Front-End Focus

How important is checkout merchandising? The typical checkout lane delivers $36,000 in annual sales to a retailer. Kmart reportedly lost more than $100 million in sales by experimenting with self-scanners last year without first developing a sound merchandising plan. Front-End Focus: Best Practices for Superior Checkout Merchandising was conducted in 2002 by Dechert-Hampe & Co. for checkout heavyweights Masterfoods USA, Time Distribution Services, and Wm. Wrigley, Jr. Co. Released in spring 2003, the study uses scanner data and consumer surveys to provide a comprehensive look at the overall state of checkout merchandising, the encroachment of beverage displays, and the potential impact of self-checkout technology. Eight major grocery chains, representing 5,500 stores, participated in the study.Charts 01-08 at right are from the 2002 Front-End Study. Highlights from the study:16% of shoppers purchased something at checkout on the day they were interviewed (17% at a regular lane, 15% at an express lane, 12% at a self-scan lane).Compared to results from 1998, overall frequency of buying at checkout has declined.Top categories purchased at checkout include: gum/mints, candy, magazines, and soft drinks.Self-Scan users skew toward the younger, higher-ducation, higher-income, family demographicsQuick and convenient are key reasons why people like self-scanSelf-scan users shop more frequently than regular lane users but purchase less per tripA lower percentage of consumers purchase checkout products at the self-scan compared with non-self-scan lanesMerchandising at the self-scan lane can have a dramatic effect on purchase activityFront-End Focus PresentationTo view the complete Front-End Focus Study results in Flash format, click on the "Front-End Focus Presentation" in the Attached Files section at right.Supplemental charts at right were obtained from the following sources: Chart 09: Front-End Study, 1999, a precursor to the 2002 study.Charts 10, 11: Supermarket Checkout Puzzle by Comag Marketing Group (CMG)Charts 12, 13, 14: Market Basket Analysis of Magazine Purchasers in the Grocery Channel by Management Science Associates, Inc. (Visit the Magazine Publishers of America web site at magazine.org for more data from this report.)Charts 15, 16: Technology Review Highlights 2003 by the Food Marketing Institute.Additional Facts:--There are at least 10,000 self-scanning machines in use throughout the country, according to industry estimates.--Total number of self-checkout lanes increased by 47% among North American retailers in 2002, according to IHL Consulting Group, Franklin, TN. Growth was spurred by adoption in such new retail categories as DIY (where Home Depot plans to install the technology in 800 stores) and deeper penetration in the grocery, warehouse club and mass merchants segments. --Based on reports from such chains as Kroger, Kmart, and Albertsons, IHL estimates that self-checkout machines are handling anywhere from 15% to 40% of daily transaction volume and 12% to 30% of daily dollar volume.--The number of beverage coolers per every 10 checkouts in supermarkets doubled, from two to four, between 2001 and 2003, according to Source Interlink Companies. Pepsi and Coca-Cola bottlers reportedly pay display fees of $2,000 to $3,000 for each checkout cooler placed.--In winter 2003, Kmart said it would remove self-checkout systems from its remaining stores after disappointing results. However, experts do not believe Kmart's decision, announced as part of plans to help the chain emerge from bankruptcy, is at all indicative of any overall dissatisfaction among retailers.

Front-End Focus

P2PI MEMBERS

JOIN P2PI

Related Images

Business Topic

Company

Market Segment