offer than price,” concludes Richardson. “Having an associate that’s able to consult a customer and give them a richer experience makes the customer at least consider—if not be willing—to pay more for that camera than they would at a discount store.”
Hot Products and Demos
What products are consumers willing to open their wallets for come December? According to New Age’s Towns, last holiday season consumers were interested in digital cameras with larger viewfinders that were also stylish, sleek, and colorful. “I think this year the sleek design and stylish look will be big again. Manufacturers are also focused on making cameras more friendly for consumers to take with them.” Since women are more likely to carry this item (their own and/or their male companion’s), notes Towns, a slim design is highly desirable.
Wynit’s Richichi felt the digital frame will have another hot holiday selling season. “Digital frames will be hot this year, so make sure you have choices for all budgets in stock,” he said, adding, “Retailers should also look to forecast what they believe will be their best selling products. This information will be extremely valuable helping to secure key goods and will also provide the foundation for planning sales events and promotions throughout the quarter.”
The use of digital images among teens continues to grow. Most young people won’t leave home without either a camera phone or a digital point-and-shoot. “They like playing with the video clips and sharing online,” says Towns. “The younger generation wants to capture life’s moments, whether it’s a football game, skateboarding event, or summer fun, and share it via the back of the camera or online.
“People are sharing more in a crowd situation and carrying their camera (with large viewfinder) as their slideshow to show pictures that, in the past, would’ve been printed.” This is so common among this generation, notes Towns, that even camcorder products have been scaled down to palm-size because video clips were replacing that product.
Still, he notes, everybody’s trying to find a way to make the consumer print more appealing. “I think that’s been part of the challenge of the industry—getting more print output. We at New Age are trying to put together more bundling options and other opportunities that show simple ways to print. There’s so much more robustness in printing capabilities today—consumers don’t necessarily have to have their card interface with a computer, they can just plug it into a printer, which can crop, correct color, etc.”
Experiences, Not Product
The loudest message retailers should be sending this holiday season is, “Here are the ways you want to capture and use your memories.” For instance, last holiday season, drugstore Walgreen’s heavily advertised its photo services, which included putting photos on everything from books to calendars to pillow cases and then some.
According to Goldberg, most of Walgreen’s business is extremely well margined. The pharmaceutical business might be making 7 points of gross profit, he says. “It’s a lot of volume, but when they look at the profits they can make on services such as photo mugs, T-shirts, photo frames, etc., they realize it’s a lot easier for them to grow profitability in a category like that than to capture another 3% of prescriptions.”
Goldberg points to another drugstore chain, Long’s, which recently promoted the new HP photo services it brought online. The drugstore can produce custom books in an hour, posters, etc., and it’s prominently featured at the front door for customers to see.
“[As a retailer], the storytelling I want to tell around the holidays is very different than the story I want to tell for Father’s Day or summer vacation,” continues Goldberg. “There’s the memory of handing grandma a beautiful custom-made album/book that you can output in an hour at a digital photo bureau. And by the way, you need a nice camera in order to capture those images.”
Goldberg believes people don’t really want cameras, what they want are memories and experiences. “You can’t buy the experience, but you have to buy the product that captures that experience. So the most visceral, compelling way to help customers to make unplanned purchasing decisions is to paint them a picture of an exciting customer experience that they want to have.
“Retailers need to show photos of happy people capturing memories of important holiday family gatherings,” concludes Goldberg. “In the store, you want the customer to imagine themselves on Christmas Eve (or Chanuka or Kwanza) capturing once in a lifetime photos of family members, instead of talking about megapixels. Good retailers are going to have a good holiday season in digital imaging, though not all boats are going to rise equally.” yy