RetailNet Group recently visited Techstore by OfficeMax in a tour of the Mexican market. Techstore is a small box store dedicated exclusively to consumer electronics, a departure from the retailer’s traditional office supplies stores yet a natural transition, as they already carry an assortment of electronics. Specifically, TechStore carries computers, computer accessories, and other adjacencies such as printers. In these stores, RNG analysts observed merchandising strategies that differed from the traditional OfficeMax banner as well as other competitors in Mexico.
TechStore features branded departments throughout the store. For example, in the photo below, display areas are dedicated to the Acer and Apple brands, as computer accessories of these respective brands hang below the more visible computers. In traditional OfficeMax stores, electronics products have typically been grouped by categories, not brands, as seen below at right. One consequence of these groupings is that consumers lose the ability to compare products side by side.
This brand departmentalization greatly facilitates in-store merchandising initiatives. Promotional programs can be seen throughout the store; product demos and bundle offers are prevalent on or near the branded display tables.
Digital Pricing Signage
Techstore utilizes digital signage to display pricing of their products. Digital pricing displays are more efficient from a labor perspective as employees spend less time physically putting up price tags when prices change. Additionally, in a more price-sensitive market such as Mexico, digital signage allows retailers to be more adaptive by adjusting prices, providing additional flexibility to quickly have a more competitive price.
Techstore offers an array of in-store services, including the Windows-branded computer rental station in the photo to the left. This section functions much like an internet café, allowing customers to pay for time on the computer. Additionally, Techstore has a copy and print station to meet customers’ office needs and bring more people to the store. In general, in-store services are important in Mexico and Latin America as a whole. Elektra, Mexico’s leading consumer electronics player, offers financing for shoppers that may not be able to afford a big-ticket item in one large purchase. They offer additional services like banking and also sell bus tickets within the stores. Services provide an important secondary revenue stream for retailers, and also help drive traffic to stores. They result in increased trip frequency, encouraging shoppers to come back to the store and potentially spend more money.
Conclusions and Implications for Retailers and Suppliers:
The biggest takeaway from Techstore is how brand-friendly it is. Branded categories draw shoppers to the specific brands, not the product categories, and give suppliers the opportunity to merchandise in a more effective way. In-store services continue to draw shoppers to the stores.
Retailers: From an efficiency perspective, digital signage saves retailers significant labor costs. It also enables retailers to update pricing in real time, allowing them to offer and display the most competitive prices in the market. Techstore’s in-store services provide an important revenue stream and drive store visits, increasing the odds of impulse purchases as the shoppers enter stores more frequently.
Suppliers: TechStore is very brand-friendly with branded displays, demos, and offers throughout the store. These sections give more shelf control to the suppliers, allowing them to more directly control the experience a consumer has with a product in the store. In-store services help drive store visits. More trips to stores ultimately equates to more visibility for suppliers’ products on the shelves.