Leveraging the Front End
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Transcript of Leveraging the Front End
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Optimizing
Maximizing Shopper InteractionIn A New Era Of Technology
Front End CheckoutMerchandising
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Front-End Focus Leadership Sponsors
The Front-End Focus Leadership sponsors are committed to
providing continued front-end merchandising insights andintegrated 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 $5.5 Billion for Supermarkets
Improving Front-End Checkout Merchandising could yield an additional $1.7 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 2008
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Grocery Front-End Checkstand
Store Sales Store Profits
1.0%
1.3%
$7.2 Billion
$5.5
Billion
$1.7Billion
$ Opportunity ForImprovement Of
Front-EndMerchandising
Annual SupermarketSales* =
$547 Billion x1.0% of Sales =
$5.5
Billion
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Incremental Sales Driven By Impulse Buying Are Key
Percent of Decisions Made In-Store
Magazines and Consumables drive incremental sales and thosepurchase decisions are generally made in store
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* Source: Front-End Focus
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Beverages, Magazines, & Confectionery Generate Over80% 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%
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Front-End Power Categories
$ Share of
Front-End Sales
Impulsiveness
of 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
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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 CareHousehold Products
Audio/Video/DVD
Other Snacks
Beauty Care
Grocery Products
Film/Camera Supplies
Childrens Items
Nutrition/Energy Bars
Books
Maps/Horoscopes/Puzzles
Low Scores
Salty Snacks
Batteries/Flashlights
Cookies/Crackers
Nuts/Seeds
Meat SnacksGift/Phone Cards
Tobacco Accessories
Mixed Scores
Confectionery
Beverages
Magazines
High Scores
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* Source: Front-End Focus
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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 dont select a
checkout lane based
on 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
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Visual Attention is Focused on the Power Categories
Resulting in Incremental Sales
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* Source: TWR, Indiana University
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Visual Attention is Focused on the Power Categories
Resulting in Incremental Sales
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* Source: TWR, Indiana University
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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
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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%
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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
Annual Value of a Checkout Lane= $24,000
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* Source: Front-End Focus
Average AnnualFront-End Dollars
$8,772
$25,900$23,671
Regular Express Self-Checkout
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Audits Suggest That 50% Of Self-CheckoutsAre 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
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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
IncongruentSCO areas with items or categoriesthat have little shopper relevance,
but appear to generate somerevenue and/or liquidate inventory
Tacked-OnQuick-fix solutions that simplyposition merchandising next toa SCO
Cluttered
Disorganized, bazaar-likeenvironments that are congestedwith fixtures, creating queuingconfusion and hindering SCOcheckout access
PoorMerchandising
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IncompleteSolutions that lack key categoriesshoppers seek and buy everyday
from regular checkout lanes
InconsistentSCO environments withmerchandised categories that varygreatly by SCO lane
DisconnectedSolutions that were designed with
little regard to shopper needs andbehavior/ checkout process
UninspiredFunctional, transactional solutionsthat still have opportunity to betterinspire impulse purchases
Good, Not GreatMerchandising
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EmptySCO environments thatsacrifice profitable front end
sales for operating efficiency
ZeroMerchandising
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50% of SCOshave NO
Merchandising
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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
10997
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Low
Merchandising(400 Inches)
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Beverages, Magazines, & Confectionery AreThe 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
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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 leverageboth 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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d l ll b
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Front End Solutions Collaborative Team
Best Practice Fixture Designs
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k h d d
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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-endmerchandising 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 InteractionIn A New Era Of Technology
Front End CheckoutMerchandising