Audit Summary Retailer Presentation

Transcription

1 Audit Summary Retailer Presentation 0

2 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 1

3 Retailers Are Facing A Changing Landscape Consumers shopping patterns are changing and consumer purchase behavior is evolving Retailer channels and formats must now compete for a limited number of shopping occasions Range of categories stocked at checkout locations has increased dramatically over the last few years New technology such as self-scanning is changing the transaction process 2

4 Supermarkets Must Make The Most Of Every Shopping Trip As The Frequency Of Supermarket Shopping Trips Has Been Declining Trips Per Household Per Year Annual Household Spending Grocery $2,381 Mass $955 $687 Supercenters $834 $1,692 Drug $282 $332 Convenience/Gas $136 $265 Dollar $107 $179 Warehouse $830 $1, = $2,421 Impactful front-end checkstand merchandising can help drive incremental purchases on each and every shopping trip Source: Nielsen Consumer Panel 3

5 Front-End Focus Leadership Sponsors Mars Snackfood U.S. Time-Warner Retail Sales & Marketing The Coca-Cola Company In partnership with Dechert-Hampe Consulting, an independent research & consulting firm. The Front-End Focus Leadership sponsors are committed to providing continued frontend merchandising insights to improve store performance & enhance customer satisfaction through: New learning and consumer knowledge Developing front-end checkstand benchmarks and Best Practices Innovative solutions to optimize in-store front-end merchandising 4

6 Front-End Focus Objectives Gain new insights on shopper attitudes and buying behavior relative to the Front-End checkstand Determine the impact of new developments such as self-checkout on consumer buying behavior and product sales Identify opportunities to maximize sales and profit performance through implementation of Best Practices Improve the overall productivity of the Front-End through collaboration among all the major stakeholders 5

7 Scope Of The Front-End Focus Research Research was conducted in partnership with six leading retailers representing almost 3,200 stores and 12% of U.S. Grocery Volume Retailers provided SKU level data for over 300 stores over a 6-month timeframe through September, 2008 Several retailers provided shopper card data on over a million front-end transactions Checkout planograms were collected and over 300 stores were audited at the lane level to identify merchandising conditions In-store research with 1,300 shoppers was conducted relative to checkout attitudes and purchase behavior at Regular, Express & Self-Checkout lanes All research and analysis was performed by Dechert-Hampe & Company in order to ensure objective conclusions 6

8 The Study Includes Information On Over 30 Major Categories Meat Snacks Baked Snacks Other Snacks Razors/Blades Cosmetics HBC Lip Care Books Audio/Video/CD/DVD General Merchandise Children s Toys/Games/Books Tobacco Accessories Maps/Horoscopes/Puzzles All Other Products Household Products Grocery Products Candy Gum Mints Magazines Carbonated Beverages Non-Carbonated Beverages Bottled Water Energy Drinks Cookies/Crackers Salty Snacks Phone/Gift Cards Batteries/Flashlights Film/Cameras Oral Care Nutrition/Energy Bars Nuts Seeds 7

9 Audit Findings 8

10 The Landscape Of The Front-End Checkstands Have Changed Over Time % Grocery Stores Stocking At Checkout Magazines Candy Gum/Mints Carb. Beverages Non-Carb. Beverages Salty Snacks Cookies Other Snacks Batteries Film/Cameras Razors/Blades Lip Care Oral Care HBC Books Audio/Video Phone/Gift Cards Many categories have been added to the front-end Source: Front-End Focus 9

11 The Average Supermarket Has 11 Lanes With 28% Of The Lanes Being Self-Checkout Supermarkets Percent Of Lanes By Lane Type Average # Of Checkout Lanes Per Store Express (15%) 11.1 Self-Checkout (28%) Regular (57%) Note: A Self-Checkout pod of 4 registers counts as 4 lanes. Source: Front-End Focus 10

12 The Average Store Has 858 Linear Feet Of Merchandising Space On The Front-End Checkstands Total Front-End Merchandising Space Per Store (Linear Feet) % Of Front-End Merchandising Space 858 Self-Checkout receives only 8% of the front-end merchandising space Source: Front-End Focus 11

13 The Customer Right Side Of The Checkout Lane Has 46% Of Merchandising Space Available % Of Front-End Merchandising Space 20% 46% Customer Right 13% Left Over The Belt End Cap 15% Left Not Over The Belt 4% 2% Temporary Displays Clip Strips End Caps are allocated 20% of front-end merchandising space Source: Front-End Focus 12

14 Magazines, Candy, & Gum Account For 60% Of Front-End Checkstand Merchandising Space % Of Front-End Merchandising Space (All Lanes) Beverages have 7.4% of the front-end space Source: Front-End Focus 13

15 Carbonated Beverages Are Allocated 43% Of The Overall Beverage Space Beverages % of Front-End Merchandising Space % of Front-End Merchandising Space By Type Of Beverage 7.4% 7.4% Non-Carb. Beverages 1.1% Energy Drinks 1.4% Waters 1.7% Carb. Beverages 3.2% Waters are provided 23% of the Beverage space % of Beverage Space 15% Non-Carb 19% Energy 23% Waters 43% Carb Source: Front-End Focus 14

16 The Confectionery & Magazines Categories Are Stocked On 81% To 87% Of The Front-End Checkstands % Of Front-End Checkstand Lanes That Stock: (All Lanes) Carbonated Beverages and Waters are on 1/2 of the front-end checkstands Note: Categories are ranked by % of front-end merchandising space from a previous page Source: Front-End Focus 15

17 Regular Lanes 16

18 Magazines, Gum, & Candy Account For Almost 63% Of The Regular Lane Checkstand Merchandising Space % Of Front-End Merchandising Space (Regular Lanes) Phone/Gift Cards, Batteries, and Health & Beauty Care represent 10% of the Regular Lane space Source: Front-End Focus 17

19 The Gum, Mint, & Candy Categories Are Stocked On 92% To 95% Of The Front-End Regular Checkstands While Magazines Are On 97% % Of Front-End Regular Checkstand Lanes That Stock: Carbonated Beverages and Waters are available on 60% of the Regular checkout lanes Note: Categories are ranked by % of front-end merchandising space from a previous page Source: Front-End Focus 18

20 Express Lanes 19

21 Magazines, Candy, & Gum Account For 58% Of The Express Lane Merchandising Space % Of Front-End Merchandising Space (Express Lanes) Phone/Gift Cards, Video/Media, Batteries, and Health & Beauty Care items have 12.7% of Express lane space Source: Front-End Focus 20

22 Magazines Are Stocked On 88% Of The Express Lanes % Of Front-End Checkstand Express Lanes That Stock: Candy, Gum, & Mints are on 65% to 74% of the Express lanes Note: Categories are ranked by % of front-end merchandising space from a previous page Source: Front-End Focus 21

23 Self-Checkout Lanes 22

24 Candy, Magazines, & Gum Account For 60% Of The Self-Checkout Merchandising Space % Of Front-End Merchandising Space (Self-Checkout Lanes) Beverages are allocated 8.5% of Self-Checkout space Source: Front-End Focus 23

25 The Confectionery Category Is Only Stocked On 2/3 Of The Self-Checkout Lanes % Of Front-End Self-Checkout Lanes That Stock: Magazines are on 64% of the Self-Checkouts while Carbonated Beverages are on 20% of the Self-Checkouts Note: Categories are ranked by % of front-end merchandising space from a previous page Source: Front-End Focus 24

26 Audit Summary The average Supermarket has 11 lanes of which 57% were Regular lanes, 28% were Self-Checkout lanes, and 15% were Express lanes. The average store has 858 linear feet of merchandising space at the front-end checkstands. Most of the front-end merchandising space (46%) is allocated to the customer right side of the lane, followed by 28% on customer left, and 20% on the end cap. Confectionery, Magazines, and Beverages represent 75% of the front-end checkstand merchandising space. 1/3 of the Self-Checkout lanes do not carry the Confectionery or Magazines categories. Beverage coolers are only carried on 20% of the Self-Checkout lanes. Source: Front-End Focus 25

27 Consumer Learning 26

28 73% Of Respondents Shopped The Store at Least Once A Week & Majority Of Trips Were Quick Trips Frequency Of Shopping This Store Type Of Trip (% Of All Respondents) (% Of All Respondents) 73.4% Source: Front-End Focus 27

29 On Average, Grocery Shoppers Purchased 15 Items And Spent $42 How Many Items Did You Buy & How Much Money Did You Spend on this Shopping Trip? % All Respondents % Of Respondents Average # of Items Bought National = 15.5 % Of Respondents Average Amount Spent National = $42.17 Source: Front-End Focus 28

30 Nearly 2/3rd Of Shoppers Surveyed Shopped Alone & Spent About 27 Minutes In The Store How Much Time Did You Spend In The Store? (% Of All Respondents) Who Did You Shop With Today? (% Of All Respondents) Shopped With Others 35.1% Shopped Alone 64.9% *self-reported Other Adult Family Member 33.4% Spouse/Partner 29.7% Friend/Co-Worker 12.1% Child <5 17.6% Child % Child % Multiple Answers Allowed Source: Front-End Focus 29

31 Lane Usage 30

32 The Majority Of Shoppers Surveyed Used The Regular Checkout Which Checkout Did You Use Today?* What Was Your Primary Reason For Choosing The Checkout Lane You Did? (% Of All Respondents) (% Of All Respondents) Self-Scan* 22.3% Express Checkout 9.9% Regular 67.8% Source: Front-End Focus Shortest line was the primary reason for picking a lane *20% of interviews were only self-scan 31

33 1/3 Of All Self-Scan Respondents Mentioned Privacy As A Reason For Choosing A Lane What Was Your Primary Reason For Choosing The Checkout Lane You Did? (% of All Respondents) REASON Shortest Line/Wait Time ALL RESPONDENTS SELF-SCAN EXPRESS REGULAR 72.5% 61.2% 75.0% 75.9% Privacy/Scan Myself 7.8% 33.6% 1.6% 0.2% Know/Like The Checker 6.7% 0.3% 7.8% 8.7% Only Lane Open 5.5% 2.1% 7.8% 6.3% Near The Door 3.4% 1.0% 4.7% 4.0% Checker Asked To Lane 1.9% 0.3% 0.8% 2.6% Products Merchandised In Lane 1.4% 0.3% 1.6% 1.7% Other 0.8% 1.0% 0.8% 0.7% Source: Front-End Focus 32

34 Trip Spending Varies Significantly By Lane How Many Items Did You Buy & How Much Money Did You Spend on this Shopping Trip? % All Respondents Lane Used Today How Many Items Bought Today How Much Money Spent Today Self-Scan Lane 6.5 $19.07 Express Lane 10.1 $28.90 Regular Lane 19.2 $51.71 Averages 15.5 $42.17 Source: Front-End Focus 33

35 Self-Scan Shoppers Spent Less Time In The Store How Much Time Did You Spend In The Store? (% Of All Respondents) *self-reported Checkout time ranges from 3-1/2 minutes to almost 5 minutes Source: Front-End Focus 34

36 Front-End Purchase Behavior 35

37 90% Of Shoppers Purchased Something From The Front-End During a Six-Month Period In The Last Six Months, Have You Purchased Any Items Merchandised At The Front-End Checkouts In This Store? (% Of All Respondents) No 10% Yes 90% Source: Front-End Focus 36

38 Confectionery, Beverages, and Magazines Have the Greatest Buyer Penetration at the Front-End % Shoppers Buying at Checkout in Six Months (% Of All Respondents) Source: Front-End Focus 37

39 Confectionery, Beverages & Snacks Are Some Of The Most Frequently Purchased Categories at Front-End % Shoppers Buying Frequently at Checkout* (Once a Month or More) (% Of Purchasers Of Categories) A number of categories are purchased frequently *% of shoppers who purchased the category Source: Front-End Focus 38

40 Candy, Children s Items, & Nuts/Seeds Are High Impulse Categories At Front-End % Shoppers Buying on Impulse (% Of Purchasers Of Categories) There are many categories where over 1/2 of the purchases were on impulse Source: Front-End Focus 39

41 Almost One In Three Shoppers Would Walk Away If The Item They Wanted Was Not Available If Item Was Not Available, What Would You Most Likely Do? (% Of All Respondents) 29.9% Source: Front-End Focus 40

42 Shopper Research Summary Most shoppers (73%) shop at least once a week and 2/3 of their trips are quick trips On the average supermarket shopping trip, consumers purchase 15 items and spend $42 The average shopping trip lasts 27 minutes Over 70% of shoppers choose a lane because it is the shortest line 90% of grocery shoppers have purchased an item merchandised at the front-end checkstands over the last 6 months Candy, Gum, Carbonated Beverages, Bottled Water, and Magazines are the front-end categories that most people purchase 30% of shoppers will buy nothing or go to another store if the front-end item that they are looking for is not available in the checkout lane the shopper is using Source: Front-End Focus 41

43 POS Findings 42

44 Nearly Half Of All Grocery Baskets Contain Five Items Or Less Basket Size # Items Over 20 Items 17.7% Items 17.2% 1-2 Items 23.5% 6-10 Items 19.2% 3-5 Items 22.3% Basket size averages only about 12 items due to many Quick Trips Front-End offers opportunity to add incremental items Source: Front-End Focus 43

45 The Front-End Checkstands Deliver $5.5 Billion In Sales To Supermarkets, But Significant Opportunities Still Exist Dollar Sales Of Products Sold At Front-End Checkstands Dollar Opportunity For Improvement Of Front-End Merchandising $7.2 Billion Opportunity $1.7 Billion $5.5 Billion $5.5 Billion Improving Front-End Checkout Merchandising could yield an additional $1.7 billion Source: Front-End Focus, DHC Analysis 44

46 Front-End Purchasing Adds 8.8% To The Basket Ring Basket Ring +8.8% The key is to increase Front-End conversion Source: Front-End Focus 45

47 Multiple Item Purchasing Is Common At Front-End and Should Be Encouraged % Of Front-End Buyers Who Purchase: Single Item 60.5% Multiple Items In Different Categories 12.7% Multiple Items In One Category 26.8% 4.1% Confectionery & Beverage 1.5% Confectionery & Magazine 1.0% Magazine & Beverage 12.5% Confectionery 5.5% Beverages 5.0% Magazines 40% of Front-End buyers buy multiple items Confectionery and Beverage are the most common combo Source: Front-End Focus 46

48 Front-End Focus Strategic Insights 47

49 Key Strategies For The Front-End Recognize the value of the Front-End to store sales & profits Manage the Front-End as a department with a dedicated manager Base decisions on total profits from sales revenue & placement fees Focus on the power categories that drive Front-End sales & profits Take advantage of the growth opportunity by adopting the Best Practices of top performing retailers 48

50 The Front-End Represents About 1.0% of Grocery Store Sales and 1.3% of Profits Grocery Front-End Checkstand Annual Supermarket Sales* = $547 Billion X 1.0% of Sales = $5.5 Billion Sales of Front-End Items Front-End items generate $5.5 billion for Supermarkets *Progressive Grocer 2008 Source: Front-End Focus 49

51 The Front-End Is Larger Than Many Other Retail Categories/Departments % Of Supermarket Dollar Sales Strategy: The Front-End should be managed as a department with its own Category Manager Source: DHC Analysis. A.C. Nielsen 52 weeks ending 12/28/08 Progressive Grocer, **FEF Study. 50

52 Gross Margins Are Much Higher On The Front-End Checkstand Generating Greater Profit Dollars Gross Margin % Percent Of Total Profits** The majority of Total Profit Dollars are driven by selling product, not product placement fees Strategy: The Front-End should be managed to maximize total revenue including both profit from sales & placement fees *- Source: Progressive Grocer 2008 **- Includes Gross Margin % & Placement Fees excluding cost of racks. Source: FEF Study. DHC Analysis. 51

53 Magazines, Confectionery & Beverages Generate 81% Of Sales Profits Category Share of Checkout Dollar Sales (2008) Share of Checkout Total Profits1 (2008) Confectionery* Beverages** Magazines Batteries Video/Media Snacks*** Other GM/HBC Razors/Blades Tobacco Accessories Gift/Phone Cards Oral Care Lip Care Cookies/Crackers Film/Cameras 29.9% 24.3% 24.8% 3.0% 0.6% 3.7% 1.4% 2.0% 2.0% 6.2% 0.6% 0.5% 0.6% 0.3% 30.5% 25.4% 24.8% 3.8% 1.4% 2.8% 1.9% 1.8% 3.4% 1.3% 0.8% 0.7% 0.6% 0.4% 79% 81% Strategy: Focus on the key power categories to maximize checkout performance *- Includes Candy, Gum, Mints. ** - Includes Carbonated, Non-Carbonated, Bottled Water, & Energy Drinks. *** - Includes Salty, Meat, Nutritional. 1 - Includes Gross Margin & Placement Fees. Source: FEF Study. DHC Analysis. 52

54 Beverages & Gift Cards Have Gained Importance Between The 2002 & 2008 FEF Studies 2002 Dollar Shares 2008 Dollar Shares Magazines Total Confections Candy Gum Mints Total Beverages Carbonated Non-Carbonated Other Categories In 2008 Books Children s Items Nuts/Seeds Tobacco Accessories Video/Media Grocery Products Meat Snacks Nutrition/Energy Bars 0.0% 0.0% 0.5% 2.0% 0.6% 0.0% 0.7% 0.1% Salty Snacks* Film/Cameras Razors/Blades Batteries Other GM/HBC Cookies/Crackers Oral Care Lip Care Gift/Phone Cards Source: Front-End Focus *- Includes Salty, Meat, Nutritional. 53

55 Dining Cards Represent 38% Of Front-End Gift Cards % Of Front-End Gift Card Dollar Sales Dining Applebees Boston Market Chili s Olive Garden Starbucks Home Improvement Home Depot Lowes Pier 1 Toys Build-A-Bear KB Toys Toys R Us Electronics Best Buy Circuit City Radio Shack Health & Beauty Bath & Body Works Entertainment AMC Barnes & Noble Blockbuster Dave & Busters I Tunes Clothing Eddie Bauer Food Locker Gap Lands End Old Navy Department Store J. C. Penney Macy s Sears Sports Bass Pro Dicks Sporting Goods Source: Front-End Focus Study. 54

56 Opportunity For Improved Performance at the Front-End Is Huge Total Checkout Sales Per $ MM ACV Index Top performing retailers enjoy a 30% advantage in store performance at Front-Ends Strategy: Take advantage of this opportunity by adopting the Best Practices of top performing retailers Source: Front-End Focus Study. DHC Analysis. 55

57 The Bulk of the Front-End Opportunity Gap Is in the Power Categories, Especially Beverages Beverages, Confectionery, and Magazines Account for 83% Sales Per $ MM ACV Difference Between Medium & Top Performing Stores Category Growth Opportunity Per $ MM ACV % Of Total Growth Beverages $1, % Confectionery $ % Magazines $ % Gift/Phone Cards $ % Snacks $ % Razor/Blades $79 2.7% Batteries $78 2.7% 83% Strategy: Focus performance improvement on the key categories that offer the greatest opportunity Source: FEF Study. DHC Analysis. 56

58 Front-End Merchandising Can Dramatically Effect The Value Of The Lane Average Annual Front-End Dollars Average Annual Front-End Collars of Fully Loaded * Lane Additional merchandising, especially at self-checkout, can drive incremental sales *Fully Loaded = sum of category sales per lane carrying Source: FEF 4 Retailers 57

59 Focus On Power Category Space & Location By Lane Type % Of Front-End Dollar Sales By Lane Type Regular Express Self-Checkout Beverages Confectionery Magazines Gift/Phone Cards Power Categories of Beverages, Confectionery, & Magazines 75.5% 71.3% 74.6% Strategy: Focus on key categories across all lanes and employ different merchandising strategies by lane type Source: FEF Study 3 Retailers 58

60 Conversion Rates Differ By Lane Type Conversion % Transactions with Front-End Item % Conversion By Lane Type Conversion is highest at Regular lanes where shoppers wait longer Conversion is lowest at Self-Scan lanes where the shopper is doing their own transaction and there is less merchandising of products Source: Front-End Focus 59

61 Best Practices 60

62 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 61

63 Best Practice: Manage The Front-End Based On Consumer Buying Behavior Low Scores Mixed Scores High Scores Health Items Salty Snacks Confectionery Razors/Blades Batteries/Flashlights Beverages Baked Goods Cookies/Crackers Magazines Lip Care Nuts/Seeds Oral Care Meat Snacks Household Products Gift/Phone Cards Audio/Video/DVD Tobacco Accessories Other Snacks Beauty Care Grocery Products Film/Camera Supplies Children s Items Focus on key categories that have high Household Penetration, Purchase Frequency, Provide Higher Impulse Sales, and generate higher FrontEnd Sales Nutrition/Energy Bars Books Maps/Horoscopes/Puzzles Source: FEF Study, DHC Analysis 62

64 BEST PRACTICE Devote at Least 83 Linear Feet of Merchandising Space at the Checkout & Stock 530 To 599 Items Total Checkout Sales Per $ MM ACV Index By Linear Feet Per Lane Total Checkout Sales Per $ MM ACV Index By Number of Items Carried Retailers that devote more merchandising space at checkout can generate increased store performance at Front-Ends Source: Front-End Focus Study. DHC Analysis. 63

65 BEST PRACTICE Maximize Sales at Self-Scan Checkouts With More Complete Merchandising Self-Scan Checkout Sales Per $ MM ACV Index By Level of Merchandising Front-End sales at Self-Scan checkouts improve significantly with more complete merchandising. Source: FEF Study. DHC Analysis. 64

66 BEST PRACTICE Confectionery Should Be Stocked on Every Checkout Lane Confectionery Sales Per $ MM ACV Index By Percent Of Lanes Total Checkout Sales Per $ MM ACV Index by Percent of Lanes % Lanes Stocking Confectionery Retailers that stock Confectionery on every lane enjoy greater checkout sales performance. Source: FEF Study. DHC Analysis. 65

67 BEST PRACTICE Maximize Checkout Sales by Devoting 56% or More of Front-End Space to Confectionery Confectionery Sales Per $ MM ACV Index By % of Space to Confectionery Total Checkout Sales Per $ MM ACV Index By % Space to Confectionery % Linear Space Both Confectionery and Total Checkout sales benefit when Confectionery is allocated more space. Source: FEF Study. DHC Analysis. 66

68 BEST PRACTICE Stock Confectionery on Both Sides of the Checkout Lane Confectionery Sales Per $ MM ACV Index By Stocking Confectionery Total Checkout Sales Per $ MM ACV Index By Stocking Confectionery Stocking Confectionery on both sides of the checkout aisle can encourage more impulse sales Source: Front-End Focus 67

69 Some Gum/Mint Over The Belt Improved Total Checkout Performance Gum/Mint Sales Per $MM ACV Index Magazine Sales Per $MM ACV Index Candy Sales Per $MM ACV Index Total Checkout Sales Per $MM ACV Index OTB sales are optimized when merchandised with Confectionery and Magazines Source: Front-End Focus Study. DHC Analysis. 68

70 BEST PRACTICE Magazines Should Be Located on 100% of Checkout Lanes to Maximize Sales Magazine Sales Per $ MM ACV Index By Percent Of Lanes Stocking Total Checkout Sales Per $ MM ACV Index by Percent of Lanes Stocking % Lanes With Magazines Both Magazine sales and Total Checkout sales benefit with additional Magazine exposure. Source: FEF Study. DHC Analysis. 69

71 BEST PRACTICE Maximize Checkout Sales by Placement of Magazines Both InLine and End-cap Magazine Sales Per $ MM ACV Index By Magazine Placement Total Checkout Sales Per $ MM ACV Index By Magazine Placement % Magazine Placement Both Magazines and Total Checkout sales benefit when shoppers have more opportunities to buy Magazines. Source: FEF Study. DHC Analysis. 70

72 Magazines Should Be Allocated At Least 24% Of Checkout Space to Maximize Sales Magazine Sales Per $ MM ACV Index By Percent Of Lanes Stocking Total Checkout Sales Per $ MM ACV Index by Percent of Lanes Stocking % Of Linear Space To Magazine Both Magazine sales and Total Checkout sales benefit with additional Magazine exposure. Source: FEF Study. DHC Analysis. 71

73 BEST PRACTICE Beverage Coolers Should Be Located On 80% or More of Checkout Lanes Beverage Sales Per $ MM ACV Index By Percent Of Lanes Stocking Total Checkout Sales Per $ MM ACV Index by Percent of Lanes Stocking % Lanes With Cooler Both Beverage sales and Total Checkout sales benefit with additional cooler exposure. 80% of lanes must include Self-Checkout and Express where Beverages have a high share development. Source: FEF Study. DHC Analysis. 72

74 BEST PRACTICE Pass-Through Beverage Coolers Should Be Located In-Line at Regular Checkout Lanes Beverage Sales Per $ MM ACV Index By Beverage Cooler Placement Total Checkout Sales Per $ MM ACV Index By Beverage Cooler Placement Beverage sales are higher with Endcap coolers but the Total Checkout performs better when coolers are In-Line. Source: FEF Study. DHC Analysis. 73

75 BEST PRACTICE Provide Beverages At Least 10% Of Checkout Space Beverage Sales Per $ MM ACV Index By Percent Of Space Total Checkout Sales Per $ MM ACV Index by Percent of Space % Linear Space to Beverages Source: FEF Study. DHC Analysis. 74

76 BEST PRACTICE Lead Power Category Merchandising At Self-Checkout With Beverages Self-Checkout Sales Per $MM ACV Index Beverage Share Of Dollar Sales #1 Share #1 Share Source: FEF Study. DHC Analysis. 75

77 BEST PRACTICE Limit GMHBC to No More than 10% of Checkout Space GMHBC Sales Per $ MM ACV Index By Percent Of Space Total Checkout Sales Per $ MM ACV Index by Percent of Space % Linear Space to GMHBC* Total Checkout sales suffer when too much space is allocated to the GMHBC segment. * GMHBC includes Batteries, Razors/Blades, Cameras/Film, Lip Care, Oral Care, Beauty Care, & Health Care excludes Gift cards. Source: FEF Study. DHC Analysis. 76

78 BEST PRACTICE Limit Gift Cards to No More Than 5% of Checkout Space Gift Card Sales Per $ MM ACV Index By Percent Of Space Total Checkout Sales Per $ MM ACV Index by Percent of Space % Linear Space to Gift Cards* Total Checkout sales suffer when too much space is allocated to the Gift Cards segment. * Excludes retailers own gift cards Source: FEF Study. DHC Analysis. 77

79 Best Practice Checklist Checkstand Devote at least 83 linear feet Stock between 530 and 599 items Generate at least 80% of checkout sales from Confectionery, Magazines, & Beverages Merchandise all self-checkout lanes Confectionery Stock on all lanes Allocate at least 56% of space Stock on both sides of the lane Magazines Merchandise on end-caps and in-line Stock on all lanes Allocate at least 24% of space Beverages Stock on at least 80% of the lanes Pass through coolers at regular lanes Rear facing endcap coolers at self-checkout and express lanes Allocate at least 10% of space GM/HBC Provide 7% to 10% of space Gift Cards Allocate 4% to 5% of space Focus on Dining, Home Improvement, Electronics, & Entertainment Cards 78

80 Recommendations Manage the Front-End as a department with a dedicated manager accountable for Front-End Sales and Profits Focus on Power categories on each lane Merchandise all self-checkout installations to drive incremental purchases Employ different merchandising solutions by lane type to optimize sales and profits Encourage consumers to purchase multiple front-end items through tie-in or combination deals Merchandise Beverages on Self-Checkout and Express lanes with endcap coolers 79

81 Contact Us For information about any of the front-end studies, please contact either: Bill Dusek or Ray Jones (847)

82 Appendix 81

83 Shopper Demographics 82

84 Respondents Included Males and Females and Diverse Ethnicity Gender Ethnicity (% Of All Respondents) (% Of All Respondents) Source: Front-End Focus 83

85 Respondents Included a Broad Ranges of Household and Family Types Number Of People In Household (% Of All Respondents) Marital Status (% Of All Respondents) Source: Front-End Focus 84

86 Respondents Included a Broad Ranges of Ages and Incomes Age (% Of All Respondents) Household Income (% Of All Respondents) Source: Front-End Focus 85

87 More Than 40% of Respondents Had Children at Home Children Living In Home (% Of Respondents) Ages Of Children Living In Household (% Of Respondents with Children) (Multiple Responses) Source: Front-End Focus 86

88 Over 25% Of The Respondents Were College Educated & Most Were Employed Education (% Of All Respondents) Employment (% Of All Respondents) Source: Front-End Focus 87