BRINGING UP HOUSEWARES

AMY SUNG

A combination of upscale product trends and the blurring of channel lines represent an opportunity for supermarket housewares categories.

"Consumers are shopping us for their housewares needs, just as they are shopping Linens-N-Things, or Bed Bath & Beyond," said Karen Schroeder, mercantile category manager, Wild Oats Markets, Boulder, Colo. Mercantile is the housewares department at Wild Oats and Henry's Markets.

"I believe that we can be competitive in price and selection," Schroeder said. "We have the added advantage of having the regular shopper in for her weekly grocery purchase. We can capture that consumer's attention and interest and have her plan her housewares purchases at Wild Oats."

With consumers looking at all outlets - whether mass merchandisers or supermarkets - in the same way, food retailers are beginning to offer more upscale products. Consumers now believe they can find some of the same upscale products at supermarkets as they can in other channels, according to the 2004 "Merchandising for Success" study of the GMDC Educational Foundation, Colorado Springs.

For supermarket retailers, this means that they can merchandise for excellence, said Roy White, GMDC's New York-based vice president of education.

"We no longer categorize channels in terms of housewares and I think that's an important trend," White said. "In a sense, the handcuffs are now off the supermarket operators to go do what they have to do to really develop a good housewares business. I think that that's a very important trend."

TIMES ARE CHANGING

Although the supermarket share of housewares sales was down 0.8% in 2004 from 2003, according to the International Housewares Association 2005 State-of-the-Industry Report, experts believe that future sales rise.

The shift toward more trendy, upscale and costly housewares products will aid in lessening competition with mass merchandisers and increasing sales, supermarket retailers and industry experts told SN.

"In 2005, retailers were looking to a branded, more upscale mix with more color and innovation," a nonfood executive with a major Southeastern chain told SN. "Retailers are offering a good, better and best. They are trading customers up with branded product vs. the private label or low end of years past."

At Publix Super Markets, Lakeland, Fla., all facets of cookware sales are up, according to spokeswoman Maria Brous.

"We are offering more upscale food preparation items and are utilizing a kiosk approach for these items as opposed to our regular inline program," she said.

"The changes are tailored towards our gourmet customer. We noticed that sales started out slow but are slowly increasing."

Shifts in the eating habits of today's consumers are also a contributing factor to the expected increase in housewares sales at supermarkets, the Southeastern nonfood executive said.

"Today's changes in housewares are definitely related to food offerings. Because today's consumers are eating healthier and fresher foods, there is more food preparation done at home then in the past years of fast-food pickup. Consumers are adding to the assortment of gadgets at home to accommodate the way they are preparing food for their families," he said.

KNOW THE CUSTOMER

To have a successful housewares department, retailers must know their customer base and provide a good representation of varied levels of product in all categories, retailers and industry experts agreed.

"Something for supermarket retailers to pay attention to is the business you serve," said Perry Reynolds, vice president, marketing and trade development, IHA, Rosemont, Ill. "The chains that have integrated housewares into their business can make a matching value statement, one that fits the values of their particular customer base. Supermarkets now have the opportunity to offer a tremendous amount of sophistication, and this gives them the freedom to focus on offering their customers convenience."

Publix offers spatulas retailing from $3.99 to $15.99 to appeal to a range of consumers, Brous told SN.

At Wild Oats, consumers are environmentally sensitive and a portion of the product mix is tailored to them.

"We try to find new and eclectic items that would appeal to this customer. We offer recycled items, items that promote sustainable resources, such as our bamboo cutting boards and items that support a cause, such as co-ops in Third World countries," Schroeder said.

According to Reynolds, the presence of design has also become an aspect of value for the consumer.

"The industry is in a period right now where there is a big emphasis on design, but not just at higher price points. Basic function is being enhanced with design tweaks including ergonomics and aesthetics," he said.

"Designers speak through color and display to highlight their products. One thing that will be seen is color proliferating with housewares and color transferring from high fashion into the home."

Jim Wisner, president, Wisner Marketing Group, Libertyville, Ill., told SN that according to his firm's research for the GMDC, consumers are more interested in finding a product that meets their performance needs in the supermarket than finding a product that is merely inexpensive.

"While many supermarkets cannot devote the space for these full-line department stores' individual product lines, the quality of product is being upgraded in many cases. In focus groups we heard several comments about products being 'too cheap' to purchase even if it was an emergency," Wisner said.

Dorothy Lane Market, Dayton, Ohio, has noticed this tendency with its consumers and their housewares purchases.

"Generally, our customers appreciate and will seek out quality items. They're not concerned with price and willing to pay if quality warrants it," said Tom Hart, assistant store director of Dorothy Lane's Oakwood store in Dayton.

CROSS-MERCHANDISING

Cross-merchandising housewares products is a key to building sales in the category, said the Southeastern nonfood executive. He told SN that his company's stores are using secondary display vehicles, such as meat thermometer racks in the meat department and banana hangers in produce.

"Without a doubt, making an item such as a peeler available near potatoes, and ice cream scoopers near ice cream, is very important," he said. "This category is driven by impulse purchases, so making more items available in more locations has proven to bring more sales."

Innovative promotions with in-store cooking demonstrations, a clearly defined planogram with the good, better and best mix, and promotions to tie in with seasonal ads have all been successful for the chain, he said.

Dorothy Lane Market does not have a housewares section, but instead relies solely on cross-merchandising, integrating products within different departments of the store.

Wild Oats also recognizes the impulse factor with housewares sales.

"In the last two years we have carved out inline space throughout the stores to merchandise housewares. We have placed these strategically throughout the grocery aisles to promote the impulse buy. We try to merchandise in every available space that we can," Schroeder said.

While some experts and retailers believe that supermarkets are starting to improve their housewares merchandising, some said there is still room for improvement.

"If they're smart, supermarkets will start cross-merchandising, which I don't think many do very well. They haven't optimized their ability to retail housewares," said Robert Passikoff, president, Brand Keys, New York.

Passikoff said that he does believe, however, that supermarket retailers have an advantage because of the ability to cross-merchandise.

"Supermarkets by and large have simply not done as good a job as other channels in approving assortment, product quality and merchandising expertise," Wisner said.

Ethnic Growth Potential

Ethnic growth in the first two decades of the 21st century is expected to be substantial and retailers should take heed as it represents a big opportunity in the housewares department, experts told SN.

According to the U.S. Census Bureau, a growth rate of 68% for the Hispanic population is projected, 28% for African Americans and 78% for Asians by the year 2020.

"We're dealing with a huge explosion of population. The mere growth of the ethnic populations demands that they be paid attention to," said Roy White, New York-based vice president, education, for the GMDC Educational Foundation, Colorado Springs. GMDC put out a study on "Multicultural Marketing" last year.

Ethnic cuisine has become increasingly popular and ingredients are penetrating supermarkets across the board, said Jim Wisner, president, Wisner Marketing Group, Libertyville, Ill.

"We are seeing a lot more ethnic cooking products in stores today, particularly Hispanic. This isn't too surprising given the changes in the demographic makeup of this country, but these items are being sold to considerably more than just Hispanic households," Wisner said.

Some supermarkets see the demand and recognize the opportunity.

"We are tailoring our selections to complement the new ethnic food offerings in grocery," said Karen Schroeder, mercantile category manager, Wild Oats Markets, Boulder, Colo. "We are offering beautiful Asian tabletop woks, steamers and chopsticks. We are bringing in a selection of Hispanic products such as fajita pans and tortilla steamers."

"These products have been well received and have added incremental sales to the bottom line," Schroeder said.

According to White, the Hispanic market is very family oriented. Large cooking utensils, large packaging for food, barbecues and such are very marketable to this segment of the population.

"Because there's this orientation in a very large portion of the Hispanic market, it's a big opportunity for housewares manufacturers to address this and benefit tremendously. The Hispanic market's growth is going to be a huge plus for housewares," White said.

Housewares can benefit from not only the growth of the Hispanic market, but all ethnic markets.

"Ethnic cuisines of all types are gaining in popularity and many of them are best prepared with different kinds of utensils, cookware and other products," Wisner said. "This is a big opportunity."

AMY SUNG