Optimizing Front End Checkout Merchandising Maximizing Shopper - - PowerPoint PPT Presentation

Optimizing

Maximizing Shopper Interaction In A New Era Of Technology

Front End Checkout Merchandising

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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

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The Front-End Situation

 A location most every shopper passes

The Front-End checkout is a critical location in the store

 Major location for immediate consumption

snacks and other impulse items

 It represents a significant source of impulse sales

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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

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Sales of Front-End Items

Annual Supermarket Front-end items generate $5.85 Billion for Supermarkets Improving Front-End Checkout Merchandising could yield an additional $1.76 Billion in sales

The Front-End Represents About 1.0% of Grocery Store Sales and 1.3% of Profits

* Source: Front-End Focus, Progressive Grocer 2012

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Grocery Front-End Checkstand

Store Sales Store Profits

1.0% 1.3% $7.61 Billion

$5.85 Billion

$1.76 Billion $ Opportunity For Improvement Of Front-End Merchandising Annual Supermarket Sales* = $585 Billion x 1.0% of Sales =

$5.85 Billion

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

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* Source: Front-End Focus

Beverages, Magazines, & Confectionery Generate Over 80% of Checkout Sales & Are Purchased Frequently

Percent of Total Checkout Dollar Sales And they are the power categories across all lane types

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* Source: TWR Checkout Research, 2011 (eight retailers and over 1,400 stores), 52 weeks through 2010 to 2011, Impulse Marketing

Percent of Consumers Buying At Checkout Once a Month or More

(% of Purchasers of Category)

84%

Front-End Power Categories

$ Share of Front-End Sales Impulsiveness

• f Purchase

Front-End Power Categories Are Defined By Key Metrics

Frequency of Purchase Household Penetration

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* Source: Front-End Focus, DHC Analysis

High performing retailers consider four essential shopper demand criteria when allocating space

Best Practice: Manage The Front-End Based On Consumer Buying Behavior

Focus on key categories that:

• Have high Household

Penetration

• Have high Purchase

Frequency

• Provide Higher

Impulse Sales

• Generate higher

Front- End Sales

Health Items Razors/Blades Baked Goods Lip Care Oral Care Household Products Audio/Video/DVD Other Snacks Beauty Care Grocery Products Film/Camera Supplies Children’s Items Nutrition/Energy Bars Books Maps/Horoscopes/Puzzles

Low Scores

Salty Snacks Batteries/Flashlights Cookies/Crackers Nuts/Seeds Meat Snacks Gift/Phone Cards Tobacco Accessories

Mixed Scores

Confectionery Beverages Magazines

High Scores

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* Source: Front-End Focus

Magazines And Confectionery Should Be On ALL Lanes

Consumers tend NOT to shop across checkout lanes so retailers must have key consumer front-end categories available on every lane

“I don’t select a checkout lane based

• n the items

displayed there.”

67%

60%

“I rarely take items from one checkout and wait in line at another.”

60%

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* Source: Front-End Focus, Envirosell

Visual Attention is Focused on the Power Categories Resulting in Incremental Sales

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* Source: TWR, Indiana University

Visual Attention is Focused on the Power Categories Resulting in Incremental Sales

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* Source: TWR, Indiana University

Visual Attention is Focused on the Power Categories Resulting in Incremental Sales

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* Source: TWR, Indiana University

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Self-Checkout

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Penetration Of Self-Checkout Usage Has Reached A Critical Level, Similar To ATMs

Self-Service Devices used in Last 6 Months

5%

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* Source: Self-Service Consumer Study

Cashier Lanes

$34.50 $31.71 Basket Without Checkout Item Basket With Checkout Item

Checkout Purchases Make A Big Difference In Profitability

+8.8% …Especially at self-checkout where there is a 13% increase in basket size

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* Source: Front-End Focus, TWR Checkout Research, 2011

Self-Checkout Lanes

$23.40 $20.61 Basket Without Checkout Items Basket With Checkout Items

+13.5%

Inspiration Simplicity

Shoppers Choose to Use a Self-Checkout Lane Based Upon 4 Core Shopper Needs: Speed, Control, Simplicity, & Inspiration

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Source: Coca-Cola SEI Qualitative Concept Optimization: Grocery Self Checkout, Gongos Research, 10/2011.

I want to get in and out as quickly as possible I want control of the check-out process Control I want it organized and clutter-free I want shopping to be more fun than a chore Speed

Front-End Merchandising Can Dramatically Effect The Value Of The Lane, Especially At 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

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* Source: Front-End Focus

Average Annual Front-End Dollars

$8,772 $25,900 $23,671

Regular Express Self-Checkout

Audits Suggest That 50% Of Self-Checkouts Are Not Merchandised

Self-Checkout Merchandising Conditions % of Stores Where Self-Checkout Has…

Good Merchandising 11% Average/Less Than Average Merchandising 39% No Merchandising 50%

Lack of merchandising has a pronounced effect on impulse sales

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* Source: Industry Audit

Self-Checkout Lane Today Vary Dramatically in Layout & Merchandising

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Self-Checkout Merchandising Today Tends to Fall into One of Three Broad Categories

 Incongruent

SCO areas with items or categories that have little shopper relevance, but appear to generate some revenue and/or liquidate inventory

 Tacked-On

Quick-fix solutions that simply position merchandising next to a SCO

 Cluttered

Disorganized, bazaar-like environments that are congested with fixtures, creating queuing confusion and hindering SCO checkout access

Poor Merchandising

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 Incomplete

Solutions that lack key categories shoppers seek and buy everyday from regular checkout lanes

 Inconsistent

SCO environments with merchandised categories that vary greatly by SCO lane

 Disconnected

Solutions that were designed with little regard to shopper needs and behavior/ checkout process

 Uninspired

Functional, transactional solutions that still have opportunity to better inspire impulse purchases

Good, Not Great Merchandising

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 Empty

SCO environments that sacrifice profitable front end sales for operating efficiency

Zero Merchandising

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50% of SCOs have NO Merchandising

Maximize Sales at Self-Checkout Lanes With More Complete Merchandising

Front-End sales at Self-Checkouts improve significantly with more complete merchandising

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* Source: FEF Study, DHC Analysis.

Self-Checkout Sales Per $ MM ACV Index by Level of Merchandising

109 97 78 Low Merchandising (<200 Inches) Limited Merchandising (400 Inches) Most Complete Merchandising (>400 Inches)

Beverages, Magazines, & Confectionery Are The Sales Drivers Of The Self-Checkout Lanes

Strategy: Focus on these key categories on self-checkout to drive incremental sales

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* Source: Front-End Focus

% of Front-End Dollar Sales in Self-Checkout Lanes

There Are Many Incomplete Approaches To Merchandising The Self-Checkout Lanes

But none of them are integrated … until now

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Innovative solutions that leverage both new technology and checkstand best practices...

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Front End Solutions Collaborative Team Best Practice Fixture Designs

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Front End Solutions Collaborative Team Best Practice Fixture Designs

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Front End Solutions Collaborative Team Best Practice Fixture Designs

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Front End Solutions Collaborative Team Best Practice Fixture Designs

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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.

Working Together To Provide Integrated Merchandising Solutions For Self-Checkout Lanes

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Optimizing

Maximizing Shopper Interaction In A New Era Of Technology

Front End Checkout Merchandising

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