The battle continues in the nonfood arena. Armed with a variety of effective merchandising strategies designed to fortify their business, supermarkets are fighting back in nonfood.
Several retailers have even played the enemy's game, emulating mass merchants' displays and pricing.
"We're creating more of a mass merchandiser format, using front-end and lobby space to merchandise product," said Randall King, nonfood director at Byrd Food Stores, Burlington, N.C.
At the Food Marketing Institute's General Merchandise/Health and Beauty Care Conference in Philadelphia this week, a series of seminars have been planned to examine ways food retailers can retain their nonfood business.
One discussion, titled "Supercenter Survival Strategies," will focus on how supermarkets can keep their nonfood sales from going to this emerging and rapidly expanding format.
Genuardi's Family Markets, Norristown, Pa., has responded to the supercenter situation by keeping its nonfood prices competitive, said Mike Kilgallon, buyer-merchandiser for grocery and HBC.
"We want to be a price leader," Kilgallon said. "We're trying to keep up with mass."
Associated Food Stores, Salt Lake City, has started to move its retail pricing closer to those of wholesale clubs and Wal-Mart, according to Brian Duff, manager of general merchandise and HBC.
"Our major pursuit this year for the 750 independent retailers we supply with nonfood was starting to put together more promotional buying opportunities in HBC and general merchandise," Duff said.
For the 52 weeks ended July 16, 1995, food stores held a 30% share of the nonfood market, or $13 billion, according to Information Resources Inc., Chicago. Food chains trailed drug stores, which had a 38% share. Mass merchants were second with a 32% share of sales.
Some retailers have seen nonfood sales grow through a series of aggressive strategies, such as combined grocery and nonfood displays; heightened health and beauty care advertising and promotion, especially for new products that have switched from prescription to over-the-counter; stronger seasonal in-and-outs; the debut of new segments and services such as phone cards, and the creation of dedicated nonfood display areas.
Michael Sansolo, group vice president for education and industry relations at the Food Marketing Institute, Washington, said retailers can grow nonfood business by linking it more cohesively with grocery, a process he said can help supermarkets become more user-friendly.
Sansolo cited Abco Foods, Phoenix, as one retailer that has combined several food and nonfood categories. For instance, he said personal soaps, which have been displayed with laundry detergents, were moved into the same aisle as shampoos and conditioners.
One of the best nonfood strategies, though, has been the creation of expanded departments with increased product assortment. Though small chains may find difficulties doing this, they can make an impact by siphoning slow-moving items and placing greater emphasis on leading sellers, a process otherwise known as category management.
"It's not about having all the choices; it's about having the right choices," Sansolo said.
In HBC, retailers have been quick to capitalize on the growing prescription-to-OTC market, which now includes a growing number of stomach remedy products, such as Pepcid AC and Tagamet HB. Another such product, Zantac 75, is expected to receive Food and Drug Administration approval before the end of the year. Manufacturers for all these products have launched highly competitive advertising campaigns
"We've maintained an aggressive stance on new items, especially the OTC products. We're on an automatic distribution program so that we get all new products virtually the day they come out," said Kilgallon of Genuardi's.
Retailers also have beefed up general merchandise promotions that focus on seasonal in-and-out campaigns, such as lawn chairs in the summer.
"In the past year we've done more to carry, promote and advertise seasonal merchandise," said King of Byrd Food Stores. "It's a real good profit item and helps build traffic, so it's a good item to focus attention on."
Associated Grocers of Florida, Miami, increased its general merchandise business with a promotion that moved 9,000 umbrellas during a six-week period in June and July, according to Larry Walker, director of general merchandise and HBC. About 18 stores had an upright mobile display rack at the front end that held 192 men's automatic and golf umbrellas, each priced under $5.
"Sales were excellent due to exceptionally heavy rain," Walker said. "Although we had planned the promotion for that time and expected to sell only a couple hundred umbrellas, the rain made it a highly successful sale."
The imported umbrellas, which carried 40% margins, were supplied by a service merchandiser in pastels, neon and black. They were restocked twice a week. Comparable umbrellas at another store cost between $5.99 and $14, Walker said.
Many supermarkets have found success with phone cards, a relatively new U.S. market that is growing rapidly.
"There's a substantial amount of dollar sales to be generated in this category," said Tom Esh, director of purchasing at Associated Wholesalers, York, Pa.
About 50 of Associated's retailers are offering calling cards, according to Esh. The category has helped the stores generate incremental general merchandise sales, with margins running up to 40%, Esh said.
Retailers also have had success with kitchen gadgets and storage this year. Abco, for example, has had highly successful Rubbermaid sales this year, said Nick Borze, director of nonfood merchandising.
"We had 10 times the normal movement and 85% sell-through during a three-week period in July with a 'Race for Savings' Rubbermaid food storage container promotion," Borze said. Abco ran a color roto with $2 to $5 price points that were 50 cents to $2 off regular retails.
Products were arranged on an 8-foot-long display that was in the shape of a racing car. The display was positioned either in a front-end, high-traffic location or in a large rear area.
Reduced priced gadgets, meanwhile, have been a profitable category at Certified Grocers of California, Los Angeles, according to a buying source.
"Our independent retailers have doubled turns in everyday kitchen and other household gadgets using lower promotion prices and 10% to 15% reduced margins," the source said. Coffee filters, shampoos and toothpaste were also included in the promotion.
The product mix has been based on the best-selling items at each retailer. Some items have been purchased especially for the promotion, while others came from the regular everyday gadget section.
This year Merchants Distributors, Hickory, N.C., ran more timely seasonal, in-and-out and dollar-day promotions, said buyer Matt Zaharis. In certain general merchandise and HBC categories, a buy-one-get-one-free offer increased volume by 40%.
Along with highlighting specific products, an increase in overall nonfood promotions has played an important role in the supermarket nonfood fight.
Roundy's, Pewaukee, Wis., has added more nonfood items to the electronic marketing member card, said Ken Foucault, corporate director of frozen food. The card gives customers items at reduced prices. Anytime customers buy a featured item, they get their card scanned at the checkout -- and get a discount.
"Shoppers like the program for the savings on general merchandise items that aren't usually discounted, like bakeware or batteries," Foucault said.
Currently, Roundy's features three general merchandise items, such as batteries and aluminum foil bakeware, in the program, which features select products at a discount for 30 days. The retailer eventually hopes to have a minimum of 15 to 20 general merchandise items included in the program.
The program not only has helped increase visibility of general merchandise items, but has heightened advertising activity among Roundy's retailers.
"Before, you might be able to get ads for film and batteries at Christmas, but otherwise you weren't going to get any ad support," Foucault said.
In another advertising campaign, Associated Food Stores launched a program of 40 to 50 deals that can be regular advertising opportunities for retailers, according to Duff. In general merchandise, basic categories of film, batteries and blank videotapes are now promoted by 300 to 400 retailers with more consistent ad space.
"A lot of the little ad groups are taking advantage of allowances to run nonfood ad specials at 15% to 20% lower than their everyday retails," Duff said.
Meanwhile, retailers have created another way to increase nonfood visibility: dedicated nonfood promotion areas.
About 15% of retailers supplied by a general merchandise division of Fleming Cos., Oklahoma City, have a dedicated nonfood promotion area, said a company source who did not want to be identified. Since creating the sections, all have seen increased general merchandise sales, the source said.
"This is making our retailers more of a destination for general merchandise at Valentine's Day, Easter, Christmas and for summer promotions," the source said. "We're putting a bigger push on this, and our [new] corporate category managers are developing plans for that."
