Thursday, August 7, 2008

Queue Science Helps Retailers Recover Revenue at Checkout

By Debbie Hauss, Executive Editor

If you aren’t managing the checkout area of your stores, now may be the time. The old adage, “You can lead a horse to water, but can’t make him drink” unfortunately proves to be true in too many retail situations. Retailers can lose hundreds of thousands of dollars each year per store from customer walkaways due to poor checkout management.

If an average transaction value is $35, for example, and you have 200 walkaways per week, then you could be losing $364,000 in sales per year in each store. One retailer was losing exactly that much using lane-per-lane queue management. After switching to single-point checkout with the help of Lawrence Metal Products, the retailer saved $345,800 in a year in incremental revenue from reduction of walkaways, according to Richard Prigg, president of sales and marketing, Lawrence Metal Products.

“Retailers spend huge amounts of time and money creating pleasant shopping environments, yet they subject their customers to stress and uncomfortable experiences at checkout,” says Prigg. “It is the last touch point with customers — the last chance to make a good impression, and too often we allow them to leave the store feeling annoyed and frustrated.”

Giving up space to increase revenue
Many retailers overlook checkout because it is a “specialist” area, says Nick Byrne, vice president of sales and business development, Lawrence Metal. Retailers also believe dedicating extra space to checkout cuts down on profitable merchandising space in the store.

Recently Lawrence worked with an 800-store retailer, proving that allocating space for proper checkout reduced checkout time from six to 1.5 minutes. “Revenues went up and sales improved,” says Byrne.

For this retailer, Lawrence instituted single-line queuing with electronic call forward. The organized queue line created efficiencies that the retailer did not anticipate. In addition, Lawrence helped the retailer set up product merchandising in the queue area which added to the total average transaction value. Items that sell well as impulse purchases in the queue can experience uplift in sales of 400 to up to 1,000%, says Byrne.

In addition to reducing walkaways by 92%, the single-point cueing helped to eliminate “sweethearting,” a practice in which store employees give away items to friends by not ringing up every item. With the single-lane system, customers can not choose their cashier. Single-lane queuing also eliminates the need for queue buster personnel – employees who help direct customers to the next available line. With efficient queuing in place, queue buster personnel can be redeployed to other area of the store, improving overall customer service. In a recent test of single-point queuing with U.S.-based TJX stores, customers reported a 94% approval rating of the system. Since the test, the TJX company has committed to convert every one of its stores.

As little as $200 per store to implement
n many cases a retail store may already have retractable barriers in place, and by adding signage and receiving some organizational help, that retailer may be able to improve their queue management situation for $200-300 per store. In other cases, if a retailer wants to add electronic call forwarding, the price could be up to $10,000 per location.

U.K.-based Lawrence Metal has achieved business success working with companies like Virgin Megastores abroad, and the company is making inroads into the U.S. with TJX and other companies including Staples and CVS.

6 comments:

Lynn said...

I’d like to make you aware of new technology that detects “sweethearting”, referenced in your article. I work with a company called StopLift Checkout Vision Systems, which has created video recognition software to catch sweethearting”, occurs when cashiers pretend to scan merchandise but deliberately bypass the scanner, thus not charging the customer for the merchandise. The customer is often a friend, family member or fellow employee working in tandem with the cashier.

In the U.S., retail store employees steal $20 billion worth of merchandise a year, $13 billion of it due to “sweethearting” at the checkout*. While retailers can't increase their revenues in this economy, they now can reduce their shrink. As you can see in this CNBC story, http://www.cnbc.com/id/15840232?video=807110233, as soon as a “sweethearting” incident occurs, the software, which constantly monitors 100% of the security video, flags the transaction as suspicious. It quickly reports the incident, identifying the cashier and the date and time of the theft.

StopLift’s computer vision technology — patent-pending in more than 30 countries — visually determines what occurs during each and every transaction to immediately identify fraud at the checkout. Dishonest associates are identified on the basis of video evidence the very first time they conduct a fraudulent transaction, rather than months or even years down the road, significantly reducing inventory shrinkage, deterring future theft, and boosting profitability.

StopLift CEO Malay Kundu has created technology that eliminates costly, time-consuming human review of video, drastically reduces and deters fraud at the checkout, and significantly improves profitability. Rather than take a one-size-fits-all approach, StopLift develops targeted applications to address the specific needs of retailers from different sectors including general merchandise, grocery, and specialty retail.

StopLift is currently being piloted at the Safeway, Hannaford and Big Y supermarket chains in the U.S. and making inroads into major retail chains.

The National Retail Security Survey reports that $41.6 billion was stolen in 2006 at U.S. retail stores, almost half of it by employees. The survey is a collaborative effort between the National Retail Federation (NRF) and the University of Florida.

Sherry Alpert, Canton, MA 02021, USA

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