Impulse Merchandising In Drug Stores - Front

Transcription

Impulse Merchandising In Drug Stores Generic Presentation
Impulse
Merchandising
At Drug Store
Checkouts
0
Agenda
z Drug Store Merchandising Leadership
z Drug Store Consumer Insights
z Drug Store Merchandising Opportunities
1
The Leadership Challenge
“Leaders don’t force people to follow,
they invite them on a journey.”
Charles S. Lauer
2
Leadership In Drug Store Impulse
Merchandising
Formation of a leadership council including the following
manufacturers:
z Masterfoods USA, a Division of Mars, Incorporated
z The Wm. Wrigley Jr. Company
z Time Warner Retail Sales & Marketing (TWRSM)
In partnership with Dechert-Hampe & Company, an
independent research and consulting firm
3
Mission Of The Group
To work in partnership with retail customers and other
stakeholders to improve store performance and enhance
consumer satisfaction through:
z New learning and consumer knowledge
z Developing benchmarks and Best Practices
z Innovative solutions for in-store merchandising
4
Consumer Based In-Store Solutions
Consumer as
Purchaser
Understand consumer
attitudes and purchase
behavior
Understand retailers’
marketing strategy and
business issues
Design format
specific selling
strategies
Implement
In-Store
Solutions
Retailer as
Business
Partner
5
Key Issues For The Drug Channel
z Increasing Drug store count and industry consolidation have led
to increased competition
z Channel blurring has resulted in more cross-channel competition
and increased importance of convenience
z Two-thirds of Drug store sales are now from Pharmacy, but the
majority of profit comes from front of store sales
z Drug stores have lost shopper penetration and trip frequency to
other outlets
Sources: MVI, A.C. Nielsen
6
Drug Store Sales Are Skewed To Pharmacy
But Front Of Store Drives Profit
Drug Store
Drug Store
33
58
68
Pharmacy
68
Front Of Store
67
42
32
% Sales 1999
z
z
% Sales 2004
32
% Sales 2004
% Profit 2004
Aging population is likely to increase trend
Increasing front of store sales is key to profitability
Source: MVI, 2004.
7
Drug Stores Need To Increase Household
Shopping Frequency
Household Shopping Frequency
(# of Trips per Year)
70
Grocery
78
26
Supercenters
17
21
25
Mass
Merchandisers
Drug Stores
15
15
Convenience
Stores
15
14
Dollar Stores
13
10
Warehouse
Clubs
Mid-2004
2000
11
10
Source: Nielsen Household Panel.
8
A Key Opportunity For Drug Stores Is
To Increase Basket Ring
Average $ Basket Ring
Warehouse
Clubs
$82
$83
$56
Supercenters
$49
$42
$38
Mass
Merchandiser
$33
$32
Grocery
Mid-2004
2000
$21
Drug Stores
$19
Convenience
Stores
$12
$10
Dollar Stores
$11
$11
z Basket size has increased, but still lags other outlets
Source: Nielsen Household Panel. Basket does not include prescriptions or gas.
9
Objectives Of The Drug Store Checkout
Shopper Study
1.
Understand current and emerging consumer attitudes
and shopping behavior in the Drug class of trade
2.
Develop new insight on the challenges and potential
opportunities for impulse sales in Drug stores
3.
Develop new concepts for in-store solutions to Drug
store impulse merchandising
10
Drug Store Checkout Shopper Study
Scope
Participation by 4 major Drug store chains
z Research conducted in 72 stores in:
z
Atlanta
Boston
Charlotte
Chicago
Detroit
Hartford
Los Angeles
New Orleans
No. New Jersey
Pittsburgh
San Francisco
11
Drug Store Checkout Shopper Study
Methodology
z
Audits of 371 checkout locations in 72 stores
z
Observations of 3,913 shoppers at point of sale
z
In-store interviews with 1541 consumers
z
Independent analysis by Dechert-Hampe & Co.
12
Impulse Merchandising Is A Key
Element Of Drug Store Strategy
z
Drug stores need to recognize and adapt to changing
consumer shopping occasions and patterns
z
Drug stores can generate incremental sales through
more points of interruption with impulse items
z
Checkouts are the prime locations where all shoppers
can be exposed to effective impulse merchandising
13
Key Drug Store Opportunities For
Impulse Merchandising
z
Opportunity to refocus checkout merchandising on
key impulse items that generate incremental sales and
increase market basket
z
Opportunity to redesign Pharmacy and Photo
checkouts around consumer buying behavior
z
Opportunity to utilize convenience strategy to drive
shopping frequency with key consumables
14
Drug Store
Consumer Insights
15
Consumers Expressed A Variety Of
Reasons For The Drug Store Shopping Trip
Primary Reason For Shopping Today
% Of Respondents
Consumables
22%
16%
13%
9%
Prescription/
Pharmacy
Beauty/
Personal
Products
Groceries
Beverages
7%
Candy/Gum/
Mints/Snacks
6%
OTC/NonPrescription
Medicine
6%
Photo
Processing
z Pharmacy accounted for about one-fourth
z Personal Care and OTC accounted for a similar amount
z Consumables were a surprising 29%
Source: Drug Store Interviews.
16
Most People Chose A Store Because It Was
Near To Home Or Near Their Destination
Why Did You Pick This Store?*
% Of Respondents
70%
Convenient - Near
Home
Convenient - Near
Destination
21%
19%
Good Values
Good Shopping
Experience
15%
Sale/Coupon
14%
Product Assortment
10%
z Convenience of location leads to a case for consumables
* Could provide multiple answers.
17
Most Shoppers Had Something In
Mind, But Not A Shopping List
Use of Shopping List
% Of Respondents
5%
21%
17%
57%
Brought A Shopping List
Had A Mental List
Had No List
Saw Something In Circular
z The absence of a list suggests potential for impulse buying
18
Few People Shopped The Whole Store
Shopping Pattern
% Shoppers
16%
43%
41%
Shopped Whole Store (all or most of aisles)
Targeted Products Needed And Some Shopping
Targeted Products Needed With No Shopping
z This suggests the need for impulse merchandising at checkouts to
capture purchases
19
While Many Shoppers Bought Multiple
Items, Half Bought Just One Or Two
Number of Items Bought
% Of Respondents
19%
8%
29%
Mean = 3.8
10%
15%
1 Item
2 Items
20%
3 Items
4 Items
5 Items
6 Items
z There is a clear opportunity to sell incremental items
20
Shoppers Spent An Average Of $16.00, But
Almost Half Spent Less Than $ 10.00
Dollar Expenditure
% Of Respondents
10%
4%
8%
14%
15%
Mean = $15.97
27%
22%
Less Than $2.00
$10.00-$19.99
$50.00 Or More
$2.00-$4.99
$20.00-$29.99
$5.00-$9.99
$30.00-$49.99
z There is a major opportunity to increase basket ring
21
Checkout Purchases Are A Key
Source Of Incremental Volume
Bought Item at Checkout Today
% Shoppers
16%
84%
Bought At Checkout Today
Not Bought
z One in six shoppers bought something at checkout today
Source: Drug Store Observations.
22
Drinks, Candy, Gum And Magazines Are Most
Purchased Categories At Front-End Checkouts
Observed Purchase At Front-End Checkout
% Shoppers
(2,636)
5.8%
Candy-Bars
5.2%
Drinks-Carbonated
5.2%
Cigarettes
1.0%
Cookies/Crackers
0.8%
Nuts/Seeds
0.8%
0.7%
Gum
4.0%
Camera
Drink-Non Carb.
3.8%
Remedies-Cough
0.7%
Film
0.6%
3.8%
Magazines/Newspaper
Candy-Bag
Tobacco Access.
Lip Care
Candy-Novelty
Oral Care
Salty Snacks
Mints
2.6%
2.3%
2.0%
1.6%
1.6%
1.3%
Low Carb Snack
0.5%
Phone Cards
0.5%
Energy Bars
0.4%
Cosmetics
0.3%
Video/DVD/CD
0.3%
Batteries
1.1%
Meat Snack
Remedies-Cold
1.0%
Diet Products
Remedies-Headache
1.0%
Razor Blades
0.3%
0.3%
0.2%
23
The Checkout Represents A Major
Opportunity For Incremental Purchases
Bought at Checkout in Last 12 Months
% Shoppers
28%
72%
Bought At Checkout In Last 12 Months
Not Bought
z 1 in 6 bought today, while seven in ten shoppers buy at checkout
regularly
24
Candy, Gum, Mints And Drinks Were The Most
Common Consumables Bought At Checkout
% Bought At Checkout In Last 12 Months
26.2%
Candy - Bar
17.2%
Candy - Bag
8.9%
Candy - Seasonal
6.4%
Candy - Novelty
20.2%
Gum
17.7%
Mints
10.4%
Drinks - Non. Carb.
13.6%
Salty Snacks
8.6%
Cookies/Crackers
6.4%
Nuts/Seeds
Energy Bars
29.1% Soft Drinks
12.5%
Drinks - Water
Low Carb. Snacks
29.2% Gum/Mints
18.2%
Drinks -Carbonated
Meat Snacks
39.3% Candy
5.1%
3.3%
3.0%
25
Batteries, Cosmetics, Film And Magazines
Are The Top Non-Consumables
% Bought At Checkout In Last 12 Months
22.8%
Batteries
17.2%
Cosmetics
Film
15.0%
11.2%
Oral Care
10.6%
Vitamins
9.8%
Razor Blades
Cigarettes
13.4%
Remedies - Stomach
7.5%
Magazines
13.0%
Eye Care
7.5%
Remedies - Cough/Cold
13.0%
Cameras
6.5%
Gift Cards
12.9%
Video/DVD/CD
5.6%
Lip Care
12.7%
Books
5.5%
Hair Care
12.3%
Tobacco Accessories
4.1%
Skin Care
12.0%
Phone Cards
3.5%
Remedies - Headache
11.8%
Dieting Products
3.4%
26
Most Of The Consumables Have
High Purchase Frequency
Frequency Of Buying At Checkout
% Shoppers
Candy – Bar
Candy – Bag
Candy – Novelty
Candy – Seasonal
Gum
Mints
Cookies/Crackers
Energy Bars
Low Carb. Snacks
Nuts/Seeds
Meat Snacks
Salty Snacks
Drinks – Carbonated
Drinks – Non Carb.
Drinks – Water
Once A Week
Or More
49
39
30
16
56
46
47
41
38
44
42
53
59
60
70
Once A
Month
35
35
42
17
26
30
33
34
46
38
33
27
26
24
16
Less Than
Once A Month
16
26
28
67
18
24
20
25
16
18
25
20
15
16
14
27
Magazines Are The Only Non-Consumable
Category With High Frequency At Checkout
Frequency Of Buying At Checkout % Shoppers
Books
Magazines
Video/DVD/CD
Batteries
Cameras
Film
Razor Blades
Eye Care
Lip Care
Oral Care
Skin Care
Cosmetics
Hair Care
Vitamins
Dieting Products
Remedies – Cough/Cold
Remedies – Headache
Remedies – Stomach
Gift Cards
Phone Cards
Once A Week Or
More
Once A Month
Less Than Once A
Month
17
61
24
9
14
14
18
10
10
10
17
16
15
7
25
5
5
11
18
27
30
24
17
32
24
34
53
46
46
43
38
41
45
47
49
27
32
28
32
29
53
15
59
59
62
52
29
44
54
47
55
43
40
46
26
68
63
61
50
44
28
Snacks Drive Impulse Behavior At
Checkout
% Planned
% Impulse
Candy – Bar
36
64
Candy – Bag
46
54
Candy – Novelty
39
61
Candy – Seasonal
62
38
Gum
43
57
Mints
44
56
Cookies/Crackers
55
45
Energy Bars
63
37
Low Carb. Snacks
46
54
Nuts/Seeds
49
51
Meat Snacks
31
69
Salty Snacks
36
64
57
43
Drinks – Non Carb.
59
41
Drinks – Water
58
41
29
Non-Consumables Tend To Be More
Destination Buys In Drug Stores
Books
Magazines
Video/DVD/CD
Batteries
Cameras
Film
Razor Blades
Eye Care
Lip Care
Oral Care
Skin Care
Cosmetics
Hair Care
Vitamins
Dieting Products
Gift Cards
Phone Cards
Cigarettes
Tobacco Accessories
% Planned
% Impulse
45
66
63
80
69
78
85
81
66
80
82
84
72
87
73
82
83
81
79
71
84
62
55
34
37
20
31
22
15
19
34
20
18
16
28
13
27
18
17
19
21
29
16
38
30
Drug Store
Impulse Merchandising
Opportunities
31
Opportunity: Refocus Front-End Checkout
Merchandising To Gain Incremental Purchases
Focus on the products with these characteristics:
z
High penetration – many shoppers buy it, so
everyone is a potential sale
z
High frequency – shoppers buy it very often, so
each store trip is a new occasion/opportunity
z
High impulse – shoppers do not plan the purchase,
it is incremental
Source: Dechert-Hampe & Co.
32
Incremental Purchase Potential Is Driven By
Penetration, Frequency And Impulse
Incremental
Purchase
Potential
PENETRATION
=
% Consumers
Buying
FREQUENCY
IMPULSE
x Purchases Per x % Consumers
Month
Buying On
Impulse
Source: Dechert-Hampe & Co.
33
Base Front-End Checkout Merchandising
On Incremental Purchase Potential
Low
Batteries
Tobacco Accessories
Candy – Seasonal
Cosmetics
Books
Video/DVD/CD
Gift Cards
Film
Energy Bars
Razor Blades
Skin Care
Oral Care
Cameras
Phone Cards
Dieting Products
Eye Care
Vitamins
High
Medium
3
3
3
3
3
2
3
3
2
2
2
2
2
1
1
1
1
1
1
1
Cookies/Crackers
Cigarettes/Cigars
Meat Snacks
Nuts/Seeds
Candy – Novelty
Lip Care
Hair Care
Low Carb Snacks
9
7
7
7
6
4
4
4
Candy – Bars
Gum
Mints
Salty Snacks
Candy – Bag
Drinks – Water
Magazines
Drinks – Non-Carb.
39
29
21
21
21
18
15
12
11
Incremental Purchase Potential
Source: Drug Store Interviews, Dechert-Hampe & Co.. Analysis
34
Opportunity: Design Pharmacy Checkout
Merchandising Around The Consumer
z
Merchandise health-related products to
provide solution sales at Pharmacy checkouts
z
Display Magazines and Books to provide
information and entertainment for consumers
while waiting for prescriptions
z
Display Consumables (Candy, Gum, Mints,
etc.) to generate impulse purchases
35
A Significant Proportion Of Prescription
Customers Buy Nothing Else That Trip
% Of Prescription Customers Who Purchase Something Else
56%
44%
Buy Nothing Else
Buy Something Else
z This represents a key opportunity for impulse merchandising
Source: IRI Rx Pulse, 2003.
36
Pharmacy Purchases Were Often
Related To Health
Observed Purchase At Pharmacy Checkout
% Shoppers
(738)
Remedies-Cold
3.0%
Remedies-Headache
3.0%
Remedies-Cough
2.7%
Vitamins
2.7%
Lotions
1.5%
Remedies-Stomach
1.2%
Candy Bars
1.1%
Batteries
1.1%
Lip Care
1.0%
Candy Bag
1.0%
Eye Care
1.0%
Gum
1.0%
z There was low presence of impulse items at pharmacy checkouts
37
Design Pharmacy Checkout Merchandising
Around Consumer Buying Patterns
Display
Magazines
To Provide
Information
And
Entertainment
Offer
Related
Remedies
and
Wellness
Products
Display Candy,
Gum, Mints And Snacks
for Impulse Sales
38
Opportunity: Design Photo Checkout
Merchandising Around The Consumer
z
Merchandise Photo related products such as Film
and Cameras
z
Display a variety of Batteries including photo and
specialty batteries
z
Provide an assortment of photography and other
special interest Magazines
z
Display Consumables (Candy, Gum, Mints, etc.) to
capture impulse sales
39
Purchases At Photo Counters Are
Limited To Related Products
Observed Purchase At Photo Checkout
% Shoppers
(421)
14.3%
Film
Video/DVD/CD
4.3%
Cameras
2.9%
Batteries
2.4%
Candy Bar
1.2%
z There was low presence of impulse items at Photo checkouts
40
Design Photo Checkout Merchandising
Around Consumer Buying Patterns
Display
Specialty
Batteries
Display
Film/Cameras
Display
Special Interest
Magazines
Shelves Of Candy,
Gum, Mints And Snacks
for Impulse Sales
41
Opportunity: Drive Shopping Frequency With
Key Consumables
z
Current frequency of store visits is dictated by
prescriptions and infrequently purchased personal care
z
Frequency can be influenced by focus on convenience
and effective in-store merchandising
z
Merchandising of frequently purchased items at
checkout will be key to success
42
Key Checkout Categories Can Drive
Shopping Frequency
# Annual Purchases/Household
Carbonated
Beverages
32
27
Magazines
25
Snacks
21
Candy
Gum/Mints
z
7
These are also high impulse categories that can generate incremental
sales
Source: A.C. Nielsen Household Panel; DHC Analysis
43
Drug Store Purchasing At Checkout Is Lower
Than Grocery On Key Consumables
% Of Shoppers Purchasing Products At Checkout
Grocery Stores
Drug Stores
Gum/Mints
72%
29%
Candy
69%
39%
Magazines
48%
13%
Soft Drinks
35%
18%
Batteries
28%
23%
Non-Carb. Drinks
18%
10%
Film/Cameras
15%
15%
Cookies/Crackers
13%
9%
Salty Snacks
13%
14%
Lip Care
13%
13%
Cigarettes/Tobacco
11%
13%
Razors/Blades
10%
10%
Nutrition Bars
6%
3%
Oral Care
5%
11%
Books
5%
6%
Phone/Gift Cards
5%
14%
Cosmetics
3%
17%
Audio/Video/CD
3%
17%
z Purchasing is higher on Cosmetics, Phone Cards and Oral Care
44
Drug Stores Generate Fewer Impulse
Purchases On Key Categories
% Checkout Purchases Impulse Driven
Grocery Stores
Drug Stores
Candy
81%
62%
Magazines
74%
34%
Gum/Mints
72%
57%
Books
70%
55%
Soft Drinks
65%
43%
Audio/Video/CD
65%
37%
Salty Snacks
63%
64%
Cookies/Crackers
58%
45%
Nutrition Bars
58%
37%
Non-Carbonated Drinks
55%
41%
Lip Care
55%
34%
Batteries
45%
20%
Film/Cameras
44%
26%
Razors/Blades
40%
15%
Phone/Gift Cards
38%
25%
Oral Care
23%
20%
Cosmetics
22%
16%
Cigarettes/Tobacco
21%
16%
45
Summary Of Recommendations
z Checkouts are the prime locations where all shoppers
can be exposed to effective impulse merchandising
z
Incremental checkout sales are driven by a focus on
items purchased broadly, frequently and on impulse
z
Drug stores should refocus Front-End checkout
merchandising on impulse items and expand impulse
merchandising at Pharmacy and Photo checkouts
46
For Enhanced Impulse Merchandising
z Contact a representative of Masterfoods USA,
Wm. Wrigley Jr. Co., or Time/Warner Retail
Sales & Marketing
z Visit our Website at Front-EndFocus.com
z Contact Bill Dusek or Ray Jones from Dechert-
Hampe and Company at (847) 559-0490
47

Impulse Merchandising In Drug Stores - Front

Transcription

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