HOLIDAY HOOPLA 1998

R. MICHELLE BREYER

Unfurl the tinsel. Stack up the canned yams. Hoist Santa and his elves onto the roof. The holidays are coming!

Retailers from coast to coast -- in rural, suburban and major metropolitan markets -- know that the holidays are too important to ignore. They present an opportunity to bring new shoppers into the fold, as well as show appreciation to loyal customers.

"Clearly, the holidays are absolutely the key opportunity for grocery retailers across America to make a good amount of profit and get more exposure," said Jim Sweeney, a director at Senn-Delaney, New York, a unit of Arthur Andersen.

Food retailers can expect to see their revenues increase 35% to 40% during the period from Thanksgiving through Christmas, Sweeney said.

Four years ago, Henry's Markets didn't bother with the holiday season. Executives at the La Mesa, Calif.-based chain of small markets didn't believe they could compete with the larger stores in the area.

"We used to roll over and let the big guys get all the holiday business," recalled Steve Fernandes, a buyer for the chain. But three years ago, Henry's decided to get into the holiday spirit. Now, in October, Henry's begins advertising its baking supplies. By the beginning of November, the stores are stocked with holiday foods -- walnuts and raisins, turkey and stuffing.

Each year, Henry's has expanded its holiday offerings, adding custom-made gift baskets, freshly prepared holiday meals and a new private-label, free-range turkey. "We've really built up a holiday business," Fernandes said.

"This time of year accounts for a lot of our profit and sales volume for the year," said Bryan Ryckeley, category manager for H.G. Hill Stores, a Nashville, Tenn.-based chain of 14 stores. "It's very important."

But it's not enough to put up a few decorations. Retailers have to earn the business.

"It is an extremely competitive time of the year, not only for the supermarket share of the business, but also for the gift-giving share of the business," said Frank Malott, who heads sales and promotions for Spartan Stores, a cooperative wholesaler based in Grand Rapids, Mich. "The importance of having the right promotions is a must in order to get the consumers into our stores to spend their food dollars."

Being prepared means stocking up on traditional holiday fare, putting together creative displays, hiring additional employees and using effective cross merchandising. Holiday displays should begin going up right after the Halloween decorations have been put away.

"It's important for folks to see you're in the business of the holidays," Sweeney said. "If you don't have stuffing and vegetables out by the beginning of November, you're behind the learning curve. There's no doing it twice for the holiday."

For some foods, such as figs, spiced peaches, almond bark and poultry spice, close to 75% of annual sales come during the holiday season, said Ross Nixon, vice president of merchandising for Dahl's Foods Markets, Des Moines, Iowa. "We sell more pumpkins in six weeks than we do in the other 46 weeks combined," Nixon said.

To make sure the chain's 11 stores don't run out of these key items, Nixon said, adjustments must be made in inventory. He recommends that store managers order steady amounts of key items to ensure that they don't run out, rather than making a few large orders.

"There are a lot of sensitive items you must stay on top of," Nixon said. "There's no substitute for pumpkin pie spice."

The smart chains, said Sweeney, carefully study historical sales records to make sure they'll be ready for the holidays.

"It seems simplistic to say 'I'll log all the things that did well and all the things that were surprises,' " Sweeney said. "But I'm shocked at how few companies do it."

For the most part, there are few surprises during the holidays, he said.

"Holiday time is about as simple as it gets," he said. "It's like clock work. You should be doing the basic things that the consumer expects. This is blocking and tackling time."

Because Thanksgiving and Christmas require many of the same foods, stores have an easier job. If they order too many pie crusts for Thanksgiving, they'll have a second shot a month later.

But each holiday season involves months of careful planning. Big Y Foods, Springfield, Mass., begins preparing for the holiday season throughout the year, buying imports as early as February, said Daniel Lescoe, senior vice president of sales and marketing for Big Y. Buyers are out year-round searching for holiday items.

Lescoe stressed that the "holiday season" actually has several separate components. While there are similarities, Thanksgiving and Christmas are two distinct holidays. Thanksgiving is "turkey," while Christmas involves weeks of entertaining and gift-giving. That means party foods, candy, baked goods and wrapping paper, in addition to "the meal."

Depending on the customer base, Hanukkah may get more attention in a store. Many chains are putting up menorahs alongside Christmas trees. Some stores put together Hanukkah displays with traditional holiday items like macaroons and chocolate Hanukkah coins.

Retailers stress there are no rules during the holidays when it comes to displays. Aisle stacks, double-wing displays and endcaps become larger. Anything goes, as long as it makes it easy for customers to find what they want.

"Get as much product out there as possible," Sweeney said. "With seasonal merchandise, people tend to buy it the first place they see it. They're very susceptible to impulse sales."

At some H.G. Hill stores, mini-aisles are set up specifically for baking goods -- putting everything customers need in one easy-to-find place. These 20-foot aisles, located toward the front of the store, are stocked with flour, sugar, dried fruits, coconut, baking chips, marshmallow creme, mandarin oranges and other baking ingredients.

Creative cross merchandising is especially important during the holidays: marshmallows with yams, cheese with apples. High-profit items like gravy basters, nutcrackers and apple corers can be displayed with holiday foods, to get cross-over sales.

The holidays are a time to sell more brand-name, high-margin items, said Nixon of Dahl's Food Markets.

"When you're entertaining, you want the best, across the board," Nixon said. "People who cook a lot during the holidays buy the brand-name sugar during the holidays."

Price is less important during the holidays, Sweeney noted. "It's nice if you give them a good price, but it's not as important," he said. "The No. 1 consideration is to meet the customer's quality and availability expectations."

While food still is the main focus, many stores do a brisk business in wrapping paper, lights and decorations. Some stores even have gotten into the lucrative Christmas tree business.

"They're trying to be the whole holiday solution," Sweeney said. In addition to creative merchandising, retailers are using innovative promotions to bring in shoppers.

A growing number of companies use elaborate holiday mailers. In addition to getting customers in the holiday mood, they include coupons to bring them into the stores. Houston-based Randalls Food Markets' "Holiday Savings" booklet, which went out the first week in November, includes coupons for traditional holiday fare, as well as other general merchandise.

Big Y's "Celebrate the Season" is a 45-page magazine. Interspersed with articles on holiday safety and homemade gifts are meal suggestions, recipes and 221 electronic, no-clip coupons.

Mad Butcher, Pine Bluffs, Ark., hosts a holiday open house Dec. 1 to get its shoppers thinking about gift certificates, party trays, gift baskets and other holiday items. This event is a chance to show off more than six months of preparation. It also gives customers a chance to sample different foods.

"It's a good way to get people to buy things they might not think about buying," said Roger Burks, senior vice president. "What you find in December is that people have money to spend. If you have the right items out, you're going to sell them."

To further promote its holiday foods, Mad Butcher has added special "Christmas Holiday Helpers" this year -- special bib tags that help holiday-related items stand out on the shelves, said Burks.