Optimizing Front End Checkout Merchandising Maximizing Shopper Interaction In A New Era Of Technology 1 2593
Front-End Focus Leadership Sponsors The Front-End Focus Leadership sponsors are committed to providing continued front-end merchandising insights and integrated solutions to improve store performance & enhance customer satisfaction 2 2593
The Front-End Situation The Front-End checkout is a critical location in the store A location most every shopper passes Major location for immediate consumption snacks and other impulse items It represents a significant source of impulse sales 3 2593
Emerging Front End Checkout Trends Increased retailer focus on checkout trips, basket size and sales performance Retailers increasingly want to reduce design and style complexity Lower profile fixtures – streamlined look – category segmentation Average program life – 4.5 years Additional and larger beverage coolers Self-checkout transactions continue to grow – more stores & lanes/store Growing desire by some retailers to add space for promotions Emerging categories & speed to market of new items Role of the Power Categories 4 2593
The Front-End Represents About 1.0% of Grocery Store Sales and 1.3% of Profits Annual Supermarket Grocery Front-End Checkstand Annual Supermarket $ Opportunity For Sales* = Improvement Of $585 Billion x Front-End Merchandising 1.0% of Sales = $7.61 Billion $1.76 Billion 1.3% 1.0% $5.85 $5.85 Billion Billion Sales of Front-End Items Store Sales Store Profits Front-end items generate $5.85 Billion for Supermarkets Improving Front-End Checkout Merchandising could yield an additional $1.76 Billion in sales 5 2593 * Source: Front-End Focus, Progressive Grocer 2012
Incremental Sales Driven By Impulse Buying Are Key Percent of Decisions Made In-Store Magazines and Consumables drive incremental sales and those purchase decisions are generally made in store 6 2593 * Source: Front-End Focus
Beverages, Magazines, & Confectionery Generate Over 80% of Checkout Sales & Are Purchased Frequently Percent of Consumers Buying At Checkout Once a Month or More Percent of Total Checkout Dollar Sales (% of Purchasers of Category) 84% And they are the power categories across all lane types 7 2593 * Source: TWR Checkout Research, 2011 (eight retailers and over 1,400 stores), 52 weeks through 2010 to 2011, Impulse Marketing
Front-End Power Categories Are Defined By Key Metrics Household Frequency of Impulsiveness $ Share of Penetration Purchase of Purchase Front-End Sales Front-End Power Categories High performing retailers consider four essential shopper demand criteria when allocating space 8 2593 * Source: Front-End Focus, DHC Analysis
Best Practice: Manage The Front-End Based On Consumer Buying Behavior Focus on key Low Scores Mixed Scores High Scores categories that: Health Items Salty Snacks Confectionery • Have high Household Razors/Blades Batteries/Flashlights Beverages Baked Goods Cookies/Crackers Magazines Penetration Lip Care Nuts/Seeds Oral Care Meat Snacks Household Products Gift/Phone Cards • Have high Purchase Audio/Video/DVD Tobacco Accessories Frequency Other Snacks Beauty Care Grocery Products • Provide Higher Film/Camera Supplies Children’s Items Impulse Sales Nutrition/Energy Bars Books Maps/Horoscopes/Puzzles • Generate higher Front- End Sales 9 2593 * Source: Front-End Focus
Magazines And Confectionery Should Be On ALL Lanes “I rarely take items 60% from one checkout and wait in line at another.” 67% 60% “I don’t select a checkout lane based on the items displayed there.” Consumers tend NOT to shop across checkout lanes so retailers must have key consumer front-end categories available on every lane 10 2593 * Source: Front-End Focus, Envirosell
Visual Attention is Focused on the Power Categories Resulting in Incremental Sales 11 2593 * Source: TWR, Indiana University
Visual Attention is Focused on the Power Categories Resulting in Incremental Sales 12 2593 * Source: TWR, Indiana University
Visual Attention is Focused on the Power Categories Resulting in Incremental Sales 13 2593 * Source: TWR, Indiana University
Self-Checkout 14 14 2593
Penetration Of Self-Checkout Usage Has Reached A Critical Level, Similar To ATMs Self-Service Devices used in Last 6 Months 5% 15 2593 * Source: Self-Service Consumer Study
Checkout Purchases Make A Big Difference In Profitability Cashier Lanes +8.8% Self-Checkout Lanes +13.5% $34.50 $31.71 $23.40 $20.61 Basket Without Basket With Checkout Basket Without Basket With Checkout Item Item Checkout Items Checkout Items …Especially at self-checkout where there is a 13% increase in basket size 16 2593 * Source: Front-End Focus, TWR Checkout Research, 2011
Shoppers Choose to Use a Self-Checkout Lane Based Upon 4 Core Shopper Needs: Speed, Control, Simplicity, & Inspiration I want to get in and out as quickly as possible Speed I want control of the I want shopping to be Inspiration Control check-out process more fun than a chore Simplicity I want it organized and clutter-free Source: Coca-Cola SEI Qualitative Concept Optimization: Grocery Self Checkout, Gongos Research, 10/2011. 17 2593
Front-End Merchandising Can Dramatically Effect The Value Of The Lane, Especially At Self-Checkout Average Annual Front-End Dollars $25,900 $23,671 $8,772 Regular Express Self-Checkout Lack of merchandising at self-checkout dramatically hurts sales Merchandising of self-checkout is generally an afterthought Without merchandising self-checkout, the potential lost sales is almost $100,000 per store 18 2593 * Source: Front-End Focus
Audits Suggest That 50% Of Self-Checkouts Are Not Merchandised Self-Checkout Merchandising Conditions % of Stores Where Self-Checkout Has… No Merchandising 50% Good Merchandising 11% Average/Less Than Average Merchandising 39% Lack of merchandising has a pronounced effect on impulse sales 19 2593 * Source: Industry Audit
Self-Checkout Lane Today Vary Dramatically in Layout & Merchandising Self-Checkout Merchandising Today Tends to Fall into One of Three Broad Categories 1 2 3 Zero Poor Good, Not Great Merchandising Merchandising Merchandising Empty Incongruent Incomplete SCO environments that SCO areas with items or categories Solutions that lack key categories sacrifice profitable front end that have little shopper relevance, shoppers seek and buy everyday sales for operating efficiency but appear to generate some from regular checkout lanes revenue and/or liquidate inventory Inconsistent Tacked-On SCO environments with Quick-fix solutions that simply merchandised categories that vary 50% of SCOs position merchandising next to greatly by SCO lane have NO a SCO Merchandising Disconnected Cluttered Solutions that were designed with Disorganized, bazaar-like little regard to shopper needs and environments that are congested behavior/ checkout process with fixtures, creating queuing Uninspired confusion and hindering SCO Functional, transactional solutions checkout access that still have opportunity to better inspire impulse purchases 20 2593
Maximize Sales at Self-Checkout Lanes With More Complete Merchandising Self-Checkout Sales Per $ MM ACV Index by Level of Merchandising 109 97 78 Low Limited Most Complete Merchandising Merchandising Merchandising (<200 Inches) (400 Inches) (>400 Inches) Front-End sales at Self-Checkouts improve significantly with more complete merchandising 21 2593 * Source: FEF Study, DHC Analysis.
Beverages, Magazines, & Confectionery Are The Sales Drivers Of The Self-Checkout Lanes % of Front-End Dollar Sales in Self-Checkout Lanes Strategy: Focus on these key categories on self-checkout to drive incremental sales 22 2593 * Source: Front-End Focus
There Are Many Incomplete Approaches To Merchandising The Self-Checkout Lanes But none of them are integrated … until now 23 2593
Innovative solutions that leverage both new technology and checkstand best practices... 24 2593
Front End Solutions Collaborative Team Best Practice Fixture Designs 25 2593
Front End Solutions Collaborative Team Best Practice Fixture Designs 26 2593
Front End Solutions Collaborative Team Best Practice Fixture Designs 27 2593
Front End Solutions Collaborative Team Best Practice Fixture Designs 28 2593
Working Together To Provide Integrated Merchandising Solutions For Self-Checkout Lanes An integrated solution of technology and merchandising that is installed simultaneously Sponsors of the Front-End Solution Center are looking to test front-end merchandising concepts with retailers that want to improve their check-out sales. 29 2593
Optimizing Front End Checkout Merchandising Maximizing Shopper Interaction In A New Era Of Technology 30 2593
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