BABY STEPS

WENDY TOTH / DAN ALAIMO

Nonfood baby product sections are growing up.

Supermarkets are confronted with an array of new baby products, consumer demand that varies by the demographic makeup of the store, and increased price competition from discounters. They are responding with more sophisticated sets and merchandising that keeps consumers in the store by conveying a sense of shopping ease.

"Baby [sections] are looking cleaner and more shoppable," said Charles Yahn, vice president, merchandising, Associated Wholesalers Inc., York, Pa. "The consumer is looking for a better-merchandised display set for baby, and that is where they are going to buy."

"For a food retailer, it is a must category," said Mike Dejulio, director of health and beauty care, Price Chopper Supermarkets, Schenectady, N.Y. "We must maintain our customer base in that section."

New products are coming in from a number of manufacturers looking to build their brand name.

There are about 10 new [stockkeeping units] from Kimberly-Clark, Dallas, and five or six expected from Playtex, Westport, Conn., Dejulio said. A new launch is anticipated from Procter & Gamble, Cincinnati, at the beginning of 2006, while Johnson & Johnson, New Brunswick, N.J., shows no signs of slowing down, he said.

"We've seen an infusion of new products, manufacturers and line extension SKUs," said Larry Ishii, general manager, HBC/GM, Unified Western Grocers, Commerce, Calif. That means there is a need for supermarkets to be careful with what they add to the nonfood baby products category, he said.

That puts pressure on retailers with limited space for baby products, he added. "It means retailers have to be up to date and competitive on their item mix.

However, as stores get larger, that pressure is not nearly as great," he said.

"It's a category you have to take care of," said Jan Winn, director of HBC and GM, Big Y Foods, Springfield, Mass.

A steady market for baby products in the U.S. combined with high fertility rates among Hispanic and other "younger" populations can explain heightened activity in the market, industry analysts told SN.

The United States has the highest birth rate of all developed countries mainly due to immigrant fertility, said Ellen Carnevale, director of communications for the Population Reference Bureau, Washington. "African American, Hispanic and Asian communities are much younger than their white counterparts in this country, with a lot more babies coming to market a lot faster than they would otherwise," said Jim Wisner, president, Wisner Marketing, Libertyville, Ill.

Ethnic consumers are among the biggest buyers of several key general merchandise and health and beauty care categories, including baby products, according to the Multicultural Marketing study released last fall by the New York-based Educational Foundation of GMDC, Colorado Springs, Colo.

The study cites U.S. Census Bureau numbers in reporting that the Hispanic population is expected to grow 68% by 2020, the African American population is expected to grow 27% and the Asian population is expected to grow 78%. Moreover, the baby aisle shopper spends an average of $1,100 more per year than the average supermarket shopper and visits the store an average of 11 more times than the average shopper, according to 2004 data from sales and marketing consultant, Cannondale Associates, Wilton, Conn.

To take advantage of this demographic, supermarkets need to do the legwork for busy parents facing an array of baby products and little time.

"There is a lot of new product coming out but it is really becoming more of a system," AWI's Yahn said. "Mothers are looking for ease of shopping."

Winn agreed. "It's common sense at this point. We are all fighting for sales from every other outlet. You have to manage your category."

The first step is to merchandise in a way that makes common sense, said Andrew Bennett, chief strategy officer, Euro RSCG Worldwide, Westport, Conn., a management consulting firm. "Merchandise the products in zones that match the way a parent engages with those products in the baby's lifestyle." Bennett, who has a 5-month-old of his own, often finds supermarkets lacking order and emotion in the baby aisle.

Specialty chain stores like Buy Buy Baby, Garden City, N.Y., and Babies "R" Us, Paramus, N.J., "do a good job of providing an experience that transcends the products. No other category in the entire supermarket is as emotionally charged as baby products, but it is probably the category that has the least amount of emotion in it," Bennett said. "To me, there is more emotion in the orange juice than in baby products," he joked.

"Supermarkets need to find creative ways to merchandise and take advantage of the high-impulse, high-margin opportunities in nonfood baby care," said Don Stuart, managing director, Cannondale Associates.

Customers need to see products that are displayed in an organized way rather than "a cup here and a bottle there," Yahn said. "So I think you are going to see more systems and less of the overall big confusing sets. Most baby sets in food stores have, historically, not been the easiest to shop for customers.

Retailers working with Topco Associates, Skokie, Ill., a cooperative private label company, are looking for more coordinated private label nonfood baby products because, "once you create a brand awareness in that category it transfers from item to item," said Tony Harrington, business manager for Topco. "The mother is shopping in the entire baby aisle, so you want to create brand equity up and down that aisle."

To build the mother's basket, it is important to manage the aisle as a whole rather than the different subsections in the category, according to Cannondale's Stuart.

Ingles Markets, Asheville, N.C., is trying to get more variety into the baby section apart from the feeding products that most of the big companies feature, said Dan Spears, director, HBC/GM. "We are trying to get more toys and functional products other than feeding," he said.

Big Y partners with Gerber in the baby aisle, Winn said. The manufacturer supports the category with numerous promotions and tie-ins with baby food and baby cups and spoons, for example, she said. "It's not a fashion category like other areas of health and beauty care, but we run large baby ads, and we are talking about doing some tie-ins with baby food," she said.

Feeding Frenzy

One baby product segment that supermarket retailers can count on is feeding products. Baby feeding "continues to be the story," said Tony Pooler, Save Mart Supermarkets, Modesto, Calif. Save Mart carries the Playtex, Westport, Conn., feeding system. "Playtex has been out with its system for about 20 years now and keeps improving it little by little," he said.

Items such as bottles, nipples and pacifiers are very strong sellers, said Al Jones, senior vice president, procurement and marketing, Imperial Distributors, Auburn, Mass. In particular, sippy cups are a very high turnover item, he said.

"Portable drinking cups are a staple in that category. I don't know how many you can have," Jones said.

By studying the leading products offered by the companies that participate in the baby category, "sippy cups and feeding dominate every company," said Dan Spears, director, HBC/GM, Ingles Markets, Asheville, N.C.

Baby feeding accessories such as spoons and sippy cups are a must for cross merchandising with baby food, according to one nonfood executive with a major Southeastern chain.

"If we run an apple juice promotion, we make sure we have that cup in the juice aisle. We do the same thing with small bowls, spoons and feeding accessories in the cereal aisle to make sure that we can grab that customer and let them know we have things for baby and mom in our store," the executive said.

Big Y Foods, Springfield, Mass., which regularly runs large baby ads in its circular, "did a big launch with Gerber this past year and tied in a lot of the baby food type products along with baby cups and baby HBC," said Jan Winn, director of GM and HBC at Big Y Foods.

"There are some feeding items it seems like you can never have enough of. Whether they get lost or you just want more of them, it is good to know that if you want more you can find them next to the food items," said Andrew Bennett, chief strategy officer, Euro RSCG Worldwide, Westport, Conn., a management consulting firm.

Additionally, the category is continually being updated, the Southeastern executive said. "There are always different orthodontic types of nipples and pacifiers. It seems like they change every year, so whatever the hot shape is will sell," he said.