Open Stock

CHRISTINA VEIDERS

Place the corer gizmo next to the pineapples — a simple, logical, profitable, executable housewares strategy.

On second thought, that move may not be quite so simple for food retailers. Otherwise, the food channel would see more cross-merchandising of highly profitable housewares products with related food and grocery items taking place across the aisles.

The reasons this strategy isn't as pervasive as it could be are multiple and dependent upon each retailer's merchandising philosophy and policy. Historical territorial hurdles still exist where the produce or dairy manager doesn't want the general merchandise buyer to infringe on their space. While the profits on corer gizmos are good by supermarket standards, the turns may not be sufficient enough to warrant the investment.

“You've got to be real careful because you don't want to invest a lot of money in inventory that sits on the shelf. What is a good turn is a different number for housewares products vs. food,” said housewares research consultant Dan Raftery, president of Raftery Resource Network, Antioch, Ill. He noted that a focus on turns is paramount for supermarkets but it doesn't really apply when selling housewares categories.

Aside from the logic in cross-merchandising synergistic products, supermarkets may be forced to reevaluate their housewares product mix and pay more attention to it as pressure mounts to increase identical sales.

“Supermarkets really need basket building. That has been the biggest issue other than deflation, which is now starting to turn itself around,” said Bob Shelton, a former Safeway vice president of general merchandise, during a recent SN webinar on building profits through housewares merchandising. “Basket building is the most efficient way to grow ID sales. It's the more profitable way and the housewares category fits that bill extremely well.”

Food retailers' reevaluation of the category and their efforts to gain a better appreciation of housewares sales opportunities begin this week in Chicago for those attending the International Home Housewares Show, which runs March 6-7.

Supermarkets in attendance will get to preview more than 500 new items and peruse the wares of nearly 2,000 exhibitors. The show is said to attract more than 21,000 buyers of which 75% are retail and specialty retail buyers from the United States.

For supermarket general merchandise category managers, the show can be overwhelming with thousands of products filling three buildings at McCormick Place. “Supermarkets can't carry all products. The goal is to try to figure out what works best for the supermarket shopper, and across food retail companies, that can be very different,” said Raftery.

What most interests buyers attending the show are the fashion and consumer trends that result in product innovation. Discovering the newest “cool” gizmo, which potentially could spark that additional sale and boost the market basket, is the main reason most food retailers say they attend the show.

PLAYING CATCH-UP

Generally, there has been an ebb and flow of housewares sales within the grocery channel. “You see attention to these categories intensify or diminish from one retailer to the next. If a supermarket decides they need to generate profit in other areas, then they will start investing in pots and pans. If they pay attention to it, then sales will go up,” Raftery said.

Supermarkets have fallen way below mass merchandisers in share points of housewares sales, 8.3% share vs. 24.3% for mass merchandisers on sales volume of $5.2 billion and $15.2 billion, respectively, according to the 2010 State-of-the-Industry Report from the International Housewares Association, Rosemont, Ill.

“One thing you can be sure about,” said Raftery, “sales and share of sales for housewares categories you think would be strong in supermarkets are not so strong compared to mass merchandisers and supercenters.”

Nationally, the U.S. market for housewares was valued at $65.8 billion in 2009, an 11.2% drop from the previous year. U.S. government statistics present a more upbeat assessment for the year with the U.S. average household spending $614 on housewares, up 0.8% over the previous year. U.S. households spent more on housewares than on dairy products and slightly less than on fruits and vegetables, the report noted. This came at a time when consumers began to loosen their purse strings and the economy began to gain back some footing.

Even though the economy continued to look more positive during the first quarter of the new year, uncertainty reigns with high unemployment, housing deep in the doldrums, high debt, inflation and the threat that rising oil prices will continue to climb. “There is still a lot of uncertainty and it doesn't translate well into impulse purchasing,” stated Raftery.

But if any retailer is at an advantage to drive impulse sales of housewares it is the supermarket channel for its high trip frequency, up over two trips per week, and its tie-in opportunities with meals and meal preparation.

“I am not sure some retailers view the housewares products used in the kitchen and the rest of the house as something their customers are looking for, or need, or want to find in the grocery store. Retailers view it as an opportunity if space is available or the market is right for them. But they don't see it as a necessity in supermarkets and, therefore, they are missing an opportunity and probably turning customers away,” commented John LaPierre, a former general merchandise executive at Wegmans Food Markets, during SN's housewares webinar.

Supermarkets in committing themselves to housewares are bucking crosscurrents with the uncertain economy and need to keep inventory costs down on one side and the need to generate higher rings in a highly competitive retail market on the other.

The first quarter through the first six months of the year is when supermarket retailers really pump up their merchandising to build up the size of their market baskets, according to Shelton.

He recommends that supermarkets start slowly in housewares merchandising. Implement very focused programs that are easy to execute like the pineapple corers in produce. “Find suppliers who can provide turnkey programs that tie in with other merchandise. If you can get early wins and show you can be profitable with housewares, then you can begin to build a story and a successful track record,” said Shelton.

TOP 25 SUPERMARKETS

Here are the top 25 supermarkets ranked by housewares sales volume on the Top 100 Domestic Housewares Retailers list. Wal-Mart is by far the leader of the Top 100 Domestic Housewares Retailers with $20.3 billion in housewares sales in 2009. Costco is No. 2 with just over $9 billion, followed by Target, No. 3, at $7.9 billion and Sam's Club, No. 4, at just over $4 billion. Bed, Bath & Beyond is at No. 5 with $3.4 billion in sales. Of the supermarkets on the list, Wegmans was the highest sales gainer with a 10.8% increase in housewares sales. Albertsons LLC sales fell off the most at 13%. All told, 18 food retailers posted sales gains in 2009 and seven lost sales over the previous year.

SOURCE: HomeWorld Business “Top 100 Retailers,” September 2010; International Housewares Association 2010 State-of-the-Industry Report