"The baby aisle offers progressive retailers the opportunity to position themselves as the place to go for families to solve all their shopping needs," said Donald J. Stuart, a partner at Cannondale Associates, which maintains offices in Wilton, Conn., and Evanston, Ill.
He's not the only one thinking along that line. Promotion in the baby aisle is heating up big time. While retailers still rely heavily on price, they are also turning to tactics such as baby clubs, nurseries and sponsorship of outside events.
"We can't let Toys 'R Us and the rest of them continue to take away our formula sales," one Northeast grocer told SN. "If we sit back and do nothing, shoppers just go there. That's exactly what those stores want. Parents always need to go to the store and get formula and diapers. If they get in the mindset that Toys 'R Us is the place to go for that stuff, we'll be in trouble and Toys 'R Us will sell a heck of a lot more toys."
Many chains have fought back by stepping up their advertising of baby-aisle items. However, some have chosen to be a bit more creative.
For example, Raley's, an 81-store operator based in West Sacramento, Calif., has built Play Care Centers in six of its stores.
The centers allow parents to drop off their children in a supervised, videotaped environment, giving moms and dads a better shot at hassle-free shopping.
The concept has been well received, Joel Barton, director of merchandising and marketing for Raley's, told SN during a visit last year to one of the centers. "It shocks most people, because they've never heard of it. But when they see it, it does change people's shopping habits. They're not just buying baby goods; [increased] sales are spread throughout the store," he said.
Cannondale's Stuart said this sort of program is a huge plus.
"Anybody can play the price game up to a point and that's been played well beyond the point of profitable returns for the baby aisle. It's time to step up for the next act in this play."
Baby clubs, such as the pilot tested at Abco Foods, Phoenix, could be just the ticket.
"Many retailers are going after the same shoppers, so if there's an opportunity to differentiate yourself from your competition, whether it's supermarkets, mass merchants or category killers, that seems like a potential way to do it," Stuart said of the baby club concept.
In Abco's club -- conducted from August 1994 through January 1995 by the American Greetings Research Council -- average weekly sales of baby items grew by more than $75,000 across the chain's 70 stores. Abco continued the test -- and implemented a three-month pet club test -- at the completion of the first test period. Officials at Abco could not be reached to determine whether either club is still in place, but store sources said neither was.
In the program, shoppers received one "Baby Buck" point for each dollar they spent on any baby item in the store. When they gained 100 points, they received an Abco gift certificate toward any item in the store.
Sponsoring baby-related events has also proven to be beneficial for several supermarket chains. Stop & Shop Cos., Quincy, Mass.; Giant Eagle, Pittsburgh, and Genuardi's Family Markets, Norristown, Pa., have all been sponsors of infant product shows conducted by Baby Faire, Boston.
Genuardi's used 4,000 square feet of space at a Baby Faire in Philadelphia to highlight its baby products, Frank Puleo, the company's director of nonperishable merchandise, told SN after the springtime event.
"I believe we reinforced the profile of Genuardi's in the customer's mind as far as being a friendly, hospitable environment," he said.
"We focused on the entire family in our pavilion," he added. "There certainly was a concentration of baby and toddler needs, but we also had products like ice cream. The whole family benefited from visiting our booth."
Boutiquing -- another trend taking place throughout the store -- is a natural for baby sections, Cannondale's Stuart said.
"I think you'll see the trend of making baby more than an aisle, but making baby a section or a boutique within the store to help supermarkets compete with the category-killer-type stores," he predicted. "Trying to make the store more baby-friendly to make it a very acceptable place with excellent variety and a good, solid shopper experience is important."
The Northeast retailer said his chain is thinking of doing just that. "We've seen the store-within-a-store concept work well in other departments and think it's a natural for the baby aisle. It's just a matter of physical limitations. We may not be able to create alcoves and such in some of the stores, but we might be able to create a similar effect with signage."
While the retailers mentioned have chosen to aggressively court young families, many others simply rely on price.
"I see the continuation of low-margin merchandising in the baby aisle, basically single-digit, average-type profitability in most of those categories, not so much in toys, but certainly diapers and a lot of the baby formula," Stuart said. "The tried and true [method] is to football the item at a hot price to draw consumers into the store."
"That's what we do," said a buyer with a Midwest chain. "We've done OK with that. I'm not sure we'd look to go the high-profile route, but I'm sure we'll keep an eye on how companies fare doing that."
Minyard Food Stores, Coppell, Texas, has also stuck to the price-impact route.
"We run things in our ads like baby food, diapers, etc., all the time. Most of the stuff, like the diapers and baby food, is real low in profit margins, so competitive-wise if our competitors lower the prices, then we have to, but we try to stay away from that stuff."
