In New York's trendy SoHo neighborhood, the new Michael K. store is rigged to offer advertisers everything from interactive videos to sponsored DJ shows. Amid the racks of designer sportswear, some 200 video screens broadcast messages, and touchscreen terminals at each cash register poll consumers. The retailer offers ad packages that range from one window display to rotation on all screens.
So far, only apparel companies already on sale there are advertising, but the company is in talks with automotive, telecommunications, travel and music advertisers, among others, said Mark Romeo, managing director of Brand Experience Lab, the agency which handled the store's development and launch.
"It's using the store as a medium for marketing," said Tom Holliday, president of the National Retail Federation's Retail Advertising and Marketing Association. He said research has shown two-thirds of buying decisions are made in the store.
"Magazines have been looking to department stores [as promotional partners] for years. Some of the smart retailers are looking to take control and be more proactive," said Sam Kaufman, CEO of Regatta, a New York agency specializing in partnership marketing. Besides prime real estate on the selling floor, retailers have extensive direct mail and advertising muscle they can use in cooperative partnerships, he said.
For retailers fighting off competition from discounters and mall stores, these efforts are a revenue stream and a way to get consumers to linger. For example, Target Corp.'s Marshall Field's has opened a Yahoo! Lounge as part of a revamping of its flagship store in Chicago where customers can spend time sampling Yahoo! services.
"It's a draw in terms of excitement," said Frank Berman, VP-marketing at Bloomingdale's. The store's New York flagship has partnered with Volvo Cars of North America and Delphi/XM Satellite Radio as part of a "What's Hot" promotion starting this month. The efforts include window displays in the store, special events and giveaways.
But shoppers aren't always that receptive, said Ellis Verdi, president of DeVito Verdi, New York, and a board member of RAMA. Consumers are likely to go into a store looking for a particular item, and then try to get out quickly, he said. "A shopping experience is a more considerate effort today ... it's a little less experiential than it was."