Retailers gear up for radio activity

Relations between retailers and brand owners are always tense, with each side griping about the other and claiming they are at a disadvantage. In that environment the growing spectre of retailers as media owners is filling brand owners with equal measures of anxiety and curiosity.

But the media owning fantasy is becoming more of a reality with a growing number of retailers investing in simultaneous broadcasting equipment and the entertainment providers only too happy to satisfy the demand. Next week, the Chrysalis Group is relaunching its retail entertainment company – MCS – as Chrysalis Retail Entertainment, offering tailored products and services to retailers.

It is the latest move on the part of entertainment providers targeting the growing band of retail media owners. Thorn UK and Retail Broadcast Services have already signed up BhS, Virgin Megastores and Texas Homecare to the launch of its retail radio satellite stations.

In a further move, last week US music producer AEI Rediffusion Music teamed up with Music Choice Europe to launch a satellite broadcasting service for retailers, involving the simultaneous broadcast of four radio stations.

The company, which has worked for Kwik Save and Principles in the past, says the system works by the subscribing store chain renting an Astra dish and decoder for each of its stores.

The retailer is able to provide a simultaneous broadcast across its stores nationwide – or even in Europe – if it wishes.

The less obvious benefit – but the one which is infinitely more exploitable – is that it gives retailers the opportunity to become serious media owners. Though AEI will not sell advertising space on the stations, the retailers themselves could offer advertising space for radio commercials to brand manufacturers.

Unlike in-store magazines, radio is omnipresent. The music is often tailored to the time of day, mornings can be more mellow, lunch time more active. With 60 per cent of all buying decisions estimated to be made at the point of sale, brand advertisers may have a powerful new medium to drive sales in store.

“The obvious problem is the amount of private label goods in UK retailers,” says Michael Malone, chairman and chief executive officer of AEI Music. “In the US, the practice of retailers selling in-store ads to brand manufacturers is well established.”

Asda has already tested its own satellite station, Asda FM, for three years. Advertising is sold through The Radio Initiative. The station focuses on product information and carries both brand and own-label advertising.

One of the participants in the trials is soap giant Lever Brothers. A company spokesman says that it has used it at the point of sale to accompany in-store materials. “It can be quite successful when linked with new product launches and heavyweight promotions,” he says.

Asda claims that branded manufacturers who have advertised on the station have experienced sales increases of between ten and 15 per cent.

One obvious drawback could be that the constant use of commercial messages will deter consumers from going into the store. Bill Hogan, international satellite operations director for

AEI Rediffusion Music, says: “We recommend that retailers should have no more than six to eight minutes for messages.”

Commercial messages need not be hard sell. Brand advertisers could use their own theme music, radio commercials, or announcements by presenters who appear in ads.

“The retail entertainment industry has developed quite substantially since the days when it was branded as ‘muzak’,” says AEI’s music director,Kim Dahmen. “We work with retailers to develop demographic profiles and address specific stores’ needs so our creatives can come up with the appropriate mix.”

Some retailers still feel that the use of background music in stores, no matter how professionally produced, would act as a disincentive. “Our customers are generally hostile to muzak in our stores,” says a Sainsbury’s spokesman. “It is not something we would get involved in because it doesn’t fit with Sainsbury’s corporate image.”

However, discount stores, pub chains, leisure outlets, DIY shops and fashion retailers may be better placed.

Chrysalis Radio head of strategy Trevor Morse says although the music and entertainment industry is targeting retail as an emerging market, brand advertisers are more reluctant. “Media buyers who buy for third-party brand advertisers still do not treat the [retail entertainment] medium as a serious competitor to established media.”

He says retail media owners would need to convince media buyers of its benefits before it can take off. He also says costs are prohibitive.

If retailers decide that becoming serious media owners is a worthwhile strategy for increasing revenue and extending relations with brand owners, it could also become a new source of conflict.

Stores which have a predominance of own-label goods may seek to use the medium to push their own brands further.

Brand owners too may see the growth of in-store media as a further threat – first, to their cost base and second, to their ability to entice consumers at the point of sale – if competitors are able to secure exclusive retailer deals.

With such opportunities opening up, issues that dog traditional media may prove contagious. In ten years, Mar- keting Week may be hosting conferences on supermarket airtime availability, fashion retailer’s media clutter and pub chain media inflation.