Food Retailers Anticipate Holiday Sales Bounty This Year

SN STAFF

Like children who have discovered their parents' secret stash of presents a few weeks early, food retailers around the country are confidently predicting a rewarding holiday season.

In interviews with SN over the last few weeks, supermarket executives said consumers appear to be responding to the relatively low price of gasoline and the strong economy with open wallets. The market is still highly competitive, however, and food retailers also are seeking to lure customers in with a mix of new incentive-based promotions and the tried-and-true array of holiday specialties.

Gary Pfeil, general manager, Roche Bros. Supermarkets, Wellesley Hills, Mass., said he expects sales to be up about 2% over year-ago levels.

“This fall consumers should have a little more money in their pockets [because of the low price of gas], and during the holidays they'll buy up if they have the money,” he said.

The mild weather in New England this fall has helped boost sales so far, he noted, adding “the general sentiment among consumers is pretty positive.”

“We're just looking for a good holiday season, and things are on track for it,” he said.

Dick King, vice president, Associated Food Stores, Salt Lake City, said the company is expecting holiday sales increases of 4% to 5% at its 23 corporate stores this year.

“The holidays are fairly good for us because people come back to our stores, rather than going to discounters, because they know us,” he said. “People are busy at that time of year, and they are familiar with our stores, and it's easy to get in and out.”

AFS is among the operators making efforts to get the season off to an early start this year. About two weeks ago the company began staging open houses in its stores featuring in-store events, such as choral performances by local elementary schools.

The performances, which began a few years ago at the company's Linn Stores banner, were expanded last year to the other AFS-owned banners, Macey's, Dan's and Dick's. The events “bring in a lot of parents and grandparents,” King said, and help the stores promote their holiday offerings.

“The store directors understand what they have to do in terms of having holiday displays ready, along with brochures that let people know about special orders in floral and bakery or deli party trays to give customers a feel for what's available when they're ready to place their orders,” he said.

Other community-based events will follow throughout the season, he said, including performances by local dance groups and church choirs, accompanied by in-store demonstrations and product sampling.

In addition, the company hopes to capitalize on the plans disclosed by some general merchandise retailers to begin running sales at 12:01 a.m. this Friday.

“We believe that will get customers into our stores earlier in the day than in the past, when we used to give up on that Friday morning because people were at the holiday sales,” King said.

AFS plans to emphasize ready-to-eat foods such as fried and rotisserie chicken, targeted to people tired from gift shopping. The stores also will offer some “better-quality” prepared foods this year, he said, such as heat-and-serve lasagna.

Rewards Programs

Lower gas prices and the expansion of a reward program for shoppers has Niemann Foods forecasting a strong holiday season, John Bocke, director of procurement for the Quincy, Ill.-based retailer, told SN.

“I fully anticipate a good season for us,” Bocke said. “We went through some flat times this summer, but with gas prices falling some, it seems like the sales have picked up again.”

Niemann this year will expand the Holiday Cash program it tested in some of its 65 stores a year ago. This program rewards frequent shoppers with punch cards they can redeem at store checkouts for a mystery prize.

“Everybody is going to win $1 at the very least, and it goes up to $500 or $1,000 in cash, and free groceries,” Bocke said. “We experimented with it in some markets last year and had good success, so now we're going companywide.

“It's been a thing that generates a lot of excitement for customers around the holiday season. We think it will get us good results again this year.”

Niemann operates stores under the County Market, Niemann Market, Cub Foods, Save-a-Lot and IGA banners in Illinois and Missouri.

Greg Sandeno, vice president and chief operating officer, C&K Market, a 59-store chain based in Brookings, Ore., also said he's been encouraged by early demand for holiday items such as party trays, hors d'oeuvres and desserts.

Lower gas prices have made consumers feel more relaxed, he said, “and while that could encourage them to drive into bigger cities than those in which our stores are located, we haven't seen that happening yet, and it looks like people will stay put this year.”

For the third year, C&K will run its Holiday Rewards program, in which consumers earn points for buying specific products or spending specific amounts from October through December that they can use to save money on groceries during the weeks of Thanksgiving and Christmas.

“We've seen increased spending because of this program in previous years, and we anticipate strong numbers again this year,” Sandeno said.

C&K also will do more cross-merchandising of holiday items, he said, with deli platters available not only in the deli but also in the meat and produce sections as part of an effort to promote its stores as “Party Central,” he said. “The goal is to capture sales throughout the store, and putting the platters in several departments plants the idea with customers and makes it easier for them to buy them.”

Sandeno said C&K is giving special emphasis to natural and organic foods this holiday season, running a two-sided insert in its weekly ads devoted exclusively to those types of foods.

In addition, the company this year decided to reinstate promotions for holiday baking ingredients, he said. “In the last couple of years we've laid off promoting baking ingredients like flour, sugar and butter, but this year we threw that out there early and saw good results.”

The company is also promoting more nonfood items on an in-and-out basis, including apparel such as jackets and socks and housewares on endcaps and $29.99 DVD players featured in its video departments.

“We've seen good early indicators of movement on all these items, especially the DVD players, and we will continue to promote them,” Sandeno said.

Associated Grocers of Florida, Pompano Beach, also will have a bigger push on general merchandise this holiday season than it has in past years, said Calvin Miller, president and chief executive officer of the 450-member co-op.

“This is the first year we are really promoting general merchandise heavily,” he said, noting that the company is “getting some unbelievable pricing” on imported products such as Christmas trees and lighting as it ramps up its GM importing business. The company is planning to open an expansive warehouse and showroom for imported products in the Bahamas next year.

Like other operators, Miller said sales appear strong heading into the holiday season. He projected the company would move 12-15 truckloads of whole pigs, which, roasted in a covered pit, are favored among the company's Latin American customers as a Thanksgiving meal.

“We sell as many pigs as we do turkeys,” he said, noting that in most of the markets where AG members operate, it is not necessary to give turkeys away, a promotion used by retailers throughout the country.

Pump Perks

Tom Jamieson, president and CEO, Jamieson Food Stores, Uniontown, Pa., an operator of Shop 'n Save and Save-A-Lot stores in the Pittsburgh area, said the company is seeking to leverage its new gasoline incentive program in which consumers can get 10 cents off a gallon of gas for every $50 spent on groceries. The company will promote certain holiday items as “pump perks” to earn gas discounts.

John Azzolina, vice president of finance and information technology at Food Circus, Middletown, N.J., a 10-unit Foodtown operator that is also running an incentive program, said indicators point to a strong holiday season.

“People have more money, the economy is more stabilized, there are lower mortgage rates, the stock market is at an all-time high, and elections are over,” he said. “People have a better feeling about the economy. We've been having decent sales, and I don't see us dropping.”

He said his stores will use the S&H Greenpoints system to allow customers to accumulate points for free turkeys. Customers using their loyalty card get 10 points per dollar spent in the store. From Nov. 18 through Dec. 30, they can redeem 15,000 or 20,000 points to get a free turkey; the size and type of turkey depends on the amount of points. Also, in all Foodtown stores, including the 10 Food Circus stores, shoppers using their loyalty card who spend $300 to $599 can either get a free turkey, free frozen lasagna or a $10 Foodtown gift card. For every $300 spent thereafter, up to $1,500, customers get another $10 Foodtown gift card.

Chandler, Ariz.-based Bashas' also is giving away turkeys to its most loyal customers, according to Christie Frazier-Coleman, senior vice president of sales and merchandising.

“It is a very popular program, as we are the only retailer that gives away free turkeys,” she said, noting that the company also emphasizes deli trays and party items for the Christmas season.

She expects the season to be strong. “As gas continues to come down in price, consumers will have more money to spend on the holidays,” she said.

Extra Weekend

That Christmas falls on a Monday this year, as opposed to Sunday a year ago, portends a strong holiday shopping season at Dorothy Lane Markets, according to Norman Mayne, CEO of the Dayton, Ohio-based specialty grocery chain.

“We're going to have five weekends between Thanksgiving and Christmas. That's one extra weekend for parties and celebrations, and that really means a lot for us,” Mayne said. “Last year we had only four.”

Mayne said the extra weekend is more significant for his store's shoppers than fluctuations in gas prices. “Gas prices may affect some [retailers], but it never affected our shoppers that much.”

Dorothy Lane stores are not planning any new promotions for the holidays, Mayne said, but instead are simply focusing on customer service.

“We want our customers' holiday season to be successful for them. So we plan on giving them the very best food and the very best advice we can, so their parties and celebrations will be successful,” he said.

Donald Rouse, president and co-owner of Rouses Markets, Thibodaux, La., said sales have been strong at the regional chain, which opened its 15th store earlier this month in Slidell, La., just outside New Orleans. The chain has seen some sales increases since Hurricane Katrina last year decimated the city, boosting the population in surrounding areas.

“We think our business is going to be solid,” he said.

Although the chain is an everyday-low-price operator, it is conducting some price-and-item advertising on some key holiday items this year to draw attention to its newest store and two others in the area on the north shore of Lake Pontrachain.

Among the chain's specialties during the holiday season are fried turkeys, which it prepares either in-store or using a trailer it acquired a few years ago that allows it to deep-fry 68 of the birds at a time. The chain's newest stores, at 62,000 square feet, were designed with the space to make the turkeys in-house, but the trailer is rotated to smaller stores as needed, he said.

“We are very strong in turkey dinners and with fried turkeys, as well as wine, floral, party trays and bakery,” he said.

Another operator impacted by last year's hurricane season was Minyard Food Stores of Coppell, Texas, which had trouble receiving many basic grocery items in 2005 because delivery trucks were tied up in relief efforts.

“Supplies of items like sugar, coffee, hot sauce, canned fruits and vegetables and water were uncertain,” said Poul Heilmann, senior vice president, strategy and marketing, Minyard. “A lot of trucks were being used to move materials into and out of Louisiana rather than for food deliveries. Current trends are more positive, and this year we will have the right products at the right prices displayed for maximum advantage.”

He also said he thinks low gas prices “should be a positive factor” this year.

“Every indicator says sales will be positive,” he said.
Reporting by: Elliot Zwiebach,
Maria Tortoreto, Jon Springer
and Mark Hamstra