Retailer Presentation
Agenda
Front-End Focus Summary
z Current Situation
z Consumer Insights
z Strategic Insights
1989-83 Retailer Presentation /7-08-03/N:ppt
z Best Practices
z Appendix
1
The Front-End Situation
Front-End checkout is a critical location in the store
z The only location everyone passes
z Significant source of impulse sales
z Critical location to maximize customer satisfaction
Retailers are facing a changing landscape
1989-83 Retailer Presentation /7-08-03/N:ppt
z There are more categories available at the checkout
z Consumers are changing the way they shop
z New technology is changing the transaction
2
The Checkout Is The Only Store
Location All Shoppers Visit
% Shoppers Visiting By Department
100
47
1989-83 Retailer Presentation /7-08-03/N:ppt
39
32
27
16
Checkout
Dairy
Frozen
Dry
Grocery
General
Merch.
HBC
SOURCE: Marsh Superstudy.
3
Consumers Spend Significant
Time At The Checkstand
Checkout
Time
30
25
5
20
10
1989-83 Retailer Presentation /7-08-03/N:ppt
15
Shopping
Time
Shoppers spend 5-7 minutes at the checkout
SOURCE: DHC Analysis.
4
The Front-End Checkstands Deliver $5.5 Billion In
Sales To Supermarkets, But Significant
Opportunities Still Exist
Dollar Sales Of Products
Sold At Front-End Checkstands
Dollar Opportunity For Improvement
Of Front-End Merchandising
$5.5 Billion
1989-83 Retailer Presentation /7-08-03/N:ppt
$2.0 Billion
z Improving Front-End Checkout Merchandising could yield
an additional $2 billion
Source: FEF Study. DHC Analysis.
5
Improving Conversion Rates Of Consumers
Purchasing Off The Checkout Is A Key
Opportunity For Retailers
% Grocery Shoppers
Purchasing At Checkout Today
% Grocery Shoppers
Purchasing At Checkout Today
By Checkout Type
(Each Lane = 100%)
20%
18%
1989-83 Retailer Presentation /7-08-03/N:ppt
No
82%
17%
Yes
18%
12%
Total
Regular
Express
SelfCheckout
z Purchase Penetration is lower on Express & Self-Checkout Lanes
which is influenced by limited or no merchandising
Source: FEF Study
6
Front-End Focus Sponsors
Front-End Focus is a major initiative sponsored by:
z Masterfoods USA
z The Wm. Wrigley Jr. Company
z Time Distribution Services (TDS), a division of AOL Time Warner
1989-83 Retailer Presentation /7-08-03/N:ppt
z In partnership with Dechert-Hampe & Company, an independent
consulting firm.
7
Front-End Focus Elements
Through a comprehensive study of:
z Consumer research
z Retailer data analysis
z Store testing
The study defines:
1989-83 Retailer Presentation /7-08-03/N:ppt
z Best Practices in merchandising
z Ways to improve consumer shopping satisfaction
z How to maximize Front-End performance
8
Front-End Focus Objectives
Front-End Focus is designed to help retailers & manufacturer
work together to
z Gain new insights on consumer attitudes & buying behavior
relative to the Front-End checkstand
z Determine the impact of new developments such as self-
checkout on consumer buying behavior & product sales
1989-83 Retailer Presentation /7-08-03/N:ppt
z Identify opportunities to maximize sales & profit performance
through implementation of Best Practices
z Improve the overall productivity of the Front-End through
collaboration among all the major stakeholders
9
1989-83 Retailer Presentation /7-08-03/N:ppt
Scope Of The Front-End Focus
Study
z
Research was conducted in partnership with eight leading retailers
representing over 5,500 stores & 20% of U.S. Grocery Volume
z
Retailers provided SKU level data for almost 500 stores over a 6
month timeframe of January 1, 2002, through June 30, 2002
z
Checkout planograms were collected & all stores were audited at the
lane level to identify merchandising conditions
z
In-Store research with 1,326 consumers was conducted relative to
checkout attitudes & purchase behavior at Regular, Express & SelfCheckout lanes
z
All research & analysis was performed by Dechert-Hampe &
Company in order to ensure objective conclusions
10
1989-83 Retailer Presentation /7-08-03/N:ppt
The Study Includes Data On Over
Twenty Major Categories
z
Candy
z
Gum
z
Cookies/Crackers
z
Mints
z
Salty Snacks
z
Nutrition / Granola
z
Batteries
z
Meat / Other Snacks
z
Film/Cameras
z
Razors / Blades
z
Oral Care
z
Cosmetics / HBC
z
Magazines
z
Lip Care
z
Phone Cards
z
Audio / Video
z
Carbonated Beverages
z
Other General Merchandise
z
Non-Carbonated Beverages
Source: FEF Study. DHC Analysis.
11
Front-End Focus Average Store
Front-End Focus Average Store
Store Volume (MM ACV)
1989-83 Retailer Presentation /7-08-03/N:ppt
Checkout Sales (Per MM ACV)
$22.3
$11,745
Checkout Items Carried
310
Checkout Square (Facing) Footage
50
Checkout Linear (Shelf) Footage
76
Checkout Lanes
10.7
Express
1.9
Regular/Self-Checkout
8.8
Coolers
4
Sales Of A Typical Checkstand
$24,531
Profit From A Typical Checkstand
$8,316
Source: FEF Study; DHC Analysis
12
Interviews With Grocery Retailers Identified
Key Questions Regarding The Front-End
z What is the value of the Front-End? How profitable is it?
z What categories are driving Front-End sales & profits?
z What categories should I stock on the Front-End?
z Should I merchandise Self-Checkouts & Express Lanes?
z What is the right amount of merchandising space to allocate to the check lanes?
z How many Beverage coolers do I need in my stores?
1989-83 Retailer Presentation /7-08-03/N:ppt
z What is the value of following Best Practices?”
z How many items should I carry at the Front-End?
z How much space should I provide to Confectionery, Magazines & GM/HBC?
z What does an optimum Front-End look like?
13
Consumer Learning
Retailers Need To Increase Purchase
Levels At The Checkout
Frequency Of Purchase At Grocery Checkout
46%
40%
38% 38%
1989-83 Retailer Presentation /7-08-03/N:ppt
16%
Once A Week Or
More
1-3 Times Per
Month
22%
1998
2002
Less Than Once A
Month
z Retailers must focus on Front-End categories/items that are
purchased frequently by many consumers
Source: FEF Study
15
Candy, Gum/Mints, Magazines & Soft Drinks Are The
Categories Most Commonly Purchased At Checkout
% of Shoppers Buying At Checkout – National Sample
1989-83 Retailer Presentation /7-08-03/N:ppt
Category
Gum/Mints
Candy
Magazines
Soft Drinks
Batteries
Non-Carbonated Drinks
Film/Cameras
Cookies/Crackers
Salty Snacks
Lip Care
Cigarettes/Tobacco
Razors/Blades
Nutrition Bars
Oral Care
Books
Phone/Gift Cards
Cosmetics
Audio/Video/CD
z
Within Last Year
72%
69%
48%
35%
28%
18%
15%
13%
13%
13%
11%
10%
6%
5%
5%
5%
3%
3%
Once a Month Or More
63%
58%
34%
29%
11%
15%
5%
10%
11%
5%
9%
5%
4%
3%
5%
2%
2%
1%
Retailers must question the value of having a significant number
of low penetration categories/items represented at the checkout
Source: FEF Study
16
Magazines & Confections Are Also The
Highest Impulse Purchases
% Impulse Items
84%
Magazines
Candy
80%
Gum/Mints
71%
67%
Books
CD's/Video/Audio
65%
Salty Snacks
61%
Soft Drinks
57%
Lip Care
57%
Cookies/Crackers
56%
Non-Carb. Drinks
49%
Nutrition Bars
49%
1989-83 Retailer Presentation /7-08-03/N:ppt
Film/Cameras
44%
42%
Batteries
Razors/Blades
39%
Phone Cards
Cigarettes
Cosmetics
Oral Care
30%
23%
21%
17%
Source: FEF Study
17
Key Categories To Carry At The Checkout Score
High On Penetration, Frequency & Impulse
1989-83 Retailer Presentation /7-08-03/N:ppt
Low Penetration
Low Frequency
Low Impulse
Nutrition Bars
Film/Cameras
Razors/Blades
Lip Care
Oral Care
Cosmetics
Phone Cards
Books
Audio/Video/CD
Mixed Score
Non-Carbonated Drinks
Salty Snacks
Cookies/Crackers
Batteries
High Penetration
High Frequency
High Impulse
Gum/Mint
Candy
Magazines
Soft Drinks
z FEF needs to highlight the value of having high penetration,
high frequency, and high impulse items at every checkout
Source: FEF Study. DHC Analysis.
18
Consumers Do Not Generally “Shop”
Across Checkout Lanes
% Agree Completely/Somewhat
1989-83 Retailer Presentation /7-08-03/N:ppt
National
You sometimes select an item from one checkout counter and then
go to another lane to check out
32%
Sometimes you have to look at all of the checkout counters in the
store just to find an item you want
18%
You often select a certain checkout lane because of the particular
items displayed there
16%
z This underscores the importance of stocking key items
at every lane
Source: FEF Study
19
A Higher Percentage Of Self-Checkout
Users Shop More Frequently
Frequency Of Grocery Shopping
9%
24%
15%
24%
Less Than Once A Week
Once A Week
1989-83 Retailer Presentation /7-08-03/N:ppt
More Than Once A Week
67%
61%
Self-Checkout
Non Self-Checkout
z Merchandising self-checkout lanes can result in more
frequent purchases
Source: FEF Study
20
Self-Checkout Users Purchase Fewer Items Per
Shopping Trip Due To The Express Nature Of
These Shopping Trips
Purchases Per Trip - National
$42
20
Self-Checkout
Non Self-Checkout
$23
1989-83 Retailer Presentation /7-08-03/N:ppt
10
Units
Dollars
z Getting self-checkout shoppers to purchase additional items
from the checkout can be a key strategy for retailers
Source: FEF Study
21
Still, Some Self-Checkout Users Purchase
Larger Numbers Of Items
% Of Shopping Trips By Number Of Items Purchased
59%
46%
30%
29%
Self-Checkout
Regular Lane
24%
1989-83 Retailer Presentation /7-08-03/N:ppt
12%
<10 Items
10-19 Items
20 Or More Items
z Over time self-checkout lanes will become more mainstream
with mainstream purchase habits
Source: FEF Study
22
Self-Checkout Usage Is Skewed Toward Younger
Shoppers But There Are Some Older Users
% Shoppers Using Self-Checkout By Age
23%
16%
13%
5%
1989-83 Retailer Presentation /7-08-03/N:ppt
18-24
32%
27%
25-34
Regular Lane
22%
17%
9%
16%
10%
35-44
45-54
Self-Checkout
55-64
10%
65+
Age Grouping
z Current merchandising of self-checkout lanes should be
geared to the younger shopper
Source: FEF Study
23
Front-End Focus
Strategic Insights
Key Strategies For The Front-End
z Recognize the value of the Front-End to store sales & profits
z Manage the Front-End as a department with a dedicated
manager
z Base decisions on total profits from sales revenue &
placement fees
z Focus on the power categories that drive Front-End sales &
1989-83 Retailer Presentation /7-08-03/N:ppt
profits
z Take advantage of the growth opportunity by adopting the
Best Practices of top performing retailers
25
What Is The Value Of The Front-End In
Retail Sales Dollars & Profits?
z The Front-End generates $5.5 Billion in sales & represents
1.6% of store profit
Total Front-End
Checkout Sales
1989-83 Retailer Presentation /7-08-03/N:ppt
$4.3
Billion
Total
Grocery
$ Sales
1997
$334.5 Billion
+28%
Front-End Checkout
$5.5
Billion
1.6
1.2
% Store Sales
2002
$398.2 Billion
% Store Profits
+19%
Strategy: Recognize the value of the Front-End in sales & profits
Source: FEF Study. Progressive Grocer.
26
How Should The Front-End Be Managed?
z The Front-End is larger than many other retail
categories/departments
% Of Supermarket Dollar Sales
2.5
2.2
1989-83 Retailer Presentation /7-08-03/N:ppt
1.3
Pharmacy
Bakery
Pet Food
1.2
1.1
Total FrontEnd
Checkouts**
Total General
Merchandise
Department
0.9
Deli (SelfServe)
0.8
Total
Detergents
0.7
Total Canned
Vegetables
Strategy: The Front-End should be managed as a department
with its own Category Manager
Source: DHC Analysis. A.C. Nielsen 52 weeks ending 12/28/02. Progressive Grocer, **FEF Study.
27
How Profitable Is The Front-End?
z Gross Margins are much higher on the Front-End checkstand
generating greater Profit Dollars
Percent Of Total Profits**
Gross Margin %
12.2%
33.9%
1989-83 Retailer Presentation /7-08-03/N:ppt
Front-End
Checkstands
25.0%
Supermarket
Total*
87.8%
Gross Margin
Dollars
12.2%
Placement
Fees
8.4%
Racks
Profits
3.8%
Cost Of
Racks
z The majority of Total Profit Dollars are driven by selling
product, not product placement fees
Strategy: The Front-End should be managed to maximize total revenue
including both profit from sales & placement fees
*- Source: Progressive Grocer 9/15/2002.
**- Includes Gross Margin % & Placement Fees.
Source: FEF Study. DHC Analysis.
28
What Is The Opportunity For Improved
Front-End Performance?
Top Performing Retailers have a 36% advantage in performance
A $2 Billion opportunity for the industry
+ 36% opportunity
between average & top
performing stores
Total Checkout Sales
Per $ MM ACV Index
135
99
1989-83 Retailer Presentation /7-08-03/N:ppt
70
Poor Performing
Stores
z Moving
Medium
Performing Stores
Top Performing
Stores
Poor & Medium performing
stores to Top performing stores
could yield an additional $2 Billion in
sales
Strategy: Take advantage of this opportunity by adopting the
Best Practices of Top Performing Retailers
Source: FEF Study. DHC Analysis.
29
What Categories Drive Front-End Sales
& Profits?
1989-83 Retailer Presentation /7-08-03/N:ppt
z Magazines, Confectionery & Beverages generate 80% of sales profits
Category
Share of Checkout Dollar
Sales
Share of Checkout Total
Profits1
Magazines
Confectionery*
Beverages**
Film/Cameras
Snacks***
Batteries
Razors/Blades
Other GM/HBC
Cookies/Crackers
Oral Care
Phone Cards
Lip Care
33.7%
31.7%
14.6%
4.5%
3.9%
3.4%
3.4%
2.0%
0.8%
0.7%
0.7%
0.6%
30.0%
33.8%
16.2%
3.6%
3.0%
4.7%
2.9%
2.2%
0.6%
0.8%
0.6%
0.9%
80%
80%
Strategy: Focus on the key categories to maximize checkout performance
*- Includes Candy, Gum, Mints.
** - Includes Carbonated & Non-Carbonated Drinks.
*** - Includes Salty, Meat, Nutritional.
1 - Includes Gross Margin & Placement Fees.
Source: FEF Study. DHC Analysis.
30
What Categories Provide The Greatest
Opportunity At The Front-End?
z The largest opportunity gap exists with Confectionery, Magazines
& Beverages
1989-83 Retailer Presentation /7-08-03/N:ppt
Sales Per $ MM ACV Difference Between
Medium & Top Performing Stores
Category
Growth Opportunity
Per
$ MM ACV
% Of Total
Growth
Confectionery
$1,501
36.0%
Magazines
$1,262
30.3%
Beverages
$577
13.9%
Film/Cameras
$150
3.6%
Razor/Blades
$130
3.1%
Batteries
$89
2.1%
All Other
$456
11.0%
Total
$4,165
100%
80%
Strategy: Focus performance improvement on the key categories that
offer the greatest opportunity
Source: FEF Study. DHC Analysis.
31
Best Practices
How Should I Decide What Categories
To Stock At The Front-End?
Best Practice:
Manage the Front-End based on consumer buying
behavior. Focus on categories that have high
Household Penetration, Purchase Frequency & provide
impulse purchases
1989-83 Retailer Presentation /7-08-03/N:ppt
Low Penetration
Low Frequency
Low Impulse
Nutrition Bars
Film/Cameras
Razors/Blades
Lip Care
Oral Care
Cosmetics
Phone Cards
Books
Audio/Video/CD
1.
2.
3.
Mixed Score
High Penetration
High Frequency
High Impulse
Non-Carbonated Drinks
Salty Snacks
Cookies/Crackers
Batteries
Gum/Mint
Candy
Magazines
Soft Drinks
Give broad exposure to the “High” categories:
Confectionery, Magazines & Soft Drinks
Provide some exposure to “Mixed” categories, but
not a key focus
Limit exposure of the “Low” categories to top
sellers. These are usually available elsewhere in the
store
Source: FEF Study. DHC Analysis.
33
What Categories Should I Stock
At The Front-End?
Best Practice: Focus on Confectionery & Magazines to drive
consumer buying at the Front-End
1989-83 Retailer Presentation /7-08-03/N:ppt
Percent of Front-End Shoppers that
Category
$ Share Of
Checkstand
Purchased At
Checkout
Within Last
Year
Purchased At
Checkout Once A
Month Or More
Percent Of
Purchases
That Were
Impulse
Magazines
33.7%
48%
34%
84%
Gum/Mints
17.3%
72%
63%
71%
Candy
14.4%
69%
58%
80%
Carbonated Beverages
11.1%
35%
29%
57%
Non-Carb. Beverages
3.5%
18%
15%
49%
Source: FEF Study. DHC Analysis.
34
How Much Space & How Many Items
Are Needed At The Checkout?
Best Practice: Allocate at least 76 linear feet to each checkout &
carry 301 to 350 items, at the Front-End
Total Checkout Sales Per $ MM ACV Index
By Linear Feet/Lane
By Number Of Items Per Store
125
100
88
98
106
108
112
96
104
101
75
108
98
108
89
85
72
50
Sales/MM ACV Index
1989-83 Retailer Presentation /7-08-03/N:ppt
25
Under 65'
66'-75'
76'-85'
86'+
Sales/MM ACV/Per Item Index
0
Under
250
250-300 301-325 326-350 Over 350
# Of Items
The typical store had 76 linear feet per lane & carried 310 items across
all lanes on the Front-End
z Top Performing Stores dedicated more space & carried up to 350 items
z
Source: FEF Study. DHC Analysis.
35
What Is The Best Way To Merchandise
Confectionery?
Best Practice: Stock some Confectionery on both sides of the lane
Confectionery
Sales Per $ MM ACV Index
1989-83 Retailer Presentation /7-08-03/N:ppt
96
Confectionery One Side
115
Confectionery Both Sides
Total Checkout
Sales Per $ MM ACV Index
98
Confectionery One Side
106
Confectionery Both Sides
Increased consumer exposure to Confectionery drives checkout
purchases
z Stores stocking Confectionery on both sides realize greater
Confectionery & Total Checkout Performance
z
Source: FEF Study. DHC Analysis.
36
Do I Need To Stock Confectionery
On Every Lane?
Best Practice: Stock a selection of Confectionery items on every lane
Sales Per $ MM ACV Index
Confectionery
98
Total Checkout
106
116
83
73
89
99
101
107
1989-83 Retailer Presentation /7-08-03/N:ppt
55
1%-50%
51%-75%
76%-85%
86%-95%
96%-100%
% Of Lanes Stocking
1%-50%
51%-75%
76%-85%
86%-95%
96%-100%
% Of Lanes Stocking
z Retailers that stock Confectionery on every lane enjoy
greater performance
Source: FEF Study. DHC Analysis.
37
How Should Magazines Be
Merchandised At The Front-End?
Best Practice: Magazines should be merchandised both in the
lane & on end caps
Magazine
Sales Per $ MM ACV Index
87
1989-83 Retailer Presentation /7-08-03/N:ppt
End Cap Only
95
In The Lane/Over
Belt Only
102
In The
Lane+End Cap
Total Checkout
Sales Per $ MM ACV Index
92
End Cap Only
102
94
In The Lane/Over
Belt Only
In The
Lane+End Cap
z This provides for an enhanced consumer purchasing opportunity
z Both Magazine & Total Checkout performance is improved
Source: FEF Study. DHC Analysis.
38
How Many Beverage Coolers Do I
Need In My Stores?
Best Practice: Beverage Coolers should be located on 26 to 33%
of lanes
Beverage Sales Per $ MM ACV Index
By Percent Of Lanes Stocking
98
1989-83 Retailer Presentation /7-08-03/N:ppt
25% Or Less
102
26%-33%
101
34%-50%
Total Checkout Sales
Per $ MM ACV Index
99
Over 50%
90
25% Or Less
97
26%-33%
108
103
34%-50%
Over 50%
% Lanes With Cooler
z Beverage sales do not increase significantly by simply adding
coolers
z Total checkout sales are higher, but this is driven by other
factors
Source: FEF Study. DHC Analysis.
39
Increased Checkout Performance Is
Driven By Confectionery, Not Coolers
Total Checkout Sales
Per $MM ACV Index
90
97
103
108
1989-83 Retailer Presentation /7-08-03/N:ppt
Confectionery
G.M. and Other
Magazines
Beverages
25% Or Less
26% -33%
34% -50%
Over 50%
% Lanes With Cooler
% of Lanes With Confectionery
# of Confectionery UPC’s Carried
z
72%
112
79%
118
92%
121
96%
131
Stores with more Coolers also stock and sell more Confectionery.
It is this, not the Coolers, that drives total performance.
Source: FEF Study. DHC Analysis.
40
Increased Checkout Performance Is
Driven By Confectionery, Not Coolers
Total Checkout Sales
Per $MM ACV Index
120
120
102
100
98
97
90
80
104
108
Confectionery
Total Checkout
103
101
99
Beverages
91
83
1989-83 Retailer Presentation /7-08-03/N:ppt
60
25% Or
Less
26%-33%
34%-50%
Over 50%
% Lanes With Cooler
% of Lanes With Confectionery
# of Confectionery UPC’s Carried
z
72%
112
79%
118
92%
121
96%
131
Stores with more Coolers also stock and sell more Confectionery.
It is this, not the Coolers, that drives total performance. Source: FEF Study. DHC Analysis.
41
How Many Magazine Titles Should I
Carry?
Best Practice: Maximize Magazine sales by focusing on best
selling titles
Magazine Sales Per $ MM ACV Index
98
1989-83 Retailer Presentation /7-08-03/N:ppt
50-68
102
69-79
100
80-100
Number Of Titles
115
102
80
62%
70%
79%
% Best Sellers
z Stocking more Magazine titles is not as important as
carrying the right assortment
Source: FEF Study. DHC Analysis.
42
Should Confectionery Be Stocked
On The Express Lanes?
Best Practice: Stock Confectionery on Express as well as
Regular lanes
Sales Per $ MM ACV Index
Total Confectionery Sales
104
1989-83 Retailer Presentation /7-08-03/N:ppt
84
Confectionery Not
On Express Lanes
z
z
Confectionery On
Express
Total Checkout Sales
91
Confectionery Not
On Express Lanes
102
Confectionery On
Express
Confectionery is the most common purchase at the express lane
Stores stocking Confectionery on express lanes outperform stores
that don’t
Source: FEF Study. DHC Analysis.
43
Should I Merchandise Self-Checkout
Lanes?
Best Practice: Be sure to merchandise self-checkout lanes to
avoid lost sales
Frequency Of Grocery Shopping
1989-83 Retailer Presentation /7-08-03/N:ppt
9%
24%
15%
24%
67%
61%
Self-Checkout
Non Self-Checkout
More Than Once A Week
% Of Grocery Shoppers Who
Purchase At Checkout Today
(Each Lane = 100%)
Once A Week
20%
Regular Lane
17%
Express Lane
12%
Self-Checkout Lane
Less Than Once A Week
z Self-checkout shoppers shop more frequently but fewer
shoppers actually purchase at the checkstand
Source: FEF Study. DHC Analysis.
44
How Should I Merchandise My
Self-Checkout Lanes?
Best Practice: Merchandise self-checkout lanes with “High
Penetration” & frequently purchased categories such
as Confectionery & Magazines
Consumers % That Agree
Completely/Somewhat
You often select a certain checkout
lane because of the particular
items displayed there
1989-83 Retailer Presentation /7-08-03/N:ppt
You sometimes select an item from
one checkout counter & then go to
another lane to check out
16%
% Purchased Product
At Grocery Checkout Today
(Each Lane = 100%)
12
14
10
4
32%
All SelfCheckout Lanes
Self-Checkout
With Full
Merchandising
Self-Checkout
With Limited
Assortment
Self-Checkout
With No Product
Merchandising
z Consumers do not generally “shop” across checkout lanes
z Merchandising at a self-checkout checkout is extremely
important
Source: FEF Study. DHC Analysis.
45
What Percentage Of My Space Should I
Allocate To The Confectionery Category?
Best Practice: Allocate at least 51% of the linear feet available
to Confectionery to drive higher sales
Sales Per $ MM ACV Index
Total Confectionery
91
1989-83 Retailer Presentation /7-08-03/N:ppt
33%-42%
100
43%-50%
Total Checkout
106
51% And
Above
93
33%-42%
106
99
43%-50%
51% And
Above
% Of Linear Space Allocated To Confectionery
z Providing adequate space to Confectionery drives both
Confectionery & Total Checkout Sales
Source: FEF Study. DHC Analysis.
46
What Size Confectionery Rack
Do I Need?
Best Practice: Where space allows, use a Confectionery Rack of
49” or more
Confectionery
Sales Per $ MM ACV Index
116
Total Checkout
Sales Per $ MM ACV Index
130
1989-83 Retailer Presentation /7-08-03/N:ppt
92
48" And Under
49"-55"
*Over 55"
48" And Under
115
108
98
94
99
101
49"-55"
104
*Over 55"
Width Of Confectionery Rack
z A wider Confectionery rack can result in greater sales &
total checkout performance
*- Limited store count.
Source: FEF Study. DHC Analysis.
47
How Much Space Should I Allocate
To The GM/HBC Categories?
Best Practice: Provide GM/HBC with no more than 15% of the
linear feet available at the checkout
Sales Per $ MM ACV Index
Total GM/HBC*
Total Checkout
116
94
96
100
98
1989-83 Retailer Presentation /7-08-03/N:ppt
Less than 6%-10% 11%-15% 16% And
5%
Over
102
101
93
Less than 6%-10% 11%-15% 16% And
5%
Over
% Of Linear Space Allocated To GM/HBC*
z At 16% of space & over, GM/HBC* sales increase but total
checkout sales suffer
*- Includes Batteries, Razors/Blades, Cameras/Film, Lip Care, Oral Care, Lighters, Phone Cards, Hair Care, Analgesics, etc.
Source: FEF Study. DHC Analysis.
48
How Much Space Should I Devote To Each
Major Group Of Products At The Front-End?
Best Practice: Allocate space to optimize the total checkout
performance
1989-83 Retailer Presentation /7-08-03/N:ppt
Recommended Space Allocations
Category
% Linear Feet
What Does That Mean?
Confectionery
50%+
Confectionery on every lane with at least a 48” wide
rack
Magazines
30-33%
Magazines on every lane with placement over the
belt and on end caps where coolers are not in place.
GM/HBC*
7-10%
18” to 24” rack on lanes where coolers do not exist.
No more than 75% of the lanes.
Beverages
2-4%
Coolers no more than every 3 lanes.
Snacks**
2-3%
Carried on top of Beverage coolers.
Cookies/Crackers
1-2%
Carried on top of Beverage coolers.
z Leading retailers balance space to profits within the
suggested ranges
*- Includes Batteries, Razors/Blades, Cameras/Film, Lip Care, Oral Care, Lighters, Phone Cards, Hair Care, Analgesics, etc.
**- Includes Salty, Meat, Nutritional.
Source: FEF Study. DHC Analysis.
49
1989-83 Retailer Presentation /7-08-03/N:ppt
Take Advantage Of The $2 Billion Opportunity By
Implementing The Best Practices At The Front-End
z
Top performing retailers have at least 76 linear feet of merchandising
space on a lane & carry 301 to 350 items at the Front-End
z
Products merchandised at the checkout should be driven by
consumer buying behavior. Select items with high penetration, high
frequency & impulse appeal
z
Focus should be on the top categories that represent 80% of sales &
profits: Confectionery, Magazines & Beverages
z
Carry Confectionery on all the lanes including express. Merchandise
it on both sides of the consumer. Where space allows, use at least a
49” rack
z
Maximize Magazine presence at the Front-End. Merchandise
Magazines on end caps as well as in the lane to enable consumer
buying opportunities
50
The Best Practices At The Front-End (Cont’d)
z Make sure top selling Magazine titles are broadly available. It
is more important to carry the right titles than a large number
of titles at the Front-End
z Place Beverage coolers on end caps at 26% to 33% of the
checkout lanes. Unlike other categories, the majority of
Beverage sales are in a few key items
z Provide up to 15% of linear space for GM/HBC. Remember
1989-83 Retailer Presentation /7-08-03/N:ppt
that most of these items are need driven & located elsewhere
in the store. Focus on just a few key items in each category
z Be sure to merchandise the self-checkout lanes. Most
consumers do not shop across the lanes. At a minimum,
carry an assortment of popular Confectionery & Magazines
51
Best Practices Checklist
BEST PRACTICES
CHECKSTAND
•
•
•
•
Devote at least 76 linear feet
Stock 301 to 350 items
Generate at least 80% of sales from power
categories of Confectionery, Magazines, Beverages
Merchandise self-scan lanes with Confectionery and Magazines
CONFECTIONERY
•
•
•
•
Stock on all lanes
Allocate 51% or more space
Rack size at least 49”
Stock on both sides of aisle
1989-83 Retailer Presentation /7-08-03/N:ppt
MAGAZINES
•
•
•
Merchandise end-cap and in-line
Allocate at least 30-33% of space
Focus on best sellers – 79%
BEVERAGES
•
Beverage coolers on 26-33% of lanes
GM/HBC
•
Allocate 11-15% of space
52
Contact Information
1989-83 Retailer Presentation /7-08-03/N:ppt
For more information, call Bill Dusek or
Ray Jones at 847-559-0490
53
Appendix
Consumer Findings
Magazines, Confectionery, And Beverages Are
Impulse Categories That Have High Household
Penetration And Are Purchased Frequently
Percent Of Front-End Shoppers That:
Purchased At Checkout
Within Last Year
Purchased At Checkout
Once A Month Or More
Percent Of Checkout
Purchases That Were Impulse
Magazines
48%
34%
84%
Candy
69%
58%
80%
Gum/Mints
72%
63%
71%
Carbonated Beverages
35%
29%
57%
Non-Carbonated Beverages
18%
15%
49%
Batteries
28%
11%
42%
Film/Cameras
15%
5%
44%
Razors/Blades
10%
5%
39%
Salty Snacks
(Salty, Meat, Nutritional)
13%
11%
61%
Cookies/Crackers
13%
10%
56%
Oral Care
5%
3%
21%
Lip Care
13%
5%
57%
Other GM/HBC
3%
2%
21%
Phone Cards
5%
2%
30%
1989-83 Retailer Presentation /7-08-03/N:ppt
Category
Source: FEF Study
56
Shoppers Like The Convenience
Of Self-Checkout
% of Shoppers
1989-83 Retailer Presentation /7-08-03/N:ppt
Likes about Self-Checkout
Dislikes about Self-Checkout
Convenience
88%
Need Attendant help
13%
Quick/Save Time
62%
Codes don’t checkout
11%
No or shorter line
35%
Need for lookups
10%
Do not deal with store employees
14%
Payment issues
4%
Hard to use coupons
4%
Slow
4%
Need to use instructions
4%
Limit on number of items
4%
Bag own groceries
4%
z There are a few common concerns, but none are major
Source: FEF Study
57
Ethnic Consumers Tend To Be Heavy
Buyers At The Front-End Checkout
FRONT-END PURCHASE FREQUENCY INDICES
1989-83 Retailer Presentation /7-08-03/N:ppt
Index Of African-American & Hispanic Consumers
To All Consumers
AfricanAmerican
Consumers
Hispanic
Consumers
Heavy (Once a Week or More)
128
150
Medium (1-3 Times Per Month)
105
92
41
23
Light (Less Than Once A Month)
z
Ethnic consumers purchase products carried at the checkstand
more frequently
Source: FEF Study. DHC Analysis.
58
Ethnic Consumers Purchase More Impulse
Categories Such As Confectionery, Carbonated
Beverages, And Cookies
FRONT-END PURCHASE FREQUENCY INDICES
% Purchased In Last Year
Index Of African-American & Hispanic Consumers
To All Consumers
1989-83 Retailer Presentation /7-08-03/N:ppt
African-American
Consumers
Hispanic
Consumers
Gum/Mint
114
106
Candy
114
103
Carbonated Beverages
134
140
Batteries
118
114
Non-Carbonated Beverages
144
56
Film/Cameras
113
147
Cookies/Crackers
161
154
Lip Care
138
115
Phone/Gift Cards
180
200
z
Phone Cards
are also a
category that a
higher
percentage of
AfricanAmerican and
Hispanic
consumers
purchase
Source: FEF Study. DHC Analysis.
59
Consumers Tend To Switch Lanes For
Need, Not Impulse
z
Only 33% of consumers said they would switch lanes to buy
something at checkout
1989-83 Retailer Presentation /7-08-03/N:ppt
Switching Index
By Category
Gum/Mints
Magazines
Candy
64
67
75
Film
Soft Drinks
Batteries
103
125
125
Razors
Cigarettes
180
278
Impulse
Need
Source: FEF Study
60
Other Findings
Confectionery And Magazines Contribute
Almost 2/3 Of Front-End Sales And Profits
1989-83 Retailer Presentation /7-08-03/N:ppt
Category
Dollar Shares
Share of Total Profits*
Magazines
33.7%
30.0%
Total Confections
31.7%
33.8%
Candy
14.4%
14.7%
Gum
12.4%
13.6%
Mints
4.9%
5.5%
Total Beverages
14.5%
16.2%
Carbonated
10.9%
NA#
Non-Carbonated
3.6%
NA#
Film/Cameras
4.5%
3.7%
Salty Snacks**
3.9%
3.1%
Batteries
3.4%
3.9%
Razors/Blades
3.4%
3.0%
Other GM/HBC
2.0%
2.6%
Cookies/Crackers
0.8%
1.0%
Oral Care
0.7%
0.8%
Phone Cards
0.7%
1.0%
Lip Care
0.6%
0.9%
*- Includes Gross
Margin & Rack Fees.
**- Includes Salty,
Meat, Nutritional.
#- Cooler fees not
broken out by
Carbonated vs. NonCarbonated.
Source: FEF Study
62
Magazines And Confectionery Generate 66% Of
Front-End Sales And Occupy 78% Of The FrontEnd Space
Dollar Shares
33.7%
Magazines
Total Confections
22.6%
12.4%
4.9%
Total Beverages
1989-83 Retailer Presentation /7-08-03/N:ppt
47.9%
14.4%
Gum
Carbonated
30.7%
31.7%
Candy
Mints
Share of Linear Feet
14.5%
10.9%
Non-Carbonated
3.6%
Salty Snacks*
3.9%
Film/Cameras
16.4%
8.9%
4.3%
3.1%
1.2%
3.7%
4.5%
1.7%
Razors/Blades
3.4%
0.9%
Batteries
3.4%
1.7%
Other GM/HBC
2.0%
3.9%
Cookies/Crackers
0.8%
2.1%
Oral Care
0.7%
0.7%
Lip Care
0.6%
1.4%
Phone Cards
0.5%
1.0%
Source: FEF Study
*- Includes Salty, Meat, Nutritional.
63
What Is The Impact Of Having
Confection Free Lanes?
Best Practice: Stock a selection of Confectionery items on every
lane.
Sales Per $ MM ACV Index
Total Confectionery Sales
Total Checkout Sales
111
95
1989-83 Retailer Presentation /7-08-03/N:ppt
84
Stores With Confectionery
Free Lanes
z
Stores Without
Confectionery Free Lanes
Stores With Confectionery
Free Lanes
103
Stores Without
Confectionery Free Lanes
Retailers that do not have Confectionery free lanes enjoy a greater
performance for Confectionery and the total checkout
Source: FEF Study. DHC Analysis.
64
Miscellaneous
1989-83 Retailer Presentation /7-08-03/N:ppt
Profit Assumptions Were Generated With The
Assistance Of Alliance Retailers And The Source
Interlink Companies
Category
Gross Margin*
Rack Fees#
Commitment*
Magazines
30%
$22.28 Per Pocket
3 Years
Candy
36%
$2.00 Per Inch
3 Years
Gum
40%
$2.00 Per Inch
3 Years
Mints
40%
$2.00 Per Inch
3 Years
Carbonated Beverages
40%
$500 Per Cooler
1 Year
Non-Carbonated Beverages
35%
$500 Per Cooler
1 Year
Batteries
35%
$17.50 Per Peg
1 Year
Film/Cameras
25%
$13.50 Per Peg
1 Year
Razors/Blades
30%
$13.50 Per Peg
1 Year
Salty Snacks
(Salty, Meat, Nutritional)
28%
$2.00 Per Inch
3 Years
Cookies/Crackers
40%
$2.00 Per Inch
3 Years
Oral Care
30%
$13.50 Per Peg
1 Year
Lip Care
30%
$13.50 Per Peg
1 Year
Other GM/HBC
40%
$13.50 Per Peg
1 Year
Phone Cards
35%
$13.50 Per Peg
1 Year
Source: *- Retailer Input.
#- Interlink Companies.
66
1989-83 Retailer Presentation /7-08-03/N:ppt
Other Categories Have Invaded
The Checkout Lanes
z Candles
z Children’s Toys
z Stuffed Animals
z Match Box Cars
z Coloring Books
z Fireplace Logs
z Work Gloves
z Dieting Aids
z Ear Plugs
z Bagged Candy
z Cotton Balls
z Trading Cards
z Walkie Talkies
z Facial Tissue
z Canned Cookies
z Plastic Table Clothes
z Ribbons
z Air Fresheners
z Charcoal Lighter Fluid
z Long Neck Lighters
z Remote Control Cars
z Maps
z Playing Cards
z Hair Brushes
z Greeting Cards
z Children Stickers
z Crayons
z Small Dolls
z Rubber Gloves
z Scouring Pads
z Paper Cups
z Scotch Tape
z Balloons
z Eye Glass Repair Kits
z Scissors
z Vitamins
z Analgesic Rubs
z Bakery
z Doughnuts
z Pizza Cutters
z Lint Traps
z Windshield Solvent
z Rotisserie Chicken
z Foot Stones
z Blowing Bubbles
Source: FEF Study
67