Optimizing Front End Checkout Merchandising. Maximizing Shopper Interaction In A New Era Of Technology

Transcription

1 Optimizing Front End Checkout Merchandising Maximizing Shopper Interaction In A New Era Of Technology 1

2 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

3 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

4 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

5 The Front-End Represents About 1.0% of Grocery Store Sales and 1.3% of Profits Grocery Front-End Checkstand Annual Supermarket 1.3% Annual Supermarket Sales* = $585 Billion x 1.0% of Sales = $ Opportunity For Improvement Of Front-End Merchandising $7.61 Billion $1.76 Billion 1.0% $5.85 Billion $5.85 Billion Store Sales Store Profits Sales of Front-End Items Front-end items generate $5.85 Billion for Supermarkets Improving Front-End Checkout Merchandising could yield an additional $1.76 Billion in sales * Source: Front-End Focus, Progressive Grocer

6 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 * Source: Front-End Focus 6

7 Beverages, Magazines, & Confectionery Generate Over 80% of Checkout Sales & Are Purchased Frequently Percent of Total Checkout Dollar Sales Percent of Consumers Buying At Checkout Once a Month or More (% of Purchasers of Category) 84% And they are the power categories across all lane types * Source: TWR Checkout Research, 2011 (eight retailers and over 1,400 stores), 52 weeks through 2010 to 2011, Impulse Marketing 7

8 Front-End Power Categories Are Defined By Key Metrics Household Penetration Frequency of Purchase Impulsiveness of Purchase $ Share of Front-End Sales Front-End Power Categories High performing retailers consider four essential shopper demand criteria when allocating space * Source: Front-End Focus, DHC Analysis 8

9 Best Practice: Manage The Front-End Based On Consumer Buying Behavior Low Scores Mixed Scores High Scores Focus on key categories that: 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 Salty Snacks Batteries/Flashlights Cookies/Crackers Nuts/Seeds Meat Snacks Gift/Phone Cards Tobacco Accessories Confectionery Beverages Magazines Have high Household Penetration Have high Purchase Frequency Provide Higher Impulse Sales Generate higher Front- End Sales * Source: Front-End Focus 9

10 Magazines And Confectionery Should Be On ALL Lanes 67% I don t select a checkout lane based on the items displayed there. I rarely take 60% items from one checkout and wait in line at another. 60% Consumers tend NOT to shop across checkout lanes so retailers must have key consumer front-end categories available on every lane * Source: Front-End Focus, Envirosell 10

11 Visual Attention is Focused on the Power Categories Resulting in Incremental Sales * Source: TWR, Indiana University 11

12 Visual Attention is Focused on the Power Categories Resulting in Incremental Sales * Source: TWR, Indiana University 12

13 Visual Attention is Focused on the Power Categories Resulting in Incremental Sales * Source: TWR, Indiana University 13

14 Self-Checkout 14 14

15 Penetration Of Self-Checkout Usage Has Reached A Critical Level, Similar To ATMs Self-Service Devices used in Last 6 Months 5% * Source: Self-Service Consumer Study 15

16 Checkout Purchases Make A Big Difference In Profitability Cashier Lanes +8.8% Self-Checkout Lanes +13.5% $31.71 $34.50 $20.61 $23.40 Basket Without Checkout Item Basket With Checkout Item Basket Without Checkout Items Basket With Checkout Items Especially at self-checkout where there is a 13% increase in basket size * Source: Front-End Focus, TWR Checkout Research,

17 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 shopping to be more fun than a chore Inspiration Control I want control of the check-out process Simplicity I want it organized and clutter-free Source: Coca-Cola SEI Qualitative Concept Optimization: Grocery Self Checkout, Gongos Research, 10/

18 Front-End Merchandising Can Dramatically Effect The Value Of The Lane, Especially At Self-Checkout Average Annual Front-End Dollars $23,671 $25,900 $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 * Source: Front-End Focus 18

19 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 * Source: Industry Audit 19

20 Self-Checkout Lane Today Vary Dramatically in Layout & Merchandising 1 Self-Checkout Merchandising Today Tends to Fall into One of Three Broad Categories Zero Merchandising 2 Poor Merchandising 3 Good, Not Great Merchandising Empty SCO environments that sacrifice profitable front end sales for operating efficiency 50% of SCOs have NO Merchandising 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 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 20

21 Maximize Sales at Self-Checkout Lanes With More Complete Merchandising Self-Checkout Sales Per $ MM ACV Index by Level of Merchandising Low Merchandising (<200 Inches) Limited Merchandising (400 Inches) Most Complete Merchandising (>400 Inches) Front-End sales at Self-Checkouts improve significantly with more complete merchandising * Source: FEF Study, DHC Analysis. 21

22 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 * Source: Front-End Focus 22

23 There Are Many Incomplete Approaches To Merchandising The Self-Checkout Lanes But none of them are integrated until now 23

24 Innovative solutions that leverage both new technology and checkstand best practices... 24

25 Front End Solutions Collaborative Team Best Practice Fixture Designs 25

26 Front End Solutions Collaborative Team Best Practice Fixture Designs 26

27 Front End Solutions Collaborative Team Best Practice Fixture Designs 27

28 Front End Solutions Collaborative Team Best Practice Fixture Designs 28

29 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

30 Optimizing Front End Checkout Merchandising Maximizing Shopper Interaction In A New Era Of Technology 30