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08/29/2022

Merchandising Strategies Shift With Rise of Self-Checkout

Less wait times lead to less chances for engagement, according to VideoMining.
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self-checkout kiosks

STATE COLLEGE, Pa. — With the adoption of self-checkout, retailers have benefited from the technology's ability to cut down on operational costs while improving the customer experience. However, front-end merchandising is lagging behind the times, according the latest Nugget from VideoMining titled Self-Checkout Changes the Front End Dynamics.

Self-checkout, which is growing rapidly in the convenience store channel, has become dominant in grocery stores. VideoMining behavior data shows that in 2021, 53 percent of all in-store transactions in grocery stores in the United States occurred at self-checkout. Additionally, between 2019 and 2021, the share of all registers in a grocery store that were self-checkout increased by 32 percent.

Because self-checkout skews toward smaller baskets and quick and fill-in trips, shoppers utilizing the technology have to wait for a shorter time and in different queue areas. As a result, retailers have a limited window of opportunity to engage customers with front-end merchandising, strategies that worked before may not work now.

"However, there is a significant opportunity to further 'course correct' merchandising and innovate to match the changing behaviors at the front end. Otherwise, retailers risk missing out on the full potential of the front end as an attractive source of incremental revenues," said Rajeev Sharma, founder and CEO of VideoMining.

"With more than 10 percent of all in-store transactions including a product from the front end, the financial impact from improving the front end can be significant in the current omnichannel retail landscape," Sharma said.

Leveraging a proprietary artificial intelligence-based platform and partnership with retailers to analyze data from more than 150 million checkouts per month across a national panel of grocery and convenience stores, VideoMining uncovered behavioral data that retailers should consider and optimize their merchandising strategy at the front end:

  • Longer wait time leads to greater engagement with front-end products. For example, in traditional manned checkout, a 20-second increase in wait time leads to an 8 percent increase in engagement.
  • There is a positive correlation between wait time and conversion rate at the front end. A 20-second increase in wait time in a traditional checkout lane results in 3.3 percent to 4.8 percent increase in front end sales, though the conversion rate does taper off after a longer wait time.
  • Older shoppers prefer traditional manned checkouts vs. self-checkout. Sixty-three percent of shoppers ages 56 and above use a traditional checkout lane more than self-checkout.
  • Men are less likely to buy from the front end vs. women. VideoMining found that men are 15 percent less likely to buy from the front end.
  • Front end conversion rates for different product categories vary significantly. Cooler beverages have a sales velocity of $7.25, with some categories ringing up 1/100th of that.
  • For some categories, front end sales are a key factor in total store category performance. For example, 57 percent of all energy drink sales comes from the front end, and that number is even greater for single-serve energy drinks at 83 percent.

"Behavioral research can help in evaluating the true impact of current and planned front-end merchandising strategies. In the end, retailers have to trade off the key factors that they are trying to optimize, but just need to be aware of the holistic impact of the changes they make at the front end and test it carefully before a wide rollout," Sharma said.

State College-based VideoMining helps retailers and consumer packaged goods manufacturers optimize retail performance and shopper experience by decoding in-store behavior using anonymous sensing and artificial intelligence.