SALT LAKE CITY -- About half of Affiliated Foods member stores are making nonfood promotion buying decisions at the store level, rather than through the wholesaler. Additional members are expected to shift to the new approach by the end of the year.
At least 315 member stores are now using a nonfood department manager to supervise general merchandise and health and beauty care decisions for seasonal and holiday promotions. Previously, 19 warehouse nonfood field advisers provided buying guidance for the promotions. Though stores began using the department managers in April 1995, there's been more of an effort to shift to the program this year. "Retailers now plan and promote their own general merchandise and HBC at better locations," said Stan Brewer, senior vice president. The strategy, implemented last year, has helped nonfood sales jump 12%. The new strategy has placed more attention on nonfood promotions. Though Affiliated Foods formerly didn't have an official guaranteed sale program for nonfood, it often took back unsold merchandise.
Now, retailers must keep all unsold merchandise. As a result, they're displaying products at high-traffic areas and fewer secondary locations.
"Now retailers are serious about ordering and merchandising since they have ownership of the products," Brewer said. Retailers have been handling their own everyday nonfood buying for the past 10 years.
Twelve of the field counselors were phased out, while
the seven others were reassigned to act as nonfood specialists. In this capacity they conduct monthly nonfood training sessions in different regions for retailers.
Along with encouraging retailers to place more emphasis on the promotions, eliminating the counselors helped pare product costs by 6%, Brewer added. An incentive program that has reduced the number of weekly deliveries also played a role in the cost reduction.
"This helped move our retailers' pricing closer to Wal-Mart, Shopco, Kmart and the five large new combination food and discount nonfood stores Target is opening near members," Brewer said.
To date, nonfood department heads at 280 different retailers have attended about 20 educational sessions held in different states during the past several months. Sessions have covered a wide variety of topics: how to implement new shelf schematics, how to delete old items and create space for new introductions, retail pricing techniques, housekeeping methods that help avoid the need for frequent resets, building seasonal displays and ordering seasonal merchandise. Materials were developed in-house by company trainers with retailing and nonfood experience. Affiliated retailers operate 630 supermarkets, nearly half of which are more than 30,000 square feet. New units are slated to be about 35,000 to 70,000 square feet, according to Brewer. Meanwhile, through the use of efficiency rebates, Affiliated has managed to cut the number of weekly deliveries of everyday nonfood to a single load, down from about three. Under the new effort, deliveries were sharply curtailed as stores began to consolidate purchases into single weekly loads. As an incentive, retailers are offered 0.5% on orders up to $2,500, and 6.5% on orders over $25,000. Store orders dropped 22% soon after the incentive program began, according to Brewer. Nonfood orders are picked at Affiliated's nonfood depot and married with grocery in cross-docking.