UNCHARTED TERRITORY 2006

While the current data from IRI shows supermarkets struggling to maintain share in many crucial health and beauty care and general merchandise categories, the biggest and fastest growing nonfood areas are off the charts - literally. No nonfood category in the IRI data topped $1 billion, but five not covered by IRI do: pharmacy, fuel, gift cards, magazines and greeting cards. Pharmacy at $27.6 billion far exceeded the $11.9 billion in sales posted by the IRI category leader, carbonated beverages. Fuel at $10.9 billion topped the No. 2 category, milk with $10.4 billion. Meanwhile seasonal goods showed stronger percentage growth than any of the traditional nonfood categories.

sales number is based on 4.6 billion gallons (source: Energy Analysts International) sold by supermarkets at an average price of $2.36 a gallon. With gas prices continuing to escalate in 2006, this category can only grow for the supermarkets that participate in it. FMI reported that 13.4% of new supermarkets built this year will include gas pumps and convenience stores.

PREPAID GIFT CARDS - $2.8 billion in 2006, based on the low-end of estimates of supermarket share (8% to 10%) by the Blackhawk Network subsidiary of Safeway, Pleasanton, Calif., and overall market volume ($35 billion to $90 billion) in a report issued by Packaged Facts, a division of MarketResearch.com, New York. Safeway Chief Executive Officer Steve Burd has said this is the retailer's fastest-growing category, and Blackhawk reports that this will be the first year that many other retailers will be fully engaged with prepaid gift cards. The end sales volume result may be far higher.

MAGAZINES - $1.1 billion for the 52 weeks ending June 17, according to the Strategic Planner of ACNielsen, Schaumburg, Ill. This was the first full year that ACNielsen covered magazines. Also, books are frequently considered part of the magazine category in supermarkets, and are not represented here. In terms of growth, Harrington Associates, Norwalk, Conn., reported that the overall magazine business grew 3.1% from 2004 to 2005. Magazine Publishers of America, New York, showed that supermarkets (including supercenters) represented 46.1% of magazine sales in 2005.

GREETING CARDS - $1.1 billion in 2004, the most recent period reported on by Unity Marketing, Stevens, Pa. Gifting and party ware, usually part of the greeting card assortment, added another $470 million to this business. Taking these categories together, supermarkets have about 8.5% of the sales volume in this business. Unity reported that while overall market sales volume for greeting cards were down 3.9% from 2002 to 2004, the numbers for gifting and party ware were up 19.2%.

SEASONAL - Up 14.6% from 2004 to 2005, according to the Seasonal Best Practices Study put out this year by the Educational Foundation of GMDC, Colorado Springs. Dollar volume numbers were not available. GMDC also tracked a five-year trend from 2000 to 2005, which showed a 10.1% increase. This compares to the top sales gainer category in IRI's nonfood statistics, suntan products, which registered 11.5% growth. Meanwhile, IRI reported that overall GM sales for the food channel declined 3.6% from 2004 to 2005, while HBC sales were basically flat with a 0.2% decline.

Other Nonfood Categories

Pharmacy: $27.6 billion 1

Fuel: $10.9 billion 2

Prepaid Gift Cards: $2.8 billion 3

Magazines $1.1 billion 4

Greeting Cards: $1.1 billion 5

1) 2005 sales volume, source: National Association of Chain Drug Stores.

2) 2005 sales volume, numbers derived from National Association of Convenience Stores and Energy Analysts International.

3) 2006 sales volume estimate based on information from Packaged Facts division of MarketResearch.com and Blackhawk Network subsidiary of Safeway.

4) Sales volume for 52 weeks ending June 17, 2006, source: ACNielsen Strategic Planner.

5) 2004 sales volume, source: Unity Marketing.