There's a sea change under way in the nonfood categories.
This is apparent from statistics obtained from Information Resources Inc., Chicago. It's also obvious from conversations with retailers, wholesalers and other industry experts that you'll find in a special section in this issue of SN. Collaborating with the General Merchandise Distributors Council, Colorado Springs, Colo., SN hosted a roundtable of prominent executives to discuss general merchandise and health and beauty care data from IRI, which show a pronounced downward drift in nonfood sales in supermarkets.
I was impressed with the candor of the retail and wholesale participants. They spent little time talking about how Wal-Mart Stores was "taking our lunch again," as Bob Candelora of Pathmark referred to it. Instead, they focused on the operational challenges they face, and the category opportunities of the present and future.
It's clear from IRI data that growth of supercenters has had a big impact. While nonfood sales in supermarkets have been down in mostly single-digit percentages, supercenters have been growing at a double-digit rate.
The roundtable participants, and others interviewed for the special section, were quick to turn the conversation to what supermarkets can do to reinvigorate their nonfood sales. Here are some ideas worth considering:
- Retailers need to achieve excellence in their execution of all aspects of nonfood merchandising. A key to accomplishing this is getting store-level personnel to take ownership in the categories and programs -- either through meetings, management directives, or other programs.
- Digital photo imaging remains a dilemma for many chains. While they wince at the cost of entry and the fast-changing technology, some recognize that conceding a potential digital photo customer with a small order could mean the loss of bigger sales to other channels that have established themselves in digital. It may be a convenience category they can't afford not to invest in.
- DVDs and batteries are continuing growth areas hindered by concerns over shrink. There's no easy answer to this for chains that can't, or won't, invest in the requisite security systems. Yet, there is a considerable upside for those that do. Vending machines for DVDs may be one solution.
- IRI's Valerie Skala Walker recommended that retailers focus on the aging baby boom generation. This may seem like an old storyline, but these are people who are more comfortable with supermarkets, while families with children prefer the one-stop shopping and low pricing of supercenters.
- Walker also pointed out three categories that are still growing in supermarkets with appeal to baby boomers: facial anti-aging products, household fresheners, and new easy-to-use cleaning products. Retailers need to stay on top of innovation in these areas.
- Finally, Walker and consultant Art Turock advocated that retailers emulate Trader Joe's and Costco by taking a more selective approach to their assortments. Walker called it becoming a "trusted friend" to the shopper; Turock said retailers need to become "editors." What both mean is that retailers should position themselves so shoppers rely on them for tested and recommended products.
All this tells me that while the numbers may be down, the trend among retailers and wholesalers that are in touch with marketplace realities is positive. The growth is there to be had for those who can seize the opportunities.