GMDC OUTLINES COMPETITIVE STRATEGIES 2004-04-05 (1)

Liza Casabona

CHICAGO -- Merchandising, not price, is crucial for supermarkets competing with mass merchandisers, according to preliminary research from the Educational Foundation of the General Merchandise Distributors Council, Colorado Springs, Colo.

In a presentation at the International Home and Housewares Show here last month, GMDC gave a preview of the "Merchandising for Success" study it will release later this year. Showing examples from specific stores, GMDC executives focused on how supermarkets can use merchandising, product variety, and a value position to draw consumers into the housewares aisle.

Consumers currently assign different roles to each channel when shopping for kitchenware and gadgets, said Roy White, the New York-based vice president of education for GMDC's Educational Foundation. These roles are not, however, set in stone.

"It is our contention that these roles are due to conventional merchandising, not to ascribed roles," said White.

Consumers turn to supermarket and drug stores for emergency replacement of everyday items, particularly disposable ones, the study showed. Mass merchants and value-priced specialty stores are sources for long-term replacement items. Department stores and premium specialty retailers are where consumers go to invest in premium goods for permanent use.

There are many factors involved in how supermarkets should treat housewares, said David McConnell, president and chief executive officer, GMDC. Key elements range from qualitative properties like environment, display and product lines to variety. Price is among the issues that affect these categories, but it shares the stage with other concerns, notably product quality. It is important to make a full commitment to the category to reap the benefits, he said.

"If you are going to be in the business, you can't be afraid of higher price points. If you are positioning yourself as a convenience and backfill source, you might as well not be there," he said.

McConnell pointed to the Market Street format of United Supermarkets, Lubbock, Texas; Hy-Vee, West Des Moines, Iowa; Stop & Shop Supermarket Co., Quincy, Mass.; and Pathmark Stores, Carteret, N.J., as examples of retail environments that have used merchandising to turn their housewares aisles into vital destinations. Each of the chains uses higher-end fixtures and signs resembling those usually seen in other channels. They have also used test kitchens, in-store demo stations, and store-within-a-store concepts to differentiate their housewares departments.

A value offering is also an important component in maximizing the potential of the housewares aisle, McConnell and White told session attendees. By providing a complete selection and balancing value with quality, supermarkets can make a statement to consumers, the presenters said.

The same channel-blurring trend that has heightened competition has also increased opportunities for supermarkets.

"Successful retailers brand their stores to their customers through merchandising, product offerings, and a good retail environment," McConnell said.

GMDC will release its "Merchandising for Success" study in two parts: the first at its GM Marketing Conference in Orlando, Fla., June 4 to 8; the second at the HBC Marketing Conference, Sept. 10 to 14, in Scottsdale, Ariz.