The back-to-school selling season, traditionally considered second only to fourth-quarter holidays and a barometer of how year-end holiday sales will fare, for some food retailers has become more complex, and for others, the season has morphed into less than the second-biggest-selling season of the year.
Supermarkets are forced to consider a number of factors that have converged to impact the BTS selling season. These include the extreme competitiveness in the marketplace; changes in how consumers shop for BTS; state and local governments forced to severely cut their budgets for education; and shifting starts to the opening of schools in districts around the country.
According to Richard Gunn, executive vice president of merchandising and marketing for K-VA-T Food Stores, Abingdon, Va., the regional supermarket operator is giving BTS more focus than in past selling seasons due to the competitive nature of retailing today.
“It's even more important than it ever has been. With sales being tough to get, every sale is extremely critical so we've refocused on a lot of different holidays like the back-to-school season to try to more maximize our sales,” he told SN.
This year in particular, K-VA-T, which operates 105 retail outlets under the Food City banner in the tri-state region of southeast Kentucky, southwest Virginia and northeast Tennessee, has moved BTS merchandise to highly visible locations on the selling floor and is highlighting hot single 10-cent and 15-cent price points on commodity items such as notebooks, filler paper and pencils, Gunn said. While K-VA-T ramped up this year's BTS merchandising, advertising support remained the same. Gunn expects sales will be slightly better than last year, which was a difficult BTS year for many. In 2009, Gunn said BTS sales at K-VA-T stores “did well.”
Meanwhile, in San Bernardino, Calif., Jack Brown, chairman and chief executive officer of Stater Bros. Markets, told SN that at one time BTS was among the chain's top five major promotions. But with the staggered starts of the school year, BTS has dropped back to the top 10. “The only difference is we have to stage displays for longer than we used to,” he explained.
Brown noted the 167-store chain is not doing anything significantly different for BTS this year “because schools in our area have different starting dates. Rather than all schools opening after Labor Day, some have already started classes while others will start later. As a result, we don't have the opportunity to run a single back-to-school ad like we used to.”
All BTS general merchandise items are displayed together in the stores, and those displays, which went up in early August, will remain up into September as kids return to school at different times. Though the displays will be refreshed, items will remain in the same place throughout the promotional period, Brown said.
In food categories, Stater is flagging luncheon meats as lunch-box items, along with a smaller-sized apple that fits easily into a lunch box that the chain promotes throughout the school year, he added.
Brown said Stater has “not seen any backing off” on sales of BTS merchandise, and he expects Stater's BTS sales this year to be about the same as last year.
While it's unclear how far the economic-aid package for states with $10 billion reserved for education, passed by Congress last week, will go in preventing further education budget cuts, it is clear education systems are under stress and have been forced to pass on procurement of more school supplies to consumers.
Supermarket chains, therefore, see a need to aid their local schools and in turn drive BTS traffic and loyalty to their stores. Last week Safeway, Pleasanton, Calif., launched its sixth annual “10% Goes Back to Schools” program, which is in partnership with 150 food manufacturers to raise funds to help support schools and students throughout the U.S.
Under the program, which runs until Sept. 14, Safeway will donate 10% of the sale price of more than 2,300 products to local schools as designated by customers, whose purchases of specially marked items — through their Safeway club card — will automatically accumulate donations that will be held for the school of their choice.
Since the program began in 2005, Safeway has raised more than $15 million for schools. “We see the BTS season as another opportunity for us to shine as a one-stop location where shoppers can find all of their BTS needs under one roof,” said Teena Massingill, Safeway's director of corporate public affairs.
To soften the blow of school expenses, sales tax holidays announced by about 20 states this year will be taken full advantage of by retailers. Jim Wisner, president of Wisner Mareketing Group, Libertyville, Ill., who follows the office supply sector, said he has never seen so much retail promotion around tax holidays before. They are considered a win for retailers because they not only drive traffic into stores but also drive other purchases as well.
Illinois began running its first-ever tax-free holiday two weeks ago on approved BTS items, saving shoppers 5% on designated items. The holiday was instituted in part to help keep shoppers from crossing into neighboring states offering similar incentives.
Wisner sees supermarkets as being “modestly more aggressive, but not dramatically so” in their BTS promotions this year.
So far, reports indicate a questionable start to the BTS season in July with sales described as spotty at various retailers around the country. Retailers were reporting sluggish sales the first week of August even with sales tax holidays kicking in. Revenues at stores opened at least a year slipped 0.2% for the week ending Aug. 7 compared with the previous week, according to the International Council of Shopping Centers-Goldman Sachs index, which measures industry retail sales.
Additional reporting by Elliot Zwiebach