CPGmatters: Collaboration Needed to Enhance Checkout Merchandising
By Al Heller
Through a special arrangement, presented here for discussion is
a summary of a current article from the monthly e-zine, CPGmatters.
According
to a study by Dechert-Hampe & Co., 14.9 percent of shoppers
buy an incremental item at the checkout. This includes 13.6 percent in express
lanes, 15.7 percent in regular lanes, and 12.7 percent in self-scan lanes.
The
study, Front-End Focus: Best Practices for Superior Checkout Merchandising,
also found that 40 percent of all checkout purchases include multiple items
such as soda and a candy bar.
“We encourage retailers to cross-merchandise, mostly by suggestive signage
such as photos of people enjoying the items together. Occasion-based marketing
such as movie night at home can work as well at checkout as in the aisle with
assembled products,” Raymond D. Jones, managing director, Dechert-Hampe, told CPGmatters.com in
an interview.
“Opportunities to improve checkout performance are huge. We estimate
that for any basket, the incremental sales of selling one more item is about
eight percent,” added Mr. Jones. “News developments drive checkout
opportunities. When the avian flu was a threat, hand sanitizers were hot. And
technology advances obsolete some items. Remember disposable cameras.”
Mr.
Jones proposed that CPG companies assess specific brands and items for checkout
suitability: Do they have high household penetration? Are they bought frequently?
Are they impulse, or on a shopping list? (Hint: impulse is better.)
“Don’t just pay retailers to be at the checkout. If an item
doesn’t
suit, it won’t work and you’ll waste money,” he said. “Also
project whether checkout will generate enough incremental sales to justify
paying the allowances. And don’t place product at the front-end if it
will cannibalize inline sales.”
He added that CPG companies can tailor
item packaging to make products checkstand-ready; for instance, purse sizes
of lip balm or mascara, trial sizes of pain relievers and cold remedies, and
6-oz packages of nuts.
Mr. Jones also agreed that self-checkouts require a longer
lead-in approach for people to peruse magazines and CPG branded items, because
people no longer shop once they begin to execute their transactions. “People
go through a regular checkout in three stages — waiting, in queue placing
items on the belt, and transaction. Most impulse buys occur in stages one and
two. Self-checkout is just two stages, so you have to catch people farther
back,” said Mr. Jones.
Discussion Questions: How can stores further maximize
checkout merchandising? What are some bad habits you’ve noticed across
retail with regard with checkout merchandising?
It is clear that the checkout lane represents an opportunity for retailers to drive incremental revenue and add-ons for purchases. This strategy has been in place for some time. What is different now is that retailers are tending to sell the space at the checkout counter to the highest bidder rather than carefully craft the checkout experience to maximize value for their customers.
Rather than a treating checkout space as real estate, retailers should consider the needs of their customer segments, and design the experience to provide added value to targeted segments.
The challenge at the POS/POP is the limited space. It is also HIGHLY price sensitive. Where traditionally this has been a high ROI area, we are seeing (at least where I shop), the sale items in the candy/gum rack stand out (since I have three kids).
Retailers have lost the art and science of capitalizing in the checkstand aisle. Most retailers have gone either to a clean and boring appearance, while others load up only on fast moving commodities that produce low profits. Missing in many instances are the “intrigue” impulse purchases that produce surprise, excitement, and high profits.
This is just one more age-old retail challenge. And, by the way, POS product merchandising is not limited to food/mass merchandise retailers. Apparel, department, etc., all need to optimize this space. Is the answer as simple as choosing the top 25 shelf-stable volume movers and stock as many of those that make sense at the POS to ensure every customer sees them, since they are the most popular items in the store? Who cares if they cross multiple categories?
I’m afraid Mark is right. When candy company X doesn’t pay the fee, they lose SKUs and move to the bottom of the shelf. The impact on the brand is devastating. The space is too dear for retailers to want to please their shoppers. It’s the only store part with 100% of the traffic.
The opportunity at check out should be assessed by traditional checkout lines and self checkout.
In the traditional setup, I agree that signage and packaging are key. I don’t think price is the key decision factor, in fact think that packaging might make the difference. For instance, some trial sizes of toiletry items might catch the eye for someone about to travel as well as purse/pocket friendly sized items. Also the mini C-store items such as a soft drink or event branded wine cooler can trigger the impulse buy.
I think the opportunities are far less optimistic in self checkout. Maybe studies show something different, but my understanding is that consumers lock into a “checkout mode” once engaged with the machine. The advantage of self check out is that you can breeze through quickly and unless an item is positioned early in a waiting Q, it won’t be considered.
Checkout merchandising is SO MUCH FUN! What would I do without my mints, dark chocolate Reeses, and lurid reports about Lindsay, Paris, and the Jennifers? Batteries! Bought Avatar there. Twenty incremental buckaroos for that basket.
I use self-checkout most times, though, so I don’t get my checkout merchandising fix very often any more. I’d like to be able to browse the impulse items from that venue, but there’s always another customer in line glowering if you’re not quick and efficient in the self-checkout area. Their ire is transferred from the checker to YOU.