With $5.5 billion in sales and representing 1.6% of store profits, the front end wouldn't seem in need of an upgrade — but a new study finds that improvements to front-end merchandising could yield an additional $2 billion.
“Retailers are still viewing it as an afterthought rather than a primary opportunity to build the basket,” noted Raymond Jones, managing director of Dechert-Hampe Consulting, Chicago, the firm that conducted the survey on behalf of a group that includes Masterfoods USA (Mars), the Wm. Wrigley Jr. Co. (which recently completed a merger with Mars) and others.
How could whole health products fit in? Right now, the top sellers purchased by the study sample over the past year were: gum/mints (63%), candy (58%), magazines (34%) and soft drinks (29%). The study notes that better-for-you products are making inroads, in the form of sugar-free gum containing xylitol, antioxidant-rich dark chocolate and a new generation of healthful beverages.
“If we were to look at this 5 years ago, we'd have virtually all carbonated beverages,” Jones said. “But today, we found the greatest growth was in waters, vitamin waters, energy drinks and juices.”
The study also notes that the checkout is the only aisle that all shoppers pass through, spending an average of 5 to 7 minutes in line. A well-run checkout can greatly influence a customer's perception of the retailer, and therefore, might be an ideal area in which to include thoughtfully chosen wellness products.
Looked at in this way, it becomes highly desirable territory. Very few retailers interviewed for the study stated that they had a dedicated front-end manager. Wal-Mart, Meijer and Supervalu are among the few that do have expertise overseeing the checkout merchandising mix. The research suggests that proper management allows retailers to maximize total revenue while dropping in high-demand items on a limited basis. A recent example of that is the booming sales of hand sanitizers.
“That's a great example of retailers seizing upon a consumer-driven need,” Jones said.