Future-Proofing Impulse Candy Sales in the Era of Autonomous Checkout

NATIONAL REPORT — The checkout process at convenience stores has changed rapidly in recent years, driven by rising labor costs and new technologies. Retailers are experimenting with or in various stages of deploying some sort of autonomous checkout solution, whether it be in the form of self-checkout kiosks, mobile checkout or frictionless checkout that uses computer vision and machine learning.

With autonomous checkout on the rise, the impulsivity of the candy category is in jeopardy. Leveraging an autonomous solution may improve the shopping experience by cutting down or removing wait times, but it also impacts front-end purchases such as candy. As a result, retailers have a more limited window of opportunity now to engage customers in one final attempt to build their basket with impulse, high-margin categories like confectionery.

Approximately 15.4 percent of c-store confectionery sales come from items purchased on impulse during the checkout process, according to the latest data from VideoMining's C-Store Shopper Insights (CSI) Tracker program. If there isn't a dedicated checkout area within the store, retailers risk losing these impulse candy sales purchased at the front end.

"Our current data shows that impulse confectionery sales are happening much less frequently (60 percent less) compared to the traditional staffed checkouts. Part of the reason may be that as retailers roll out self-checkout kiosks, front-end merchandising has not evolved to match the checkout process," Rajeev Sharma, founder and CEO of State College, Pa.-based VideoMining, told Convenience Store News. "Shoppers also spend less time waiting for self-checkout kiosks to be open [when] compared to waiting for cashiers in the traditional checkout process."

Checking Out in the New Retail Environment

Today's shoppers are increasingly looking for speed and convenience, and are more open to leveraging new technologies, especially at checkout.

While still small overall, self-checkout usage is gaining acceptance where it is available. A 2020 consumer survey conducted by Researchscape on behalf of Zynstra, an NCR company, found 15 percent of shoppers will leave a convenience store and abandon their purchase after just one minute of waiting in line, with nearly half of these shoppers leaving after only 30 seconds. Of those surveyed, 61 percent said the presence of an available self-checkout option would change their decision to abandon a purchase due to a long checkout line.

"As autonomous and self-checkout adoption rises, and shopper dwell time in a physical transaction zone is limited, highly profitable impulse items like candy, gum and mints may be less visible to shoppers," noted Jim Dodge, vice president, convenience at Mars Wrigley.

[Read more: The Convenience Channel's 'Halo Effect' on Snacking]

Citing c-store foundational research, Dodge pointed out that 35 percent of self-checkout registers do not have confectionery available currently. And where there is confectionery merchandised at self-checkout, it performs 20 percent below the manned checkout.

"Studies show the lack of availability and visibility leads to fewer impulse purchases," he said.

Army & Air Force Exchange Service Buyer III Heather Key told CSNews that the chain's chocolate grab-and-go items have decreased in units partly due to the recent implementation of self-checkout. However, as the nonchocolate category continues to be an industry growth driver, the Exchange is putting a larger selection of these items at self-checkout and seeing unit increases, she said.

"Due to little-to-no dwell time, it is important to have the right fixtures and assortment near self-checkout terminals for last-minute purchases," Key emphasized. "The Exchange pays close attention to confection and snacking trends, employs space-to-sales analytics and works to ensure the inventory reflects customer wants."

Evolving Strategies

As the checkout process evolves in c-stores, the behaviors of shoppers change with it. Given this new retail environment, VideoMining's Sharma advises retailers to evolve their merchandising strategies in tandem with the kind of autonomous checkout they offer and not treat it as an afterthought.

"The overall strategy is to make confectionery visible to shoppers waiting for checkout, but tweaking it to account for the physical space and different checkout types being [offered]," he said. "The best strategy is to group stores based on the prevailing front-end dynamics and physical space available to develop the ideal merchandising playbook. The fundamental best practice is allocating the most visible area to products such confectionery that have high impulse potential."

Sharma also offers these strategies to drive impulse candy sales in the new environment:

• Mission-based merchandising: By segmenting shoppers' trips into missions, c-store retailers can adapt both their core merchandising and secondary displays to help guide and "delight" customers with specific tactics for incremental sales. "For example, candy can be part of a lunch mission, so special displays in the 'meal building' areas with exciting messages can address that need and lead to incremental sales."
• Secondary displays: Endcaps and freestanding displays can drive impulse for candy as shoppers navigate the store. "Such displays currently drive about 26 percent of all candy sales in the channel and could be further expanded in lieu of the traditional front-end merchandising to make up for some of the lost impulse."

If a c-store still offers manned checkout as well, a queue system in the transaction zone can engage shoppers while they wait and compel one last purchase. In fact, 60 percent of shoppers don't mind waiting in well-merchandised queue systems, according to Dodge of Mars Wrigley.

"Ninety percent of shoppers think it's easier to navigate, one in four confectionery shoppers will make a purchase, and shoppers extend their 'shopping mode' for roughly 45 seconds," he said.