Self-Checkout Killing Impulse Items

In what's been called the self-checkout diet plan, retailers are learning the unintended consequences of self-checkout systems, as they see sales of candy, Hollywood tabloids, batteries and other checkout lane impulse items plummet.

A very small part of the answer for this phenomena is that retailers are typically opting to not put such impulse items next to self-checkout systems, said Greg Buzek, president of the IHL retail consulting firm, which has just completed a self-checkout study. The core of the problem is simply the way consumers interact with self-checkout systems. Typically, they have to pay much more attention to choosing a lane and to watching their products and scanning them, thereby leaving almost no time for browsing magazines or otherwise being tempted.

"Things like chewing gum and breath mints, chocolate candy, chips and salty snacks, soda and water. We're seeing a tremendous change there, drops of 40 percent overall from people who say they buy it in a standard lane but do not buy it in a self-checkout lane," Buzek said. "Retailers have to factor those impulse items in when they do an ROI (return on investment) calculation for self-checkout. They are typically using labor savings or moving labor around in the store as a primary reason for justifying self-checkout but also need to factor in the merchandising sales. There's a fundamental change happening in the frontend of the checkout line when self-checkout is implemented."

Beyond the fact that few retailers have gotten around to adding impulse items near self-checkout systems, the attention-demanding nature of those lanes are making it more difficult to sell typical impulse items, said another retail technology analyst, Paula Rosenblum, VP of research and content for the Retail Systems Alert Group.

"There's a difference in focus. I know that when I've stood on self-checkout lanes, you're much more alert to see which lane you're going to be ready to use," Rosenblum said. "Your focus is simply different. You're kind of getting ready for action.That's just when the consumer is choosing the lane and it gets worse as the customer has to manually scan items during time when they would otherwise have had little to do. "You don't have any time to peruse or browse," Rosenblum said.

"The folks that make these impulse items have to be aware of these things," Buzek said. "For instance, on average, consumers will buy breath mints or chewing gum about 20 percent of their shopping trips when going through a standard checkout, but when going through self-checkout, it drops to about 11.4 percent. That's about a 43 percent drop. The biggest drop is in chips and salty snacks dropped 53 percent and soda and water, which dropped 50 percent."

The IHL study—which was based on interviews with 533 geographically-distributed consumers—also found gender differences, with the impulse-buying drop for men coming in at 27.9 percent while it was a whopping 50 percent for women.

Another example: in a comparison of how consumers dealt with do-it-yourself purchases in 2005 compared with 2004, IHL found that the percentage that used Home Depot dropped from 87 percent to 80 percent while the percent that dealt with Lowe's increased from 50 percent to 60 percent.

Buzek's explanation: "Some 85 percent of home improvement purchases are made by women. Lowe's is more appealing to women. People are getting more and more disenchanted with Home Depot."

Buzek dubbed the trend the self-checkout diet after the report calculated that a typical checkout impulse purchase gave the consumer about 7,200 extra calories. "On average, we believe that self-checkout will save somebody two-and-a-half-pounds a year," he said.

Buzek applauded a few retailers—including Meijer and Kroger—for having changed their approaches to self-checkout impulse items, moving away from magazines and candy to more aromatic and marginally healthier offerings such as hot chicken and bread. "By offering items such as rotisserie chickens and fresh baked breads, they are relying more on the sense of smell to drive sales rather than simply visuals when consumers are trapped in a staffed lane," Buzek said. "Manufacturers such as Hershey's, Wrigley's or Pepsico need to adapt display technologies to leverage these new self-checkout lanes or face a drop in sales."

In a Web audio discussion on this self-checkout trend late last week, Mark Rasch, a senior VP for security consultant Solutionary, said this trend will likely force retailers to re-examine slotting fees and other fees they charge manufacturers for product placement. "Retailers will have to change their behaviors as well," Rasch said.

Some other self-checkout conclusions from the IHL report include a 35 percent overall increase (from 2005 compared with 2004) in consumer self-checkout spending to $110.9 billion and that 18 percent if self-checkout users use self-checkout "all the time" when it is available. This is line with industry projections that self-checkout is likely to be worth $1.2 trillion by 2009.

Almost one-third (29 percent) of consumers will only use self-checkout when there is a long line of customers at a traditional staffed lane, the report said, adding that the average number of items in a self-checkout transaction is 6.7, and the average self-checkout transaction is $32.85.

One big concern for retailers is the employee intervention issue. It's been long known that interventions—such as when store employees have to check ages for cigarette or alcohol purchases or when the system glitches—are a major point of consumer displeasure with self-checkout systems. The IHL study reported that consumers felt they were subjected to such interventions about 33 percent of the time.

This has been behind some emotional consumer-self-checkout machine encounters, such as in April, when a Texas man was arrested for punching out a Wal-Mart self-checkout system. That required a non-traditional intervention, by police.