Upending the Front End
The front end took center stage at this summer?s FMI Connect conference in Chicago. While the topic was approached from a few angles, there?s agreement that accelerating evolutionary changes, including an increase in self-checkouts, the advent of high-speed scanner checkouts, mobile payments and other initiatives that expedite the checkout process, are affecting crucial impulse purchases typically made at the front end.
The Front End of Tomorrow consortium, a group of retail suppliers, banded together to present both a presentation ? ?Front End: Get the Most from Your Shoppers? Last Chance to Purchase? ? and a booth experience that offered strategies for driving incremental impulse category growth through product development, merchandising, marketing, technology and operational efficiency. Companies represented in the consortium include Catalina, The Coca-Cola Co., Ferrero USA, Mondel?z International, NCR and Time Warner Retail.
Now in its second year (but with different member partners), the consortium felt there was a greater benefit to all, including retailers, consumers and suppliers, by collaborating on strategies that were most effective for individual retailers.
?It?s really an opportunity to share research and provide our retail partners with high-quality recommendations that optimize the checkout department in aggregate, rather than bombard retailers with category-centric insights,? says Bill Romollino, VP of shopper insights at New York-based Time Inc. ?The consumer products companies that are trying to inspire shoppers to consume products at checkout are more aligned than you?d think, and this gives us an opportunity, after some healthy debate, to help retailers optimize browser-to-buyer conversion.?
The united goal, along with retailers, is better engagement with shoppers. And given consumer sentiment around checkout, it?s a worthy goal. Front end sales ? impulse, for the most part ? represent 1 percent of total store sales ? a small percentage, but significant dollars. A 1 percent conversion equates to $560 million in sales opportunity, according to Ron Hughes, director of shopper experience innovation at Atlanta-based Coca-Cola Refreshments.
Historically, front end impulse purchases are made as shoppers make their way through checkout. Unfortunately, it?s not a place shoppers like to be. Shoppers approach queuing up at grocery checkout with the same lack of enthusiasm they have for standing in line at the U.S. Post Office or the DMV, notes Steve Zoellner, director of merchandising solutions at Deerfield, Ill.-based Mondel?z International.
The Key Is Happiness
Research demonstrates that happy shoppers are more likely to spend more than unhappy shoppers do, but queuing dampens enthusiasm. Some retailers have combated long lines with technologies that read traffic, allowing them to staff against demand. Others have turned to self-checkouts. This, in turn, has curbed front end impulse purchases. Some 44 percent of shoppers make impulse purchases while shopping in a supermarket, but that number halves to just 20 percent who make an impulse purchase at the front end. The front end should have a distinct identity, the consortium believes, one that keeps customers away from a transaction mode.
The pace of change taking place at the front end is accelerating, says consortium member Mike Grimes, SVP, mobile commerce at St. Petersburg, Fla.-based Catalina. ?There are so many different players ? technology, service, hardware, software, CPG suppliers and retailers. This consortium brings together interdependent players. We?re challenged with bringing better solutions to the end customer, and it also forces us to look at the big picture as opposed to being stuck in an analysis paralysis.?
Key Front End Insights, Implications
More than 90 percent of front end sales come from the ?power? categories of beverages (43 percent of front end impulse sales), confectionery (32 percent) and magazines (17 percent). Ensuring that merchandise is relevant to the shopping audience is key. Nail clippers and lint traps don?t fit the profile of immediate consumption and entertainment that power categories exhibit.
Many fear that the more engaged consumers are with their smartphones in-store, the less likely they?ll be to peruse even beautifully merchandised impulse items. The good news, consortium data show, is that mobile shoppers are the heaviest value shoppers: Mobile shoppers have 41 percent more trips and 43 percent higher basket rings. A key initiative for suppliers and retailers will be converting impulse purchases at the store level into planned purchases via mobile or inspiring browsing via mobile for buying at the front end, and some of the ground work is already in place. Consumers who shop with their smartphones spend 18 percent more on impulse categories than other shoppers do, and two-thirds of all consumers use a smartphone when shopping.
New configurations for self-checkouts, which have increased in number by 40 percent since 2010, include LED lights, ?framing? of like categories, and more interesting and engaging initiatives. On display at FMI were innovative chill cases that had video and digital capabilities, initiatives that keep shoppers shopping.