By John Youger & Raj B. Shroff
The end of checkout is the end of the impulse buy… or is it? Undoubtedly, the rapid adoption of seamless checkout options (mobile checkout, RFID, automated payments, among others) is altering longstanding consumer habits and expectations.
But viewed strictly through the lens of revenue numbers, automated checkout might easily be mistaken as a toothless threat. On average, front-end sales represent just slightly less than 1% of overall store sales but more than 1% in profit. With front-end margins hitting close to 5 points higher than total store, that makes this sliver one of the most profitable areas in the entire store, according to research conducted by Wrigley and Mars Chocolate North America, subsidiaries of Mars Inc. Any possible loss in a world known for thin margins demands some serious attention and not just to the operational and design traditions upended by this shift at the front of the store.
Even so, inaction reigns in the industry. Perhaps it’s because these upheavals to operational traditions are double binds for stores. For starters, even as the automation of checkout promises to cut labor costs, it diminishes human interaction at checkout. This takes away a critical space where associates, not to mention veritable shelves of candy, beverages and magazines, have typically played a role upselling products and filling the basket.
Second, checkout automation isn’t happening in just one place inside stores these days. Over the last decade or so, checkout areas have proliferated throughout the entire store, with a myriad of “transaction” spaces operating as service/checkout areas, including BOPIS counters, in-store pharmacies and cafes.
Third, with emerging technologies transforming checkout into a seamless transaction, there are fewer interruptions. This equals less downtime spent by shoppers. As a result, moments of impulse—which require unoccupied time to actually happen—are no longer integrated into the process and makes it increasingly difficult to garner the attention of shoppers.
These three converging trends drastically upend the space and flow of once highly reliable and profitable front-of-store zones. Moreover, with the growth of self-service checkouts and express lanes, each of these changes introduces new issues. For example, queue anxiety is a phenomenon identified by Wrigley and Mars Chocolate through their Transaction Zone research as one of the biggest. With checkout corals no longer clearly defined, confusion sometimes reigns. Our in-store ethnographic research suggests shoppers need new forms of wayfinding: signals, signs, design features, you name it—everything is on the table to adjust to innovative front-of-store configurations. Such adjustments are crucial, especially considering shoppers are being asked to switch out of auto-pilot at checkout and adjust longstanding shopping habits. Failing to properly address such natural confusion can lead to undue stress during a shopper’s final moments inside the store, leaving a lasting bad impression for a retailer.
Before we outline potential solutions to the challenges described above, it’s critical to define some terms and create a shared language that can then inform new strategies. Through our work with Wrigley and Mars Chocolate, we have adapted a term for the space for traditional checkout as a transaction zone—a physical destination shoppers must pass through to complete a shopping trip—and still a critically important area of the store. Historically, this has meant a coral-like design, one that confined shoppers within a clearly defined path to the cash register and then exiting the store. This space once functioned as much more than a transaction zone. Cashiers often provided a value-added service—they knew products fairly intimately and the payments process was a high-information exchange, with conversations between cashiers and shoppers commonplace.
With the emergence and adoption of scanning, this high-service function was oversimplified and this labor process was emptied of value—until it was diminished to an entirely utilitarian process: lifting a product up and moving it across a space to put on another conveyor belt and, finally, into a bag. What was once a conversational and high information exchange essentially became automated, even if cashiers still operated the register.
Second, we define what the future of the so-called “front of store” should be named. We’ve decided to call it a transition zone instead and define it as a space where payments seamlessly occur and shoppers engage with additional products, services and most importantly, experience brands and the store at its best. A transition zone should become the space where the pendulum shifts again, remaking a space that’s become subsumed by solely transactional moments for something far more valuable and holistic.
The refashioning of this space represents an opportunity for reinvention—a place to strategically focus on more experiential moments for shoppers. This is why companies like Wrigley and Mars Chocolate have been continuously investing in this space. After all, automating payments should be about more than cutting labor costs. Might it be possible to finally free up associates from the tedium of managing transactions to focus on meaningful human interaction and value-added customer service? A transition zone can become the place where all that was once valuable about shopping is reintegrated back into a customer’s final moment in the store.
This requires a shift in mindset, not only by stores, but consumer products brands, too. Wrigley, Mars Chocolate and WD have partnered together to bring this leadership in thinking to retailers and are working together on a very clear objective: Elevate the last moment inside the current transaction zone and the future “transition zone” until it becomes the shopper’s best moment inside the store. Shoppers should leave feeling good about their trip and the retailer experience.
Below are four organizing principles to meet such an ambitious goal:
Every longstanding design tradition dictating the organization of the front of the store must be questioned and reinvented. The transaction zone has long been viewed as yet another part of a store instead of a clearly defined zone for intense brand engagement. The interaction has been with a computer and human interaction is on its way to being completely designed out of the equation. This is justified for seemingly good, human ends—making payment easy and intuitive for shoppers—but there’s something lost in the process, and it’s a strategic flaw of store design to neglect this last moment of experience with shoppers.
The transition zone is a category and should no longer be considered a solely transaction-focused area. As the enduring space where purchases are finalized, checkout has operated as the most functional action within the entire shopping experience. As a result, disparate, disconnected buyers have long failed to coordinate the product mix at checkout as a single department or category. This will need to change. It may even be time to disrupt the traditional product mix models, too. In the future, when the transition zone is remade for experiential moments, it opens up new opportunities to evaluate assortment of new impulsive products to enhance the experience. When managing this area as one department, it will still be important to evaluate frequency and household penetration for the items in this space.
Brand Manufacturers must control their destiny and take ownership over reinventing this space. The operational truth might be that retailers control the space and the flow within the transition zone, but they often don’t have the time or resources to address these challenges. It’s up to consumer goods partners to suggest options and proactive manufacturers to act as thought leaders, bringing valuable ideas and, in this way, maintain category leadership. In order to move these retailers into the future, it’s imperative for manufacturers to partner with customer experience experts like WD because plan-o-grams aren’t going to cut it anymore. Brand manufacturers must come to retailers with solutions that are much more than a schematic on how to put five products, instead of four, on a checkout shelf. The onus—and opportunity—is on brands to formulate innovative new visions for this transition area.
It’s time to rethink how specific product offerings fit best into the various need states a shopper exhibits from entrance to exit: thirst, hunger, boredom. In short, both manufacturers and retailers need to take more ownership of these “interruptive” moments within the transition zone.
Put the shopper’s point of view first. Solid research on changing shopper desires throughout the entire store journey (from entrance to exit) is crucial to remake checkout. Stores would benefit from tailored, brand-specific research on how consumers want to move through stores where transition zones have replaced traditional checkout. Moreover, these transaction zones have long been designed for efficiency first—on sending the cart/shopper out the door as quickly as possible—and opportunities have been lost. As shoppers are looking for more experiential trips, it’s time to integrate this zone with the entire shopper journey, instead of merely from conveyer belt/cash register to exit.
Thinking more broadly and moving beyond these prescriptive recommendations, it’s important to recognize the emergence of transition zones represents a marked shift in overall store strategy. In the traditional checkout model—and traditional retail model for that matter—creating efficiencies in distribution and fulfillment was the foundational reason for any expenditure of capital. Creating transition zones instead represents a radical departure from such utilitarian ends. And that’s a good change for retailers, manufacturers and ultimately the shopper.
Yes, there are margins on the line, but instead of merely preserving the margin status quo, it’s not unthinkable to plan for some margin growth. Innovation inside the transition zone might turn what has always been a negative series of checkout moments into a last and final moment of satisfaction shoppers don’t mind spending their time on.
John Youger is Sr. Director, Strategy & Insights, and Raj B. Shroff is Vice President, Brand, Strategy & Design, at WD Partners, a customer experience expert for global brands with offices worldwide.