COMPETITION IN NONFOOD MAKES RIGHT MIX VITAL

JOEL ELSON

If you stock it, they will come.

That may be true in some sections, but supermarket retailers are finding it's a fallacious assumption in selling general merchandise in today's competitive marketplace.

They have discovered they must do much more than just stock items to get customers to come into their stores and buy.

As Joe Pat Smith, director of general merchandise at Minyard Food Stores, Coppell, Texas, said, "The consumer is basically your boss when it comes to general merchandise, and other products. They determine what you buy and how you price it. But you can buy all day long and put merchandise on the shelf, and if they don't buy it, then you don't benefit yourself."

Having the proper mix of merchandise that appeals to either a homogeneous group of shoppers, or stocking a line of products specifically targeted to a group of consumers that are defined in a demographic profile is just one merchandising approach retailers are using to move general merchandise.

Retailers polled by SN also cited other important criteria needed to get customers into their stores to buy the highly impulse-driven general merchandise categories. Creating displays and promotions that can stop shoppers in their tracks is important in selling general merchandise. Said Dave Bowne, corporate director of general merchandise for Roundy's, Pewaukee, Wis., "It's important to remember retail appeal is the whole game in general merchandise and anything you can do to delay the customer is the goal."

"As supermarkets try to understand their customers a little better and anticipate their general merchandise needs, they're realizing the need for complete departments and variety that is presented in an impactful manner," said Ron Turner, vice president of member affairs and education at the General Merchandise Distributors Council, Colorado Springs, Colo.

"Our general merchandise and seasonal presentations and product selection must 'speak' to our customers and 'grab' their attention as they shop our markets. We are committed to improved selection, timely execution and correct pricing to stimulate these events at Acme Markets," said Donald E. Styer, director of general merchandise and health and beauty care for Acme Markets, Malvern, Pa.

Especially with fierce competitive pricing from mass merchandisers, supermarkets constantly seek the right price for general merchandise within convenient formats. "The retail pricing of general merchandise is critical today because of the competition from the mass merchandisers entering the marketplace, and the higher nonfood price image supermarkets have had," noted Bob Hunt, director of general merchandise and HBC at Price Chopper Supermarkets, Schenectady, N.Y.

Convenience gives supermarkets an advantage over the mass merchandisers and allows them to make a profit in nonfood.

"What we try and do is provide our customers a convenience, without trying to beat Wal-Mart or Kmart," said Jeff Manning, director of general merchandise at Bashas' Markets, Chandler, Ariz.

"The products are there [in the store]. It seems our customers don't have a problem picking them up in spite of it being priced a little more because of the whole package that we offer.

"In the whole scheme of general merchandise at supermarkets, the mix and our customers are more important than the competition from other retailers," Manning added.

Retailers noted that a shift has taken place in general merchandise away from a demand for low-end goods to merchandise that contains quality and value.

"Consumers want upscale in their general merchandise at the supermarket," said Bill West, director of nonfood at Seaway Food Town, Maumee, Ohio. "Where they used to look first at price in general merchandise, shoppers now look at quality. They seem willing to pay a little more if it lasts a while longer."

Said GMDC's Turner, "Product quality in general merchandise seems to rank higher than price for today's supermarket consumers.

"Where we [the industry] used to get away with selling the very cheapest item, including gadgets, we now need to look at quality because consumers want value. We need to ask what is quality, and it doesn't need to be the high- or top-end. But it does have to be somewhat moderately priced and of good quality."

Hunt of Price Chopper mentioned the aging boomers as driving the demand for quality. "They are doing fine economically and they have no problem spending the money as long as they feel that they are getting the quality out of it," he said.

"They want the things they see in the media and on TV. They are more aware of products than they might have been in the past. This means we've got to have it for them and it's got to be at a fair value."

Retailers told SN that the aging population, single households, dual family incomes, interest in ethnic cooking and an increase in pet ownership have led them to change their general merchandise mix to appeal more to a specific demographic.

Programs implemented to satisfy the needs of targeted consumer groups include a clip strip toy program, smaller food storage containers, ergonomically designed gadgets, reading glass centers and pet accessories.

Said West of Seaway Food Town, "The large discounters have gone to the big packages and multipacks. These larger sizes don't always fit the needs of people with limited or fixed incomes." Therefore, Seaway has made an effort to maintain a good variety in sizes, especially in food storage containers. The expanding singles market and growing senior citizen population have exerted influence over the way some Safeway divisions have modified their toy and housewares sections, said a Safeway executive, who asked not to be identified.

Some divisions are scaling back large sizes of plasticware and coffee filters in favor of smaller selections at stores that have a heavy concentration of elderly and single customers.

Some Safeway divisions are merchandising inexpensive toys that are clip-stripped or pegged over dairy and frozen food display cabinets.

While some Safeway divisions have scaled back and gotten out of toys, "we're getting back into it and it's meeting with a lot of success. Even elderly shoppers are picking toys up for their grandchildren," said the company source.

Some divisions have had the toy program in place for about a year. "The space was previously unused and now generates several hundred thousands of dollars in annual toy sales for some divisions," said the executive.

Officials at Safeway, based in Oakland, Calif., declined to comment directly about the programs.

As alternative retailing formats have sprung up along Acme Markets' East Coast marketing areas, the Pennsylvania chain has become more aggressive in meeting its customers' general merchandise needs, said Styer.

"Supermarkets have experienced a sales erosion that has meant we must try harder to sell our entire product mix than at any time in the past," he added.

To that end the chain has carved out a goal for this year of increasing its nonfood sales per customer. In February, Acme began to encourage its employees to help customers find items in the store more easily and suggest other products that complement selections.

They were also reminded of the importance of creating displays with complementary tie-in items, of building seasonal displays with appropriate signs, maintaining point-of-purchase and register side displays and of carefully ordering advertised specials.

As Acme plans and executes its general merchandise programs it does so by targeting its broad customer base, and placing nonfood assortments that pull traffic counts higher.

"Our expectations for the nonfood categories are to use new and different approaches to grow the business. We must use category management, partnerships with the vendor community and all of the scan information available to assist in this effort," said Styer.

At Price Chopper, aging boomers and parents with young children are expected to have the most influence on gadgets and toys, according to Hunt.

Price Chopper is expanding its kitchen gadgets with upscale choices and boosting its toy variety to meet the demand from this shopping audience.

As the retailer revamps its gadget program with upgraded assortments, it is adding newer colors and designs with European styling, said Hunt.

Parents want more variety in supermarket toys and games, which offers good impulse sales, he said.

Bashas' Markets is reaching out to its customer base with updated lighting centers. It added 30 new light bulb stockkeeping units. "We started rolling in the kinds of bulbs used in new housing. In lighting, people seem to be looking for variety," Manning said.

Manufacturer input helped Bashas' shape its lighting variety. "They [manufacturers] helped identify the best lighting products we could carry and that our customers wanted for their homes," the executive said.

The demographic factors with the greatest influence in changing the general merchandise mix at Bashas' "are baby boomers," said Manning. "They are usually two-income families that demand convenience. That's the reason we're expanding plasticware, gadgets, light bulbs, and stepping up promotions in these categories."

Bashas' weekly food ads reflect its commitment to general merchandise. It uses four-page tabloid inserts with offers that include buy-one-get-one-free deals on such items as L'eggs stockings, Phillips light bulbs, discounted Energizer batteries, automotive oil, Kodak film, sell-through videos.

The aging population and the expanding singles market have motivated Seaway Food Town to stock a cross section of sizes suited to a diverse customer base, and "not to go to large sizes only," said West.

Also, the increasing popularity of ethnic foods has shaped cookware trends, said West.

He said a growing interest in lighter meals, stir-fry cooking and Mexican foods has spurred new product entries in cookware at moderate price points, including woks, fajita and paella pans.

"We've added an Oriental cookware line and are about to introduce Mexican cookery. In certain areas of grocery we've put in expanded Latino foods, where we'll also display the Mexican cookware at 10 stores where the demographics dictate."

At Hannaford Bros., "We're talking to our consumers all the time, looking at sales figures and visiting different parts of the country to look at what's new and going on in general merchandise," asserted Ken Johnson, vice president of nonfood merchandising at the Scarborough, Maine-based chain.

He said Hannaford is "starting to get deeper into micromanaging in general merchandise and is looking at the trade area for every store in determining what products they should have."

The aging of America and the popularity of pet ownership figure prominently in the general merchandise strategy of Minyard Food Stores.

The chain is setting up reading glass centers at all pharmacy stores and is expanding display space for pet accessories and supplies, said Smith.

"With pet ownership at astronomical heights, we don't want to risk losing our pet accessories business," Smith added.