Up in front-end

Improving merchandising, product assortment and fixtures can dramatically increase front-end checkout impulse sales.

Forget that Kris and Bruce Jenner are splitsville or that Teresa Giudice is off to the big house. The “real” big headline at the checkout counter for retailers is that the front-end can be a powerhouse of high-margin impulse sales—if the fixtures are properly merchandised and stocked with the right assortment.

“Front checkout is definitely an untapped opportunity,” says Chris Russell, group director, shopper insights, for Coca-Cola Knowledge & Insights Team, at The Coca-Cola Co., based in Atlanta. “Currently only one out of 10 shoppers purchase an item at the checkout in a given trip, looking at the power categories of beverages, magazines and confectionery.”

Frank Jimenez, senior director IDP (Insights Driven Performance) & merchandise evolution at The Hershey Co., based in Hershey, Pa., agrees that there is great potential up front. “There is a huge conversion opportunity at the front-end,” he says. “While 1% of all space in the store is dedicated to front-end merchandising, it equates to 2% of total store sales and 4% of profit.”

That is what Western Market, a Birmingham, Ala.-based independent operating seven stores, found out when it remodeled its Vestavia, Ala. store earlier this year. Management cleaned up the front end by eliminating clutter and installing LED-illuminated candy racks. Sales skyrocketed as a result.

“These new LED candy racks are all the rage right now,” says Darwin Metcalf, president and COO of Western Market. “What is interesting is that the lighting really helped the items on the bottom three shelves. In the past, movement on those items was very slow, but now that they are lit we are selling a lot of product from that bottom fourth of the fixture.”

Industry observers say that the best performing front-end racks have the ideal combination of assortment, shelf pitch and lighting. “The new LED racks really grab a shopper’s attention and encourage confection sales,” says Susan Gwinnett-Smith, vice president of grocery/retail for Mars Chocolate North America, based in Hackettstown, N.J “Plus, the front-end is the last impression a retailer makes on a shopper. These bright racks look more inviting and improve the shopping experience.”

According to Mars officials, an illuminated LED display rack can lift front-end grocery sales by 10-12%, while using the same amount of electricity as a 60-watt bulb.

David Kennedy, vice president of U.S. grocery at Wrigley, Mars’ Chicago-based sister company, notes that according to an Envirosell 2012 Grocery Front End study, 59% of shoppers said they did not consider purchasing items at the checkout because they either did not notice anything or did not think about it. “LED-lit racks draw attention to the confections, increasing the noticeability to drive purchase of a highly profitable category,” he says.

While existing shelving can be retrofitted with LED lighting, Kennedy says it is best to install it when the retailer is getting ready to reconfigure the front-end.

“It is important to remember that LED lighting is like the icing on the cake,” he says. “First you must have the ideal rack, with the correct pitch of the shelves, product assortment, product spacing and visibility and assortment. This must be correct to generate sales, with or without LED lighting.”

Last year a Mars Chocolate/Wrigley Front End Study was completed by the company. “Through this research, we learned which categories belong at the front-end, the most effective merchandising elements and what the front-end should look like,” says Gwinnett-Smith.

According to the Confectionery Best Practices list developed from the study, retailers should allocate 40% of front-end space to confectionery and leverage high impulsivity and quick grab-and-go rates on gum and candy by positioning gum over the belt and candy on the customer’s right. In addition, chocolates should be shelved within eye level of the customer’s right. A wide variety of gum and chocolate SKUs should be stocked on every lane to fulfill customers’ needs, Gwinnett-Smith adds.

“Shoppers have told us they will not change lanes based on assortment,” says Jimenez. “They choose lanes based on the length of traffic. We have measured productivity of the total checkout and the most productive checkouts are the ones that are consistently merchandised all the way across.”

Bowls on poles

Since consumers can be real suckers for lollipops including them at the front-end makes sense as well.

“Original Gourmet Lollipops are a great addition to front-end sets as they can utilize untapped space to create a profit center, simply by attaching a display pole or magnetic display at the checkout,” says Angela LeBrun, marketing and quality assurance manager, Original Gourmet Food Co., based in Salem, N.H. “They are beautiful, recognizable and affordable, making them a deliciously rewarding choice for retailers and consumers.

“Some of our displays are plastic bowls on poles,” LeBrun adds. “They are like dump bins and really allow the product to be moved at a higher volume. They are ideal for those sorts of checkouts where there is a queue of customers. Studies have shown that the more time one has to make a decision, the more likely one is to engage upon it. So if you see a display or product a couple of times in line you are more likely to actually make that purchase.”      

For traditional lanes, tight spaces and self-checkouts, Original Gourmet offers an innovative magnetic strip merchandising eight lollipops that can be easily attached to a kiosk or light pole. “It used a spot that nobody else was using—and nobody else even thought of it as a spot to be using,” LeBrun says. “Now all of a sudden it is a profit center that doesn’t take floor space away from anybody. As a matter of fact, our lollipop sales don’t detract from the sales of any other item.” 

Soft drinks can also aid the sales of other items, which is why retailers should consider adding single-serve beverage coolers to their front-ends, says Coca-Cola’s Russell. “We feel immediate consumption beverages in particular could help drive other front-end purchases,” he says. “If somebody buys a Coke they also buy a salty snack or a candy bar.”

Retailers can further improve the profitability of the front-end by treating it as a regular category, add observers. “If they gave it its own promotion schedule, a new item launch plan and some news, it would do much better than it does now,” says Russell, citing one Southern chain that does a good job of advertising front-end checkout items including drinks, snacks or candy together. “They are seeing a double-digit increase this year. It’s effective because it gets people thinking about the front checkout before they get there.”

That is what many retailers who advertise batteries and then merchandise them at the registers are finding, according to battery manufacturers.   

“Our experience shows that as much as 60% of battery sales can be attributed to a front-end battery display,” says Lou Martire, vice president, trade and industry development, Energizer Household Products Division, at St. Louis-based Energizer. “In fact, Energizer shopper research reveals most battery sales are prompted purchases and more than eight out of 10 shoppers expect to find batteries at checkout.”

Since battery purchases are often promoted, Energizer recommends retailers display core battery items on the front of every checkout lane, Martire says. He also suggests retailers stock 9-volt batteries the month before the clocks change to remind shoppers to change the batteries in their smoke detectors.

“Batteries have high household penetration, but are typically not on consumers’ shopping list,” says Win Sakdinan, a spokesperson for Duracell, the Bethel, Conn.-based battery division of Procter & Gamble. “The front of the store, particularly at or near checkout, is the last opportunity for the shopper to purchase batteries. They are among the top 10 items that shoppers purchase at checkout and have a higher retail price than other front-of-store items, and provide a final boost to sales.”

According to Sakdinan, the best locations to merchandise batteries are at the front or top of checkout fixtures. “While location at every checkout can be helpful, it is more important that batteries are visible,” he says. “Across multiple registers, it is better to have two to three visible battery locations than to be pegged near the bottom of every checkout lane fixture.”

To maximize sales, it is best to merchandise the most popular sizes—AA, AAA, 9V, C and D—at the front end to capture impulse purchases. “Specialty batteries such as hearing aid, coin/button and lithium are planned battery purchases that are best made at the primary battery location in-store versus the checkout,” Sakdinan says.       

Cell phone checkout

While front-end sales are on the upswing at traditional checkout, express self-checkout lanes usually offer minimal—if any—impulse items for purchase. “With over a third of shoppers now coming through the self-checkout, we are trying to do some things to activate that area and help retailers sell beverages there,” Russell says. “We are also experimenting with some cold drink solutions that draw a little more attention and help our shoppers grab a cold, refreshing beverage for the road.”

Other technology, like hand-held scanners and even cell phones threaten to cull some of the front-end’s impulse volume. Toshiba, for example, has a program called TCx Amplify, currently employed in 10 ShopRite stores, that offers consumers an app that connects with a participating store’s wifi system allowing them to scan items with their cell phone as they shop along. Consumers then simply place the item into their bag in their cart.

“The idea here is a faster, more convenient checkout experience,” says Brian Taylor, product marketing manager for TCx Amplify and Self-Checkout Solutions, at Toshiba Global Commerce Solutions, based in Research Triangle Park, N.C. As a result, retailers can have special checkout stations just for mobile users who then scan their phone to download their purchases, swipe their credit card to pay, grab their receipt and go.

“The retailer can have impulse items at this station and the shopper can always add impulse items to their purchase right at the station,” Taylor says. Plus, the system allows retailers to try and up-sell consumers throughout the shopping trip—something the old-fashioned transactions do not do. “Traditionally stores try to do those impulse buys or give them a Catalina coupon so they might remember to buy the item on their next trip, but with mobile shopping you have an interaction with that shopper everywhere they are in the store so you can influence what they are buying everywhere at the point of decision.”

“It is not really ‘front-end’ anymore. It is ‘pay point,’” says Hershey’s Jimenez. “The pay point can be the deli or even outside, like the drive-thru pharmacy at Walgreens.”      

In-store, retailers can boost front-end profitability by adding services, such as coin counting machines. Reasor’s, for example, recently installed coin counting machines from Mt. Prospect, Ill.-based Cummins Allison in each of its 19 Oklahoma locations. According to officials with the Tulsa-based chain, the machines are liked by customers for their convenience and by management for the additional traffic and sales that they generate.