Aggressive merchandising and cross-merchandising of seasonal goods represents retailers' best chance to overcome declines in other nonfood areas.
That is the top-line finding of the latest study from the Educational Foundation of GMDC, Colorado Springs, which will be released during GMDC's General Merchandise Marketing Conference in Orlando, Fla., this weekend. The comprehensive report reprises a topic first broached by GMDC 10 years ago, but ranges further to encompass technological advances, category management techniques, the changing direct-import landscape, consumer acceptance of higher-price-point goods, and new seasonal events and opportunities such as planning for severe weather, and incorporating health and beauty care into merchandising plans.
"Seasonal Best Practices: A Plan for Seasonal Merchandising" cites food, drug and mass data (excluding Wal-Mart) from Information Resources Inc., Chicago, in reporting that the five-year annual growth rate of seasonal products (2000 to 2005) is up 10.1%, compared to a 1.2% rise for HBC categories and a 3.8% decline for GM.
Research undertaken for the GMDC study found that 31% of 1,001 shoppers said they spend a greater proportion of their disposable income on seasonal products than five years ago, and 35% of families with children - a key demographic for supermarkets - reported spending more on seasonal than five years ago. "There is greater acceptance of seasonal merchandising by the customer base," said Roy White, the New York-based vice president of education for GMDC.
The growing populations of multicultural consumers and aging baby boomers also bode well for seasonal purchasing and creative marketing
opportunities, the GMDC report said.
"The seasonal business is truly a foundation stone for any supermarket looking for growth," said Jon Hauptman, vice president of the Willard Bishop consultancy, Barrington, Ill., which produced the study for GMDC. "While sales in the GM and HBC departments are relatively flat, the GM and HBC seasonal business is growing at over 10% per year." Some retailers devote as much as 120 linear feet of permanent space to seasonal, he noted.
Prominent in the GMDC research is how seasonal merchandising does not take place in a vacuum, or to use the industry term, a "silo." Seasonal products look and display best when they are combined with other items, whether from the same season, or a related food, candy or HBC product.
Also, the GMDC study suggests that retailers look beyond the traditional times of the year for fresh seasonal opportunities. Last year's devastation made it clear to many that there is a tropical storm season in many parts of the country, just as there is a winter storm season, as well as spring cleaning, and cough-and-cold and allergy seasons.
Meanwhile, HBC products relate more strongly to many seasonal programs than commonly thought. Beyond the sun care category in the warm weather, skin and personal care products sell very well at back-to-school time. A specific variety of food items also come into play for back-to-school in preparation for lunch boxes and after-school snacks, the study said. Greeting cards, prepaid gift cards, batteries, books, magazines and videos tie in for different seasonal occasions.
"We find it critical to integrate GM items, not only in the seasonal area, but in other parts of the store to take advantage of the traffic that the food side of the business generates for our complementary items," said Mike Juergensmeyer, group vice president, general merchandise and pharmacy, Schnuck Markets, St. Louis.
"When you can present items in a logical fashion from a merchandising perspective, consumers respond by buying," said Wayne Bryant, director of GM and HBC sourcing of Ahold USA's American Sales, Lancaster, N.Y.
When retailers struggle with cross-merchandising, it can be because of different departments trying to protect their turf, added Bill Gallo, senior director of sourcing at American Sales. "It's very difficult to execute when you are crossing departments. That lack of execution is what prevents good cross-merchandising," he said.
"Some chains do that very well," Bryant said. "With others, there are more silos involved and it is difficult to go from one department to another. The chains that can figure out how to coordinate that between their departments are the most successful."
With cross-merchandising, "we can really leverage the draw of food to get people into our stores and put the appropriate food-related products next to it," said Jim Wonderly, who recently left American Sales to become vice president, GM/HBC, at another Ahold operation, the Stop & Shop Supermarket Co., Quincy, Mass. He currently chairs GMDC.
"Cross-merchandising opens a lot of doors as it relates to seasonal product," said Larry Ishii, general manager, GM/HBC, Unified Western Grocers, Commerce, Calif. This could be with perishable or nonperishable categories. "Sometimes we tend to put all our seasonal merchandise together, but we need to make sure we keep our minds open to all the tie-ins with food products because that helps to generate incremental sales, the impulse sales that are so important to us," he said.
Wonderly mentioned selling candy with the GM seasonal items for various holidays, like Easter, Halloween and Christmas, as well as with floral and chocolate for Valentine's Day. A nonfood executive with a Texas retailer, who asked to not be identified, talked about merchandising coolers with soft drinks, iced tea jars with tea, and coffee cups with coffee makers. "You always want to take advantage of those," he said.
"The best practice operators are the ones that have created well-thought-through seasonal event merchandising plans," said Bill Bishop, president of Willard Bishop. For example, he pointed to a Valentine's Day program that might include gifts and greeting cards, candy, floral and special baked goods in one area of the store with a temporary checkstand. "So you have four different departments. It makes a store much more of a destination," he said.
However, the GMDC study goes well beyond basic cross-merchandising in its recommendations, suggesting that retailers incorporate HBC items whenever possible, and to look at new seasonal opportunities.
There are many products that retailers may regard as everyday categories, but are highly seasonal, Ishii said, for example, cough-and-cold and sun care. "Even in color cosmetics you have twice-a-year shade changes that are driven by the seasons. So if you really take a hard look at it, there are many opportunities to address your seasonal business that could open other doors to promote further sales and profits," he said.
For spring and summer, best-practice retailers will combine the expected HBC categories like skin care and sun care, with ear care and then beach and water toys, Bishop said. As retailers "get their minds around" this concept, they will focus more on the needs of shoppers as they plan seasonal or holiday events. "The more things they can tie together, the larger the ticket will be, along with the proportion of need that they are going to be able to satisfy for a household," he said.
"We've tried to change the definition of seasonal from being a holiday to being some period of the year when there is a high indexing of sales of certain types of products," said Gerald Friedler, a longtime nonfood executive with retail and wholesale firms, who is now an independent consultant based in Boston. Friedler worked with Willard Bishop on the project.
For example, Friedler pointed out that he is from New Orleans and has been long aware that there is a "storm season" that wasn't mentioned in the first GMDC seasonal study 10 years ago. Upon returning to Boston last January, he noted stores that were out of hats and gloves, and said that there is a selling season called "winter," too.
Meanwhile, most retailers have barely scratched the surface when it comes to seasonal HBC categories, Friedler said. "We identified 23 HBC seasons when the IRI index is at least 10 points higher than the norm. In some cases, it is just huge." Many HBC products index well above their norms in December, he noted.
"There is an enormous opportunity to sell HBC in December. You could have a very good Christmas seasonal program and not have any decorations because of all these categories," he said.
Other retailers do well when local sports teams go to the playoffs or beyond, Friedler said. "If you are flexible and you are nimble, and you know how to source the product, you can really succeed," he said.
Advance planning is usually not possible in this situation, but "when your team gets into the Final Four on Saturday night, who are you calling on Sunday morning?" he said.
"What we are trying to do with this program is prompt or at least provide the planning framework for putting together seasonal programs that are ongoing, that roll over," White of GMDC said. "That's the purpose of this study. So that seasonal becomes not just something that you do occasionally, but an ongoing program, and to provide a framework for being able to handle that - to get into one, and out of that one and into the next one."
Seasonal: 10 Years After
ORLANDO, Fla. - The release of "Seasonal Best Practices: A Plan for Seasonal Merchandising" here next weekend is the first time the Educational Foundation of GMDC, Colorado Springs, has revisited a topic.
Roy White, the New York-based vice president, education, GMDC, characterizes this as an "update," but at 80-plus pages, including case histories, checklists and many new approaches, it has become something more than that. "Seasonal programs are a lot more appealing than they were 10 years ago when we did the first study. What we are talking about here is an expansion of the variety of items and the price points that seasonal merchandise is capable of moving," White said.
Besides consumer acceptance of higher prices, and of seasonal merchandise in general, retailers have become much more sophisticated in the way they put these programs together, using direct importing and category management techniques, both of which were in their infancy at the time of the first study, along with technological advances in communications, White said.
One thing that hasn't changed is the emphasis on actionable information, noted Jim Wonderly, vice president, GM/HBC, Stop & Shop Supermarket Co., Quincy, Mass., and current GMDC chairman. "It was almost like a 'how-to' manual," he said.
"Seasonal will continue to be a very important category for us, and we are looking forward to the publication of the GMDC study to help us capture this very important sale," Wonderly said.
Ten years ago, competition from mass merchants' supercenters and club stores was much less, noted Wayne Bryant, director of GM and HBC sourcing of Ahold USA's American Sales, Lancaster, N.Y. "The landscape has changed and seasonal general merchandise not only offers sales opportunities, but it offers real profit opportunities as well," he said.
"Seasonal-driven merchandising holds tremendous upside potential for the retailers and manufacturers who organize to take that kind of approach," said Bill Bishop, president of the Willard Bishop consultancy, Barrington, Ill., which produced the study. "We are getting organized to help people think about it differently."
Sponsors of the study include Binney & Smith, Hallmark Cards, Information Resources Inc., Premier Greetings, Schering-Plough, World Kitchen, Wyeth, Johnson & Johnson, Cannon Retail Technologies, Del Pharmaceuticals and Energizer Holdings.