MERCHANDISING BARRIERS

MARYELLEN LO BOSCO

The intent is to purchase quickly, so display is important. But the barrier to more condom sales at supermarkets is that the products don't usually get the full merchandising treatment -- although many agree supermarkets can be a natural place to sell condoms, given the high foot-traffic. Lingering in the back of retailers' minds is pilferage. Therefore, condoms are usually sold from more secure areas. An SN survey of retailers has found that health and beauty care managers are putting more and more thought into how to make the purchase of this highly profitable item a less stressful buy for consumers.

"Traditionally, this purchase has been made in the drug store, where people felt more comfortable and private buying it. We need to provide that same level of comfort," said Jerry Golub, HBC director at Price Chopper Supermarkets, Schenectady, N.Y.

"Where we have pharmacies, it's a lot easier. People don't want to stand in line on the front end and take the risk that their neighbors will see them with condoms. It's about the same sensitivity as buying an incontinence product," Golub added.

Condoms are usually sold in front of the pharmacy, in the stores that have them, along with other family-planning items like pregnancy-testing kits. In stores that don't have pharmacies, condoms can usually be found in the feminine-hygiene aisle.

"Because of the sensitive nature of the purchase and the theft issue, we feel that out in front of the pharmacy is the most appropriate place [to display condoms]," said Golub.

Most of the 92 stores in the Price Chopper chain sell prophylactics, but only 23 have pharmacies. In those stores, condoms are mostly available, although in high-theft areas people have to ask for them, explained Golub, because the products are behind the pharmacy. The stores without pharmacies merchandise condoms in the feminine-hygiene aisle.

InfoScan statistics from Information Resources Inc., Chicago, for the 52-week period ended May 19, 1996, show that condom sales are a $286 million business nationwide. Unit sales reached over 42 million during the same period.

Nevertheless, this figure was down 3.5% from last year. Sales in drug outlets were $182 million (64%), while sales in the mass- merchandise channel were $56 million (19%). Sales in supermarket outlets were $48 million (17%).

InfoScan found that the companies with the most sales were Carter-Wallace, Schmid Products and Ansell America, in that order. The top five brands were Trojan, Trojan Enz, LifeStyles, Sheik and Conceptrol. The Trojan products were by far the most popular, with combined sales of a little more than $18 million. LifeStyles garnered more than $8 million in sales, while Sheik condom sales were at almost $5 million, and Conceptrol at a little more than $1.4 million.

"This category is anywhere from $230 to $300 million in retail sales, and nationwide, household penetration is about 17%, so it's a grossly underdeveloped business," said an industry source. "Supermarkets have the heaviest traffic," he explained. "This is a very personal purchase. If consumers knew they could depend on the supermarket having them day-in-and-day-out, it would be the preferred place of purchase. This is not a category that needs to be promoted. It's driven by retail presence and customers' knowing where it is available."

He went on to say that condoms are the most profitable item in the HBC category. At the same time, research has shown that people looking at a condom display of about 50 items will take an average time of eight seconds to make a purchase. "Clearly, it's important to put these products in a location where people feel comfortable taking the time to look at them," the source added.

Industry sources put condom retail margins between 45% and 60%. HBC managers who were prepared to comment on margins cited anywhere from 30% to 50%, depending on the product. Most buyers said sales were up, although some said they were flat.

"There was significant category growth through the early part of the decade," said Golub, "and it has now leveled out or is growing slightly."

Jan Winn, director of general merchandise and HBC for Big Y Foods, Springfield, Mass., said sales are up in the 37 stores she buys for. The most popular brands for Big Y are Life Styles, Sheik, Trojan and Gold Coin.

Every retailer agreed that the 12-pack was the most popular count with their customers. Greg Wilkens, general merchandise and sales manager at Albertson's Utah division, carries about 50 stockkeeping units and mentioned Trojan and Gold Coin as popular brands. He said that sales are up from last year. He also mentioned that the two-year-old female condom, Reality, is becoming more popular.

Jack Weissman, vice president of sales for Female Health Co., Chicago, the manufacturer of Reality, said the company is doing well in supermarket chains with pharmacies and combo stores, but that the product has not yet gone mainstream.

Nevertheless, Reality has doubled its business and hopes to triple or quadruple sales in 1996. Weissman attributes increased sales to a new advertising campaign, launched in March, that repositioned the brand, emphasizing its comfort.

One HBC manager for a supermarket company on the East Coast, who preferred to remain anonymous, said condom sales are flat. He sells 14 varieties of condoms in the 70 stores that have pharmacies, but not in supermarkets without pharmacies.

Another HBC buyer in the Midwest, who sells contraceptives in most of his stores -- whether they have a pharmacy or not -- said sales are up. "We didn't carry them six years ago, but after the AIDS scare, most companies started to carry them." This buyer stocks more than 40 SKUs in stores with pharmacies, but only about 16 SKUs in the other stores.

Grant MacLean, director of HBC at Rosauers Supermarkets, Spokane, Wash., sells condoms in all his stores, which are located in Washington, Idaho, Montana and Oregon. "In stores with pharmacies, we try to put them in front, with other family-planning products. In stores with no pharmacies, we put them with the feminine-hygiene products." MacLean felt that condoms have become a more acceptable purchase, and that the category has grown because of the concern about AIDS and other sexually communicable diseases. Trojans were the most popular condoms in his store. He also mentioned that the Reality product is not a big mover.

Phyllis Madison, a buyer and supervisor for Perlmart, Toms River, N.J., said that the number of SKUs she carries depends on the size of the HBC department. "One of our stores stocks condoms in-line [in the HBC aisle], and the rest near the pharmacies. We had some resistance to having them in-aisle, initially, but not any more," she said, adding that sales increased as a result of this placement. Her stores have been selling condoms for 17 years. Generally, she doesn't promote condoms, although her distributor, Wakefern, runs them on the store's "Price Plus" program.

Retailers said they don't do much promotion of condoms, although more than one store mentioned off-shelf bonus buys. Another store does temporary price reductions and mentioned running an ad in the HBC section of its circular. The industry source said supermarkets need to find a way to make people more comfortable buying condoms, but he stressed that this channel is missing out on a huge opportunity, at present, by not being more proactive in its merchandising strategies.