THINKING OUTSIDE THE LANE

WASHINGTON -- The growing popularity of self-scanning is forcing many retailers to rethink their front-end merchandising.When self-scanners were designed and installed, retailers and their equipment vendors focused on customer convenience and productivity gains. Little attention was paid to merchandising the highly profitable impulse products such as magazines and candy that traditionally made their

WASHINGTON -- The growing popularity of self-scanning is forcing many retailers to rethink their front-end merchandising.

When self-scanners were designed and installed, retailers and their equipment vendors focused on customer convenience and productivity gains. Little attention was paid to merchandising the highly profitable impulse products such as magazines and candy that traditionally made their home on racks surrounding the checkouts.

As the retailers and their suppliers gather this week for the annual Retail Conference of the Magazine Publishers of America, New York, much conversation will be about how to recapture the lost space and, more importantly, the lost sales.

While MPA and others with an interest in the front end have amassed a sizeable body of evidence showing the importance of magazines and other key checkout products, they are finding a willing audience in the supermarket retailers. Despite a prolonged downturn in single-copy sales, the retailers are less concerned with whether to keep magazines and more interested in how to maximize their potential.

"We're very bullish on the magazine category," said Chuck Porter, director, Iggle entertainment and video, Giant Eagle, Pittsburgh, which recently upgraded all its front-end racks and is experimenting with new state-of-the art mainline displays.

"We're running ahead right now, even though we are seeing national trends that are running down," Porter said.

At Ingles Markets, Asheville, N.C., Dan Spears, director of HBC and GM, has seen the studies produced by the industry. "We use a lot of the studies that the companies produced. I'm sure they put their resources behind them, so I'll accept the findings as true," he said.

"Magazines are still vital for a grocery store. In any grocery store you go in, you'll see magazines positioned at the checkout lanes. It's still an important part of the business." Spears said Ingles reviews the category every three years, an occurrence that is a year in the future.

At Bashas' Markets, Chandler, Ariz., that time has arrived, said Bryon Roberts, vice president, general merchandise. "It's a very high visibility area for us with high-impulse sales opportunities. We are looking at it very carefully to determine the proper mix between the three primary categories: confection, GM and magazines," he said.

Bashas' would like to integrate more food products, but not at the expense of magazines, Roberts said. "We're looking at new, more creative racks that might give us more merchandising opportunity space. ... This is on the front burner now. It's a high priority," he said.

Last year's "Front-End Focus" study, commissioned by Masterfoods USA (a division of Mars Inc., Time Distribution Services, and the Wm. Wrigley Jr. Co.) and conducted by Dechert-Hampe, Northbrook, Ill., found that an average 12% of shoppers bought items merchandised at self-checkout lanes compared to 20% at traditional lanes. That percentage went up to 14% when the self-scanning lanes were "fully merchandised," but dropped to 10% when there was limited merchandising, and then to 4% when shoppers had to go to another lane to get a desired product.

"The advent of self-scanning checkouts has taken an enormous bite out of front-end merchandising in that many of these new modules have not been successfully adaptable to a checkstand merchandiser," said Bill Mansfield, a nonfood supermarket executive formerly affiliated with Tom Thumb, Harris Teeter and, most recently, Marsh. He also is the immediate past chairman of the General Merchandise Distributors Council, Colorado Springs, Colo.

"We as an industry have some work to do to shore that up because those self-checkouts take more space away than a regular checkout. If a chain puts in three double checkouts, it probably requires five normal checkouts to be removed. There's a loss of real estate there for the category," Mansfield said.

Retailers and their magazine suppliers, along with confectionary and soft-drink firms, need to work more closely with the companies that make the self-checkout units to improve the selling environment, said Robert McCabe, senior associate, Willard Bishop Consulting, Barrington, Ill.

"The industry is trying to catch up to the growth of self-scanning, but what is going to solve it is, the more the manufacturers that rely on front-end sales talk to the self-scan manufacturers and the retailers, the sooner they'll find that there may be some untapped opportunities to build attractive and compelling merchandising units that complement the self-scanners," McCabe said.

This is especially important to the magazine industry, he said. Close to 60% of single-copy sales come from the front end, and supermarkets make up about 45% of the total magazine industry's single-copy sales, he said. While magazines only represent an average 0.8% of a supermarket's total dollar sales, they make 35% margins on them compared to about 25% for the rest of the store, McCabe said.

A big part of Giant Eagle's success in the category has been new racks at the front end, including specially designed racks for self-checkout lanes, Porter said. Working with Source Interlink, Bonita Springs, Fla., "we've been able to design a fixture that goes in front of the self-scan registers that displays our magazines very well," he said.

"The sales are up with all products on the front-end registers," Porter added. "The new fixture just displays product much better than our old fixture."

More GM products are finding a place at the front end as retailers add peg hook space, noted John Amann, executive vice president, sales and marketing, Source Interlink. "That's a challenge. We need to get more creative with our design of the fixtures so that we don't take away valuable space from existing products while we introduce new lines." A bullnose display unit, used by Giant Eagle, helps to accomplish this, he said.

"You have to be smarter about your utilization of space. The challenge is to have the correct product mix and a profitable product mix at the same time, so you truly need to be creative in your design in a front-end fixture. It's not just about having hooks and pegs and pockets. It's really about how to best merchandise them and how to add more product to your existing space, and we are doing that every day," Amann said.

The Mainline Matters

The front end may represent the more immediate challenge to magazine merchandising, but retailers are getting more aggressive and creative with mainline displays for books and magazines.

For example, Giant Eagle, Pittsburgh, is testing the new Genesis display system from Source Interlink, Bonita Springs, Fla. Others like Harris Teeter, Matthews, N.C., and Marsh Supermarkets, Indianapolis, have implemented relaxing sit-down areas in conjunction with cafes away from the main traffic flow.

The Genesis rack provides cleaner organization and full facings of product, said Chuck Porter, director, Iggle entertainment and video. Tests began last fall, and because of various complications, results have been difficult to measure. Yet, some studies indicate that sales might be up, he said.

"Our goal in the mainline is to be a destination in magazines where people can come in and buy virtually any style of magazine they want, excluding sophisticates [such as Playboy and Penthouse] of course," Porter said.

A sit-down area is "something we've talked about periodically. We have chosen not to do it at the current time," he said.

Bill Mansfield, a nonfood supermarket executive formerly with Tom Thumb, Harris Teeter and Marsh, was involved with sit-down magazine areas at Harris Teeter and Marsh. The Harris Teeter sections were "a huge success," and boosted the visibility of the coffee shop, he said. The Marsh test in two new prototype stores is too new to evaluate, he added.

"By providing the customer with an environment that protects them from getting run over by other customers' shopping carts, they stay longer and consequently buy more magazines," he said.

Tests such as Giant Eagle's also are "exciting," Mansfield said. "Those retailers that have managed their mainline magazine presentations with a full cover and easily identifiable planogrammed assortment have seen extraordinary sales growth," he said. Customers always know where Cosmopolitan will be -- in the same place at the front end, he said. "However, when she shops the mainline magazine section, the whole merchandising plan seems to migrate as the route person comes in and remerchandises it without a set planogram. Some of the new prototype magazine displays offer the full-cover placement and category identifiers that help the customer make that selection quicker. They seem to stay longer at those reading centers because of that ease of shopping," Mansfield said.

"A mainline display that is neat, orderly and organized, displaying full covers, encourages people to shop it, as opposed to a cluttered and disorderly fixture, which inhibits sales," said John Amann, executive vice president, sales and marketing, Source Interlink. Sales increases from Genesis "are off the charts," he said.