Retail Resurgence16 Sep, 2010 By: Patrick Cauley Response
When tasked with bringing a low-priced present to a Christmas grab-bag this year, I stumbled upon As Seen on TV aisle at my neighborhood CVS.
Asked during Response Expo 2010 in May what his biggest accomplishment of the past year was, TELEBrands’ A.J. Khubani answered the current state of retail for direct response. “The economic return at retail allows us to deficit spend on TV like never before,” says Khubani.
Adds Ben Smith, director of new business development for Eastman Kodak and RetailLeverage.com blogger, “I think everybody, whether you’re a retailer, manufacturer or DRTV partner, understands that As Seen on TV has found its niche where there’s typically an As Seen on TV section in most of the stores. It’s not unheard of on the display to see that familiar As Seen on TV logo. Everybody is getting comfortable selling that way.”
The retailer can actually be your lowest cost acquisition partner. “One of the main reasons DRTV enjoys retail success is because their target consumer is virtually everyone. We think our customer watches a lot of TV,” says Carie Doll, senior vice president of 250-plus retail store chain Anna’s Linens. However, marketers must be keen on the needs of retailers and how they operate.
“One thing you always have to be careful of with a traditional retailer is you have to show them value or why you’re going to do something so they’ll embrace it,” says Smith. He believes that often the retailer doesn’t have a lot of experience with DRTV products the first time around, so they’ll be skeptical until they literally see or hear the customers come into the store. “They may not initially embrace it the first time around, but once they see that, they tend to actually go a little bit more out of their way in ads or circulars to ensure they can include something related to As Seen on TV,” he says.
What Retailers Want
“Retailers are looking for hot, well-priced, highly marketed products,” says Doll. “We’ve seen that the As Seen on TV category runs the gamut in departments. When you have a very specific item on air with this amount of frequency, the customers know the exact item when they see it. It’s an immediate awareness that other products just don’t have, it is such a competitive advantage. That’s what retail has over direct-to-consumer; they can get it immediately. There’s no waiting or shipping-and-handling. It’s very impulse driven once they’re in our store; it’s just incremental business.”
Khubani says they’re looking for a simple solution to an everyday problem. “The minute people see it, they get it — and it has to be easy to manufacture and perceived as innovative,” he says.
Price is obviously an important factor for retailers. “The magic price point has certainly been under $20 for the past several years,” says Jeff Buchbinder, vice president of bdirect Inc., a retail brokerage based in Los Angeles. However, he also says the shelves of leading retailers have a sweet spot under $10.
“Our biggest items were in personal care, storage and housewares. We definitely are in $19.99 and south in this retail category. Our biggest single price point in this category is $9.99,” says Doll.
For Smith, traditionally when people see product in As Seen on TV sections, it’s at a $14.99 to $19.99 price point, without a big commitment or risk. But he also explains that the electronic and tool side is starting to have a lot more credibility and validity, leading to price points of $99 to $199. “In today’s retail climate, we’re not simply dealing with Ped Eggs at CVS, but also higher price points at Home Depot and Best Buy,” he contends.
Buchbinder describes As Seen on TV as “wow” items with smart marketing and developed brands with good profit margins — all things that bode well to successful use of space with retailers. And while price is an obvious piece of the puzzle, much like marketers must rely on media buyers to get their spot on the right stations, they must make sure they’re placed in the correct location at retail. “People have a lot of questions about where they want to be located at retail. Do you want to be in the As Seen on TV section or in the product category specific section?” says Doll.
Khubani sees five times the volume when TELEBrands products are placed in the As Seen on TV space in retail compared when not. And Anna’s Linens gained a lot of efficiencies by putting DRTV products together in stores because customers shopping probably have a higher propensity to be familiar with multiple products on the As Seen on TV shelf. “We started doing it at holiday season last year because we thought it was so giftable, and we saw a huge uptick in sales because people were buying either multiple of the same item or multiple items within the DRTV category as different gifts for different people,” says Doll.
Doll continues to advise DR marketers to locate within the As Seen on TV section. And items that have very high velocity can live in multiple places in their stores. “So a popular storage item will live in As Seen on TV, and we’ll also double face it in our regular storage section,” she says.
Moreover, regardless of shelf space or price point, much of the success of As Seen on TV products in retail rests on tried-and-true DR tactics and principles.
“The great DRTV marketers have proven that thou shall win on TV, then thou shall win at retail. If there’s a problem and your product provides a simple solution to that problem, and you’re able to be smart in communicating, then you have an opportunity to be successful at leading retailers,” says Buchbinder. He also contends that brands supported with heavy media are appetizing to retailers.
According to Smith, the retailer’s prime commodity is limited shelf space and limited focus. For instance, every brand thinks it should be in the national circular every week and accommodated with the right shelf space and height. But Buchbinder notes, the faster paced environment and more sophisticated management behind the As Seen on TV category lends itself perfectly to retail.
Consequently, Smith spoke about the recent phenomenon of certain products soliciting specific retailers in advertisements, such as MagicJack and Walgreens. “They’re using it to drive customers to a specific retailer,” he says.
Smith imagines a boardroom scenario where the marketer describes the weight it carries for its products in media and how they can swing some of it to a particular retailer if the partnership works mutually. “It benefits the retailer against its competitors, and it benefits the marketer as leverage to get in the retail door. And perhaps they’re giving MagicJack a little bit more attention in circulars or store displays,” he says.