The Evolution of the Physical Front-End

Leading retailers are investing in creative checkout solutions to meet consumer demand for a more convenient, flexible, and seamless retail experience.

Person inserting credit card into a mobile credit card reader

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Leading retailers are investing in creative checkout solutions to meet consumer demand for a more convenient, flexible, and seamless retail experience. The checkout experience is becoming as important as price in determining where a customer shops and his/her overall satisfaction – 85% of consumers highlight checkout as important or very important, while 43% of consumers would choose to shop online or abandon the trip to avoid a slow checkout line.

As an increasing number of shoppers elect to purchase items online rather than in-store, physical touchpoints will fragment to cater to a greater variety of shopping missions. A greater share of in-store trips will be smaller basket trips to grab a snack or convenience-focused trips to grab 1 or 2 recipe ingredients. Stores must be increasingly equipped for quick convenience-focused trips rather than larger, planned stock-up trips. While there will continue to be a place and audience for the traditional checkout lanes, seamless solutions such as self-checkout, click & collect, scan & go, and just-walk-out are transforming the retail process. For example, Walmart has extended its grocery pickup service and hopes that the new pickup points will generate more shopper traffic.

Ten examples of different checkout solutions including mobile checkout, click & collect, curbside pickup, collection lockers and self scan

Services such as self-checkout and click-and-collect have already been widely-adopted and become table stakes at many retailers. In recent years, we have seen a massive investment in just-walk-out and seamless self-checkout technology not only in the case of the well-known AmazonGo stores but also with numerous leading Asian retailers such as Alibaba and JD.com.

Bar chart illustrating the number of unmanned and checkout-less store count organized by retailer

The increasing investment in the unmanned store space is indicative of the overall pace of change in the greater checkout landscape or environment. Advancements in technology and an increasingly demanding consumer base will accelerate development in this space in the coming years.

In addition to checkout solutions evolving, checkout assortment is also shifting albeit at a much slower rate. There have been campaigns at a variety of retailers including Whole Foods and Meijer to build a healthier and more whole some checkout assortment. While traditional impulse categories such as candy, snacks, and beverages remain relevant, there are emerging categories such as low-price consumer electronics, healthy snacks, and travel-sized health & beauty products taking increasing space.

Brands in traditional impulse categories must look for new opportunities to recoup lost impulse opportunities from decreasing merchandising space near checkout. Brands will have to incorporate smaller, more flexible fixturing and utilize all available merchandising space in self-checkout and click & collect areas. Implementing upscale fixturing and single-line queuing strategies can also bolster impulse sales by driving more engagement with impulse products. Beyond the physical checkout, it will be important to leverage tech enabled solutions such as product push alerts and basket add-ons to generate impulse opportunities.

Checkout reinvention will be one of the fastest areas of change in retail over the next 2-3 years as retailers aim to solve consumer pain points and control more operational costs. Last year, Amazon expanded their in-store pickup service, Counter, to help partner retailers generate shopper traffic. As the landscape shifts towards more digitally enabled front-end solutions, such as scan & go and just-walk-out, which require customers to login even for in-store purchases, retailers and brands could bridge online and offline behavior.

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mark Ravi
Advisory Analyst
Mark Ravi

Mark Ravi is an Analyst in Grocery based in Boston. Mark specializes in online grocery, the Asian retail landscape, and supply chain and logistics. 

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