With iPods and portable media devices becoming as common as cell phones, digital content represents a huge market opportunity for all types of retailers. New York market research firm eMarketer forecasts that U.S. consumer spending on digital audio and video content will approach $7.8 billion in 2010, up from $1.3 billion in 2005.

Entertainment and electronics airport retailer InMotion Entertainment has seen rapid growth in the digital download market and, through the use of kiosks, it can stock thousands of products in a small space in the corner of its stores.

While digital music already constitutes a large segment of the entertainment market, books, games and other downloadable merchandise are becoming more popular. Many retailers are also finding that downloadable content can help consumers learn more about other products that they are buying.

With their iPods or smart phones, customers can download construction directions at home improvement stores, instruction manuals for televisions at electronics stores and information about their prescriptions at pharmacies.

Seattle-based Displayware produces kiosks and an infrastructure that allows retailers to merchandise and sell any type of digital product directly to consumers. Currently in 26 of InMotion’s 50 locations, Displayware’s DIGpad digital filling stations will roll out to all of the company’s stores by the end of 2008.

With air travelers always in search of entertainment for those long flights (and waits), digital downloads are a perfect medium, and Displayware co-founder and managing partner Joel McConaughy says that there is pent-up demand for digital content at kiosks.

“At the locations where we have stations, every single day they are getting asked over and over again when they can get more content,” he says.

Eden Goldberg, vice president of marketing and business development for InMotion, says that in the past year, the company’s product mix has quickly gravitated from CDs and DVDs to digital content.

Quick response to demand
Through the kiosks, InMotion sells DRM(digital rights management)-free albums for $11.99. It may soon begin single-song sales and might eventually move into digital audio books and movies. Whatever the product, one of the biggest advantages of digital content is that retailers can instantly react to the latest market demands without having to stock physical inventory.

“We can provide a variety of content targeted at our various types of clientele, but we can react to the sales history quite quickly without heavy inventory costs,” Goldberg says. “Digital delivery offers immediate convenience and immediate gratification.”

Bringing the online experience to bricks-and-mortar stores, the kiosks allow retailers to add any type of digital products to their mix. And Displayware’s DIGpad includes an e-mail manager that can deliver personalized offers and information to consumers based on what they have previously downloaded.

“I think we’re right at the tipping point of this kind of fulfillment,” McConaughy says. “It’s been only recently that hand-held media players have become so common that everybody has one. Digital delivery is now a huge distribution channel and it’s a big opportunity for all types of retailers.”