Specialty bulbs and point-of-purchase signs are giving new life to the lighting category, retailers told SN.
In an effort to ease shopper confusion over the vast array of choices in the lighting category, manufacturers have created new sets that organize products under headings like "Household," "Specialty" and "Decorative."
While home product superstores like Home Depot carry a wider and deeper selection, supermarkets can compete on the basis of convenience for customers who don't want to make a special trip just to buy a light bulb. Meanwhile, these new items have higher margins than the ubiquitous four-packs, which retailers continue to stock for promotions and to satisfy customer needs.
"We're definitely up on lighting," said Bill Dunkle, category manager, general merchandise, Valu Merchandisers Co., Kansas City, Mo., during a recent conference of the General Merchandise Distributors Council, Colorado Springs, Colo. "There's more consumer spending out there, and we're trying to upgrade them from the basic bulbs," he said.
Manufacturers are providing more information for shoppers, said Bryon Roberts, vice president, general merchandise, Bashas', Chandler, Ariz. "The lighting companies are making great strides in creating packages that enable the consumer to readily understand the use of the product," he said.
"There are a lot of unique products out there, and people seemed confused about what to do with them. Now they are doing a much better job of communicating to the customer how to use a product," Roberts said.
The new fixtures emphasize how the bulb is to be used through a color-coordinated system that identifies such segments as outdoor, household and decorative, noted David Lowe, former director of HBC/GM, K-VA-T Food Stores, Abingdon, Va., who recently became senior buyer, GM, C&S Wholesale Grocers, Avenel, N.J. "It is signed well, and that helps the customer to find their bulbs. Hopefully, that will result in more sales because it is obviously an impulse purchase," he said.
The average home has 10 different types of light bulbs, Lowe noted, and by taking out miscellaneous electrical items like fuses from the set, focusing on bulbs, and improving the presentation, the result was double-digit growth. "Review the category and listen to what the customers are telling you by what is selling," he said.
Customers are looking for value, and that doesn't mean the lowest price -- particularly in the lighting category where many have learned that spending for quality pays off in the long run, said Charles Yahn, vice president, merchandising, Associated Wholesalers Inc., York Pa.
Better Margins Are the Goal
Meanwhile, retailers and wholesalers are looking to move beyond the low-margin business of bulk packs of light bulbs. "I think the whole industry is trying to figure out how to get out of the giveaway," he said.
"The only way we can do that is to change to decorative bulbs and convince the consumer that there's a reason to pay more for an upscale bulb," Yahn said. In the new sets of AWI's retailer customers, the wholesaler is keeping the "giveaway" bulb, but giving more space to the higher-end products, he said.
Lighting is a "focus category" for Save Mart Supermarkets, Modesto, Calif., said Steve Urgo, GM buyer/category manager. "As we look across our department and all of the segments in it, we think it is a category we can promote and offer value to our consumer. That's good for our business, and so we are focusing on it, promoting to a higher level," he said.
Rosauers Supermarkets, Spokane, Wash., recently reset the decorative and basic light bulb aisles of its stores using a Sylvania program, said Gordon Thompson, GM and HABA buyer/merchandiser. "We're looking for better margins, improved product placement on the shelves, and to expand our selection a little bit," he said.
Compact fluorescent bulbs are hot, Thompson added. "Probably the biggest push I've seen is on the long-lasting light bulbs -- the twist bulbs. We've seen that expand into private label and, as a result, the price is coming down," he said.
There's "good opportunity" in the compact fluorescents, particularly in multi-packs, noted Lanny Hoffmeyer, corporate director, wholesale general merchandise, Supervalu, Eden Prairie, Minn. In some areas of the country, local energy providers are encouraging the use of these products with attractive tie-ins, he said.
The large home centers like Home Depot and Lowe's are the biggest competition in this category, "and it will be difficult for us to get a slice, but I think there's some convenience business the supermarket industry is going to get. If we have them in stock at a price that doesn't scare people away, there's some value there," Hoffmeyer said.
As an industry, supermarkets are doing a better job in managing the lighting category, he said. "That means we're getting the right products on our shelves now. I think for too long, we stuck with the same assortment and didn't adjust. From what I can see on the retailer shelves that we're going to, the assortments that they're carrying are reflecting some of those new trends in category segments, such as compacts, spotlights, etc.," Hoffmeyer said.
Compact fluorescents are also starting to catch on with the customers of Carter's Food Centers, Charlotte, Mich. "We're trying to stay on top of that," said Rex Harcourt, president. "It's tough for us to compete on the four-pack light bulbs because the discounters sell them so cheaply. We're looking for new, innovative ways to keep up with technology."
Because of television shows focusing on interior decoration, customers are looking for the latest upgrades in lighting products, Harcourt said. "It's going to be more of a fashion category than it has been. It's not the old standby, four-pack light bulb anymore. Consumer demand is changing," he said.
Competition for the basic consumable items like four-packs and three-way bulbs is tough, confirmed Larry Ishii, general manager, GM/HBC, Unified Western Grocers, Commerce, Calif. Trends in new home construction are resulting in more types of bulbs in the typical household, and supermarkets can capitalize on that, he said.
"If retailers have the space for those types of items, then they can realize increased opportunity for retail sales while improving the category mix. We in food are feeling very heavy pressure in the commodity part of the business -- four-packs can be 30% to 40% of our total light bulb category. There are other opportunities in the category and a wide variety of product that is available," Ishii said.
"We need to learn to put together the right promotions and take advantage of that opportunity," he said.
Capturing Customers
"You've got to have selection in the store. You can't just have a four-foot section on light bulbs," said Al Jones, senior vice president, procurement and merchandising, Imperial Distributors, Auburn, Mass. "The business is going more and more to the specialty kinds of bulbs -- floods, spots, decor bulbs -- and you need to have a selection in the store to keep the customer there," he said.
"The consumer who is in your store shopping for food will look at that section because they need a bulb or two, and if you don't have what they need, you lost them. They're not going to look there again, and they're just going to move on to a competitor in a different class of trade. So you've got to look at expanding your lighting sets. Some supermarkets are going to 16- or 20-foot sets so they can accommodate that," he said.
Light bulbs in the dollar section are well placed, Jones said. "I think people understand the trade-off. They don't expect them to last as long. That's a good value for some people. They need a bulb now, they're going to buy it for 99 cents, and if it lasts three weeks less, if it lasts a year instead of 13 months, it's not a big deal. Besides, who remembers how long light bulbs last, anyway?" he asked.
With the competition from home centers, grocers need to have the right selection to succeed in the lighting category, said Jeff Manning, managing partner, F&M Merchant Group, Lewisville, Texas. "Supermarkets have a chance if they treat it right, carry the variety, and have the right pricing, but I don't see them wanting to do that," he said.
Home centers and mass merchants drive the category, confirmed Bill Mansfield, vice president, GM and HBC, Pueblo International, San Juan, Puerto Rico. For supermarkets, there are two proven approaches for keeping the business: putting in new items and keeping up a good pricing strategy. Retailers who do that "have been able to maintain their business," Mansfield said.
Increasingly, new light bulbs are "romancing" the look of homes, while the economy is forcing more people to save money. "There's a large segment of the population that is willing to spend more money on the new light bulb technologies to save money down the road," Mansfield said.
