Haggen's store No. 35 in Yakima, Wash., contains a set of unique demographics that has shaped its greeting card department.
Such detailed demographic market data as characterize Haggen's store No. 35 have become important criteria for both retailers and manufacturers in tailoring a store's nonfood mix to better serve its customer base and increase sales.
The Yakima store competes in a trading zone with a shopper base of 26,500 people. Within that base, 24% is mostly Mexican Hispanic and 26% is age 15 and under.
The median household income of those living within this store's trading zone is $18,900, compared with the national median income of $29,700. Just 7% of the population within the Yakima trading radius is said to have graduated from college.
While there are no Wal-Mart stores near the Yakima location, Haggen does compete with 25 supermarket, drug and discount chains within a 10-mile radius. Stores operating within a mile of the Haggen store include Costco, Safeway, Pay Less, Shopko, Fiesta Foods and Kmart.
The greeting card industry has been at the forefront in developing and using customer-based information and analytic tools in determining product mix, department set and maximizing promotional opportunities.
Based upon the information gathered on Haggen's store No. 35, American Greetings, Cleveland, set the 72-foot card department last fall by including a 4-foot in-line section of Hispanic cards, the La Flor line.
Given the youthful population, it rated alternative card lines such as Kid Zone, In My Thoughts, In My Heart and Pets as having moderate sales potential at the store. And given the below-average income, gift wraps and party goods were rated as having only modest sales potential.
Joe Sinkula, director of nonfood at Haggen, Bellingham, Wash., said that since American Greetings took over the chain's card departments last fall "sales have been excellent." However, he added, "I don't know what to attribute it to yet. Is it the mix, different cards, or what?"
Reviews will soon begin to assess the results of the new sets, he said. "We are just starting that process now. We've looked at a couple of stores and know we will change footages within the card section and within the categories."
According to Sinkula, other nonfood manufacturers do market analysis, but no one does to the extent that the card companies have developed it.
Other categories that could benefit from such analysis would be haircare and kitchen gadgets, said Sinkula. The market analysis tools used by the card companies are not new. American Greetings developed its Street Smart Analysis six years ago, and is now using an upgraded version that includes geographic and natural barriers, as well as competitive breakouts.
"It gives us an opportunity to take advantage of all demographic information that profiles that particular store. With the information, we establish a trading radius, then look at all the information within the trading radius to design our departments, including the competition in the area," said Bill Parsons, vice president of corporate trade development at American Greetings. This week at the Food Marketing Institute Convention in Chicago, Ambassador Cards, Kansas City, Mo., will showcase its newest market analysis software along with what it terms are other profit tools and sale drivers.
Joel Barton, merchandising marketing manager at Raley's, Sacramento, Calif., is working with Ambassador on a 10-store test of alternative cards and party goods that targets "a younger, more mobile and affluent customer."
Raley's will share point-of-sale information with the card manufacturer during the test period to determine whether to roll out the concept chainwide. The test consists of altering the category mix and store fixtures, said Barton.
The chain has been using Ambassador's various analytic tools for the last several years. "It has helped us identify each store as a unique business," said Barton.
The upgraded analysis software from Ambassador features drive-time information. The usefulness of drive-time information, said Phil Jacob, retail technology strategist at Ambassador, is that it "provides a more realistic account of who will shop in your store. "It isolates neighborhoods and groups if you want to do direct mail or promotions. You can hit those close to you, and give them an incentive to come in."
Although technology is helping to advance the use of market analysis tools, the more important driver is competition in the marketplace.