Impulse Control

Some front end items generate the impulse to buy — as well as the impulse to steal.

Impulse items are a key part of the success of any retailer's front end operations, and the right ones add to the basket size as well as the bottom line. The front end is also where another impulse often comes into play — the impulse to steal, whether via a cashier's sweethearting, or a customer exiting the store without paying for the case of beer in the bottom of the basket.

These were among the critical topics discussed at a recent Progressive Grocer roundtable discussion held during the recent ECRM Front End Checklane event. Sponsored by leading store fixtures and fittings designer, manufacturer and distributor Pan-Oston and Red Bull, the event, which took place June 14 in Atlanta, included the following participants:

Danny Billingsley, director or space development and visual merchandising, Fred's, Memphis, Tenn.; Tony Harper, category manager, Vistar, Centennial, Colo.; Tanya Hasey, national category manager, merchandising department, Pharmasave Drugs, Langley, British Columbia; Wayne Legg, Evolution Robotics Retail, Pasadena, Calif.; Yas-smin Mireles, party goods, checklane and candy, H-E-B Mexico, Monterrey, Mexico; Sharon Porter, director of vendors, business development, Royal Buying Group Inc., Lisle, Ill.; Pearl-Ann Prieur, category manager, Pioneer Energy, Lakewood, Colo.; Ray Jones, managing director, Dechert-Hampe, San Juan Capistrano, Calif.; Bob Henry, president, IT Retail, Riverside, Calif.; Chad Eilers, VP of design engineering, Pan-Oston, Bowling Green, Ky.; and Guy Wooton, director of key accounts, Red Bull, Santa Monica, Calif.

Highlights of the lively and dynamic roundtable discussion begin here as the first of two-part series, the second of which will continue in a future issue of PG.

Progressive Grocer: Since we have retailers from several different channels, let's begin with a topic that Chad Eilers and I spoke about just before the roundtable. Chad, take it away.

Chad Eilers: With the different formats that are here, what percentage of your total store sales are accounted for with the sales around the checkstand and the front end? Is it pretty similar for other different-format stores?

Pearl-Ann Prieur: One of the things we do is take a look at the overall market and study what categories are growing. A good example is meat snacks. They're growing in leaps and bounds, and so what we have done is move them to the front of the store, and the first year we moved them to the front of the store, we saw a 400 percent increase in sales, which is just phenomenal and continues to grow today.

At the end of the fiscal year, I evaluate my sales and see what products are really starting to take off, and if I can, I move them up into a [more prominent] area, even it is just for a year, and see how much we can grow its sales.

Bob Henry: When you do that, do you see a drop in the basket size, does it stay the same, or do you see an increase?

Prieur: In this case, we saw an increase because meat snacks are a higher ring in the cash register, but it depends on the product, too. If the product is a lower ring, then you're going to see probably the same, but if it is a higher ring, you're going to see a definite increase.

Ray Jones: I think it is important to talk about incrementality when you talk about the front end, because if somebody has been in the store and bought something, and now they're about to leave, you want to think about the things that would be incremental purchases to them. We found that incrementality in a grocery store yields an average item basket of about 12 items, so if you sell one more, roughly speaking, you will increase your sales 8.5 percent.

"Look for high-penetration/high-impulse items." — Ray Jones, Dechert-Hampe

When you look in a drug store, the average person is walking out of there with two items, so if you sell one more, guess what? Your increase is even greater. If you're a convenience store, the average person is walking out with a couple of items — maybe a sandwich and Coke. But if you can sell them a candy bar, too, you've dramatically increased the ring. So think about things that are incremental.

We always tell people to look for high-penetration/highimpulse items. But we have done some studies and have found that when moving to things like general merchandise over to things like candy, you have got more people purchasing candy than razor blades and thus, more purchasing on impulse. Do you see what I'm saying?

Eilers: And in the grocery format, those items would be higher margin in those cases.

Jones: So you're looking for incrementality with impulse sales?

Prieur: In our stores, one of the big things that we have that grocery stores may not have is more male clientele. So moving the meat snacks to the front was actually a big plus because a lot of men buy that particular product. The customers in our stores are probably 60 percent male.

PG: That's a good point.

Tony Harper: What's also interesting is that… a lot of women now eat beef jerky, which I didn't realize.

Prieur: I can tell you they do.

PG: Switching subjects, how about the smokeless tobacco?

Jones: You have to be careful. I know of a retailer that has 10 or 12 checkout lanes, three or four of which are devoted to nothing but tobacco products. In my opinion, that is not an appropriate front end strategy for all people. It is a relative small sample of people who want that, and it may turn the nonsmokers away.

Guy Wooton: Besides, tobacco products are for the most part a planned purchase; you want to drive incremental sales, like Ray mentioned.

PG: We touched earlier on the subject of internal theft. What are you doing to minimize this? In my reporting, I hear that just the perception by the cashiers that they are being watched is a big deterrent. Is this true?

Henry: Yes. Often, once cashiers know their transaction times are being monitored, their average item price is monitored, their average basket size is being monitored, etc., statistics depict that a more favorable trend pattern follows suit.

Prieur: It's the illusion of control.

Henry: Exactly.

Eilers: There are a couple of different solutions that address loss from a cashier perspective, such as LaneHawk's bottom-of-the-basket protection system. Part of the cashier's responsibility, especially with the larger grocery retailers, is to identify bottom-of-the-basket products, which are one of the biggest sources of loss. There are many cameras on the market that integrate with your POS and that help to track what is actually scanned vs. what is perceived to be scanned.

The LaneHawk device brings this functionality to the bottom of the basket. If the customer forgets to unload the bottom of the basket or it's full of heavy of items the shopper doesn't remove, the device scans the products and matches them against an image database. It then prompts the cashier to add the item to the transaction, and reminds him or her to check to see if there are any more items left in the bottom of the basket.

Wayne Legg: In addition to reducing shrink, it also provides feedback that can be used to enhance the training of cashiers. Of course, they should look over to see if there are any products in the bottom of the basket there, but it simply doesn't happen, and the busier your store gets, the more it doesn't happen, and it's a very good insurance policy, and the numbers on the payback and investment are absolutely remarkable.

Eilers: Another significant opportunity for loss is handling the cash in the transaction process, and one of the new technologies we brought to the market is a cash-handling solution that is embedded in the lane and is on the customer side. So, instead of having a cashier touch cash and having to reconcile cash and possibly accept counterfeits and stuff like that, we build the technology into the checkstand, and have the customer feed the money directly in and basically take that whole cash-room environment out of play.

We use a bank note recycler that MEI provides us that reduces the burden of loading up the self-checkouts frequently. We can do it with the same amount of cash that you would have in a normal till and be able to service several days of transactions with that equipment, which in essence can be your safe, and ultimately have CIT pickup at the lane level and not even have to interject into a cash-room environment.