Shoppers Checking Out on Impulse Items

Discussion
Jul 26, 2006
George Anderson

By George Anderson


Self-checkout systems have a number of benefits. Retailers appreciate being able to reduce labor costs or free up people to work in other areas of the store. Some consumers simply
prefer going through the checkout on their own.


A new study from IHL Consulting Group, however, suggests there may be at least one drawback to operating self-checkouts. It appears as though consumers who check themselves out
spend much less on impulse items, such as gum/mints, candy, beverages, magazines and other products typically found at the front-end.


Consumers using self-checkouts purchase impulse items 45.4 percent less on average than shoppers who use lanes manned by cashiers. Women at self-checkouts are even less likely
to purchase impulse items (50 percent less) than men (27.9 percent less).


Greg Buzek, founder and president of IHL Consulting said in a company press release, “Retailers are being forced to re-think their merchandising at the front-end as they deploy
self-checkout systems. The impulse displays have not caught up to this new technology. By definition these are impulse items — thus they must engage the senses. Retailers such
as Meijer and Kroger have adjusted by offering items such as rotisserie chickens and fresh baked breads to rely more on the sense of smell to drive sales rather than simply visuals
when trapped in a staffed lane.”


Finding new means to drive impulse sales at the front-end will become more critical as stores continue to rollout more self-checkout systems and consumers become more willing
to use them.


According to IHL, consumers spent over $110.9 billion on self-checkout transactions in 2005. That number was 35 percent than the year before.


Eighteen percent of self-checkout consumers say they use the lanes “all the time” and 29 percent say they use it when there is a line at checkouts with cashiers.


Discussion Question: How can retailers address the front-end sales challenges posed by consumers’ use of self-checkout systems?

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12 Comments on "Shoppers Checking Out on Impulse Items"


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Odonna Mathews
Guest
Odonna Mathews
14 years 7 months ago

Consumers want to check out quickly – whether it is in a regular checkout or a self-checkout – and the fewer displays or obstacles getting in their way the better. More retailers need to make this a priority.

I would be wary of putting too much at the self-checkout simply because the space may not justify the sales. Customers are just too busy putting items on the belt, pushing buttons and often bagging to notice much else. And if the customer also has young children with them, there are even more distractions. Thus, the impact of impulse purchases is greater for women (down 50%) than for men (down 27%) in this recent study.

And I can’t help thinking that a cold drink to go, fresh flowers, or an appropriate seasonal product nearby might be the more likely choices to offer near self-checkout.

MARK DECKARD
Guest
MARK DECKARD
14 years 7 months ago

Hey, here’s a twist. Maybe the self-checkout crowd are the folks in line that statistically spend less on impulse items anyway.

By voluntarily cutting themselves out of the herd, they’re now more measurable. Did the percentages stay the same or increase for those non-self-serve types standing in the other lines?

There are lies, damn lies and statistics….

James Tenser
Guest
14 years 7 months ago
Seems that the developers of self-checkout systems may have perfected their operation, but neglected to study their impact on consumer behavior. Several hypotheses deserve investigation: H1. SCO users may be more time conscious and therefore less predisposed to notice or consider impulse items located nearby. H2. The act of using the SCO device may be so involving (that is, it requires more focused attention compared with a conventional checkout) that users are less likely to pay attention to impulse items. H3. Retailers may have generally placed fewer impulse item displays on their SCO lanes due to the physical configuration of the equipment. H4. SCO users may simply be self-selected for different personality traits or shopping attitudes that predispose them to be less prone to impulse purchases, regardless of the checkout method. We can speculate about this all we want – as Martin and Paula observe, it’s an example of “unintended consequences.” I say measurement trumps speculation. Makers and users of SCO systems had best do their homework on the consumer. In this business of narrow… Read more »
Karin Miller
Guest
Karin Miller
14 years 7 months ago

Sure, the longer the wait at checkout, the higher the transaction value of impulse items. This no doubt applies regardless of whether or not the cash register is manned. I agree that selling impulse items in a self-checkout environment is a challenge.

However, expected in-and-out time may determine where shoppers shop in the first place. Although Ralph’s is further from my home, I will shop there vs. Albertsons for no reason other than that I will, generally, be out sooner, partially because they have self-checkout lanes, which I will always use if the wait is shorter. So the average sale may be lower, but Ralph’s gets the whole order!

My opinion is that Fry’s Electronics has optimized the balance between customer experience and the potential to boost incremental sales. Their single queue checkout line forces the customer through a long, wide, aisle that has enough impulse merchandise to fill a 7-Eleven! Even when the line is long, the wait isn’t, and the transaction is always handled by a person.

Raymond D. Jones
Guest
Raymond D. Jones
14 years 7 months ago

Dechert-Hampe has also studied the impact self-checkouts on impulse sales. The Front-End Focus study was sponsored by Masterfoods, Wrigley, and Time-Warner and involved eight major retailers. The study can be found at frontendfocus.com.

We found that consumers do not tend to switch lanes to buy impulse items and they are less likely to buy on impulse at self-checkouts because they are involved in the transaction process itself. This can result in significant declines in consumer buying. We have worked with retailers to design new merchandising racks (like the one referenced at Kroger) that are more appropriate for self-checkouts.

This demonstrates a basic premise that retailers must learn to use more inventive merchandising to sell product to consumers rather than just making it available for sale.

Martin Amadio
Guest
Martin Amadio
14 years 7 months ago

My experience with self-checkout is anecdotal, but having designed and produced numerous front-end checkout lane display/merchandisers over the last 20 years, I know the value of proper space allocation and layout to drive impulse sales at the checkout lane.

I have not seen any front-end displays attached to the queue of most self-checkout lanes, regardless of shopping venue.

Actually, the physical layout and the way consumers approach self-checkout do not lend themselves to traditional checkout lane merchandisers. This may be an opportunity to re-think impulse merchandising for the self-checkout consumer. I am sure magazine publishers and distributors will cooperate.

Maybe in their quest to reduce labor costs, retailers forgot how profitable impulse items (magazines, candy, batteries, razors, soft drinks, etc.) could be.

This is what CIA calls “blow-back”…unintended consequences.

Mark Lilien
Guest
14 years 7 months ago

Certainly it would pay to merchandise self-checkout lanes appropriately to maximize impulse sales. It isn’t clear if shoppers who prefer self-checkout would be more resistant to impulse displays even if self-checkout was unavailable. There’s a breakeven point: by maximizing speed is the retailer hurting sales? Some tablecloth restaurants deliberately make everyone wait at the bar for a table, even when reserved tables are available. The profits are enhanced by the bar wait, but the restaurant also risks alienating their customers.

Paula Rosenblum
Guest
14 years 7 months ago

I love this factoid. Talk about the law of unintended consequences!

As Greg and I discussed in last week’s “StoreFrontBackTalk” week in review, I think there’s a lot more “position jockeying” at self-checkout lines – since one line tends to flow into 2 checkout stands. The customer doesn’t really have time to “settle down” and look at magazine or candy racks. Retailers will have to decide for themselves if the gross margin dollars lost from those impulse items are offset by the payroll and efficiency improvements they get.

It’s interesting really – the original retailer worry was “would shrink rise” with the implementation of SCO? That has seemed to work out fine. IHL’s finding is fascinating.

I’m not sure retailers can “fix” this.

Matt Werhner
Guest
Matt Werhner
14 years 7 months ago

Self-checkout users are time savers, so engaging them with impulse items is difficult.

Retailers need to merchandise their self-checkout lanes based on engaging the impulses of the people using them. This includes drilling down further to understand the demographics including age and gender.

After understanding this, offering some or all convenience products such as pre-cooked meals geared toward these demographics would be a good start. Convenience offerings are a way to appeal to time savers. Self-checkout users want out quickly.

As self-checkout lanes increase in popularity, wait time will likely begin to increase slightly. The result of this will contribute to an increase in the sale of impulse items as well.

Mark Hunter
Guest
Mark Hunter
14 years 7 months ago

This is a problem that may not have a solution. The issue with self-checkout is that it consumes the shopper’s mind and therefore does not free them up to notice what is around them. Second issue is the layout of most self-serve checkouts where items are not stocked as close to these units and in regular check-out lanes; this of course is driven by the perception that if items were stocked close there would be an increase in shoplifting. If a retailer intends to use self-serve as part of their retailing strategy then they may have to accept the reduced front-end labor is not all incremental gains to the bottom-line as with it comes a loss of profit from lower sales of incremental front-end items.

Dr. Stephen Needel
Guest
14 years 7 months ago

My experience with self check-out is limited to Kroger Atlanta stores but the answer to the problem seems obvious – put front-end displays in the self check-out area. In our stores, there is a very small display as you enter the 4-register check-out area – not even close to the regular front-end displays.

Dave Wendland
Guest
14 years 7 months ago

This is an interesting conundrum. Honestly, I don’t think that the all-new “self-checkout” area can have it both ways.

So I believe the solution is one that requires re-examination of the store’s traffic pattern. A new impulse-oriented area must be created in plain view that makes up for the lost profit from the checkout area. To burden shoppers at checkout who are already looking for convenience and a quick in-and-out would likely backfire.

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