On The Way Out

Retailers discuss which impulse items work best at the checkout

The term "last chance" can be applied to almost every industry from animal rescue to auto wreckers. Convenience stores are no exception, particularly when it comes to the checkout area. But where this final bastion of customer sales should be and which products belong there depend on the retailer and its market position.

Tobacco, lottery, candy and high-theft family planning products are standard front-end fare. The remaining assortment, however, is primarily impulse driven and varies tremendously. This mix — along with cash register location — is largely determined by company and store size, geographic location, volume and local competition.

At the front end, some chains showcase high-margin novelty items such as local sports memorabilia or fancy key chains. Those with large foodservice areas may look to upsell customers with meal or snack items. The checkout area can also be used for new products, cross-merchandising and as a way to lure new shoppers via contests, gift cards or event tickets.

"The front end is a focal point where the customer is waiting in line and seeing everything on the counter," said Joe James, director of operations at Bamberg, S.C.-based E-Z Shop, operator of 28 c-stores. "It's an excellent area to merchandise impulse items. But we are very selective about what goes here since we don't believe in cluttering the register space."

As for cash register positioning, David Bishop, managing partner of Chicago-based retail consultancy Balvor LLC, said many retailers are trying different positions. This is particularly true of chains that want to draw more visual attention to expanded foodservice and less to the destination tobacco category. Placing the register near foodservice encourages purchasing, while allowing personnel to monitor self-serve areas for spills and replenishment.

Salt Lake City-based Maverik Inc. has tried several tactics. "We were by the door, then moved the register to center store," said Brian Sullenger, customer segment manager. "One pro to the center store position is that you can have the traditional c-store part on one side and food on the other. But the front door position provides more visibility to outside."

Sullenger said Maverik has also been evaluating its product mix storewide to see if a total revamp is needed.

Regardless of register location, drawing attention to front-end merchandise is vital for Maverik and other c-stores that sell fuel. "C-stores have many customers who just get gas and come in to pay," said Kathryn Howe, vice president of sales and marketing for RetailNext Learning Labs (formerly Shopper Gauge), an in-store behavior monitoring provider. "The only purchasing opportunity is at the counter."

TOWN & COUNTRY

A convenience store's front-end mix should reflect its location. Downtown stores, for example, attract more women and do well with products such as lip balm and cute key chains. Roadside locations draw men who work in landscaping or construction and are more interested in food.

"Many are Hispanic and use the c-store as their base, visiting several times daily," said Ray Jones, managing director at Dechert-Hampe & Co., a sales and marketing management consulting firm in the Chicago area. "They buy coffee and doughnuts in the morning, hot dogs, chips and soda at lunch, and beer at day's end."

In economically distressed areas, people who do not own cars often shop at a c-store two or three times a week for toilet paper or groceries. While they may not splurge, a well-priced dessert or other "affordable luxury" can lure them. "Many c-stores live off this customer," said Gary Stibel, CEO of the New England Consulting Group in Norwalk, Conn. "But these shoppers only buy these items if they trip over them up front."

Tourist markets can present ample front-end opportunities as well. In shore areas, E-Z Shop's James said his chain offers beach toys and umbrellas up front.

Other E-Z Shop stores, though, are in rural areas with limited competition. Six months ago, this prompted E-Z Shop to develop its own DVD rental business at five locations. James said this is more profitable than using an outside provider like Redbox. Located near the register at the front of the store, the DVD rack is updated regularly. DVD rentals also generate incremental snack and beverage sales, he pointed out.

In all 28 locations, E-Z Shop replaced two-for-$1 bagged candy with higher priced king-size candy bars. J-pegs were supplanted by shelf displays. James said this has increased profits without adding clutter. The company stages manufacturer promotions, too.

In candy and other high-impulse categories, the front end is a good place to highlight new items. At its locations, Alimentation Couche-Tard Inc.'s Circle K Stores feature Crave electronic cigarettes, fancy lighters and the latest energy drinks, said Derek Gaskins, senior vice president of marketing and merchandising for Mid-Atlantic Convenience Stores (MACS), exclusive brand developer for Circle K in four states.

MACS also uses a countertop rack at the middle checkout station to showcase several energy drink brands, including Street King, 5-Hour Energy and Dream Street.

In smaller stores, MACS places the checkout to the right along the back wall. In larger stores, the register is to the left (facing the door) and provides "clear sight lines," said Gaskins. Since its growth has been driven by acquisitions, options are limited. "We don't have the luxury of design. We have about 300 stores with this layout. We're trying to optimize what works."

A FRESH POSITION

Many c-stores use the front end to highlight fresh food. For instance, Whitehouse Station, N.J.-based Quick Chek Corp. features three fresh baked goods, including that month's featured bakery item and soft pretzels. Store managers can choose what works best.

"This is probably the only area where we allow that," said John Schaninger, Quick Chek's vice president of sales and marketing. "We tested the concept and it's been pretty successful, the opposite of what we expected."

Quick Chek likes its registers to face customers. "This gives us a clear view to the outside and makes women feel safe since we see them leave." But the retailer does not always have this option since many of its 120 stores are in mature New Jersey and southern New York markets.

E-Z Shop also highlights fresh food, placing fresh fruit baskets on its front counters. Fruit is attractive and generates add-on sales. Two pieces sell for $1.15. "We sell apples, oranges, pears, plums and bananas — lots of bananas," James reported. "This is a growing segment. You have more vendors delivering fruit twice weekly. In the old days, nobody did."

MACS' front end features both fruit and baked goods, including individually wrapped cookies, muffins and snack cakes. "We keep it simple, with one or two items — not a whole bakery rack," said Gaskins. "We rotate items to keep offerings fresh and drive impulse sales. Fresh complements coffee and fountain better than 'trash and trinkets.'"

Using a 2-foot-by-2-foot warmer display, MACS also merchandises hot foods at the checkout: there can be breakfast sandwiches in the morning, pizza at lunch and warm cookies later on. "[The warmer display] keeps products fresh three or four hours and maintains food quality without burning," said Gaskins. "It's unique to our channel."

Some retailers try to suggestive sell customers with front-end merchandise. Quick Chek's Schaninger said one of its stores features a huge bakery assortment up front. "I asked the manager what they were doing — she had all kinds of stuff up there. She said she knew what her regulars bought. I watched her do it and she would suggestive sell bakery to go with coffee. She'd also suggestive sell mints with cigarettes. She was having a ball."

RetailNext Learning Labs' Howe noted that in addition to upselling shoppers, associates can invite them to sign up for e-mail lists, loyalty programs or contests. At E-Z Shop, associates wear buttons to promote gift cards. They also do suggestive selling, added James.

FUN STUFF

Sometimes, the front end is a good place to merchandise high-margin novelty or seasonal merchandise. "Nobody walks in to buy these things," said Stibel of the New England Consulting Group. "But profits are incredibly high. BIC does well with cool lighters in all sorts of designs. People who don't smoke want them."

Periodically, E-Z Shop will sell sunglasses and other merchandise featuring the University of South Carolina logo. Sunglasses are merchandised on spinner racks. Howe said umbrellas and "little purple flash lights" (her favorite) are also strong novelty performers.

At Maverik stores, a small area is devoted to Mother's Day flowers on an in-and-out seasonal basis. Other retailers also feature Mother's Day cards, which they said are mainly bought by men as last-minute purchases.

MACS' seasonal offerings include pumpkin-shaped items merchandised in baskets and harvest snack cakes for the fall and Halloween, and Valentine's Day candy, said Gaskins. Quick Chek also showcases seasonal baked goods, such as this fall's pumpkin mini loaf.

Even though margins are high, many retailers limit or do not carry seasonal or novelty items. Some feel eclectic products distract customers, hold up the line and/or are subject to high theft. With a limited SKU base, many c-stores also want to stick to everyday merchandise.

What everyone agrees on, though, is that no chain has found a universal solution to front-end merchandising. Some retailers see themselves primarily as tobacco shops with little or no foodservice. Others cater to college towns or markets with special needs.

"It depends on the retailer's position as to what's important to the business and where they're looking to take it," said Balvor's Bishop. "It's not black and white. Lots of things can be going on."