FRONT-END STUDY REVEALS $1B OPPORTUNITY

JOEL ELSON

NEW YORK -- Supermarkets have an opportunity to grab an additional $1 billion at the checkout lanes in sales of magazines, candy and other nonfood, according to a new study released by suppliers of magazines and candy.

The findings were revealed in the second phase of a multicategory analysis called "Front-End Focus," a collaboration involving M&M/Mars, Hackettstown, N.J., Time Distribution Services, here, and Dechert-Hampe & Co., Mission Viejo, Calif., a consulting firm for the project.

The study urges supermarkets to adopt a best-practice approach to optimize front-end performance. It suggests that the checkstand fixture area is large enough and of such importance to consumer satisfaction that it should be managed as a separate department of the store.

Best practices detailed in the study will be presented during the Food Marketing Institutes Convention, May 2 to 4, in Chicago.

The study showed a dramatic 24% difference between those retailers with average checkstand performance and those best-practice retailers with high-performing checkouts. This is calculated to represent $1 billion in potential revenue nationally.

Retailers that managed the front end as a separate department within the store had 24% better sales from the checkstand area.

"The study has confirmed that the front end should be managed as a separate department," said Cameron Cloeter, senior vice president of sales at TDS.

Operating checkstand display racks as a stand-alone category "forms the final impression that consumers have when they walk out of the store," he added.

Due to their ability to trigger high-impulse purchases, checkstands account for over $4.3 billion in supermarket sales, representing 1.1% of all store sales and 1.5% of store profits, the study stated.

Research for the study was conducted at supermarkets that were not identified.

Cloeter also cited the importance individual categories play in maximizing retailer performance. Category placement should be developed using key criteria. For example, placement of magazines, which is a core category at the front end, should be developed based on frequency of purchase, impulse buying, image/shopping experience, sales volume and profit margin, according to the study's recommendations.

Among other strategies the report suggests retailers implement to improve front-end sales are:

Optimization of major products already on the rack, including magazines, batteries and film, confectionery and soft drinks, which generate the most sales and profit, rather than adding more categories.

Constant evaluation of checkstand categories based on purchase frequency, impulse appeal, image, sales, profits and productivity.

Varying checkstand displays at stores according to local demographics.

Ray Jones, managing director of DHC, said the study "clearly showed that decisions about checkstand merchandising can have a major impact on consumer buying and shopping satisfaction, sales and profits."