BrainTrust Query: Loblaws Quits Candy Cold Turkey
Commentary
by Doron Levy, President, Captus Business Consulting
One of the lines I love about our industry is that the only constant in retail is change. Reinventing
ourselves is now more critical than ever and one chain that has done
a great job of pulling themselves from the brink of extinction is Canada’s
Loblaws. New layouts, aggressive pricing and expansion of service and
merchandise have helped the mighty Loblaws regain footing in the ultra-competitive
grocery industry.
So what’s my
problem now?
I like to get
my daughters treats when I pick them up from school on Fridays. Loblaws
is on the way so I used to stop in and head to the cash registers to
peruse the wire racks that are usually filled with chocolate, gummies,
sour whatever you can come up with and other bad-for-you goodies. On
a recent Friday, however, horror washed over me. The only thing I found
was a cash register! Really, just a register. No candy, no Bic Lighters,
no Purel Travel Size, no Duracell batteries, nothing! I couldn’t even
find a National Enquirer to mull over while I was waiting in line!
I became desperate
so I sought out help, which they do have in abundance now. I was directed
to small racks tucked in a back corner amongst Halloween pallets. Two
racks, filled with Nestle product (obviously paid for by Nestle). No
Allans or Maynards products. What was I going to do? My girls love sour
stuff. So I was forced to purchase big packs (pillow packs as we call
them in the trenches) from the regular candy aisle.
My first impression
was: parents are going to love this. They can now pay for their purchases
without having their kids pawing and screaming for candy while waiting
in line. Then logic appears. This is the worst possible move any retailer
can make. The checkout is the last possible opportunity to sell your
customer something.
After the kids went to bed, I went on a field trip to Sobey’s,
Shoppers Drug Mart and Walmart. Lo and behold, I found expansive, well stocked
checkout sections with an assortment of unique, high-margin and high-velocity
products. Walmart had even put impulse displays at their self service
registers. At this point, I’m starting to wonder what the motive is behind
Loblaws’ deletion of the products at the checkout. Why
pass up on that last opportunity to sell to your customer?
I admit that
the new Loblaws layout does look a lot cleaner but I’m still scratching
my head over why they would give up all that extra money at the register.
If their past layout wasn’t bringing in the bucks, I would revamp and reorganize;
not obliterate. In the meantime I will have to stop at the Shell on the
way to school to get the goodies and I can always read the National Enquirer
at my sister-in-law’s.
Discussion Questions:
How do you feel about taking away the merchandise in the checkout
line? What are the pros and cons of removing this section? Which
chains most effectively execute at the checkout lane?
The competition of Loblaws is probably smiling. Retailers need to take advantage of consumer weaknesses. Making it easier on parents? First, it doesn’t teach bad parents how to control their kids and second, it reduces an opportunity to separate cash from the parent’s pockets.
Retailers need to put the most impulsive, eye catching products at the checkout, especially those that are desired by children. As retailers, we want these children to grow up and not think twice about being an impulse shopper. What better way to imprint this habit on their brains except by putting impulse items at the checkout?
This is one of those queries we occasionally get where I’m left scratching my head and wondering two things–they must have had a good reason for doing this and what could that possibly be? Can’t come up with a good answer.
Doron – have you had a chance to visit a few stores to see if this is pervasive or is it a test?
The checkout area is the one place in the store that you can be certain every customer will eventually come to. As such, it has always been a place not only to handle the purchase process but also to make a final sale. In supermarkets, it has evolved from a place to sell candy and TV Guides to one that carries a wider variety of merchandise including single-sell bottles of soft drinks. In some cases it has been done well and in others it’s simply been a hodgepodge of “stuff.”
Removing this merchandise does have some benefits. It “cleans up” the front end, may actually speed up the checkout process (no magazines to read), and doesn’t require any labor to stock and straighten.
On the other hand, it does remove that last chance to sell some fairly high-margin merchandise. While it may increase the actual speed of the checkout process, it is likely to lengthen the perceived time involved as it provides the customer nothing to occupy their time while waiting.
The article does not indicate Loblaws’ rationale for taking this step. Perhaps their intent is to increase the average candy purchase by only offering larger bags but in my experience, forcing customers to do what you want and not what they want is not a good move.
If there was a marketing strategy behind the change (let’s say a paternalistic desire to remove unhealthy temptations at the checkouts) then one would expect that the press announcements would occur in tandem.
I’m really at a loss to understand or explain the switch unless it was a test store. I have been wondering what the benefits might be, I don’t see how it could improve the speed of checkout or the waiting-in-line experience. If anything, it removes add-on sales and the ability to distract oneself reading the covers of the latest trashy magazines.
Impulse merchandising is a multi billion dollar business and it seems senseless to give up that volume.
If this is widespread, it’s lunacy. I can see having one or two aisles that are dedicated “no candy” so parents can steer into them and not have their kids throwing hissy fits wanting stuff. But this does not serve the consumer, and it not only loses sales but the revenue generated from the companies paying to put product there. I have to think this is a test, or some local manager’s misguided whimsy. Doron?
Maybe it was an efficiency expert trying to speed up the line without training the word “hustle” into the cashiers.
Now there is a sales Gap in Loblaws’ stores. True, they are a lot cleaner but they aren’t meaner. Kids loved the cluttered checkout lanes. It gave them a sense of purpose for shopping with moms. Now they’ve been abandoned.
When stores are in trouble they rearrange to deal with change, doing things that can seem strange. And that seems to be what Loblaws has done. But the paradox of caution-ness appears, if they have, in fact, found a new magic formula for front-end merchandising, the front ends of retail arenas will follow Loblaws like mice following the Pied Piper. But let’s not count on that happening, at least, not yet.
Duh!!! Why would you do this? There is so much impulse buying and some of it is convenience. Not sure what the rationale was but I agree, I’m sure their competitors are smiling.
Just to clarify, this is the new standard format for the Loblaws banner. Other chains under Loblaw such as No Frills, Fortinos, Great Canadian Superstore and Zehr’s have kept candy racks in place.
I don’t know who owns the racks where the merchandise was displayed but if I were Loblaws, I would store them for awhile.
I think the only shocking thing here is that Loblaws actually listened to the target consumer. With smoking on the decline, childhood obesity at epic proportions and working mothers trying to maintain their sanity in an increasingly challenging environment, Loblaws actually listened. Unbelievably, they seem to have put the feelings of the consumer ahead of their own need for profit. What a concept!
How many times have we all heard the mother (or father) at their wits’ end arguing with their child who is pleading for candy. Candy-laden checkouts are not only unfair for the mother but they’re even more unfair to the child who really can’t be expected to make a rational decision when a chocolate bar is placed carefully at eye-level.
Increasingly, consumers are looking to retailers to help them do the right thing. Funneling people past a feeding trough of candy with their kids in tow is hardly “the right thing.”
Kudos to Loblaws for putting an end to an archaic merchandising practice from another era. I hope it pays off for them in happier customers.
I don’t like to jump to conclusions without fully understanding what’s behind the decision, but my first reaction is that this is a bit goofy. Easy sales with high margins are the hallmarks of the checkout line. In all retail formats, the easiest sale is at the point of sale, when the customer is already committed to making a purchase. The added impulse item is hard to say ‘no’ to.
I’ll get out to my local Loblaws store and watch how long this decision sticks. My guess is that it won’t be for too long.
This is just one of those moves–and everyone seems to agree–where you ask yourself “What where they thinking?”
Or, maybe as Jerry Seinfeld might have said, “Who are the marketing geniuses that came up with this one?”
The preceding fine minds have almost unanimously said that this move by Loblaws borders on lunacy. Without knowing the reason why Loblaws took such drastic action, there really is no discussion.
It would be fascinating to know why. Loblaws may be very right, but how did they get to this point? If they are correct, this is an earth shaking development for the supermarket industry.
This decision by Loblaws has been puzzling.
At store level, the customer service rep said it was part of the “remodeling.” At the head office, the Customer Relations Manager said that the stores were all going to a similar format–all the candy in just one store section, magazines in one location. She said they were working to simplify all the different banners in terms of making layouts and department locations similar as they remodel.
The remodeled stores are brighter, cleaner and less cluttered. Sounds like they are working on store efficiency targets–out-of-stocks due to the “new” supply management system were prominent for the last two years, causing problems across the chain. Interesting to follow up and see if plans change!
Yikes! Not only is Loblaws missing out on the impulse sales opportunity, they also are not capitalizing on a strategy that the likes of Disney World, belt lines at register checkouts, and stanchion rope lines at banks and airports long ago perfected.
When you have a consumer in line, keep them engaged, and offer them the sense that they are moving forward. The merchandise in those lines offers the fidgety consumer items to ponder, and keeps them engaged in the store, not fuming about where they are in line.
Of course, there’s been discussion around candy-free checkout aisles for years. They are a boon to parents of young children, but the rest of the store community doesn’t seem to gain from this.
I was curious about Loblaw’s rationale for this decision, so I did a bit of searching and found some interesting references:
Blogger reprints a letter from Loblaw’s investor relations about “clutter-free” checkouts.
Loblaw Aug. 2007 release about new Milton, ON store highlights “Clutter-Free Check Out Lanes.“
From these (and others) I conclude that Loblaw has had more than two years of experience with this concept and must be satisfied that it’s an overall win. How these stores make up for the lost revenues from the periodicals, confection and battery vendors remains an unanswered question.
I agree with most of the other comments that this makes little sense. Not only is it a lost sales opportunity but it might also have a negative impact on waiting time satisfaction. There is a lot of research documenting that customers who are bored waiting in line perceive the wait to be longer and are much less satisfied than those who are entertained. All the magazines and product give the consumer something to look at and consider.
I would not be surprised if the actual wait time drops slightly but so does satisfaction with wait time.
Do not–repeat, do not–get between a valued customer and the product that she wants to buy. Loblaws must have some research showing that this is a good move, but I’m guessing that customers who are denied a dark chocolate fix will be royally ticked.
Loblaws is pulling all the merchandise from the checkout aisles? Hard to imagine what could be management’s reasons for taking such anti-profit measures. Can’t wait to learn their point of view and reasoning.
I’m more surprised by the vehement reactions than by the move itself. Clutter is retail’s big red devil these days and nothing says clutter like candy! I think that Loblaws, like Walmart, Walgreens and others, is exploring ways to take clutter clearance to a whole new level…and perhaps focusing on retail’s most coveted shopper in the process–mom!
I don’t get this move at all. Just a personal observation; I don’t do the grocery shopping in my household often but when I do, I grab my wife’s favorite candy bar on the way out. She always appreciates it. Happy wife, happy life…retailers that help me with this are my favorites.
Rather than remove the guilty pleasure of impulse buying, they should be working on making the merchandise at the checkout super-cool. It should be the coolest checkout in town. Heck, in the universe. That’s what they should be spending their time focusing on. Being better, not being more boring.
Why it’s un-American!
Oh that’s right, this is Canada…seriously though, it’s rather curious to read some–or even most–of these comments. We constantly hear calls for “responsible retailing” but when some retailer actually acts on this premise, the cry of anguish arises because people come to realize selling less “bad” things means selling less overall. Of course one can argue this needlessly inconveniences the occasional snacker (probably true) and there are always the usual hard-core libertarians (you know who you are) who say that people should be more responsible, but in no way should any entity do anything to encourage this.
I applaud Loblaws’ management. It really takes guts to do this and they are my new retail heroes.
I love self-scanning checkouts because they don’t have the space to merchandise ultra expensive junk. Same with Aldi. No stuff at their checkout lanes, and I like that.
Looking at the accompanying photo, the checkout lanes really look neat and clutter-free.
Bravo Loblaw!
From my view as a cashier: the majority of people looking for a candy bar in my line are adults, not kids. Sure, every once in a while there is an annoying child who won’t take “no” for an answer, but that’s pretty rare beyond the toddler stage in my experience. (And is, I suspect, tied in to overall behavior issues.) But adults will actively search for their favorite candy bar or gum. When I ask shoppers “Do you want this in a bag (with the rest of the groceries)?” the majority say, sheepishly, “No, I’ll take it,” and put it in their purse or shirt pocket.
I think that this is a brilliant idea.
Why?
1.) It differentiates them from the competition. In my hometown, the Real Canadian Superstore just went “candy free.” This is probably timely because the Walmart which is right next door has gone “supercenter” and added an entire grocery section. Based on my own personal buying patterns (and the amount of traffic in the grocery aisles at Walmart) since the Walmart Super Center has been open I think it is safe to say that Walmart is taking a significant amount of the local grocery industry. Clutter-free aisles is a reason for mothers shopping with children to choose the RCSS rather than Walmart, and I am sure that Loblaws would love to sacrifice the impulse buys at the checkout in order to get the entire grocery budget for the week.
2.) Am I the only one who uses those candy and magazine racks to dump merchandise that is in my cart but I have decided to not purchase? Sometimes I get to the front of the store and realize how much stuff I am buying and want to get rid of some of it. If I have no where to dump it and there is a line behind me I am likely to just buy it rather than dump it. 🙂 This obviously translates into higher revenue.
3.) If it reduces time spent in checkout I am more likely to shop there than the Walmart with its huge lines!
Just my $0.02.
I can think of at least a dozen other areas of the store where Loblaws–and most every other merchant–could devote some much-needed time and attention. Even the checkout lane. Rethink some of the impulse items, for instance, or create a few lanes without the items. But eliminating all the lane’s goodies (salty, sweet, sexy, and silly) is crazy. Bare lanes are boring–and they don’t ring up sales.
Lowlaw is not the first chain to do this.
See below case study from 2007 regarding Ferrell Quinn, infamous leader of Superquinn stores in Ireland:
The Superquinn experience is not so much a product of high-concept design principles as it is the result of Quinn’s first principle: In every deed, focus on persuading the customer to return. Quinn calls it the “boomerang principle.” The challenge in building a business on the boomerang principle, he says, is that, in many cases, the option that brings the customer back isn’t as quantifiable as the option that maximizes profit on the current transaction.
Take the standard industry practice of stocking candy at checkout counters, which causes a hassle for moms shopping with kids. “They kick up blue murder until the mother buys them something from the display of goodies,” says Quinn. While Quinn had hard data spelling out the considerable revenue he would forgo, he had no accountant-friendly evidence on the benefits of removing the sweets. But clearly, removing the displays presented an opportunity to generate repeat business from grateful mothers. “This is where leadership comes in,” he says. “It requires courage to take the unquantifiable option.” Superquinn ultimately went with the customer-driven choice and banned sweets at checkouts across the entire chain–to an immediate and overwhelmingly positive response.
Properly executed, the front end can not only be a solid profit contributor but it could serve as a convenience center so that shoppers don’t exit the store without that one last item. I’m not convinced that Loblaws’ move will be mirrored by others … at least not cold turkey.
In spite of the Superquinn example, the only justification I could see for not merchandising at the checkout is if it speeded the process, and I can’t conceive of any reason this would be true, since the checker largely controls this.
Obviously one could “clean” the checkout appearance without canceling all merchandising. In fact, selling only a much more limited selection there would probably result in sales increases. The candy issue, relative to kids, seems nuts, given the small share of shoppers with children. So you are going to deny all your other shoppers?
This is clearly a poor decision. Dumb and dumber. Loblaws has failed some of the basics of retailing and their sales and profits will show this. No retailer would NOT include products at the most profitable part of their store. To ignore this, and the most profitable products that belong there (batteries, gum, candy, magazines, and other high-margin, impulse items) speaks more about Loblaws than anything else. What else is possible here?
Loblaws definitely deserves some credit for the “zag” they are taking. Given the state of economic activity, which admittedly is not as weak in Canada, this is indeed a bold move. The fact that so many of us are questioning it makes it even more interesting.
That said, it will be surprising if a US-based chain follows suit….
I have read through all the comments about how good an impulse area the checkout is and how wrong Loblaws is to remove the sweets and treats.
In the UK the retails came under huge pressure from customers, press and health groups to remove sweets from checkouts. Some of the major grocers like Tesco did extensive customer research and removed the category from all the large store checkout queues over 10 years ago. The customers were very appreciative and their business has not suffered.
It is one of the areas where listening to and putting the customer first can have a positive impact on the business by providing the customer with an improved shopping experience.
As a shopper with children, I really appreciate not having the temptation for both myself and the children. I hope it works for Loblaws.