Store shelves will soon show video screen ads

Filed under: Retail |

Retailers are losing their traditional television audiences to cable, their radio listeners to satellite services and newspaper readers to the Internet.

So Vestcom, a company that makes price labels that adorn shelves nationwide is developing a different way to reach shoppers: video monitors attached to store shelves.

Vestcom’s video monitor, about four inches wide, will show 10-, 20- or 30-second commercials as well as an item’s price.

It is the next logical step after ceiling-mounted video displays and end-of-the-aisle kiosks promoting weekly or daily specials that have become commonplace in grocery and drug store chains.

Vestcom is developing a prototype for a large national retailer (who it will not identify publicly), and it says shoppers could catch commercials on the small screen this time next year.

Retailing experts say the concept is likely to work.

Vestcom began 21 years ago as Electronic Imaging Systems.

On a machine that appears fashioned from the sides of an old dishwasher, some gears and wide rolls of Scotch tape, the company produced labels that carried a product’s bar code and the price, and not much else.

EIS merged in 1997 with six other companies to form Vestcom, which was traded publicly until 2002.

It is now privately held.

Inside Vestcom’s football-field-sized building in Little Rock, clerks compile price tag information from stores.

Printers push out reams of paper to be sliced into strips or perforated for later detachment. Vestcom has a dozen similar plants nationwide to provide a quick turnaround for retailers as they change prices weekly.

Vestcom’s new video monitor can accomplish price changes virtually on the fly.

For companies not wanting or needing videotaped commercials, Vestcom has expanded development of “ad tags,” which combine shelf price tags and static advertisements that can tell consumers which cough syrup is best for a dry cough, or tell them which wine is best with chicken.

Starbucks expansion plans may surpass McDonald’s

Starbucks plans to nearly triple in size, perhaps one day topping hamburger giant McDonald’s Corp. as the largest fast-food brand in the world.

The chain has set a goal of 30,000 units, half in the United States, but last month the company’s chairman suggested the target is too low, leading to speculation about what is the limit for the chain – and when Starbucks will set a new goal.

Starbucks is credited with rapidly transforming coffee from a 50-cent staple to a $3 indulgence with its chain of cafes, where customers often hang out with their laptops or newspapers for hours.

The chain has been criticized for driving independent coffee shops out of business while aiming to give its own stores a local feel by sponsoring community events and steering clear of national advertising.

Already the world’s biggest coffee shop chain, Starbucks’ store count has soared to more than 11,000 from less than 200 since the Seattle-based company went public in 1992. At current growth rates, it could hit its target in about five years.

Starbucks has several things going for it, analysts say.

First, new products like holiday drinks have kept customers coming back for more. Plus, coffee is a habit for many.

Starbucks itself has begun to raise the possibility that its 30,000-store target, set in late 2004, is too low.

Starbucks has said its 230-store China unit is its biggest opportunity outside the United States.

Seattle, Starbucks’ hometown, has one coffee shop for every 11,754 people. But rival Dunkin’ Donuts has built even more densely on its own home turf, Massachusetts, with a store for every 8,400 people.

Thus much of Starbucks’ U.S. growth will come in markets where there are already hundreds of stores, such as the West Coast.

The United States has room for as many as 22,000 locations, compared with the company target of 15,000.

U.S. chain store sales rose 1.8 percent last week

U.S. chain store sales rose 1.8 percent for the week ended April 8 compared to the previous week, according to International Council of Shopping Center’s index.

The year-over-year pace of growth came in at 3.9 percent for the week.

“This past week, sales once again reflected the Easter-shift and the shifting weather patterns across the country,” said Michael P. Niemira, ICSC’s chief economist and director of research.

The Easter-shift also affected chain store sales for March.

On a year-over-year basis, chain store sales rose by 1.9 percent in March, according to ICSC’s index.

In March, wholesale clubs and drug chain stores led the way, posting increases of 5.7 and 5.1 percent, respectively.

Luxury chain stores continued to see gains as sales rose by 3.9 percent. Department stores sales increased 1.2 percent and discount department stores saw sales increase 1 percent.

On a negative note, apparel chain stores saw sales decline by 3.6 percent.

For April as a whole, Niemira says he expects monthly chain store sales to rise by 5 percent to 5.5 percent, on a year-over-year basis.

Joan Johnson covers retail for the Colorado Springs Business Journal.