HARPS PLAYS UP HIGH-TICKET ITEMS TO SWEETEN MARGINS

JOEL ELSON

SPRINGDALE, Ark. -- By focusing on general-merchandise areas with higher price points and gross margins, Harps Food Stores here is hoping to boost its overall nonfood profits above its current 25% range.

The retailer is stressing variety while spotlighting new impulse departments and higher-ticket seasonal and holiday general-merchandise items. "We're focusing more attention on categories with gross margins over 40%," said Bob Yehling, general merchandise director for Harps. Of total store sales, 8.1% are done in nonfood, according to the retailer, of which general merchandise accounts for 4.8%.

During the past few months, Harps has added new 4-foot to 8-foot sets for ironing accessories, closet storage and computer and home office supplies. The retailer had seen growing demand for irons, ironing boards and ironing supplies, according to Yehling, who attributed that to "more apparel being made from cotton and other natural fibers."

Harps is replacing J-hooks that hold small gadgets cross promoted on grocery shelves with plastic panels. The 24-inch panels are attached to grocery gondolas perpendicularly to face on-coming traffic. The move is designed to garner higher impulse turns for items such as small kitchen gadgets, plasticwares, toys, baby accessories and other housewares.

Sales of these products have mushroomed 50% to 60% since the display panels were placed in the grocery aisles last September at the first group of stores, the retailer said. Priced from $1 to $1.50, the products are supplied from a 250- to 300-item inventory maintained at the chain's nonfood warehouse. Harps warehouse stores continue to display them on regular clip strips. "We buy these items as overruns and discontinued styles at several nonfood closeout shows and make 40% to 50% gross profit," Yehling said.

The items that Harps picks up at these shows include "some better-grade branded kitchen gadgets from suppliers like Ekco that normally sell at higher retails," said the retailer. The chain expects to have the new display panels implemented at 80% of its conventional stores by April 1.

Harps revamped its spring lawn and garden program with an assortment of gasoline lawn mowers priced at $108 to $239 and outdoor furniture priced as low as $3.50 for a plastic lawn chair to $189 for cast-iron table/chair sets. These displays were up at stores by January. The chain is featuring patio sets consisting of a table, umbrella and four chairs for $99. "People have more disposable income and so we're trying to get some bigger-ticket items out there in lawn and garden," Yehling said.

Competition for general merchandise "from supercenters like Lowe's remains our biggest challenge," Yehling said. Five Harps stores compete head-to-head with Wal-Mart Neighborhood Store formats. "If you aren't at or right below these retailers' lawn and garden furniture and lawn-mower pricing you just won't sell it," he declared.

At Harps stores that compete against Wal-Mart Neighborhood Stores, Yehling is beefing up the HBC assortment and selected general-merchandise areas. "Although smaller than a regular Wal-Mart, the Neighborhood Stores still carry a broader offering [than other supermarkets] in these two nonfood categories," the general merchandise director said.

With the economy on an upswing, Harps has also taken a stronger position in holiday and seasonal programs by spotlighting some higher-priced items, "to give the promotions a new look," said Yehling. A new 8-foot candle section with retails up to $9.99 and gift sets, priced at $19.96, "has been phenomenal."

Harps is scaling back some in-and-out promotions to an extent. Yehling said Halloween and Christmas produces stronger sell-through sales.

Harps takes markdowns on leftover seasonal merchandise for its 42 stores, which range in size from 20,000 square feet to 68,000 square feet. "As the sales campaigns wind down, nothing is carried over to make room for the next promotion," Yehling explained.