Impulse Marketing Co.’s Mindy Asper explores the changing front end and how retailers can merchandise to satisfy shoppers in the transaction zone.
Washington — Achieving the right merchandising balance at checkout has always been challenging for retailers. Checkout is one of the only spaces in the store where many categories are consistently merchandised together on one display fixture. Limited space creates tough choices across different departments when determining the optimal mix of categories and assortments. At checkout, shoppers expect to be able to find items to solve for their personal needs — such as hunger, thirst or reminder items — before they head out of the store.
Another challenge for retailers is balancing merchandising with shoppers’ desire for an efficient transaction. Shoppers often cite the checkout experience as one of the most frustrating aspects of the in-store shopping experience. Long lines and lack of transaction choice are often top reasons shoppers switch stores.
The Impact of Self Checkouts
As such, retailers have been installing more self-checkout registers to reduce wait times and add transaction options. Self-checkout growth exploded during the pandemic as shoppers wanted to get in and out of the store faster and have less interaction in-store. Retailers also have been investing in new technologies such as mobile scan and go, smart carts and checkout-free options to remove friction from the transaction process. And, while all generations are interested in transaction choice, younger shoppers have a greater desire for these alternative options, according to Catalina Marketing Corp.
With the increase in transaction choice, the balancing act between transaction options and merchandising has become even more difficult. Decisions on what transaction types to offer and how are needed by store are critical operational and customer service challenges to solve. Often the expansion of transaction choice requires a retrofit of existing space which can differ store to store — leaving less room for merchandising products shoppers have come to expect at checkout. How does achieving optimal operational efficiency and transaction choice balance with profitable checkout category sales?
Consider that in the grocery channel alone, the “checkout category” generates $7.6 billion in sales, reports Circana, with an average margin 13 percent higher than the rest of the store, according to Impulse Marketing Co. research. For many items in the category, this is the only merchandising location in the store. As trips decline, adding another item to the basket is a significant opportunity.
According to Circana, shoppers that buy items from the front-of-store make 14 percent more trips and spend 20 percent more in store per year than non-checkout shoppers. Checkout purchases are often part of the shoppers’ routine in-store, and it can be frustrating not to be able to find their favorite items.
Balancing The Assortment
Impulse Marketing research shows that average transactions are nearly 50/50 between cashiered lanes and self-checkout. There are many retailers that have more than 70 percent of transactions occurring at self-checkout. This number can differ widely at the store level depending on factors such as how many self-checkout registers the store has installed or by the demographics of the shoppers in the area.
At the same time, almost 70 percent of category sales dollars are generated from cashiered lanes versus 30 percent at self-checkout. While some of this can be attributed to reduced wait time, much of this gap has to do with merchandising availability. Once committed to a transaction type or lane, shoppers are not likely to leave the queue to find an item.
How can retailers strike the optimal balance of transaction and assortment choices in-store? First, set a holistic strategy for what you want to stand for at checkout. The checkout is the last experience your shopper has of their trip to your store leaving a lasting impression of your brand.
The key is understanding what your shoppers expect at checkout and prioritizing the experiences you want them to have transacting in your stores. These decisions require collaboration among key departments such as IT, operations and merchandising to make sure goals are aligned and cross functionally supported.
Front-of-store layout planning should include both equipment and merchandising considerations. Register type can include many variables including frequency usage, average basket size, labor availability, overall transaction space, etc. Understanding current throughput efficiency and productivity can help optimize where and when transactions are happening and how many of each register type is needed to support customer goals.
Enhancing The Checkout Experience
It is also important to include appropriate space for merchandising across all transaction spaces. Merchandising design development should consider the register type, how the shopper queues and interacts in the space, and category affinities in order to create the best experience and drive the most sales.
Even if the goal is to eliminate the physical transaction point in-store, providing a convenient merchandising location where shoppers pass through before heading out of the store provides them the opportunity to purchase their favorite items before they leave.
Lastly, it is important to continuously track and evaluate the shopper experience and sales goals. This is critical to understanding if the balancing efforts are successful.
Regularly measuring sales, profit and conversion by category will help highlight any misalignments in space across transaction points and identify opportunity gaps in assortments across categories. Based on performance, simple retrofits to existing merchandising might be necessary or more testing could be needed to determine new layouts and solutions.
Taking on the challenge of balancing checkout spaces does have its rewards. Top retailers outperform average retailers by almost 28 percent in category conversion generating roughly $100 more per store per day, Impulse Marketing research finds. Also, offering shoppers choices in transaction and an assortment of high frequency, high household penetration items are sure to improve their experience as they close out their shopping trip.
Contributor Info: Mindy Asper is a partner at Impulse Marketing Co. With a background in retail analytics and sales, she joined IMC in 2003 to bring a fact-based process to checkout. Asper’s expertise is in leveraging insights and data to help develop innovative solutions and go-to-market plans. She can be reached at [email protected].
