OSAGE BEACH, Mo. (FNS) -- Independents can improve their competitive position against Wal-Mart's supercenters and its new Neighborhood Markets by paying closer attention to health and beauty care margins and improving store-brand promotion, Bill Lancaster, vice president for sales at Associated Wholesale Grocers, Kansas City, said here last week.
Lancaster, who spoke at the annual convention of the Missouri Grocers Association, urged retailers to re-examine merchandising strategies on HBC items.
"Retailers have to get off the high-margin HBC concept and go to a lower and more competitive margin in order to build distribution -- not only through pricing and promotion but through display and seasonal events," he said. "All of these things are necessary to stay even close in the ballpark to mass merchandisers."
Lancaster is a long-time Wal-Mart watcher who has published a series of books titled "Survive and Thrive."
He noted that because of Wal-Mart's image of a low-price purveyor of HBC, the firm's 40,000-square-foot Neighborhood Markets, of which there are already four, are producing HBC/general-merchandise volume totaling 30% of sales. "On the other hand, in the customers' minds when they come into our stores, they feel that they will be paying a higher price for HBC. They are not in a comfortable mood to buy."
Lancaster told the audience that the Neighborhood Markets can break even at $200,000 a week because of the HBC/GM mix in the units. He estimated that a couple of the stores are doing more than $300,00 a week -- with the remainder chalking up sales of $175,000 to $220,000. "We never recommend that you be on the same price level with them -- just get close."
A retailer, Chuck Murfin, owner of two stores at Ozark and Willard, Mo., told the group that he recently sold 1,000 stackable chairs by displaying them outside the stores and pricing them at $3.99. "We were cheaper than Wal-Mart but didn't say it. If you want to really get their attention and find out how deep their pockets are, hang up a sign that you are cheaper than Wal-Mart -- and they will show you what cheap is."
Murfin said his stores are registering double-digit sales increases, partly as a result of special promotions. On the Fourth of July, his stores sold 700 coolers as the result of a deal that involved the coolers, soda, chips and hot dogs. "Those were 700 coolers that Wal-Mart didn't sell," he noted.
The Murfin stores recently sold 500 chili pots in a promotion including meats, beans, seasoning and crackers. "Even though we didn't make a lot, the customers can later look at those pots and remember that they got them from me."
This summer an "outside sale" at one of the Murfin stores involved picnic tables, fans, lounges and umbrellas. As a result, HBC/GM sales were up 120% that week. As a result of added traffic, produce was up 37% that week.
Independents should use store brands to more effectively compete, Lancaster pointed out. He predicted that Wal-Mart and all the chains, especially Albertson's, will become more store-brand oriented.
In a convention session on "Sexual Harassment in the Workplace," Al Titus, human-resources manager of Fleming's Kansas City division, said that he hasn't received one complaint of sexual harassment in his tenure of more than one year at the division. At least part of the good record is attributed to the policy of placing company brochures on harassment in the hands of all new hires. Also, supervisors undergo several hours of training and orientation at least every other year, Titus explained.
Fleming's good fortune comes in a year when complaints filed with the Equal Employment Opportunity Commission and other state agencies are expected to double. The company has a policy statement that says that "in the event an associate believes he or she has been sexually harassed, it should be reported to the appropriate human-resources representative who will conduct a thorough and confidential investigation. Anyone guilty is subject to disciplinary action up to and including termination."
Jack Koetting, owner of Koetting's Foodway, St. Genevieve, Mo., was elected president of the MGA, succeeding Bill Smillie of Smillie's IGA, Springfield.