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Consumers Rate Checkout

BY Connie Gentry

Understanding what shoppers want is critical to retail success. Although attention has been largely focused on product, store experience and making the right impression from the front door throughout the store, the last impression—the shopper’s experience at checkout—is equally important.

In January, Chain Store Age partnered with Chicago-based Leo J. Shapiro & Associates to evaluate “How the Checkout Really Works” from the customer’s perspective. Interviews were conducted with 812 adult consumers across a broad spectrum of U.S. households. The survey and subsequent report affirmed many perceptions and shed light on new areas to consider, but the findings also refuted some conventionally accepted myths.

The report revealed that in a typical 24-hour period, half of all Americans over 18 have waited in line at a checkout counter, and 76% have found themselves standing in a checkout line within the last week. For most, that is not time well spent. The average wait reported by shoppers was 5.2 minutes, but 14% of respondents indicated their wait was 10 minutes or longer. The study suggested that prolonged waits such as this may account for as much as 20% of the time customers spend in a store.

The report goes beyond defining the duration of time spent standing in a checkout line, and delves deeper into the attitudes, expectations and responses of consumers to better gauge the quality of time spent in checkout lanes. An alarming 39% of the respondents said they have stopped shopping at a particular store because of dissatisfaction with its customer service. While this statistic likely confirms what retailers have always feared, the breadth and depth of questions yielded some surprising deductions as well. Among the sacred and trendy truisms that the survey findings proved false are the following:

Myth: Shoppers just want to have fun.

Fact: Store experience is critical, but when it comes time to checkout, shoppers want service over entertainment. For instance, in response to questions about checkout practices and environment, only 20% indicated a favorable opinion of television screens at the checkout counter advertising products in the store. However, practices that enhanced the checkout efficiency met with majority approval: self-checkout counters appealed to 51%; a dedicated checkout lane for customers with full shopping baskets was favorable for 54%; and 65% responded favorably both to baggers at every checkout counter and to a dedicated express lane for shoppers with 10 items or fewer.

Myth: Shoppers shop while they stand in line.

Fact: Sometimes, but longer waits do not contribute to more impulse purchases. Twenty-six percent of shoppers who waited less than three minutes purchased something from a checkout display, but of the customers who waited 10 minutes or longer, only 16% succumbed to impulse buying.

Myth: Friendly cashiers sell more merchandise.

Fact: Of the people who reported purchasing merchandise from a checkout display, 14.3% indicated the cashier made them feel either neutral or negative. Conversely, 70% of the people who did not buy checkoutcounter merchandise said the cashier made them feel either positive or very positive. Again, the moral of the story is that shoppers want efficiency from the checkout lane—not conversation.

In addition to providing consumer responses to checkout practices, the in-depth report has detailed statistics on form of payment, consumer confidence in checkout accuracy, and consumer experiences at specific store types, including food retailers, home improvement stores, warehouse clubs, drug stores, apparel stores, department stores and Wal-Mart/Target/Kmart. The findings are broken down into a number of revealing categories, including age, gender, household size, income, form of payment and purchase total. The complete report is available for purchase at www.chainstoreage.com/specialreports.

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FINANCE

Home Depot Projects Lower Profit in 2007

BY CSA STAFF

Atlanta, The Home Depot Inc. said Wednesday it will pump $2.2 billion into improving its business this year even as it expects lower earnings and slim sales growth. Home Depot said that for fiscal 2007 it expects sales growth in the range of flat to an increase of 2%, a decline in comp-store sales in the middle single digit percentages and an earnings per share decline of 4% to 9%.

Including the effect of a 53rd week in its fiscal year, consolidated sales are expected to increase by 1% to 2%, and earnings per share are expected to decline by 3% to 8%, Home Depot said.

CEO Frank Blake told investors at Wednesday’s conference that like last year, “2007 also will be a difficult year.” But he said it will be a year of focus on Home Depot’s priorities and a year with “hopefully less noise.”

The “noise” was apparently a reference to the investor furor over former CEO Bob Nardelli’s hefty compensation in light of the company’s lagging stock price. Nardelli resigned in early January after six years at the helm of the company. He took with him a severance package valued at $210 million.

To improve its business, Home Depot said it will invest $2.2 billion this fiscal year in key priorities, including the opening of 115 stores. The investment includes $1.6 billion in capital spending and $600 million in expense.

Home Depot said it will recruit master trade specialists, simplify its staffing model, use more technology to aid customer service, and redesign employee compensation and reward plans. It also will invest in new merchandise and review its pricing strategies. Additionally, the chain will spend money on customer loyalty programs, direct-ship programs, credit programs and other specialty sales initiatives.

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FINANCE

Federated Plans Name Change

BY CSA STAFF

New York City, Federated Department Stores on Tuesday said it would ask shareholders to approve changing the company’s corporate name to Macy’s Group Inc. A vote to amend the corporation’s charter to accommodate the new name will be held in conjunction with Federated’s annual meeting on May 18. If approved, the company will be known as Macy’s Group Inc., effective June 1. The move comes on the heels of the company changing most of its store nameplates to Macy’s.

“Macy’s Group is the appropriate name for our company, given that about 90% of our sales involve the Macy’s brand. That said, Bloomingdale’s is—and will remain—a very important part of our company,” said Terry J. Lundgren, Federated’s chief executive. Federated Department Stores also said stronger sales at established stores and lower costs drove a 5% rise in fourth-quarter earnings. For the quarter ended Feb. 3, net income rose to $733 million from $699 million the prior-year period. Sales fell 4% to $9.16 billion from $9.57 billion, as the company shuttered 80 “duplicative” store locations. Comp-store sales rose 6.1% in the quarter.

During the quarter, Federated lowered its selling, general and administrative costs 11% to $2.31 billion.

The company also announced a $4 billion increase to its stock buyback program and said it will immediately repurchase 45 million shares for $2 billion under the plan.

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