Supermarkets are bullish about the early results of back-to-school sales as a result of aggressive pricing strategies meant to battle other retail formats.
Sharp pricing by supermarkets on commodity items and innovative merchandising are helping to fuel the 15% to 20% increases in sales reported by some operators. Supermarkets are keeping prices on many items under $20, with many basic items in weekly ad sheets priced below $10 to keep pace with mass merchandisers and drug chains.
Retailers report backpacks are particularly good sales items in a range of price points. In addition, retailers are focusing on low- and medium-priced items such as standard notebooks, pens and portfolios.
Some retailers got a jump on the season in July due to early August school starts and in anticipation of paper price hikes expected this fall.
Before the start of the season, the School & Home Office Products Association's consumer research indicated shoppers were planning to spend more this year on school supplies, $134 compared with $120 in planned purchases last year, said Steve Jacober, president of the Dayton, Ohio, association, who noted the figures did not include expenditures for clothing.
While backpacks, priced from $7.99 to just under $30, are fast sellers at supermarkets this season, retailers said there is a demand for clear styles.
Due to safety concerns as a result of recent shooting incidents, some schools now require kids to carry their belongings in clear, see-through packs.
Said Millard Garnaas, senior nonfood buyer for Certified Grocers of California, Los Angeles, "In metropolitan areas like Los Angeles most school lockers have been taken away. Kids are now using backpacks to store their books and other supplies." Harps Food Stores, Springdale, Ark., is selling just clear backpacks. "Some schools now want to see the contents of backpacks that students bring to school." noted Bob Yehling, director of general merchandise. At B&R Stores, Lincoln, Neb., clear vinyl backpacks, priced from $13.99 to $14.99 in assorted blue, green and orange colors, are moving well.
Harps, which is projecting a 15% sales jump over last season, demonstrates how supermarkets aren't letting their guard down when it comes to merchandising seasonal commodity items. "We decided we would not be beat on the key items, including three-subject notebooks, Crayola products and computer paper," said Yehling.
The food chain kicked off its school-supply promotion with a full-page ad featuring 25 "red hot" items priced lower than or matching Wal-Mart and Kmart retails.
In putting together this year's back-to-school merchandising strategy, Harps assembled previous back-to-school ads of the two mass merchandisers "to gage their pricing strategy," said Yehling, who rated the two-week July through August promotion as a "real good" performer. "We made sure we had high demand items priced the same as those retailers [mass merchandisers], like filler paper at two for $1, and portfolios at six for $1."
According to Jim Key, director of general merchandise and health and beauty care at Acme Markets of Virginia, North Tazewell, Va., "This is a product area a buyer cannot afford to take a 'business as usual approach,' and those that do risk being left on the sidelines." The season started off strong for Acme with more impulse purchases. "The displays at store level are being shopped, and people are picking up many accessory items," noted Key. Top movers for the retailer are the basics -- highlighters, whiteout, composition notebooks and ruled paper.
"Grocery chains need to be innovative and forward-thinking in marketing and merchandising the school-supply category with products that match students' needs and skills," Key stated.
"We started very strong," said Charles Yahn, vice president of general merchandise at Associated Wholesalers, York, Pa., who reported sales running 20% ahead of last year. "The key factors are the healthy economy coupled with good retail pricing and getting displays up by July 15 in time for the Aug. 1 ad kickoff."
The high costs of paper products expected to take effect this fall "are normal increases," said Yahn. "They follow a depressed market for the last several years, and suppliers are now upping prices since there is some breathing room to do it," he commented. Yahn believes the increased paper costs will be reflected in higher retails on fashion products and basic filler papers.
Certified Grocers of California was able to lock in lower paper prices before the season began. "All the stuff was bought at lower prices before the expected September increases," noted Garnaas, who projects a 4% to 6% increase in paper prices by the beginning of October.
Jack Mahan, head general-merchandise buyer at Supervalu's Desloge division, Desloge, Mo., said back-to-school sales got off to a strong start by promoting leader items like filler paper, 70-ct. theme books and portfolios earlier. "The program was about the same as we had in previous years, but the products went into stores about a week earlier, by early July, since some schools now start back the first week of August."
B&R Stores expects the back-to-school season to be strong and better than last year, said director of nonfood Barb Zugmier. "We're highlighting some new and different products like Crayola umbrellas and ponchos for $6.99 for higher impulse sales."
The SHOPA's Jacober noted that retailers like B&R are wise to focus consumer attention on impulse items. "A balanced approach in back-to-school ads for supermarkets is always good, rather than just playing up the commodity loss-leaders. Those chains that push commodity items as loss-leaders direct the consumers' attention to those areas and not to the variety that should include fashion or value-added products," he said.