BATTERIES STORM MARKET

WENDY TOTH / DAN ALAIMO

Hurricane season is under way and with it comes a stronger focus on merchandising batteries as part of storm preparedness.

The severity of last year's hurricane season raised consumers' fears and awareness of the need for storm supplies, primarily in the Southeastern U.S.

However, retailers and wholesalers told SN that demand for items like batteries and flashlights also grows in the Northeast as major winter storms approach, and even on the West Coast in the aftermath of earthquakes.

Special displays of batteries are available from the big battery manufacturers, and the suppliers and the retail/wholesale community have plans in place to get an adequate supply of batteries to stores in time for the storms. These plans have been refined since the devastation of Hurricanes Katrina and Rita last year.

This demand is expected to increase with the marketing of more battery-powered devices, such as fans and televisions, for use during prolonged power outages. Retailers and wholesalers interviewed by SN - many in Orlando, Fla., during this month's General Merchandise Marketing Conference of GMDC, Colorado Springs, at the beginning of hurricane season - agreed that this was less a sales opportunity and more an obligation to meet customers' needs.

Batteries were among the top-selling items in Florida during the 12 days leading up to the official start of hurricane season on June 1, when storm-preparedness products were exempt from state sales taxes.

"Every store, no matter the size, has a display going into hurricane season," said Maria Brous, spokeswoman for Publix Super Markets, Lakeland, Fla. "We keep additional battery inventory on hand because people reach for portable radios and TVs and flashlights. Batteries are a very fast-moving item during this season." Publix did "well" on batteries

during the tax-free sales period, she noted.

At Winn-Dixie Stores, Jacksonville, Fla., batteries are staged in the retailer's general merchandise distribution center. "We are fortunate that we have one facility that delivers to all of our stores," said Dewayne Rabon, vice president, general merchandise, HBC, procurement/sales.

Pre-loaded battery display shippers are sent out to stores in coastal areas where they are held in preparation for storms. "There will be a heightened awareness because of the history of the storms," Rabon said.

Meanwhile, there are new items out this year for power outages, such as battery-operated fans and TVs, he said. "So battery demand will probably be greater this year."

RITA AND BROOKSHIRE

Hurricane Rita directly impacted the east Texas trading area of Lufkin-based Brookshire Bros. Seven stores were damaged so badly that the retailer temporarily operated out of tents and refrigerated trucks set up in the parking lots. The retailer also served evacuees from the Houston area, where the storm was initially expected to hit, said Doug Barnett, director of GM/HBC.

"We had probably close to 2 million or 3 million people evacuated and all of those people were looking for batteries and other hurricane-related items to operate anything they had that could run," Barnett said.

Last year's experience caused Brookshire to re-evaluate its preparedness measures in regard to batteries, he said.

"One of the main things that we looked at this year was, how many dollars in battery inventory it would take to really be prepared, and could we, as an employee-owned company, really afford to house the number of batteries that we sold last year? That answer was, probably not," Barnett said. Instead, the retailer turned to its supply partners and asked them what they had done in Florida and other communities when a hurricane was coming.

In response, some suppliers agreed to have batteries held for the retailer, ready to ship at any time. "All we had to do was have purchase orders to them before the season started. We were under no obligation to buy the batteries, but they would hold them for us until we needed them. So that was a major burden off of our shoulders," Barnett said. With hurricane season under way, batteries were rolling into stores even while Barnett was talking to SN during the GMDC conference earlier this month.

"We recommend that supermarket retailers take an active role in educating their consumers about preparedness and the things needed to have a successful preparedness kit on hand," said Lou Martire, vice president, trade development, Energizer, St. Louis.

The storm season for Stop & Shop Supermarket Co., Quincy, Mass., comes in late summer, with northeastern Stop & Shop stores not as affected by hurricanes as fellow mid-Atlantic Giant Food stores operated by the Ahold USA company. Winter snowstorms are also an issue and preparedness is a priority, Stop & Shop executives told SN.

"To be prepared, we generally work with our two major partners [Duracell and Energizer] in the battery category and have incremental displays available to ship to stores with 24-hour notice," said Marco Leone, nonfood director, Stop & Shop.

PRE-BUILDING DISPLAYS

Big Y Foods, Springfield, Mass., has an agreement with a major supplier to ship batteries within 48 hours. "[However,] we also build some displays in our warehouse just to make sure we are going to be in good shape if a hurricane hits," said Jan Winn, director of HBC and general merchandise. Scott Miller, general merchandise category manager, added that the retailer is looking at electrical products that operate when the power goes out, such as a lantern with 16 hours of battery life.

For a distributor with customer stores in the South Florida area, Valu Merchandisers Co., Kansas City, Mo., has found it is best to build hurricane pallets in its warehouse. "We pre-build 50 or 60, and if they aren't shipped, we just break it down and put it back into stock," said Bill Dunkle, category manager, general merchandise.

At private-label cooperative Topco Associates, Skokie, Ill., natural disaster preparation includes severe weather displays that the company pre-books with retail clients. "It is getting a lot more traction now that Hurricanes Katrina and Rita have gone through," said Debbie Deitke, director, business management, GM.

Even for Schenectady, N.Y.-based Price Chopper Supermarkets, varying selection for storm preparation has to be taken into consideration. "Typically AA and AAA batteries are the best sellers. During storms, however, the demand moves to C and D sizes. We have to prepare by having enough inventory to meet the customers' demand," said Jack Serota, vice president, GM and HBC.

WINTER WEATHER

Retailers in the Northeast and mid-Atlantic states have more opportunity to sell emergency supplies than many other areas of the country, said Al Jones, senior vice president, procure We have to prepare by having enough inventory to meet the customers' demand ment and marketing, Imperial Distributors, Auburn, Mass. "From time to time we have hurricanes come up the East Coast. We might get one or two scares a year."

What the Northeast sees the most, however, is snowstorms, Jones said. "We get nor'easters coming up the coast and to have four or five in one season is not unusual. They bring very severe weather and power outages that cause people to think about buying batteries."

Earthquakes up the battery demand for Unified Western Grocers, Commerce, Calif. "Unlike most natural catastrophes, you can't know that an earthquake is coming in advance. What we see is an increased demand for batteries after an earthquake takes place," said Larry Ishii, general manager, GM/HBC.

Building a merchandising strategy around natural disaster preparation benefits consumers through convenience, and retailers through increased sales, retailers and analysts told SN.

"Any time there is a severe weather season, especially after last year, once you remind people they need to have something on hand, you are going to get sales out of it," said Jim Wisner, president, Wisner Marketing Group, Libertyville, Ill.

Storm preparation products such as batteries, water and candles move fast when retailers prepare from an inventory standpoint, he added. "When you have more product you sell more product."

Technological Advances

The growing popularity of high-tech items such as digital cameras and portable video game consoles is pushing the battery category toward more technological sophistication.

Dollar sales for a battery category called Nickel-Cadmium/Lithium-Ion/Lead Acid Batteries - all of which are long lasting and rechargeable - have gone up 34.3% to $6.4 million in the food store channel in the last 52 weeks ending May 21, 2006, according to Information Resources Inc., Chicago.

"The upward movement into high-drain devices like digital cameras and MP3 players is helping to drive sales in the battery category," said Jack Serota, vice president, GM and HBC, Price Chopper Supermarkets, Schenectady, N.Y. "We are seeing a movement toward higher-priced items because consumers are realizing that the cheapest batteries do not always perform as well."

"The battery business is becoming a lot more advanced in quality and technology," said Debbie Deitke, director, business management, GM, Topco Associates, Skokie, Ill.

According to Procter & Gamble-owned Duracell, Bethel, Conn., digital devices are being used more than ever, and over 70% of these items are powered by AA and rechargeable batteries. "Consumers will be looking to retail shelves for device-based battery purchases such as those for digital cameras, and retailers will have an opportunity to drive sales through consumer education," said Duracell spokeswoman Stephanie DiPisa.

"Consumers are looking for the right battery for the right device," said Lou Martire, vice president, trade development, Energizer, St. Louis. "There has been tremendous growth in the performance battery category, driven in large part by the growing number of technology-focused devices and consumers."