DDi - August 2010 - (Page 48)

48 | Shopping with Paco Place-marking O ne of the best-kept secrets in modern business is the underground war between marketers and merchants. For almost two centuries, one class of business manufactured products, while another class sold products. For the most part, the manufacturer controlled the relationship; they paid for the advertising, designed the packaging and dictated the terms of payment. But, with the increased sway of retail chains in recent years, the balance of power shifted. Tired of being pushed around, merchants looked enviously at the manufacturers’ marketing budgets, did their math on profit margins and pushed back. Today, retail chains are trying to control where corporate marketing dollars are spent. Supermarkets, drugstores and mass merchandisers have raided the budgets of manufacturers to finance customer research, shopper-marketing programs and sponsor in-store media advertising and display campaigns. Another battlefront has been with private label. In a multi-brand environment—from drug to mass—the percentage of sales in private labels climbs every year. The success of private-label-based store chains, like H&M, Zara and IKEA, is unparalleled. Trader Joe’s, Whole Foods and ALDI source product outside the traditional networks and pass their savings on to the consumer. Behind the curtain, the branded product and the private label may come out of the same factory, and perhaps the very same assembly line. Even those places where private label has not had a presence—like consumer electronics—please be assured that major chains selling television sets, computers and the like have private-label sourcing in development. Taking this a step further, consumer product brands are opening their own stores. The Apple store is a glowing example. Beauty brands, while they may sell in multi-brand stores, also operate their own freestanding locations. Our psychological explanation is that brands want to make love to their customers without going through an interpreter. The newest phenomenon is what we call “place-marking.” When a manufacturer unveils a retail location as a brand and advertising commitment—regardless of the traditional rules of retail profit and loss—the result can be a powerful and effective “place-marker” in a sea of retail clichés. That investment is using money that may have been spent on print and media advertising, and putting it into a physical retail asset. One excellent example is the Samsung Experience Center in the Time Warner Building in New York. Nothing is for sale. In its current iteration, there is a major focus on household appliances, including a cutting-edge washing machine that cleans products in ionized bubbles using almost no soap and very little water. The stack of towels on top of the showcased machine demonstrating the single-load capacity is hugely impressive. The M&M’s store in Times Square is another strong example—who knew chocolate could be so much fun? Place-marking is about being evangelical; it is meant to reinforce the faith of the deacons, nourish the acolytes and reach out to the heathens. It’s possible that the M&M’s store, the Nintendo store in Rockefeller Center and other similarly successful stores make money. I’m guessing they don’t, but even as advertising and marketing dollars dwindle, they are smart investments. Unlike a television commercial, they hold people for much longer than 30 seconds. They inform, and the interaction between visitor and staff can be transformational, because there is no sale at stake. They can be viral in that they get people to talk. And most importantly— unlike broadcast or online—the visitor gets to taste, smell and feel. Sometime it takes a darker turn. In New York’s trendy West Village, surrounding the infamous “Sex and the City” block—where Carrie steps out of her abode and a taxi instantly materializes at the curb—Mark Jacobs has been gobbling up small bodegas and laundromats to secure place-marking locations for his newest lines. It’s almost as if The Grove in Los Angeles, which tries to replicate the urban experience, had come to the very place it was trying to replicate on Bleecker Street. Place-marking: you’ll hear that term again. —Paco Underhill is the founder of Envirosell and author of the books “Why We Buy” and “Call of the Mall.” Considered to be the retail industry’s “first shopping anthropologist,” he shares some of his insights with DDI in a bimonthly column. | August 2010 www.ddionline.com http://www.ddionline.com

Table of Contents for the Digital Edition of DDi - August 2010

Display & Design Ideas - August 2010
From the Editor
Newsworthy
Shopper Insights
Greentailing
Editor’s Choice
Design Snapshot
Department Store Focus
Contents
Anthropologie
Store Windows Showcase
Right Light
In-Store Technology
Product Spotlight
Advertisers
Calendar
Classifieds
Shopping with Paco

DDi - August 2010