Front & center 2018-01-01 (1)

Technology, services, vending machines and a rapidly changing product assortment are transforming the front end of the store. Those who think the front end checkout area of the supermarket has all the excitement of a museum must not have gone grocery shopping lately. Retailers are moving away from ho-hum register lanes with a host of updated product offerings reflecting consumers changing tastes and expectations. Better-for-you snacks, ice-cold beverages and high-margin batteries, razor blades and other “I forgot I needed that” nonfoods now beckon shoppers. For consumers that do not want to be bothered by taking out their wallet or credit card to pay for their purchase, technologically savvy supermarkets now offer an app for that. In even more stunning news, in the not too distant future, some industry observers predict, hand-held checkout devices will eliminate bulky cash registers and conveyor belts altogether, freeing up more front end space for customized beverage fountains, coin counting machines, carpet cleaning systems and even video games, mechanical prize cranes and other games of chance. Clearly there has not been this much fun and excitement at the checkout since Double Plaid Stamp Days at the A&P. Consumers actually love the front end, observers say. The 2013 U.S. Supermarket Experience Study conducted by the Retail Feedback Group found that the top areas of satisfaction among supermarket shoppers are often based on their experience at the front end of the store. “On a five-point scale, cashier friendliness was an average score of 4.55, second highest on the list, while the overall checkout experience had an average score of 4.51, fourth highest area across the survey,” says Brian Numainville, principal, Retail Feedback Group, a Lake Success, N.Y.-based consulting firm. “These results show the strength of the supermarket sector at the front end and the opportunity that supermarkets have to leverage this versus other classes of trade where the checkout experience is often much less compelling,” Numainville says. As retailers improve the efficiency and product assortment at the front end that satisfaction rate is likely to go even higher. “The challenge for retailers is to think about the checkout or the front of the store as the last opportunity to solve customers’ problems,” says Dr. Richard George, professor of food marketing, at St. Joseph’s University in Philadelphia. “They need to focus on not ‘what do I want’ but ‘what do I need.’ That opens up a whole other realm of merchandising at the front of the store.” Keeping in mind that customers go to “where the shortest line is” George sees little appeal with the current fad of “candy-free” checkouts that offer only healthy snacks. “When people are on line they are looking at the conveyor and thinking, ‘Did I get everything that I need?’ It is kind of like the last checkpoint,” he says. “As a retailer, think of the thing they might have forgotten that you can merchandise there as an alternative to candy and other traditional front end items. I think that is a great opportunity.” That forgotten item for many consumers is a pack of batteries. “Batteries are a core sales driver at checkout,” says Lou Martire, vice president of trade development, for St. Louis-based Energizer Holdings. “It’s where the vast majority of shoppers—more than eight out of 10—expect to find batteries. We recommend retailers stock core items, including batteries, at every lane since shoppers typically do not shop across checkout lanes.” It is no secret that the majority of battery sales are impulse driven. “Our Energizer Shopper Based Solutions team has found that batteries are a prompted purchase and 75% of shoppers who buy batteries at checkout only buy them at that area of the store,” says Martire. Mars Chocolate North America partnered with sister company Wrigley to conduct its own front end study, and found that a “cookie cutter” plan with a “one size fits all” mentality just does not cut it anymore. “It’s more of a framework we call the ‘Front End Growth Laws,’” says Timothy LeBel, vice president of sales, grocery/value/military at Mars Chocolate North America, based in Hackettstown, N.J. Front End Growth Laws have five key points, he says. There is the need to create front end exposure to all shoppers (traditional, express and self checkouts); capture the “for me” moment; only include power categories; offer simplicity of merchandising to elicit a quick purchase; and consistency in lane merchandising across all front end check lanes. “The power categories—confectionery, single-serve beverages, magazines—still make up nearly 90% of front end sales, but magazines have experienced significant sales declines over the last decade, driven by consumers’ ability and preference to receive reading material electronically,” LeBel says. It is also important that the area be uncluttered and stocked with items that do not require major thought decision, LeBel says. “We’ve redesigned our fixtures so they’re more streamlined and lower in height, and they center on the power categories with clean line designs,” he says. “To maintain the area, the retailer’s in-store execution is key, as well as their management focus, discipline and labor application.” A well-placed beverage cooler may help boost front end sales as well, say Coca-Cola officials. “According to the findings of our 2012 Front End Focus Study, 46% of IC (immediate consumption) beverage buyers purchase other IC categories from the checkout lane when purchasing a beverage,” says Ron Hughes, director, shopper experience innovation, shopper marketing, at Coca-Cola North America Group, based in Atlanta. Hughes says 20-ounce bottles of IC beverages contribute 8.8% of category dollars, and 59% of IC purchases are driven by thirst, craving or energy need. “IC beverages have gained importance and are purchased more frequently as additional coolers have been located at the front end check stands,” Hughes says. “Yet there are still many checkout lanes without merchandising units, representing missed opportunities to grow and drive retailers’ front end sales. We recommend full merchandising at all lanes to maximize front end sales” In an ironic twist, while many young shoppers have embraced self-checkout stations, the units have a negative impact on front end sales, say observers. “We’ve seen studies showing that implementing self-scan can reduce total front end sales by 10%,” LeBel says. “In an average cashiered lane, shoppers spend nearly five minutes in line so they have time to shop the front end before becoming involved with the actual transaction. With self-checkout, this time is reduced to only three minutes, with the majority highly involved in the transaction.” More bandwidth As checkout technology continues to rapidly evolve, the front end will physically change in scope, say observers. “I imagine in time that the front of the store will not exist anymore,” says Kevin Meany, founder/CEO, BFG, a marketing and communications company with joint headquarters in Atlanta, New York and Hilton Head, S.C. “That is where we are going to see a major shift.” Meany cites trendy retailers including Apple, Urban Outfitters and Sears where employees wander the store with iPads to check out customers. “In retail it was always Location. Location. Location, but it is probably going to be Bandwidth. Bandwidth. Bandwith, in the future. The brand experience will become a lot bigger and more powerful both for the retailer and the brands, giving them a lot more opportunity for merchandising beyond what they have been traditionally able to do.” Contactless or mobile payment will continue to gain popularity, says Cillian Kieran, founder and CEO of CKSK, a New York-based digital innovation agency. While many believe mobile payment will cut down on impulse sales as it speeds up the checkout process, Kieran says it may lead customers to up-sell. “I think if you are not holding cash you are not as aware of the financial implication,” he says. “Starbucks has said 10% of their sales this year are from contactless or mobile device payments, and there is no question that with that 10% they have seen an uplift in what they would deem as cross-selling of additional items,” he says. Kieran has high hopes for a new payment system called Loop. “They are only launching at the moment, but they have considerable backing from a number of the larger credit card providers,” he says. “Their system provides consumers with a special case that their phone goes inside and they scan all of their credit cards into their phone so they no longer need to carry them. A key Loop advantage is that all retailers can accept their technology already through existing point-of-sale systems.” Mobile payment is also more secure from a theft standpoint. “The key thing we see happening with a number of our technology partners and the brands we work with is facial recognition, motion tracking and gender recognition in relation to smart screens and smart technology,” Kieran says. Coin counters While shoppers may not be paying with cash, an increasing number are turning to the supermarket as a place to turn in their loose change. “Coin counting machines have been one of the most popular trends in supermarkets over the last few years,” says Jim Weaks, vice president, business development at Cummins Allison, based in Mount Prospect, Ill. “When we talk to supermarkets that do not yet have them they say customers ask for them all the time because today consumers expect to be able to take their coin to the supermarket instead of a bank.” Cummins Allison offers several coin counting machines and programs to retailers, including options to buy, rent or a placement program. Astute retailers can use the machines to “recycle” coins for use in their own registers. “When supermarkets purchase coins from the bank or an armored carrier it can cost from 7- to 12-cents a roll, regardless of the denomination,” Weaks says. “If you have 100 stores at 7-cents per roll of pennies it can get pretty expensive.” Since the machines only take up three square feet of space and use about the “same amount of electricity as a light bulb” many retailers have installed them along the “fourth wall” area beyond the cash registers. That location is imperative to their success, Weaks says. “People use self-service coin machines because they’ve seen it in the store,” he says, “so having it in a highly visible location is critical. The supermarkets that are the most successful with them have high repetitive customer counts because somebody will see the machine and it registers with them the next time they come in to bring that big bucket of change they have sitting at home.” A similar scenario unfolds at stores that carry Rug Doctor carpet shampooers. “If you rent the machine and buy the cleaner, that is about a $42 transaction,” says Walter Haug, vice president, marketing, Rug Doctor, based in Plano, Texas. “That is a nice ring for the grocery store, but the customer has to bring the machine back so there is a second trip to the store. That is especially important in this era of store trips, loyalty and how people shop at different retailers because they typically spend money when they come back.” Haug says the Rug Doctor customer is the one retailers crave. “Rug Doctor tends to skew towards Millennials, we over index on higher incomes and we over index for large families, plus about 70% of the people are pet owners,” he says. “Carpet cleaning is a destination, not an impulse purchase like a bag of chips. You don’t go into the store and say ‘I just saw a Rug Doctor. I think I’m going to take one home and spend a few hours cleaning the rugs.’” In addition, the key carpet-cleaning season begins just before Thanksgiving, with summer national holidays also being peak rental periods. Since a Rug Doctor display only measures 4.3 square-feet and add-on units only take an additional 16.5-inches, Weaks suggest retailers prominently place them at the front of the store. “The best place is in front of the fourth wall on the way out the store, but some retailers, like Safeway, have a Lifestyle concept where they try to keep the front end free of things. In some Safeway stores out West you’ll find us behind the customer service desk. That is not a good place to be.” Retailers could also capitalize on the fourth wall space by installing kiddie rides, video and arcade games. “The crane machines are where the better income is,” says Steven Toranto, president, Birmingham Vending Co., a Birmingham, Ala.-based seller of vending machine equipment. “Kiddie rides, though, are decent and surprisingly they are a nice complement because it gives parents and their children something they want to do.” Vending is a revenue source many supermarkets are missing out on, Toranto says. For example, on a crane machine, the retailer gets a 30% cut. “We haven’t seen a lot with grocery stores, but they are big with movie theaters, family entertainment centers, restaurants, and of course all of the Walmarts have them,” he says. “Generally the equipment does well wherever there is a lot of traffic.” Ice dispenser machines are also finding a new home at the front end, especially as more stores put in foodservice areas and Coca-Cola Freestyle soft drink machines at the front of the store. “It enhances that shopping experience by being able to have that drink,” says Jeff Biel, director of marketing, Scotsman Ice Systems, based in Vernon Hills, Ill. An ice machine would allow supermarkets to capitalize on the chewable nugget ice trend. “Chewable nugget ice has really gained a lot of traction in the foodservice industry,” Biel says. “Scotsman makes the original nugget ice, a chewable pellet form of ice. People love it. You have to Google ‘chewable ice’ or ‘nugget ice’ to see all the stuff that is out there.” Typically the ice machine is placed on top of the soft drink dispenser. “For any ice machine you are going to need a water line, a drain and electrical,” Biel says. “Those are the ingredients needed to make ice. You are going to need adequate water pressure, so the minimum of 20 SPI water pressure is needed.” Robotic eyes on front end theft $10.00. That is how much money is lost to bottom-of-the-cart shrink per day, per checkout lane, according to several studies. In an eight-lane supermarket that amounts to at least $560 per week in unpaid bags of dog food, bundles of paper towels, cases of beer, soda and other bulky, heavy, high-ring products walking—or more literally wheeled—right out the front door. Officials at Datalogic are looking to eliminate that loss with their LaneHawk vision-recognition technology system. LaneHawk works with a camera that is placed beneath the payment shelf in the checkout lane. When the cart passes the camera LaneHawk sends a picture of the un-scanned item to the POS system alerting the cashier, who then has to address the item before the POS system allows the sale to be completed. It shows the cashier a picture of the item, the UPC code and the price. The cashier then has to scan the item or delete it from the order. “LaneHawk works off of complicated vision technology that came out of the robotics industry,” says Jose Vega, marketing manager at Datalogic, based in Eugene, Ore. The system works off of a constantly growing database of more than 500 common items regularly placed underneath the basket of the shopping cart. “LaneHawk learns items that it doesn’t recognize,” Vega says. “If someone has something on the bottom of their shopping cart that is not in the database, when the cashier scans the barcode it makes an association and adds it to the main database.” According to Vega, LaneHawk can also prevent sweethearting, like when a cashier might ring up only three of the four cases of beer underneath the carriage for a friend who is hosting a party. “Every transaction is logged as a report and all of those reports are reviewed to show what was purchased, what was purchased immediately before the detection and immediately after. It will show those employees who have recurring cancellations,” he says.