ANew Tipping Point
While self service may not be a mission-critical solution just yet, a tipping point is well within reach. Consumer demand continues to increase, and new, appealing self-service versions are making their way onto retailers’ store floors. But the chains that continue to treat self service as an option rather than forcing the issue will gain the long-term loyalty of shoppers.
Self-service solutions have been on the scene for more than 15 years, but they are finally coming into their own. This was obvious as I walked the exhibit floor at the 2008 FMI + Marketechnics convention, sponsored by the Washington, D.C.-based Food Marketing Institute, held last month in Las Vegas. The show featured the newest self-checkout units, mobile NFC (near field communications) marketing and payment solutions, and even streamlined DVD units.
I played with each one, and loved every minute of it. Yes, I am definitely a member of retailers’ self-service “sweet spot,” and I am proudly contributing to the technology’s tipping point.
I use automated kiosks to purchase my train and subway tickets. I check into airports using self-service units. And when available, I always use self checkout during supermarket visits—especially when shopping with my two girls. (My 4-year-old likes to help, and since my 9-month-old is not the best “shopper,” self checkout gets us out the door quicker than waiting on a full-service line).
Thankfully, more grocers seem to understand my pain and continue to add more units. Currently, self checkout is offered by more than six out of 10 companies (62.8%) in at least one store location, according to the Food Retailing Technology Benchmarks 2008 study, from FMI.
Within these retailers, self-scanning stations on average comprise 25% of their total checkout lanes. These electronic checkstands conduct 25% of total transactions.
As society grows more accustomed to self service, penetration of solutions is clearly growing by leaps and bounds. For example, the study revealed that two-thirds of companies plan to increase the number of self checkouts in their stores.
Why shouldn’t they? Besides consumer demand, self service helps retailers improve store-level productivity by redeploying front-end labor, and as unit costs go down, chains are encouraged by a strong, positive return-on-investment scenario.
Retailers just need to make sure they don’t take their eyes off the ball. In the end, self service is still a choice—and it must remain so.
While more shoppers are demanding self service, there is a contingent—including both loyal customers and, at times, even self-service advocates— who still want the traditional, fully manned checkout experience. That said, traditional checkstands must continue to be an option. Alongside these stations, chains should also keep an educated employee on hand at self-service units to help scan, redeem coupons, check prices and bag.
I don’t ever see manned checkouts becoming obsolete. But the more personal service you can provide at self service can only enhance the shopping experience. And who knows, it may even convert some naysayers into believers.
As unit costs come down, retailers no longer have to make a choice. They are in the position to provide the best of both worlds. By embracing this strategy, self-service’s tipping point is not far off.
Michaels comps down for the quarter
IRVING, Texas Michaels Stores reported that total sales for the quarter were $847 million, a 1% increase from fiscal 2007 first quarter sales of $839 million. Same-store sales for the comparable 13-week period decreased 2.9%.
Ceo, Brian Cornell, said, “While our overall comps for the first quarter declined 2.9%, we were very encouraged with the sales of our kids and specialty craft categories, scrapbooking and frame and art supplies. Sales in April showed a reversal of trend with same-store sales up 3.1% on a strong increase in transactions. This positive sales and transaction performance gives us confidence that our new marketing and merchandising programs are connecting with our Michaels customers.”
For fiscal 2008, the company expects same-store sales growth to be approximately flat given the current economic environment.
Kirkland’s 1Q sales up 2.1%
JACKSON, Tenn. Kirkland’s reported that net sales for the first quarter ended May 3 increased 2.1% to $84.1 million from $82.3 million for the first quarter ended May 5, 2007. Comparable-store sales for the first quarter of fiscal 2008 increased 4.3% compared with an 18.8% comparable-stores sales decrease in the first quarter of fiscal 2007.
The company reported a net loss of $2.6 million, or 13 cents per diluted share, for the 13-week period ended May 3, 2008, compared with a net loss of $7.5 million, or 38 cents per diluted share, in the 13-week period ended May 5, 2007.
Robert Alderson, Kirkland’s president and ceo, said, “The first quarter results reflect strong merchandising execution and the benefits of aggressive financial initiatives that have reduced our operating costs, improved cash flow and strengthened our liquidity. During the quarter, we experienced improved customer conversions as shoppers have reacted very favorably to our merchandise mix. The positive comparable-store sales and trimming of unproductive stores led to leveraging of occupancy and distribution costs. Combined with an improvement in merchandise margin and a year-over-year reduction in operating costs of almost $5 million, we were able to post a significant improvement in our pre-tax results.