TAKING CHARGE 2005

Dan Alaimo

Through a combination of new technologies and more aggressive merchandising strategies, supermarkets expect a reinvigorated battery category in the months ahead.

With mostly positive experiences selling higher-end batteries and rechargeables, retailers polled during the recent GMDC General Merchandise Conference in Phoenix said they were looking forward to the upcoming introduction of Panasonic's Oxyride Extreme Power battery.

Meanwhile, many are acting on last year's study from the GMDC Educational Foundation, "Merchandising for Success," which said they could increase sales significantly by increasing the number of locations where batteries are sold.

"It is still an increasing category for us," said Dan Spears, HBC/nonfood director, Ingles Markets, Asheville, N.C. "Year after year, battery sales continue to grow."

While batteries are a high-impulse category, supermarkets are competing with multiple channels, notably mass, drug, dollar and home supply stores. Meanwhile, the improving battery technology itself is a two-edged sword: The batteries command a premium price and are in demand by consumers with high-drain devices like digital cameras, but the batteries last longer, with less frequency of purchase.

Numbers from the Strategic Planner of ACNielsen, Schaumburg, Ill., showed dollar sales for the 52 weeks ending April 16 for supermarkets down 2.2%, an improvement over the previous year's negative 8%. Total battery sales in supermarkets for the period were over $566 million.

The high-drain battery market has so far been dominated by Duracell of Gillette Co., Boston, and Energizer Holdings, St. Louis. Panasonic Corp. of North America, Secaucus, N.J., is about to join the party with Oxyride Extreme Power, a new type of battery designed for devices like digital cameras, and priced at $3.99 for four, less than the other company's premium offerings and about the same as regular alkalines.

Many buyers were just learning the details about the new battery at last month's GMDC conference.

"We certainly will take a look at it and see what the potential is for those batteries," said Spears of Ingles.

"If the advertising happens, then it will be something that we'll look at," said Russ Servais, corporate category manager, wholesale general merchandise, Supervalu, Eden Prairie, Minn. "But we are currently carrying the Energizer lithium, which is even a longer-lasting battery."

Consumers were not convinced of the cost effectiveness of the Energizer E2 and Duracell Ultra batteries, said Al Jones, senior vice president, procurement and marketing, Imperial Distributors, Auburn, Maine. "I suspect that the E2s and the Ultras weren't significantly better, and if they were, nobody believed it, so now here comes another attempt with some different technology to do the same thing. Whether or not that goes over, well, the product hasn't even launched yet," he said.

Not all executives agreed with Jones' assessment. "The fastest-growing part of the battery category is the higher-performance batteries for use in digital cameras," said Nate Acheson, GM buyer/merchandiser, Rosauers Supermarkets, Spokane, Wash.

Consumers will go for the new batteries, said Gordon Thompson, district manager, Rosauers. "Once the advertising gets out there, they are going to understand that they are going to save money on batteries because they are going to last longer," he said.

"The trend is definitely to the higher-end battery," said Charles Yahn, vice president, merchandising, Associated Wholesalers Inc., York, Pa. "The consumer is still a little price resistant, but they seem to be accepting that. Once they buy a higher-end battery and use it and get good service out of it, then they become a repeat buyer."

With the aging of the population, hearing aid batteries represent another avenue of growth, said Larry Ishii, general manager, GM/HBC, Unified Western Grocers, Commerce, Calif. "The potential for growth between existing products and new products is going to continue to be an opportunity."

Lower-priced rechargeable batteries that charge faster also are having an impact on the category, said David Lowe, senior GM/ HBC merchandise manager, C&S Wholesale Grocers, Keene, N.H. "We will continue to see new items and innovations, especially in high-drain batteries, and less of the cheaper batteries. I don't think that is going to be a market any more. I think everybody is moving up with the quality of batteries, because they buy them for one reason: They want them to last," he said.

"There is more of a move into the higher-tech, stronger, longer-life batteries, so there is a segmentation: the commodities vs. the high-end use," said Jay Goble, vice president, merchandising, Valu Merchandisers Co., Kansas City, Kan. "We will ultimately choose a strategic relationship with one or two players at the high end."

Lower-priced rechargeables, regular alkalines and dollar batteries are all doing well, said a nonfood executive with an east Texas retailer.

The retailer has displays on all of its checkstands. "We keep a dollar battery at the front end, because if you look at the sales trends of the dollar stores, the No. 1 item in almost every store is batteries. So we have chosen to let our customer know that we have one just as good at the same price," he said.

Last year, as part of its "Merchandising for Success" study, the GMDC Educational Foundation recommended that retailers expand their displays of batteries to more locations, taking advantage of impulse purchases. The follow-through has been mixed.

"It happens with the better retailers who care about their business. With many of the smaller independents, it's not happening," said Lowe of C&S.

"The independent grocers typically are going to merchandise batteries in fewer locations," said Unified's Ishii. "Space is an issue. Security is another issue."

While batteries is a mature category with limited opportunity for percentage increases, "it shows growth when you promote it, market it and give attention to it," said AWI's Yahn. "There is still an awful lot of use out there for batteries."

Mass merchants and drug stores are more aggressive about merchandising batteries throughout the retail environment, noted Goble of Valu Merchandisers. "Conventional supermarkets are behind that merchandising curve and therefore, on a per-storefront basis, there are a lot of upward possibilities," he said.

"Everybody buys into the concept that what drives battery sales is multiple locations, but it still comes down to the execution at the store level to get that done," said Lanny Hoffmeyer, corporate director, wholesale general merchandise, Supervalu.

"We have retailers doing very well at that, and we still have some retailers with some opportunities. It's not a concept that they need to be sold on; they understand it. It's just a matter of executing it," he said.

"People who have seen the GMDC study understand it, believe it and have started to take action on it, particularly in trying to find multiple display points around the store," added Jones of Imperial.