CPGmatters: Collaboration Needed to Enhance Checkout Merchandising
By Al Heller
Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.
According to a study by Dechert-Hampe & Co., 14.9 percent of shoppers buy an incremental item at the checkout. This includes 13.6 percent in express lanes, 15.7 percent in regular lanes, and 12.7 percent in self-scan lanes.
The study, Front-End Focus: Best Practices for Superior Checkout Merchandising, also found that 40 percent of all checkout purchases include multiple items such as soda and a candy bar.
"We encourage retailers to cross-merchandise, mostly by suggestive signage such as photos of people enjoying the items together. Occasion-based marketing such as movie night at home can work as well at checkout as in the aisle with assembled products," Raymond D. Jones, managing director, Dechert-Hampe, told CPGmatters.com in an interview.
"Opportunities to improve checkout performance are huge. We estimate that for any basket, the incremental sales of selling one more item is about eight percent," added Mr. Jones. "News developments drive checkout opportunities. When the avian flu was a threat, hand sanitizers were hot. And technology advances obsolete some items. Remember disposable cameras."
Mr. Jones proposed that CPG companies assess specific brands and items for checkout suitability: Do they have high household penetration? Are they bought frequently? Are they impulse, or on a shopping list? (Hint: impulse is better.)
"Don't just pay retailers to be at the checkout. If an item doesn't suit, it won't work and you'll waste money," he said. "Also project whether checkout will generate enough incremental sales to justify paying the allowances. And don't place product at the front-end if it will cannibalize inline sales."
He added that CPG companies can tailor item packaging to make products checkstand-ready; for instance, purse sizes of lip balm or mascara, trial sizes of pain relievers and cold remedies, and 6-oz packages of nuts.
Mr. Jones also agreed that self-checkouts require a longer lead-in approach for people to peruse magazines and CPG branded items, because people no longer shop once they begin to execute their transactions. "People go through a regular checkout in three stages -- waiting, in queue placing items on the belt, and transaction. Most impulse buys occur in stages one and two. Self-checkout is just two stages, so you have to catch people farther back," said Mr. Jones.
Discussion Questions: How can stores further maximize checkout merchandising? What are some bad habits you've noticed across retail with regard with checkout merchandising?