Adding up to profits

Fergal O’Sullivan, Astra Sales Promotions

Creating the right atmosphere in-store and offering extra services that go above and beyond the expected norm, can add up to greater footfall and incremental sales, writes Gillian Hamill

Brand Central

12 October 2010

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At a glance: RETAIL ADD-ONS

In-store demonstrations, when combined with on-shelf or coupon offers, can deliver uplifts of in excess of 100%, according to Astra Sales Promotions
If a retailer approaches the Irish Music Rights Organisation (IMRO) for a licence, as opposed to IMRO approaching the retailer, the cost is 33% lower
84% of shoppers say they like shops that play in-store music and, of that percentage, 23% claim they would be prepared to pay 5% more for goods if music was being played (Source of research data: www.musicworksforyou.co.uk)
66% of employees surveyed believed that background music made them feel better and more motivated at work (Source of research data: www.musicworksforyou.co.uk)
BillPay and One4all Gift Card services have grown by over 50% year on year since their introduction to the market

Driving footfall into stores has arguably never been more important than at the current time, when consumer confidence is low. Stretched budgets mean expensive nights out are largely a thing of the past for many people and entertaining and relaxing at home have assumed greater importance, with the result that more customers are looking for DVD and CD offerings from their local store.

Creating a pleasant atmosphere in-store and turning your shop into a store where customers actively want to shop, instead of making the top-up or weekly shop another dreary task people want to be over as soon as humanly possible, is also an important consideration. One of the easiest ways to do this is by playing music in-store, yet in order to avoid prosecution for the illegal playing of copyright music, a licence must first be obtained from the Irish Music Rights Organisation (IMRO). The good news is that by approaching IMRO first, before playing copyright music, a retailer can save up to 33% on the cost of a licence.

Statistics also reveal that since their introduction onto the market, BillPay and One4all Gift Card services have been growing by over 50% year on year. As with these and most electronic services, the convenience they offer is a prime incentive for consumers to make a purchase. A local c-store with several competitors in the vicinity (possibly even on the same street or road) can therefore stand out in consumers’ minds by offering such services. Unfortunately, the risk is that if one store offers these services and another does not, the consumer will go to the former and subsequently take any incremental sales with them.

Fergal O’Sullivan, Astra Sales Promotions

Q&A

Fergal O’Sullivan, general manager, Astra Sales Promotions

What are the main services / products you offer?

Astra’s two main areas of expertise are merchandising services and in-store demonstrations. Our demonstration business focuses on Dunnes Stores, where we hold the exclusive rights to organise in-store activity, plus we also work in SuperValu and other symbol and independent stores. Demonstrations can be customised to suit the exact requirements of the brand and the budget available, with staff available to match your message; fully-trained and briefed on what to communicate. Days and times of activity can also be customised, based on the brand and the store’s busy periods.

To what extent do in-store demonstrations and sampling help to drive/increase profits for the retailer?

In-store demonstrations provide an unique opportunity to get face-to-face with customers and introduce them to new brands or remind them of existing ones. By encouraging customers to trial new products or switch brands, overall sales increase. When combined with on-shelf or coupon offers, the value of purchases can also be increased. Past data has shown that uplifts of in excess of 100% are achievable, with some promotions achieving well in excess of this figure. Crucially, the uplift achieved is rarely just a temporary effect of the demonstration, but is still evident in the weeks following it.

Has demand for in-store demonstrations and sampling risen during the current economic climate?

In-store demonstrations have been proven to offer excellent value for money for suppliers and a highly effective method of adding something extra to stores. For a retailer, it provides a cost-effective method of adding something extra to the store environment, from a basic tasting that adds mouth-watering cooking aromas to the store, through to an element of in-store theatre, limited only by imagination and space restrictions. Therefore, whilst it competes for reducing marketing budgets, when completed in conjunction with other in-store offers, such as buy-one-get-one-free offers (BOGOFs) or coupons for example, the increased awareness further drives the promotion.

Tuning into benefits of music

With competition in the retail industry becoming increasingly intensive consumers are encouraged to select one retail premises over another. This is where the power of music becomes a positive influencing factor. Music has the tendency to put customers at their ease thus encouraging them to spend more time in retail outlets. Therefore the longer they remain in your shop the more likely they are to purchase something.

Research shows 84% of shoppers say they like shops that play in-store music and, of that percentage, 23% claim they would be prepared to pay 5% more for goods if music was being played. (Source of research data: www.musicworksforyou.co.uk)
This is good news – it demonstrates that creating a good atmosphere can help drive your business. Larger retail outlets have long recognised the influence music can have on shopping patterns. Music with a high tempo can encourage shoppers to move more quickly through a shop, while slower tempo music can have the influence of slowing down customers with the overall benefit of them spending more money in such situations. (Source: Based on research by Milliman, R.E, ‘Using background music to affect the behaviour of supermarket shoppers,’ Journal of Marketing.)

Very importantly the advantages of using music in your retail outlet also extends to staff motivation as well as buying behaviour. Research has brought to light the impact that background music can have on staff. In fact, 66% of employees surveyed believed that background music made them feel better and more motivated at work, and with improved motivation often comes greater productivity. (Source of research data: www.musicworksforyou.co.uk)

Copyright music is a vital input into the success of your retail business, however, its use in your business does require that you obtain a music licence from the Irish Music Rights Organisation (IMRO).

Why an IMRO licence is necessary

Just like any other input into your business musical compositions must be paid for. Thus when you use copyright music in your retail shop you must first obtain permission from the copyright owners to do so and you do this by taking out a licence from and paying the royalties due thereon to IMRO.

IMRO is a non-profit making organisation and all distributable royalties collected by IMRO, less a deduction for running costs are paid directly to the people who compose, publish and write the music that you are playing in your premises.

By paying your annual licence fee to IMRO you are enabling songwriters to continue writing songs that you will ultimately use to run and improve the way in which your business operates.

Cost of an IMRO licence

The level of royalties due with regard to background music use in retail shops is dependent on the shop floor place areas. e.g. the cost (pre VAT) for a shop space up to 100m2 is currently €206.75 pa in the first year and €137.64 in the second year of the licence. That works out at 56 cents per day for the most extensive range (well over 10 million works) of best quality music available. For a shop with a floor area of 500m2 the cost works out at €1.41 per day.

IMRO will be happy to advise you about the cost of a licence for your particular business. You must get an IMRO licence before musical performances in public begin and if you do so, your first year royalty charge could be reduced by up to 33%.
If you are an existing music user or you intend to use music in your company in the future please contact the IMRO Licensing Department at (01) 6614844 or by email at licensing@imro.ie or visit www.imro.ie for further information.

Brendan Griffin, IMRO

Q&A

Brendan Griffin, IMRO

What are the potential adverse consequences for a retailer who plays copyright music in their store without first obtaining a licence from IMRO?

Unless the retailer holds a licence from IMRO, he/she is infringing the copyright in the musical work and risks prosecution for such infringement under the Copyright & Related Rights Act 2000.

Are frequent checks undertaken to ensure retailers are not playing copyright music without the required IMRO licence?

Yes we have nationwide sales team in the field monitoring all types of premises, including retailers.

What type of music do you believe would help maximise sales and productivity within a store?

IMRO is not on a position to advise on what genre of music to use to maximize sales and productivity. However it has been shown in various research studies that music does help drive revenue and that it does boost employee morale. See website musicworksforyou.com for details on various recent research studies in the area. One such study revealed that 84% of shoppers say they like shops that play in-store music and, of that percentage, 23% claim they would be prepared to pay 5% more for goods if music was being played. This is certainly good news for retailers using music in a very competitive marketplace.

Do you currently have many clients within the Irish grocery sector?

Yes – our penetration levels are high in the sector which is no doubt reflected by the positive impact music can have in the retail environment and that businesses wish to be legally compliant in all aspects of their trading. We are constantly trying to increase those levels, hence our widespread on-the-ground presence.

Q&A

Alo Brereton, sales director, Beaumex

What are the key elements/offerings of the business?

Beaumex Ltd, established in 1990, operates within the key categories of DVD, CD, mobile communication devices (eg, phones iPods, iPads), consumer electronics, games, etc. We have developed in-depth relationships with all of the major film and music studios over the past 20 years. We continue to work closely with our suppliers and customers to fully manage the entire home entertainment category to deliver a range that is consistently exciting and constantly first to market with new products. Within this category a “one size fits all” approach is not enough. We tailor the offering to suit the customer profile of each individual retailer.

To what extent does the installation of such products drive footfall into a store?

DVDs, CDs and accessories are classic impulse purchases which deliver real incremental volume opportunities, with clear pricing messages and innovative promotions.
The three key factors in delivering success are the:
• Continuously evolving product range (over 100,000 back catalogue titles available)
• Value for money price points
• Innovative and exciting promotions that consistently engages the consumer

Has demand for DVDs, games and music, risen during the current economic climate?

Supported by strong execution and bespoke point of sale, Beaumex, has delivered significant double-digit growth for the first eight months of this year in markets that are experiencing decline.

What margin do you deliver for retailers?

Margins are competitive within the industry. This category, by its impulse nature, has the ability to deliver significantly increased basket spend and therefore greater cash margin.

Are you offering any promotions over the coming months?

We are very confident, that this fourth quarter will be one of the strongest ever as the new release line up is extremely strong, combined with very innovative promotional activity on both DVD and audio offerings. Outside of traditional promotional seasonal activities, such as at Halloween and Christmas, Beaumex can create individualised promotional campaigns for specific retailers/channels. Why not have a discussion with us about the type of activity we can offer you to help drive your business, particularly for this quarter four.

Posting results

PostPoint, a wholly owned subsidiary of An Post, is Ireland’s leading electronic transaction and payment service channel proving to be the perfect retail add-on service for retailers nationwide. In these tough recessionary times retailers depend on services that will drive footfall into their stores. This is where PostPoint steps in providing its broad spectrum of services to satisfy all customers across different demographics.

With PostPoint, your customers can:
• Pay their bills in your local PostPoint store
• Get their family and friends the most desired Gift Card on the market – One4all
• Get mobile phone top ups – Including the newly launched Postfone from An Post.
• Make their journey home easier with a TollTag from PostPoint
• Buy stamps in your local PostPoint shop
• Purchase International Calling Cards

PostPoint2 These add-on services will undoubtedly steer business into your retail shop encouraging other impulse purchases once in store. Statistics reveal that sales of these add-on services are climbing annually with BillPay and One4all Gift Card services growing by over 50% year on year since their introduction to the market. These services are excellent revenue opportunities that can be easily organised for a retailer once requested and the best thing is there is no charge from PostPoint to the retailer to acquire these services as retail add-ons. Once again proving PostPoint is the electronic service provider retailers can trust.
If you would like to talk to a PostPoint sales representative about these services please contact PostPoint on 1890 20 42 20 or visit www.postpoint.ie.

In the zone

Payzone offers an extensive range of products and services, including:
• Prepaid Mobile Top Up,
• International Calling Cards
• TollingCongestion (eFlow)
• Customised Electronic Gift Cards
• Prepaid Utility
• Prepaid Waste Payments
• Utility Bill Payments
• Credit & Debit Card Processing
• Money Transfer
• Prepaid Debit Cards & Internet Vouchers (3V, UKash)
• Parking Solutions
• Transport Solutions (Integrated Ticketing Scheme coming during 2011)

Payzone drives footfall and contributes to sales by offering retailers a unique basket of services that they in turn can offer their local community. The company focuses on providing services that are relevant to consumers within their neighbourhood and it tailors the offering depending on the locality and demand within each store. Payzone partners with national brands to enhance the proposition and is educating consumers on the convenience of shopping within their local Payzone retailer.

Historically the Irish e-payments market has been dominated by the post office but in more recent times other channels including convenience retail are becoming an increasingly important alternative.

Payzone’s extensive range of services provides the retailer with a healthy revenue stream, customer loyalty, drives increased footfall, and link purchases.

Important innovations

Payzone tries to make it easy for retailers to do business and the key is to offer services in a simple easy to use model.
The company continues to look outside the box and seek fantastic new opportunities within retail.

Payzone’s model has been to work with partners to develop services which in turn drive consumers into retail outlets and also making it easier for consumers.

Factoring in cost

Depending on the retailer, there is typically no initial cost associated with the initial placing of the Payzone technology in store.

Managing margins

The return to the retailer is a service fee for completing each transaction as distinct from a margin. This varies based on the in store technology and the product suite available from each retailer. When combined as a basket, there can be a valuable return to each retailer.

Furthermore, the services create real up selling opportunities – for example Payzone sees evidence that one in three electronic services within retail is now a non-mobile top up transaction and there is scope for this to increase. In Ireland Payzone processes over 800,000 transactions per week, which is a lot of consumers that retailers can target to drive overall store sales.

New offerings
The Integrated Ticketing Scheme (ITS) will launch in 2011 bringing a new dimension into retail.

Payzone has been awarded the exclusive contract to provide payment services for the Integrated Ticketing Scheme (ITS). The integrated ticketing scheme will provide a pay-as-you-go system on re-usable smart cards in addition to holding weekly, monthly and annual tickets for regular commuters on Bus Eireann, Dublin Bus, Irish Rail, Luas, and privately operated services.

This will lead the way in Payzone’s plans to develop smart cards to enable low payment transactions which will provide significant benefits to retailers and consumers alike.

The company envisages these smart transport cards may over time be enhanced and complemented with additional payment solutions to enable and manage low value payment transactions. This will be the first time such a card will exist in Ireland.
Payzone believes the ITS product will further enhance retailer’s offering to consumers and could lead the way in introducing new technology to capture low payment transactions within their stores.

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