NOT JUST KIDS' GAMES

WILLIAM SMYTH

With baby-product sales booming in supermarkets nationwide, retailers are trying to make it easier for new and expectant mothers to shop for their baby care needs by giving children a place to play.

Baby-related sales in supermarkets are growing and, according to Information Resources Inc., Chicago, for the 52-week period ended July 18, 1999, many top brands saw increases in the total food, drug and mass-merchant channels. Powders (up 1% to $89 million), baby ointments/creams (up 6.1% to $71 million), baby soaps (up 13% to $67 million), petroleum jelly (up 3.4% to $65 million), baby oils (up 1.4% to $57 million) and baby lotions (up 7.6% to $45 million) all saw increases in sales during this past year. Towelettes were up 11.9%, bringing in $727 million for the industry. Diaper sales were down, but industry insiders have pointed out that consumers predominately buy them in bulk at mass-merchant outlets.

Baby products continue to be a prosperous category for retailers, and brand sales continue to rise for major companies. For Johnson & Johnson, New Brunswick, N.J., products across the board are moving off supermarket shelves. J&J's regular baby-soap line and head-to-toe baby-soap line witnessed 38% and 37% increases, respectively, bringing in a combined $26.6 million. Johnson's No More Tears line was up 16% to $7.6 million in sales.

However, the company saw the biggest increases in its baby-lotion and -oil categories, with lotion sales increasing 26% to $14.2 million (the Baby Baby line was up 14.7% to $10.3 million) and oil sales climbing 51.6% to $23 million.

The baby-powder category wasn't as successful as the others. Johnson's was the top-selling brand, with a 35% increase to $27 million, but Johnson's Baby Baby powder line experienced a 19.7% decrease.

A category that seems to be doing well is baby formula. Powdered formula was up 11.6% and generated a whopping $1.4 billion in sales for the industry.; ready-to-drink was up 5% to $520 million; and liquid-concentrate sales dropped 5.1% to $966 million.

In the powder category, Enfamil was the leader in 1999 with $607 million, a 25.9% increase over the prior year. Other brands that prospered included Prosobee (up 18.5% to $117 million), Carnation Follow-Up (up 12.1% to $73 million), Nutramigen (up 16.6% to $43 million), and Lactofree (up 27.8% to $45 million). However, the most notable increases in the RTD category were in the private-label sector, which saw sales jump 24.4% to $20 million; Enfamil Nutramigen, which experienced an 18.1% increase to $14 million; and Similac, the category leader, with a 4.7% increase in sales to $138 million.

Although sales have picked up, in order to do battle with the mass merchants and drug-store chains, retailers have been developing baby destination centers to draw young parents to their stores. Destination centers are areas or aisle sections that solely feature baby products, confining them to make it easier for new and expectant parents to shop. By creating these centers, retailers strive to create shopper loyalty.

One chain that is presenting the destination concept is H.E. Butt Grocery Co., San Antonio. According to an administrator at H-E-B, all the products are located together in an aisle or section. From formula, diapers, ointments and creams to shampoos, soaps and lotions, customers can find their entire baby needs in one designated place.

One marketing analyst told SN he believes supermarket baby sales are indeed increasing with the help of baby destination centers, and loyalty is also growing. "I think it's being driven by the stores. The destination centers are targeting young mothers that can fill their entire baskets and build store loyalty," said Don Stuart, a partner at Cannondale Associates, a marketing and sales management and consulting firm in Wilton, Conn. "It's attracting young families to establish a loyal relationship.

"What you're now seeing is a lot of baby clubs and baby-fitting stations funded by manufacturers. Retailers are also coming up with baby aisles that cover everything from formula and toys to lotions and clothes," he added. Stuart also noted that companies like Wegmans Food Markets, Rochester, N.Y., and Big Y Foods, Springfield, Mass., are just some of the retailers who have become involved with baby destination areas. Those chains could not be reached for comment.

One chain looking into designing a baby destination center is P&C Food Markets, a Syracuse, N.Y.-based division of Penn Traffic Co. "We've made the first step and it is still in the paperwork stage. We haven't gone 'full bore' with it," said Kathy Meyers, buyer. "We've talked about it and we haven't yet been ready to form an opinion on whether or not to go through with it."

According to Meyers, for the plans to begin, stockkeeping units have to be lined up on the grocery end and category management has to be reviewed with the right mix of items and new items that come out. "A baby destination center could be beneficial for our customers by moving the general baby merchandise into the aisle or center with the other products."

As baby destination centers are on the minds of retailers, so are baby and kid play areas, or "baby/kid's clubs," which create a safe zone for parents to leave their children for any given amount of time while they shop for their groceries.

Minyard Food Stores, Coppell, Texas, is in the beginning stages of creating such an area. According to Ron McDearmon, senior vice president, Minyard put a Kid's World into one unit in the spring of 1999 and the results have been fantastic. So good that Minyard is opening up another unit some time during the fall of next year.

"In the first unit, we average 60 children a day and we feel it's doing real well," said McDearmon. "So far we've felt good about it and we've received positive feedback from consumers who shop at the store."

The Kid's World area is approximately 24 feet by 20 feet, which, according to McDearmon, comes out to roughly 500 square feet. The area is located right near the front doors of the store and is designed for children aged 3 to 7. Five trained clerks handle the children, one working each shift, and children are able to engage in a variety of activities while they wait for their parents.

"There are several games that the children can play. We show movies and there is a play area where kids can climb into a truck, a place with netting that is safety-oriented," said McDearmon. "At the end of their stay, we give them a bag with toys. It's our way of thanking them for coming to Kid's World. It's like at McDonald's when you buy a happy meal and get a toy. We run that toy theory with Kid's World."

Conversely, Dahl's Food Markets, Des Moines, Iowa, doesn't want to go the destination area or baby club way. "We've seen them and there are some pros and cons. We've definitely looked at them," said Ross Nixon, vice president of marketing at Dahl's. "I don't think we're going to go in that direction."

According to Nixon, a few years ago Dahl's had a "kiddie corner" program set up in its stores where parents could bring their children to color and play while they shopped. "It was like having a baby-sitting staff and it was too much of a liability," added Nixon.

As for the baby care products set up in a destination area, Dahl's has no set plans for that anytime soon either. "It really would depend on the physical plan of the store and there are no prototypes for that kind of project," noted Nixon. "The products are arranged in a standard aisle."