STATE OF THE - Sweets and Snacks Expo
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STATE OF THE FRONT-END
The Front-End experience has come a long way
Evolution began with a conveyor belt and bar code
Merchandising followed and a category was born
Initially, the offering was largely Magazines – with some Confection https://stacker.com/stories/3984/history- supermarket-industry-america
Cigarettes also played a bit role Source: blog.buffalostories.com/tag/cigarettes/
Beverages moved in and added opportunistically to checkout
The first retail self-checkout system was installed in the 90’s
Dr Howard Schneider developed
the first retail self-checkout
system - called “the service
robot” which was installed in
1992 at a Price Chopper
Supermarket in New York
https://www.progressivegrocer.com/grocery-tech-look-past-centurys-innovations
https://qikserve.com/self-service-tech-a-history/Aug 6, 2018
Self-checkout expanded over the years - often a love / hate relationship
But our lives have changed significantly
Prioritizing Convenience:
• 45% of consumers claim
to eat snacks instead of
eating meals at home
• 72% do not plan when
they will eat snacks
during the day, but grab
one as needed (+5pts vs
5yrs ago)
• Consumers average 2.7
snacks per day
Source: IRI : Seesaw State of the US Snack Industry 2022And, COVID has impacted shopping behaviors
Prioritizing
Convenience … in a
different way
• Personal space
and safety
• Fast transaction
• Increase in online /
mobile shoppingInflation is also impacting how & where people shop
Changes in Shopping
Behavior
Have you changed your shopping choices
recently due to increased grocery prices?
(among those who noticed higher prices)
45% Looking for sales/deals more
often
33% Cutting back on non-essentials
21% Switching to store brand/private
label
20% Switching to lower cost brands
13% Switching to lower cost retailer
Source: IRI OmniConsumer™ Survey Solutions, December 2021, n=1,069 total respondents, fielded 12/3-8/2021While sales are growing online, consumers intend to shop in store
more in the next year
Less consumers have purchased or are planning to
purchase groceries online in 2022
Online Grocery Purchased & Purchase Intent
62.5%
59.0%
54.3%
52.0%
49.5%
46.9%
39.5%
36.8%
25.8%
23.1%
2018 2019 2020 2021 2022
Have purchased in the last 12m Expect to buy in the next 12m
Source: Supermarket News: Share of US Shoppers buying groceries online
stabilizes 5/16/22The checkout has evolved to become a very important part of the in-store experience
Reducing friction for shoppers at checkout has become paramount retail
Checkout is important to the shopper
85% of shoppers say
checkout is important or
very important to their
shopping experience
58% of shoppers are
likely to change stores if the
primary difference was a
better checkout experience
Source: Forrester Research, “The State of Global Online Grocery Retail 2018”, March 2018Checkout has been one of the biggest pain points for shoppers
Top 5 in-store Pain Points
Product availability 69%
Lines in store 49%
COVID safety in
store 47%
Wrong prices 36%
Lack of staff 29%
Source: IHL Group/Intel Consumer Study 01/22Shoppers desire an efficient transaction
• Minimal Wait Time
• Multiple transaction choices
in-store
• Efficient process – but
immediate help when
neededAnd, Checkout is the one place in-store to satisfy the “me-moments”
• Typical need states at checkout
include:
• Hunger Satisfaction
• Reward
• Forgotten Items /
Convenience
• Impulse purchases are less
price sensitive
• Items are consumed within 30
minutes after leaving the store
• Open to discovering something
newThe balance of time and effort at self-checkout has proportionally been
on the efficiency side at the expense of the shopper need states
Technology
Operations
Efficiency
Shopper
Personal Need
StatesSelf-Checkout installations accelerated due to COVID
Global shipments of
self-checkout
machines increased
by 25% in 2020
Source: Retail Customer Experience, Self-Checkout Machine Systems Jump 25% in 2020; December
2, 2021Self-checkout usage has grown over the last few years
• On average, 59% of shoppers
used cashiered lanes and 41%
used self-checkout
• Some stores report as high as
70% of transaction now
occurring at self-checkout
depending on demographics,
training, # registers, open cashier
lanes, etc.
Source: IMC Proprietary Retailer Research 2021-2022Self-checkout also helps retailers address labor challenges
“Every 1-percent shift to
self-checkout is $1 million
in labor expense that could go
back into the store for other
purposes"
Dave Wilkinson, President NCR
Source: Convenience Store News: Technology Experts Decode the Year’s Top C-store TrendsBut, availability and labor issues persist - impact sales
Shoppers’ interest in Non-Traditional checkout is growing
All groups also say they desire non-
traditional checkout experiences –
the highest being Gen Z at 86%
and Millennials 80%
Source: PYMNTS.com Today’s Self-Service Shopping Journey Grocery
ResultsSelf-checkout and POS improvements are among top retailer technology
investments
Top Grocery
technology priorities
in 2022
67% Inventory visibility
49% Adding self-
checkout
1 out of 5 grocers
plan POS infrastructure
upgrades – both in hardware
and software
Source: IHL/Intel Consumer Survey 2021 of FDCM retailers
https://progressivegrocer.com/6th-annual-grocery-tech-trends-studyRetailers are responding with new investments in cashier less innovation
The Checkout Category is a big, growing category for retailers
Annual US Supermarket Sales*
= $804 Billion X .77%** of Sales Total Checkout Sales $
= ~$6.2 Billion Total Checkout Sales
0.87% $6.16
0.77% $5.54
% of Store Sales % of Store Profit 2017 2021
Checkout is almost 1% of total store sales equaling Category has increased 11.2% since 2017
$6.2B in total category sales driven by gains over the 5 years
Source: IMC Checkout Update 2022And, Front-End items are in 21% of grocery baskets
Product Trips
89.2 88.5
17.8 18.6
Total Store Checkout
2020 2021
Source: IRI Front-End Food 52 w/e 12/26/21The key principles of checkout category merchandising are
Allocation Visibility
Availability LocationShopper need states don’t necessarily change based on how they transact Shopper desires or need state no not change based upon transaction point ? Friction is added when shoppers can’t find what they want at checkout
Availability is a big issue at self-checkout
• Self-checkout areas tend to
be optimized for transaction
efficiency
• Terminals positioned so that
candy, snacks, gum and
beverages are not at arms
length
• Terminals not positioned in a
way to enhance customer
flow, queuing and impulse
salesConsider the shopper’s experience
Without effective merchandising, conversion drops an average of 50%
On average, the conversion difference between cashiered
and
self-checkout lanes is 50% across all categories
% Average Conversion Difference by Segment
10 0%
9 -10%
8 -20%
7 -29.3% -30%
6 -41.4% -40%
5 -48.7% -50%
9.3 -55.5%
4 7.8 -60%
3 6.5 -70%
-73.7%
2 3.8 -80%
3.5 3.1
1 -91.3% -90%
1.6
1.0 0.6 0.1 0.7 0.4
0 -100%
Beverage Candy Gum & Mints Magazines Snacks GM
Cashiered Lanes SCO Lanes SCO % Difference
*Source: IMC Proprietary Retailer Research 2021 – 6 retailers totalThis is devastating for Confections in particular
% Total Category $ Sold in Checkout
86%
28%
22%
3%
Total Candy Gum/Mints Snacks
Confections
Source: IRI Front-End 52 w/e 12/26/21Losses for retailers are significant
% Transactions Average Conversion Difference
20
18
Average transactions per day
16
14
1,868
37.1% 12
10
$1.90 average price
8
Conversion gap worth $116 per
62.9%
4
6
17.3
8.8
day per store
2
0
Conversion
Cashiered SCO Cashiered SCO
$4.3M Based on an average 100-store chain, this is
per year in profitable impulse purchases
*Source: IMC Proprietary Retailer Research 2021 – 6 retailersThis is a $1.5 billion dollar risk to a top 10 center store category
Rank 2021 Top Categories Dollar Sales $ % Chg
All Categories $374,036,572,770 -2.5%
1 BEER/ALE/ALCOHOLIC CIDER $13,617,732,092 -4.4%
2 CARBONATED BEVERAGES $13,142,560,145 4.6%
3 SALTY SNACKS $13,023,946,932 1.2%
4 NATURAL CHEESE $10,858,592,350 -3.7%
5 WINE $10,123,383,305 -5.6%
6 FRESH BREAD & ROLLS $10,118,006,049 -2.5%
7 BOTTLED WATER $8,585,257,234 6.2%
8 DAIRY MILK $8,203,821,819 -4.2%
9 DINNERS/ENTREES - FZ $6,683,116,331 2.5%
10 CHECKOUT $6,156,727,642 2.7%
11 COFFEE $5,844,808,669 -3.4%
12 YOGURT $5,367,870,129 1.0%
13 BREAKFAST MEATS $5,316,519,195 -3.1%
14 ICE CREAM/SHERBET $5,027,315,114 -8.6%
15 COLD CEREAL $4,952,709,777 -9.6%
*Source: IMC Checkout Update 2022
**IRI Total US Food Calendar Year Ending 12-27-21Yet, it could be a big opportunity for growth
If retailers can increase Self
Checkout conversion to that
of cashiered lanes,
this is a$3.1B
opportunity for the
immediate consumption
category!
*Source: IMC Proprietary Research 2021 & IRI Category size Calendar Year Ending 12/26/21How can retailers balance the need for efficiency while solving for shopper needs?
What leading retailers do to optimize checkout category sales and profitability Establish a checkout category with a dedicated manager Develop a checkout category plan by pay point Evaluate each pay point and the entire checkout category annually Have on-going test and learn project plan
Analyze current business performance to identify gaps
Category Conversion by Pay Point % of Checkout Category Space
26%
26.6%
23.4%
20% 22.7%
19%19% 19%
20.5%
18% 19.5%
16% 16% 15% 17.8%
15%
13% 14.8%
14.1%
12.4%
8% 9.4% 10.0%
8% 7% 8.7%
7%
6% 6% 6% 6%
2%
Candy Snacks Gum & Mints Magazines GM
Regular Self-Checkout Average Top
Merchandising Productivity Category Space Analysis
Source: IMC Proprietary Research 2021Create merchandising solutions that offer top sellers at all pay points
Impulse Marketing Co can help achieve success
Analyze Track
26%
20% 19%
19%
18%
19% 16%
16%15%
15% 13%
Strategize 8%
6%
7%
6%
8% 7%
6%
6% Design
2%
Candy Snacks Gum & Magazines GM
MintsThank You!
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