ST. LOUIS -- The American Greetings Research Council in conjunction with the Food Marketing Institute mapped out three key strategies supermarkets can use to protect and build their nonfood business.
Findings from the 16-month project were released here last week in a presentation titled, "Turning Traffic Into Transactions," during FMI's General Merchandise/Health and Beauty Care Conference, Sept. 25 to 27.
The study tested ways supermarkets can capitalize on their strength in customer traffic by linking grocery with nonfood purchases through relationship-building programs and in-store cross-merchandising.
Relationship-building programs include event marketing, preferred shopper programs and category destination programs. Specific programs were examined for their effectiveness in protecting nonfood sales and sustaining customer loyalty.
The council continues to conduct research with several chains testing "Baby Club," a category destination designed to build long-term relationships with customers. Those results will be available at FMI's annual convention in Chicago next May.
The results of various cross-merchandising tests conducted in seven chains to convert existing traffic showed that cross-merchandising increased sales of both the targeted item and other general merchandise and health and beauty care items. Tests were run at Abco Foods, Buttrey Food & Drug, Dick's Supermarkets, Fred Meyer Inc., Loblaws Supermarkets, Raley's Supermarkets and Ukrop's Super Markets. Three different tests were run that connected related nonfood items, unrelated nonfood items, and grocery and nonfood. Couponing and discount-with-purchase offers were used.
Commenting on the study, David Steitz, a research council member and executive vice president of Raley's, West Sacramento, Calif., said, "By need, barriers that have existed in the grocery aisles to cross-promote other products are breaking down and evolving into a greater presentation of the store, wall to wall, with the customer as the focus."
In addition to the study's primary research, the results of surveys and telephone interviews conducted with 38 supermarket chains and 24 drug store chains were presented as the industry's "Best Practices" for relationship building, cross-merchandising and category management.
The report identified category management as the catalyst to protect supermarkets' nonfood business. The "Best Practices" survey findings compared several components of category management, including organizational structure, category organization, job responsibility/compensation, technology, analysis, supplier relationships, space management, new item introduction, store visits and private label.
It is hoped that by implementing some of the study's findings, supermarkets can change consumers' present shopping habits. The report found that three out of four supermarket shoppers leave the store without making a nonfood purchase. About one-third of a store's customer base shops for a month without buying any nonfood items, and 60% of that one-third are "cherry pickers."
The American Greetings Research Council was established in 1991. A new council is formed every two years. The council membership consists of a rotating group of senior marketing officers from geographically dispersed supermarket retailers. Research for the study was conducted by the University of Chicago Graduate School of Business.
