Costco 3D: The Rise of the In-Store Network

Discussion
Aug 02, 2012

Coming to a warehouse club near you…

The announcement that Costco has reached agreement with Premier Retail Networks (PRN) to expand its in-store digital network to include a dedicated 3D content channel is big news, but also brings up questions about in-store execution and whether or not the efforts will have an appreciable effect on consumer demand for the technology in their homes.

Both companies expressed happiness with expanding on a business relationship started in 2004.

Paul Latham, vice president of membership and services at Costco, said PRN provides it "with new and innovative ways to engage our members and bring the highest quality technology to in-store media."

"We are excited to bring 3D to Costco," said PRN President Ahmad Ouri. "Costco members benefit from this new platform as they can learn about and compare products and be entertained while they shop."

Content, 3D and otherwise, will be available in Costco’s 400 warehouses in the U.S. Each month, according to Nielsen, some 45 million members shop Costco’s domestic locations.

Under the agreement, Costco will receive:

  • Custom HDTV content, strategic programming, ad sales, network operations, media management and scheduling;
  • Programming to demonstrate the warehouse club’s services and department offerings as well as branded Costco consumer electronics education;
  • Access to custom HD entertainment and sports programming from more than 150 content providers.

Costco and PRN have not specified if glasses will be needed to view the 3D content. Still to be answered, glasses or not, is if consumers in any substantial numbers will pony up the extra dollars to put 3D sets in their homes.

Discussion Questions: What is your take on the role and effectiveness of in-store media networks? Will access to 3D content in stores, Costco and elsewhere, have an appreciable effect on unit sales?

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14 Comments on "Costco 3D: The Rise of the In-Store Network"

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Dr. Stephen Needel
BrainTrust

I’ve never seen an in-store media network produce incremental sales, including Turner’s Check-Out channel, Walmart’s in-store TV, and a number of other in-aisle attempts to get shoppers to watch (and perhaps learn something). Shoppers are not there to be educated or entertained in Food/Drug/Mass — they are there to do their shopping and get out of there. The few browsers you would find who are not mission-oriented never seem to generate enough measurable incremental sales.

Jason Goldberg
BrainTrust

I’d assume that the subset of content in 3D is content intended for demonstrating the 3D feature on TVs for sale in Costco.

It’s hard to imagine that 3D would be very practical for environmental video and digital signage throughout a retail store. Glasses-free 3D (Autostereoscopy) is very position dependent, so not very suitable for general retail environmental video. Shoppers tend to be moving in a retail store, not standing still in a very constrained location to consume video content. And glasses based 3D reduce a lot of light and would make it difficult for shoppers to consumer any of the other signage or POP in the store while wearing them (even if you could get shoppers to put the classes on).

Frankly, retailers have really struggled to create a good 3D demo to sell the TVs much less use 3D as a general merchandising tool in the store. So I suspect, you are just talking about 3D being sent to a set of demo 3D TV sets. It will be interesting to see what they come up with.

Ken Lonyai
BrainTrust

The value of in-store media is often questionable. Even the term “media” is vague. But to take media on the face of it like the “…HD entertainment and sports programming from more than 150 content providers.” What is it there for? Not too many people will head down to Costco or any other store to watch TV. It has some usefulness for the stereotypical husband to be occupied while the cliched wife is off filling the shopping cart, but it’s hard to imagine how much value that really adds to the bottom line, especially given growing time constraints and endless self-procured “channels” available to consumers. Really, what will they be willing to spend time watching? Adding 3D: so?

Digital signage with BRIEF video content that provides information valuable to the consumer (repeat: to the consumer) is the best track for stores to consider, particularly if it’s an enhancement to mobile content. That’s where 3D may have limited benefit. In the next few years though, AR (augmented reality) will likely be far more effective, so a mobile in-store media channel is where I’d put my efforts.

Ben Ball
BrainTrust

Absolutely. I don’t know what the baseline on 3D TV will be, but this content enables Costco’s merchandising technique for entertainment (front entry of store if you don’t get to visit Costco) to be maximized.

This is an interesting statement on Costco jumping out as a pioneer in electronics vs. playing the better value follower role.

gordon arnold
Guest

All of my colleagues and friends in retail provide one another with consumer trending stories across a wide spectrum of the retail industry. There is never a shortage of news on how consumers are investigating the products and services they purchase. In fact, this topic of information is exists as a kind of news of the day experience and is usually predicated with “Guess what I saw some gal/guy doing today!” For the past several years, stories of how shoppers use IT devices and what and where they get their information are the main course of daily updates.

It is up to each retailer to provide accurate, up-to-date information about their products and services to the consumer. It is also the retailer’s responsibility to get for themselves accurate information about consumer satisfaction and interests. Consumers always want to experience the excitement of new IT toys (devices/apps) as soon as they can, where ever they are. This was a good idea for Costco and will bring in consumers with new, past and present status.

Nikki Baird
BrainTrust

I’m with Jason on this one. If they can use it to demonstrate hassle-free 3D, then more power to them, but so far all the 3D demos I’ve seen have not been anywhere near hassle-free. And considering how often we’re sofa diving for the remote in my household, I can only imagine what would happen to the glasses.

On the whole it makes sense — this is how PRN got its start, helping retailers demo TVs without having to air competitors’ ads. They made the move to support HD, and now they’re making the move to support 3D. PRN knows how to deliver content that helps sell TVs, and I’m pretty sure they’ll bring that expertise to 3D.

Whether that can be leveraged anywhere else is up for grabs.

Anne Howe
BrainTrust

I think the Costco shoppers could be persuaded to at least try the 3D experience. If any in-store tribe has the savvy to get on board with this, it has to be Costco shoppers.

That said, I’m skeptical of a direct correlation to incremental sales in any area other than TVs.

It takes human contact and conversation to have long-term consistent impact on sales…Costco knows this well and continues to invest in people talking to shoppers about products.

I’m happy to see Costco testing different in-store technology; it will be interesting to watch how shoppers react.

Dr. Stephen Needel
BrainTrust

Reading the article, I don’t think the purpose is to sell 3D TVs, it’s to appear throughout the store as a sales tool for Costco stuff.

Adrian Weidmann
BrainTrust

There are two issues here that need clarification. Let’s not confuse PRN’s role with Costco and “in-store media networks.” PRN is aggregating and delivering content to and for Costco to show on their ‘television wall’ display for its shoppers. This should not be confused with an ‘in-store media network’ that is (should be!) designed to bring unique and relevant programming to different departments and/or locations within the store environment. To call what PRN has been doing at Costco an ‘in-store media network’ is a stretch.

That being said, PRN can certainly aggregate 3-D content and create a playlist of different types of content to attract, entertain, and provide tremendous exposure of the visual experience of 3-D technology to a large audience. Over time, this will certainly lead to more consumer awareness and eventually, sales. The availability of 3-D programming, the viewing experience and requirements (glasses vs. no glasses), the expense will all play a key role whether consumers will embrace, and pay for this experience for their home. Both content developers and the display manufacturers certainly hope to sell more and Costco’s customer traffic will certainly give them exposure.

Roger Saunders
BrainTrust

Costco plays in the in-store promotional card as well as any retailer. Just take notice of the lines that form around their free-samples offerings.

Based on the BIGinsight Media Behaviors & Influence Study of 24,000+ respondents, free-samples has the largest influence on Costco shoppers’ in-store experiences. Store loyalty cards, special displays, shelf coupons, and reading product labels also show up highly. In-store television, however, does not.

If Costco has experience with this Premier Retail Networks dating back to 2004, they are likely to have solid data that points to an upside. Have to give them the benefit of the doubt, based on their 8 years working together.

Herb Sorensen
BrainTrust

My question is, who will be ponying up the cash to fund boondoggle-2, since the money spent on Walmart TV was very nearly a total waste?

Camille P. Schuster, PhD.
BrainTrust

The last comment was confusing to me — is Costco making 3D material available in-store for consumers or is Costco going to stream 3D content to consumers at home? If not the latter what does having 3D content in the store have to do with consumers purchasing 3D TVs?

The issue of glasses is big — do consumers view their visit to Costco as a leisurely entertainment event so they will think it is OK to stop shopping, put on glasses, and watch content?

As always the details of implementation will be important.

James Tenser
BrainTrust
If you want to sell a lot of 3D television screens, it seems fundamental to demonstrate their capability with the best possible programming content. Costco sells a lot of TVs, and its displays are often the first thing a shopper sees upon entering the store. PRN has been Costco’s provider of content for those “video wall” displays since 2004. It ensures a high quality signal that drives a large number of sets at one time. It ensures that the sets on display are not tuned to inappropriate content (like programs with competitor ads, or worse). The consistency allows shoppers to compare picture quality between models. The captive network also allows the retailer, at its option, to show informational content or paid sponsor messages on the video wall. Ads can get tricky when there are multiple brands on display. Although it would be nice to collect a bit of revenue from suppliers, I believe Costco and PRN have to justify this commitment in terms of other benefits — especially increased category sales. All these factors are no more or less true when the TVs on display have 3D capability. Before spending serious cash, shoppers need visual proof that the sets deliver… Read more »
Ben Sprecher
Guest
Ben Sprecher
4 years 10 months ago

The comments about 3-D content for display on the 3-D TVs Costco is selling all make sense… if that’s the play here, then Costco is right to want to source more real content for showing off what a 3-D TV viewing experience can be.

If, on the other hand, this is about product displays throughout the store, then I think it’s very misguided. Costco already has 3-D product displays — they’re called… “displays.” In fact, they even have 4-D (Smell-O-Vision) and 5-D (Taste-O-Vision) displays on all their sampling carts.

Sometimes, technology just gets in the way.

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