STORES READY TO TACKLE PRICING IN QUARTER

JOEL ELSON

Supermarket retailers and wholesalers continue to face competitive pricing and an onslaught of new products in health and beauty care as they begin the first quarter of the new year.

Nonfood executives polled by SN said they intend to stay competitive by adopting more aggressive pricing policies that will enable them to contend with the fierce market pressures from other retailing in HBC merchandising.

"A continuing priority will be to make sure our advertised specials are at very competitive prices. We'll be checking our competitors' HBC pricing and their ads every week. We want to make sure we're offering our customers national brands as good or better (than our competitors) on an advertised retail," stated Jan Winn, director of HBC and general merchandise at Big Y Foods, Springfield, Mass.

Retailers and wholesalers also said they are meeting the challenge of the new year by fine-tuning their HBC mix, especially for any new switches from prescription to over-the-counter, by focusing on more profitable sections like dental, vitamins and first aid.

"Our biggest challenge will be to make sure the product mix is correct for individual stores. We're training our in-house rack service staffers who call on the retailers to make certain the HBC mix is fine-tuned," said George Satterwhite, director of nonfood for Affiliated Foods, Amarillo, Texas.

Gary Schloss, vice president of general merchandise at Carr's Quality Centers, Anchorage, Alaska, expressed his frustration in buying into the many new products that flood the market each year.

The following is what supermarket and wholesaler executives identified as their main objectives in HBC for the first part of the new year:

Rick Rogers

nonfood, direct-to-store buyer

Basics Food Centers

Randallstown, Md.

I will target keeping HBC variety strong by focusing on new category items, taking advantage of advertising opportunities and the uniqueness of new products. We'll try to push more profitable categories like dental with the upscale toothbrushes and baking soda products, and will push the private-label segment harder.

We'll take advantage of first aid and expand vitamins, which is growing. People are more interested in preventive measures and increasingly look for ways to help themselves and improve their health and, therefore, are coming to the vitamin category.

We're pricing HBC fair and reasonably. It has helped the department's business pick up. If shoppers feel they're getting a fair price, they won't go out of the store to a mass merchant.

Jerry Willts

director, general merchandise, HBC

Certified Grocers Midwest

Hodgkins, Ill.

As we move into the new year we've got to continue advertising and merchandising HBC aggressively, particularly in the fast-moving categories of cough and cold, analgesics and oral care.

Market pressures from other classes of trade will continue to be fierce, and consumers are looking especially in HBC for lower retail prices. You've got to be competitive and promote within a category to show customers that supermarkets are still a major player in HBC.

The supermarket industry must get back to basics by constantly promoting the basic categories, and not go too far out.

You need shippers for in-and-outs, but many carry too many new items as an introductory to the [product or category] area. It's not that it shouldn't be done, but promotional shippers is an area you've got to start scrutinizing and not letting them take over your basic business or the department.

A shipper for a promotional new item trial size doesn't offer shoppers that much savings in that smaller size. It'd be better to set up a mass display of new HBC items for effective presentations.

Gary Schloss

VP, general merchandise

Carr's Quality Centers

Anchorage, Alaska

The real challenge will be in terms of space management. Every time you bring in something new something else has to taken away.

It is sometimes overwhelming the way these HBC companies come out with new items. They say you have to have everything [in the new product line]. They are putting their money into it. If a supplier is spending millions on national ads, you as a retailer must be there with the item.

But you can go nuts in reviewing new product presentations. In shampoo alone there are umpteen flavors.

Sometimes you feel like saying enough is enough. We can't possibly carry every single flavor a manufacturer has. In cough and cold with the new liquid caps and other new items we added 50 to 60 new SKUs last September and October, and I'm sure more are coming on the market this year.

Although we use computerized space management in planning our allocations at HBC, there are still many new items coming and HBC department sets aren't getting any larger. It's a matter of fitting within that section and weeding out slower sellers to make room for the new entries.

On the other hand, with all the major national brand advertising you've also got to have it on your shelf prior to when the national ads start breaking. We'll be making sure all new HBC items are available to us and put on the shelf in a timely manner.

Jan Winn

director, HBC, general merchandise

Big Y Foods

Springfield, Mass.

A continuing priority will be to make sure our advertised specials are at very competitive prices. We'll be checking our competitors' HBC pricing and their ads every week. We want to make sure we're offering our customers national brands as good or better (than our competitors) on an advertised retail.

Offering our customers good values in HBC is another priority. We carry TopCare private-label HBC. We keep adding new items as Topco brings them out. We pick them right up to be able to offer our customers a good value and a wider choice of products.

We're carrying Topco's new TC cosmetics, a new fashion oriented 84-item cosmetics line that is positioned to match Cover Girl. We started testing it at one store last September and had some reorders, so we know it's selling. As we move ahead this month, we'll be looking at moving that line into some other stores.

With our Topco private label HBC we feel we have a distinctive advantage in that we can really get competitive with retails and offer customers good variety at a good value. TC cosmetics offer shoppers $1 savings off the national brands.

It's a cosmetic assortment that we as a Topco member offer at Big Y exclusively, and that none of our competitors carry. Topco has a high recognition value and a good reputation for quality, which is a decided advantage.

George Satterwhite

director, nonfood

Affiliated Foods

Amarillo, Texas

Moving into the new year, we want our retailers to have their product assortments reflect the newest introductions into the market. A good example is in cough and cold, where the new entries have been phenomenal.

Our biggest challenge will be to make sure the product mix is correct for individual stores. We're training our in-house rack-service staffers who call on the retailers to make certain the HBC mix is fine-tuned.

We have some stores with a product mix that needs updating, and we have to make sure those stores have the correct items at the correct prices to remain competitive in their trading areas.

Another goal will be improving communications with our retailers. We'll use sales bulletins and computer messages to immediately update something that we find is hot. This could be in the form of electronic mail between the warehouse and stores to communicate quickly and draw their attention because they are inundated with paper.

This also could be used to transmit data in sales campaigns and HBC pricing comparison information, based on checking HBC retails at competitors. This is something we are working toward doing. It would allow our retailers to compete more effectively against other classes of trade, including the large drug chains.

Richard Sizemore

nonfood merchandiser

Pay Less Supermarkets

Anderson, Ind.

Into the new year there will probably be an increase in the number of over-the-counter switches, and quite a few new items, which seems to be what drives the HBC category. It's important to get the new items up on the shelf as quickly as possible, when they become available.

But finding a spot for them is always a challenge. We're using scanning data to pinpoint those items with slow movement, and replacing them with the new products.

As the new over-the-counter items make their way into the HBC department we try to enlarge those categories, if at all possible. Other than that you must weed out the poor performers to create the room for the newer items.

We will promote HBC more aggressively. Our customers will know we have a good variety in HBC, and that we have the promotions and new items they want.

We'll bring the new items into the system either as trial sizes or promotions. To make a better impact we try to introduce trial sizes or use shipper displays, making sure they are in a choice location with signs and at the right price.