When the warm sunny weather kicks into gear, supermarkets will get their chance to shine with spring and summer seasonal general merchandise.
While other classes of trade dominate the marketing of Christmas holiday goods, food stores have a unique opportunity to show their creativity in selling spring/summer GM, as well as tying in with the food products that they are in a unique position to cross merchandise.
This year there may be added opportunity as Easter comes relatively late - April 16 - offering a longer selling season, more cross-promotional chances, and warmer weather in northern climes that will boost sales of seasonal products.
Interest in warm weather seasonal is growing as consumers become more comfortable buying higher-priced items in the supermarket, and buyers and sellers alike are adjusting to the dominance of goods from overseas, particularly Asia. The result, said retailers, wholesalers and other knowledgeable industry observers, is increased sales volume and profits, not to mention a point of differentiation from other channels.
"The spring/summer program is our highest dollar-volume seasonal category due to the furniture sales and the overall length of the season," said Denny Hopkins, vice president, advertising and public relations, Giant Food Stores, Carlisle, Pa., the Ahold USA division that also operates the Tops and Martins banners.
The weather plays a key role in the category's performance, he said. "The quality, selection and 'bonus buy' savings, as well as the convenience of one-stop shopping, contribute to the success of the seasonal programs."
"Supermarkets were among the early retailers to
realize that they could capitalize off consumer value for convenience," said Robert Passikoff, president, Brand Keys, a New York-based consulting firm. "So for a good deal of the kinds of merchandise that folks are looking for, if it's right there in front of them, they will buy it there." Included among those products are what he referred to as "all the stuff for cleaning up the yard, things for outdoor cookouts, chairs, tables, umbrellas, plus all the accouterments for grilling and such."
Meanwhile, spring/summer seasonal organic goods - food and nonfood - with their higher average price points, are increasing in demand, according to Jenny Valkenburgh, senior vice president, research, Cannondale Associates, a marketing and sales management consulting and software solutions firm with offices in Wilton, Conn., and Evanston, Ill. "We're seeing more and more of that - the 'organic everything.' Premium power is going to be a big theme."
"It's the nature of the market, aided by the fact that the economy has not been terrible," Passikoff said. "We're seeing that margins are much, much better."
"There has been a surprising expansion in a number of different GM categories," including seasonal, said Bill Bishop, founder and president of Willard Bishop Consulting in Barrington, Ill. "You have a real growth in berries and summer fruit, and there are general merchandise products around that. You have things that might hold the berries, things like bowls and gelatin molds, or the countertop bowls to present the product to the household."
Bishop predicted the industry will see "quite a bit more crossover merchandising" between grocery and GM. Some natural pair-ups, he said, are sun care products with summer beverages like Kool-Aid and others. "We see a tremendous amount of that going on. The question is, where are the joint merchandising possibilities around them that would be related to GM?"
Assortments are expanding. For example, spring/summer products begin to arrive in Giant and Tops stores in early to mid-March, Hopkins said. They cover the gamut:
Lawn and garden products.
Barbecue grills and grilling accessories.
Coolers, including foam, hard-side and soft-side models, and reusable ice products.
Americana merchandise, including flags and housewares items.
Toys, including balls, jump ropes, and indoor and outdoor toys.
Beach and water merchandise, including pool toys, pools, rafts, beach furniture and beach towels.
Fireworks, distributed from May to July.
All subcategories are planogrammed by parent Ahold USA. Furniture items are merchandised in the center of the seasonal aisle, on platforms with the open stock product stored beneath the display, or in the front of the store, as space permits. Barbecue accessories are merchandised with the charcoal and grocery picnic items. Foam coolers are displayed next to the ice cooler, while fireworks are merchandised on an eye-catching pallet display in the front of the store. Pool chemicals are located next to the beach and pool items.
Among the spring/summer items Valkenburgh sees as perennial favorites are those connected with grilling as well as auto care, which she cautions, like apparel, involves serious "space issues."
"Outdoor spring/summer patio and pool products are always quite popular in Arizona," said Bryon Roberts, vice president, GM, Bashas', Chandler, Ariz., "and they'll be hot again this year."
Due to its Arizona location, Bashas' starts putting out its spring/summer merchandise in late February. By that time of year, said Roberts, "people are starting to think about going outdoors again. We don't put a large assortment out; we start to dabble in it in late February, and by mid-March we'll be hitting it pretty hard."
Despite the common assumption, spring/summer merchandise does not sell well year-round just because of Arizona's climate. "I wish it was always summer here, but it's not," Roberts said. Bashas' carries a large variety of market umbrellas, pool and patio table sets, resin wicker furniture, gazebos, pool toys and more in its seasonal aisle portion. The seasonal GM area, which is maintained year-round, is typically located in a highly visible area in the store near the main entrance. A seasonal decor package and decorative signage add ambience.
Bashas' has found that its price points on seasonal general merchandise have dipped somewhat over the past few years. "Until this year, prices have always in some respects gotten better," said Roberts. "As more and more production was happening and it got increasingly competitive overseas, we were able to get better pricing. But this year, with increases in metals, resins and freight, we'll see some [price] increases for the 2006 selection. The worst I've seen on anything was in the 10% range."
As with general merchandise overall, more spring/summer products are being sourced outside the country.
"The majority of the seasonal purchases are international products," Giant's Hopkins said. Strong competition and consumer retail awareness are the primary reasons for international purchases, he said. "Most of the items purchased are not available from domestic suppliers."
"I think that's been the trend for probably three or four years now," Bashas' Roberts said. "You can select your quality, and the price is certainly much better" than it was in the past. "We started to dabble in it four or five years ago. Now, pretty much all of the primary, large, expensive items are imports," he said.
"That's been true for the past five years," Passikoff agreed, "and the pace of it is increasing. You can get goods at an extraordinarily efficient price point, and the quality has gone up dramatically compared with the stuff we were getting from overseas a decade ago."
How good are the prices? "You can't touch them," Passikoff said. "On a good portion of the merchandise, you're looking at savings that are anywhere from 30% to 50%."
Broadening the Base
One consultant foresees strong growth for general merchandise overall, including spring/summer assortments.
"It's going to put a lot of pressure on some of the traditional retail distribution outlets, and that's always an interesting situation because ultimately there really is a lowest price point. You can't give [merchandise] away," said Robert Passikoff, president, Brand Keys, a New York-based consulting firm.
"What you're going to find," he said, "is that the supermarkets are going to broaden the base in terms of the merchandise that they offer up and of the consumers that they bring in. That's not going to be good news for the Wal-Marts of the world. The competitive set from a consumer perspective has expanded dramatically. "
The very nature of retailing in America has set the stage for this evolution. "There was a time when, if you wanted to buy a grill, you went to your local True Value hardware store and that's where you bought it," Passikoff said. "A number of years go by and guess what? You've got a whole section of the stuff in Wal-Mart. People have come to capitalize on the values in terms of convenience. A grill is a grill is a grill, and the lowest price is going to be the lowest price. But they're going to buy it at a place [that is handy]."