STUFFED ---- AND GROWING

MARYELLEN LO BOSCO

The often unwieldy baby-food section is in need of a category management lullaby.While some retailers have launched aggressive efforts to handle the growing number of stockkeeping units, many are in need of a structured management program that involves frequent introductions and deletions.

Retailers should analyze the category more often and update it as fast as they can, said John Cordero, vice president of grocery buying at K.V. Mart, Carson, Calif.

"Both retailers and manufacturers drag their feet when it comes to updating the section," Cordero said. "We tend to rely on staple items, but new introductions bring life into the category."

Terry Panther, category manager and schematics for Tidyman's, Greenacres, Wash., supplied by Supervalu, Minneapolis, noted that the wholesaler sometimes is not in synch with the stores about what they can actually carry.

"That's why we have to look at our own sections and manage our categories better. We have to delete items on our own, because new items keep coming," Panther noted.

Tidyman's is now on Supervalu's category management system, which does help retailers in ordering and deciding what they should carry, Panther added.

But a Midwestern buyer had a different opinion, saying category management may not be the answer.

"You can get into category management on the surface level or spend a lot of effort digging in and spending a lot of time. I really wonder, though, if all the time you spend [on any category] pays back in terms of growth within the category," said the buyer, who did not want to be identified.

Some retailers SN polled mentioned that Gerber Products, Fremont, Mich., the market leader, has recently changed the way it sells baby food, which has created some short-term confusion.

The Midwestern buyer noted, "Until recently, Gerber had its own sales force and they were very active in helping retailers decide what to carry. [Now] we will rely heavily on the broker, as we did on the salesperson."

Mike Lawton, senior vice president and operating officer for Gerber, said that the company generally received some "very positive feedback" about the new broker relationships and that it intends to provide accounts with even better category management under the new system.

More help with category management may be on the way from Beech-Nut, according to Ed Peters, director of sales planning at the St. Louis-based company.

He told SN that Beech-Nut is looking at different ways that "moms feed their babies," as well as ways in which the baby-food section could be made easier to shop.

"Most definitely, it would be a solution for the category," he continued, but would not provide any further details, except to say that something concrete will be available to retailers in about six months.

Heinz U.S.A., Pittsburgh, currently helps retailers with category management, according to Deb Magness, spokeswoman for the company. The Heinz optimization model identifies for retailers the SKUs they should maintain and discontinue, based on local data.

Baby food occupies anywhere from 10 to 20 feet in the aisle in most stores and is usually merchandised with formula and baby needs, near diapers and wipes.

"We have roughly 30 feet, with 10 feet of that being formula," said Art Strickland, grocery manager at a ShopRite in Bethlehem, Pa. The store carries Gerber, Beech-Nut and Earth's Best.

"We have to constantly rearrange and cut down allocations, but somehow we manage to do it," said Strickland, explaining how he manages a great number of SKUs.

Most retailers have not added space, but they are experimenting with the space that they do have.

G&R Felpausch Co., Hastings, Mich., is currently trying two different baby-food sets, said Mort McKillop, director of procurement. Some sets use trays of baby food stacked one high, while other sections are hand stacked. Facings will vary, said McKillop, according to space availability.

While there are no plans to augment the jarred-food department, which currently runs from 8 to 12 feet, Felpausch is moving toward a store-within-a-store concept for baby needs, McKillop said. An entire section of food and formula, diapers and wipes and baby needs may occupy as much as two 56-foot gondolas in some stores, McKillop explained. Pathmark Stores, Woodbridge, N.J., allocates 16 to 20 feet to baby food, depending on store size and demographics, according to Rich Savner, spokesman for the chain.

Pathmark carries Gerber as well as Earth's Best. Savner says SKU management is not a problem, and the category is monitored like all others, through testing and constant re-evaluation.

Cordero of K.V. Mart noted that the number of SKUs has increased in the approximately 16 feet of space devoted to baby food in his stores, since the retailer previously used dump bins and has gone to case stacking.

"We added a few more shelves and ended up with more linear footage last year," he said.

The Midwestern buyer who supplies a number of independents noted that baby-food sections vary in size, from 20 linear feet to 36 linear feet. He carries only Gerber. The number of SKUs stocked by individual stores varies, from 200 to 250.

"We carry pretty much a full line and try not to have an excess," he said. "We are at a saturation point with items, and we are not interested in bringing any more in without some of them going out."

The buyer determines what to carry based on item-ranking reports. "We go up from the bottom and look at it from the standpoint of, 'Are there others like it? Is it unique?' " he explained.

According to the buyer, many stores that had wire bins or baskets for the jarred food are going to shelving. "It seems labor intensive, but it makes a better presentation," he noted.

At Tidyman's, baby food is given about 16 feet, although a few stores have as much as 20 feet of jarred victuals.

Panther's stores carry Gerber and Heinz, although he expects the Heinz items to eventually be discontinued. Currently, the stores carry 191 Gerber SKUs and 30 Heinz SKUs.

Tidyman's is also moving away from bins and relying more on case stocking or hand stacking. Panther noted that bins are easier and faster to stock, but the appearance is sloppier. Items are harder to find, unless there is a sign on the bin.

Currently, about half the stores are still using bins. Panther also noted that a category review is coming up in about a month, and the retailer may delete some items that are not moving.

"The section is becoming quite crowded," he said.

According to Peters of Beech-Nut, most supermarkets carry about 250 baby-food SKUs, regardless of store size.

He explained that facings will expand or contract according to the size of the sections, with larger sections stocking greater amounts of fast-moving items.

"In Manhattan stores, they may have 12 to 16 feet and will cut back on the SKUs, but they will still have somewhere between 180 and 200 SKUs, which is a very good assortment," he said.

Retailers agreed that baby food was not a very profitable category, although Panther noted that movement was up by 11,000 units in his stores over the previous year.

Chains vary in how much they promote the category.

Strickland at ShopRite said that he takes advantage of pallet programs whenever he can, which provides higher gross margins.

"We promote quite extensively. Right now we have a four-week locked-in savings," he said. Strickland noted that one of the three major manufacturers is almost always running a sale.

Cordero said that vendors offer promotions once or twice a quarter. The Midwestern buyer said baby food "is fairly active in our roto program, and we promote it several times a year."

McKillop promotes baby food about once a quarter. Gerber is doing a good job promoting its new organics line, he said, although manufacturers are not doing as much as they should by way of offering promotions.

Consumers' deepening awareness and concern about what's in the baby-food jar has prodded all three manufacturers to pay closer attention to this issue.

Beech-Nut recently repositioned its jarred food and cereal line, with new packaging and a slight change in name, to "Beech-Nut Naturals." According to Beth Rogers, vice president of marketing, the rollout will be completed this summer.

Beech-Nut has not changed its formulations, explained Rogers, but is putting more emphasis on the fact that the company makes "simple and wholesome foods with no unnecessary additives."

The repositioning -- which makes "natural" more "top of mind" -- was the result of consumer research the company did nationally last summer, in focus groups and claims tests.

As reported in SN, Gerber completed its rollout of a new organics line, Tender Harvest, early this year. It is doing very well, according to the retailers SN spoke with. All the stores that carry Gerber also carry the organics line.

Heinz has just added six beginner foods and four whole-grain snack bars to its Earth's Best organic baby-food line, said Magness. The items were first introduced in the natural-food channel, but they will be rolled out to supermarkets shortly.

According to Magness, the market leader's foray into organics has had a positive effect on the whole organic baby-food category, doubling it to 3% of total baby-food sales.

"In accounts that offer both Earth's Best and Tender Harvest, we've seen a positive, complementary relationship," she said.

Gerber's Lawton said that the organics line has "totally lived up to expectation" and noted that the company has already achieved broad distribution.

Heinz has also responded to heightened consumer awareness of ingredients by introducing a new mainstream baby-food line. Trademarked as "Simple and Delicious," the line is touted as using whole fruits and vegetables with no modified food starches, preservatives or salt.

Magness said the new line is not significantly different from the Heinz brand. What Simple and Delicious really amounts to is a repositioning strategy. Currently, the new products do not overlap with the Heinz label.