Shopping boxes Digital TV has failed to make a convincing start as a platform for home shopping. So why are grocers putting their faith in the medium? Belinda Gannaway reports The UK is the most mature digital TV market in the world with more homes having access to digital TV than the internet. But a question mark hovers over the medium as consumers' lack of enthusiasm for the full range of services offered by interactive digital television (iDTV) unnerves investors. So where does this leave the retailers with iDTV sales channels? Retailers are signing up to iDTV in a number of ways and at varying costs. ONdigital and the cable operators both host web style iDTV shopping sites whereby consumers interact with the retailer using remote control type devices or PC-style keyboards to send information via the internet down telephone lines or by quicker cables. Sky's Open platform offers a more technically advanced presence for retailers with better looking sites ­ at a premium cost ­ and the return interactive path uses satellite rather than internet technology. Shopping is a key plank of all the interactive platforms, although to date it has not proved a runaway success, with only one in 12 digital viewers buying anything according to e-mori research. Data on what people buy is hard to obtain although it is said that 90% of Open revenue comes from gambling rather than retail. Despite the information blackout, two retailers have put their heads above the parapet and Domino's Pizza and Woolworths are routinely paraded as iDTV successes. iDTV, said to be the ideal platform for lean-back' electronic pizza ordering, represents £180,000 sales a week for Domino's. In sheer numbers, the medium out-performs internet orders 2.5-fold and after 18 months iDTV sales are equivalent to six bricks and mortar stores with e-commerce transactions 8.4% higher. And, critically, Domino's says iDTV is attracting new customers rather than cannibalising existing markets. Woolworths is tight-lipped about its iDTV performance saying only that it is the equivalent to its tenth largest high street store. So where are the grocers in this conundrum? Iceland, the most established iDTV supermarket with platforms on NTL and Telewest, opted out of Open after six months, blaming "technological infrastructure incompatibility". Its customers use iDTV to complete a full shop, from order to payment. However, the store group declines to say how well the service is doing, what its targets are or if it is profitable. It does, however, admit the internet remains a more popular ordering channel. So far, the picture for iDTV grocers is not compelling. But these are still early days, points out Dick Clarke of IT and e-commerce management consultants Consult Hyperion. "Interactivity is working and has great potential," he says. He identifies one of the biggest brakes on iDTV as a sales channel as the costs charged to retailers by the digital operators. Although they vary wildly ­ the platform, bandwidth required, nature of the return path, length of time retailers are prepared to sign up for, and when retailers sign are all critical factors ­ sources suggest a large retailer could be charged up to £1m a year for ground rent on Open and the platform operator also takes a slice of transactions, reported to be as much as 8%. Open is also reported to charge content providers a penalty of £250,000 every time they cause a system to crash. Then there's the investment needed in the development work itself. Tesco found Open's charges prohibitively expensive and has opted for the low grade but "free" web style service offered by ONdigital which was apparently tempted to waive its ground rent ­ estimated to be in the region of £100,000 plus a year ­ for the lure of a big name. Given this faltering start and the high cost of entry, why are more grocers signing up for iDTV ­ among them M&S, Asda and Sainsbury? Primarily the answer lies in the familiarity of the TV set ­ it doesn't crash, it's not prohibitively expensive and it's not an alien object. And while online security is still a hotly debated subject, digital TV's in-built conditional access and as yet undedicated second slots' offer the potential for more reliable payment mechanisms. However, there is still no agreement on a standard solution and any slip in security in the meantime could easily squander that trust equity. Tesco's iDTV launch has been low key, but a spokesman believes the TV platform will give the retailer access to customers who wouldn't use PC-based internet shopping. "We've no desire to switch people over from the PC to digital TV shopping. Our desire is to get more customers and there are an awful lot of people who would like to shop from home with us, but don't want to spend £800 plus on a PC. Digital TV could expand our customer base significantly because people trust it and it appeals to technophobes." And the cost to Tesco? "Nothing," says Tesco. "The web development work was already done and the fulfilment mechanisms are exactly the same. That's the beauty of it ­ we only need one customer to break even." Unlike Tesco which, until a few months ago, was not convinced of the need for an iDTV presence, Asda has long been talking about its hopes for iDTV and is about to go live with its long awaited Open shop. A spokesman there rejects negative stories about the medium. "We think this has huge potential. In the long term we think iDTV offers a much more attractive route to market than the internet." But there is more to iDTV than sticking up a shopping service and waiting for customers to come running. As digital platform operators move beyond the shopping mall towards a more integrated approach between shopping and programming, the real opportunities of iDTV for retail will become apparent. Consult Hyperion's Dick Clarke says: "Interactivity is about giving people a sense of community. What has tended to get forgotten recently is the success of community on the internet. Customer reach and retention is not about shopping malls, these don't work in electronic environments without a community around them." Sainsbury, which owns the Taste CFN channel with media company Carlton, is trying to build a community of programming, goods and services around its passion for food brand tag. Taste CFN chief executive Antony Ellis explains: "You can't see iDTV as only a shopping channel. It is a new point of contact that takes brand awareness right into the home. Growing brand loyalty is about how much consumers can touch a brand and in how many arenas. Via Taste CFN, Sainsbury's passion for food is inspiring people in a whole different arena. We are a very good support to Sainsbury's overarching passion for food ­ if we get the Oscar for best supporting actor in three or five years' time we'll be very happy." So far there is no shopping mechanism on Taste CFN although viewers can e-mail recipes from the channel to the Sainsbury's to You web site where ingredients can be added to PC orders. The whole thing is not terribly fluid, but Ellis promises it's just the beginning and a full Sainsbury's to You iDTV shopping option is in the pipeline. "We're talking about degrees of development. We can build a full digital TV shop, but does the customer want it? It's fair to say we're approaching it in a fairly stilted manner but we're testing the platform and proving a concept. "It's far too early to talk targets; we're building a long term business model that's about an extended development process of two or three years." Interactive services are not driving the take-up of digital TV ­ 25% of viewers who visit interactive services do so to escape adverts, and what consumers/ viewers do when they discover the services is not yet understood. For the time being, the PC is better than the TV at managing quantities of data and will remain the prominent on-line shopping channel for groceries. The trick for grocers will be in building compelling reasons for viewers to want to interact and communicating those reasons effectively. TV is about entertainment not functionality and retailers had better think imaginatively if they want to be part of the picture. The digital operators are waking up to the possibilities of ordering and viewing at the same time and more buy-me options will crop up around programming. Technologists, for their part, need to make interaction via the digital TV seamless. Consumers shop in different stores in different ways, and are increasingly adept at choosing the virtual shopping experience that best suits their needs. The success of Domino Pizza's interactive TV service is testament to the value of getting functionality combined with the right place, right time equation, just right. How the supermarkets manage that remains to be seen, but one thing is for sure, the marketers, not the technologists alone, will provide the solutions that consumers want. {{FEATURES }}