The basics in school supplies help supermarkets compete in the back-to-school market. But high-ticket fashion items and licensed products produce profit and growth for them.
The hot-ticket, trendy back-to-school items will get a careful look from supermarket buyers attending the School & Home Office Products Association show in New Orleans, Dec. 8 to 10, as they get ready for a new season.
SHOPA is expected to draw about 1,000 retail buyers, distributors and manufacturers, and there will be more than 440 manufacturer exhibitors.
Among the chains that attended last year's show were Kroger Co., Cincinnati, along with its King Soopers and Dillon Stores divisions; Safeway; Publix Super Markets; Price Chopper Supermarkets; Meijer; Brookshire Grocery Co., and Albertson's.
"We're going to the show to look at all the new hot licensed lines coming out, especially in the major team sports such as NFL products in binders, folders and backpacks," said Jerry Moore, buyer for Brookshire Grocery Co., Lufkin, Texas.
"We want to intersperse the overall mix with some higher-fashion goods to pick up more impulse back-to-school sales. The basics like number two pencils will always sell, but the fashion goods and hot licensed products are what really add to your mix," he added.
Moore mentioned the success mass merchandisers like Target and Wal-Mart had with licensed Nike products from Mead last year. "We understand it had real good sell-through, but it wasn't available to grocery stores. If the line is made available to the food
trade, we'd would look at it, even though some items may be priced too high for us. We could include some of these in the overall variety."
Fred Velasquez, back-to-school buyer at Scholls, Arden Hills, Minn., last year added upgraded back-to-school items to the broad selection of basics it supplies to supermarkets.
"We'll be looking at licensed theme binders, notebooks, memo pads and portfolios. I'm sure there will also be more licensed lines in 'Lion King' and 'Snow White' that we'd pick up as well," he said.
Supermarkets' merchandising strategy for back-to-school has been to cut price points on paper products and other basics to bring customers into the stores so they will do more impulse buying on the expensive high-fashion items.
Jane Jansch, nonfood buyer, general merchandise, for The Copps Corp., Stevens Point, Wis., said although Copps has to be below cost on many commodities because it is in a very competitive market, it hopes this brings customers into the stores so it can make up these losses with sales of high-priced fashions.
According to Rodger Wilcox, buyer of general merchandise for Raley's Supermarkets, West Sacramento, Calif., "Some of our fashion goods, such as the licensed products and the higher-priced portfolios, are doing better than they used to, and products such as crayons and craft kits that appeal to the little kids are very popular. But the business is in the basics. School supplies such as filler paper, theme books and pens and pencils give us 50% margins year-round."
"We run several loss leaders during back-to-school, such as offering filler paper at half price, which brings a lot of people into the stores. Over the year, this doesn't hurt much when we repeat these items at full markup," he added.
Supermarkets attending the SHOPA show will be looking at what their competition is offering, and what products and lines at appropriate price points are available that would allow them to compete.
"Retailers are trying to meet the pressure of competition from the big three -- Wal-Mart, K-mart and Target," said William E. Bering II, director of sales for the Home & Professional Products Group of Borden, Columbus, Ohio.
"They want to offer value, yet make a profit. Value added is the single most important thing retailers are trying to address now, and rebates also are a big part of this effort."
Said a buyer from a major southwestern supermarket chain, who asked not to be identified, "The back-to-school category seems to be getting bigger for us every year. I think the grocery trade is getting into it more as they take a lesson from the mass merchandisers."
"Although parents are looking for value, quality and fun fashions," said Sue Benedetti, vice president of operations for Creative Works, Northbrook, Ill., "there also is a lot more focus on activity items, especially crafts for the kids and items which allow the parents to participate with the kids."
"We ran a huge backpack promotion the last two years, and we'll probably repeat it," Wilcox said, "but we'll also be looking at licensed products connected with movies to be released this summer so we can tie them into future promotions."
Pat McGivern, vice president of wholesale nonfood procurement for Supervalu, Eden Prairie, Minn., added, "Portfolios and licensed properties are hot items. Although we promote the basic merchandise and leave it to the individual divisions to determine the needs of their retailers, we do put out a four-page tab which gives a general overview of our product line."
Promotions centered around the back-to-school season will be a big part of the trade talk for many planning to attend the show.
Successful promotional efforts by individual stores yield cash awards for members of the Copps chain, Jansch said. A display contest is run every year in conjunction with a chainwide ad campaign.
Fairway Foods Inc., Bloomington, Minn., this year is repeating a four-color back-to-school promotional flyer, which it has run successfully in the past, said Dave Roske, senior buyer-merchandiser for general merchandise and health and beauty care.
"Back-to-school is a major category for us," he added, "and the show will give us a chance to meet manufacturers in time for our planning for next year before we begin buying in February."
The SHOPA show has become a major arena in which to make contacts and begin planning for the next year, but not the place to put in orders, said those interviewed by SN.