PILE IT WIDE

JOEL ELSON / Additional reporting: DAN ALAIMO

WEST VALLEY CITY, Utah -- Harmons piles nonfood high and exceptionally wide in a bid to position the category as a major store attraction.

The nine-store independent's general merchandise and health and beauty care offerings are as broad as any supermarket retailer's. Its seasonal presentations are exemplary for supermarkets and its aggressive price points frequently lead other classes of trade, observers said.

The strategy is working, according to executives with the chain, with sales continuing to grow in the face of competition from giants such as Wal-Mart, Blockbuster and Home Depot.

For example, when a Wal-Mart opened opposite Harmons' Bennion, Utah, store seven years ago, Jim McCaleb, nonfood merchandiser/buyer, expected to lose nonfood sales. "But instead our nonfood and overall store sales actually went up," he recalled. "While Wal-Mart runs some hot prices, we run some awful hot prices too," he said. Other nonfood competitors include discount drug chains and supermarket retailers Fred Meyer Inc., Smith's Food & Drug Centers and Albertson's.

"We want to keep sales in our stores instead of seeing our customers go to the mass merchandisers or discounters," said McCaleb. Harmons' promotional strategy is based on extremely large quantities with retails pegged at or slightly above cost, he said.

To drive higher nonfood sales and customer traffic, Harmons often cuts margins on featured items "down to the bare bones -- under cost, or to a 3% or 4% margin," he added. Nonfood promotions typically involve massive displays of products ranging from outdoor resin chairs and picnic coolers to kitchen gadgets, shampoo and diapers.

"When we decide on a promotion we look at what sells, and not so much on profitability or gross dollars," added McCaleb.

Harmons' strategy was recently confirmed in the video category, noted Wanda Munsell, video specialist. When a Blockbuster opened in the same shopping center as the chain's Cougar, Utah, store, "it didn't even faze us. When our customers are in here for groceries, it is just so much more convenient to come over here and pick up a movie than to go someplace else," she said.

Other retailers don't come close to Harmons' nonfood promotions in terms of size and pricing, said Mike Lunak, nonfood sales manager in Fleming's Salt Lake City grocery warehouse. The product just blows out of Harmons' stores, he said.

"None seem to do it quite like Harmons. Albertson's doesn't even come close, although Smith's has pretty decent promotional aisles," Lunak said.

Few 50- to 60-store supermarket chains buy the same quantities as Harmons, he noted. "Even larger chains with smaller stores can't do the same promotional business in nonfood."

Many of Harmons' nonfood specials are highlighted in its double-wide 80-foot-long mid-store promotional aisles. Speed tables, pallet displays or shippers are positioned in the middle, said McCaleb.

Harmons has long taken a leadership stance with such promotional aisles that reinforce its image for nonfood variety. Other supermarket chains have put in dedicated promotion areas for nonfood in the past few years. But "Harmons always had promotional aisles to create a high level of excitement and overall store traffic," said McCaleb.

Stores range in total size from 69,000 to 83,000 square feet, averaging nearly 75,000 square feet, he said. Harmons carries some 35,000 nonfood products, said McCaleb. It devotes about 25% of total selling space to nonfood.

Harmons' general merchandise and health and beauty care sales account for 28% of total store sales, said Fleming's Lunak. For the wholesaler, this equates to about $8 million in annual nonfood volume that comes from Fleming's general merchandise division in Sacramento, Calif., he said.

The large nonfood displays form lasting impressions with shoppers, said McCaleb. "They create a dramatic impact compared to a typical 4-foot endcap. This grabs the customers' attention and they usually end up buying something," he said.

Harmons' strategy in seasonal promotions is to buy full-truckload and container quantities, such as imported lawn chairs for spring and summer. These are purchased either direct or through its wholesaler.

Weekly food circulars feature about 20 nonfood items at eye-catching prices. One of the featured items in March circulars was a 60-quart Rubbermaid cooler with wheels priced at $24.99. Harmons made 5% on the item while other chains in the area sold it for $49.99, said McCaleb.

"We purchased the coolers from the manufacturer's close-out list late last year and sat on them until the weather broke this spring. We had 120 per store and they blew off the shelf," he said.

In November, Harmons plans a two-week 50%-off Good Cooks kitchen gadget sale featuring the top 25 gadgets for that time of year. "We will negotiate with the supplier on a promotion price, bring in 50 cardboard shippers per store and run them back-to-back along the promotion aisle," McCaleb explained.

But before the promotion ends, "typically the shippers will have to be replenished as products sell down," he said.

At about the same time, Harmons will also promote Pyrex and other bakeware, as well as kitchen-countertop appliances priced up to $29. All will be merchandised on promotion-aisle gondolas.

Last year each store sold 288 Rival crock pots at $9.99 for a 3.5-quart size that usually sells for $16, and another style with a removable insert for $15.99, discounted from $29.

In housewares, Harmons has had better results with toasters, juicers, coffee makers, electric knives and bread makers priced under $10, said McCaleb. "Grocery stores do better keeping small kitchen appliance retails around $9.99. Consumers think of other kinds of stores if they want higher priced appliances," he noted.

Harmons targets its housewares pricing to a popular price range, with Good Cooks gadgets priced from 59 cents to $5.99, the vendor's Ultimate upscale line priced up to $10, and a cookware assortment at between $3.99 and $12.49. Gadgets, glassware and bakeware are displayed in 36 to 40 feet, and plasticware is in 36 feet of shelf space.

Harmons also will convert its glassware sets from shrink-wrapped four-packs to a bulk presentation, said McCaleb. The current half of a 2-foot presentation will be enlarged to a full 4 feet presentation, with plans eventually to expand it to 8 feet.

The mix will be expanded from the current assorted Libby glassware with additional Anchor Hocking selections. Glassware pricing in the new loose display is also being cut from the $6 to $10 range for the shrink-wrapped products to 99 cents for single glasses.

Although McCaleb said $6 to $10 glassware may sell well in other retailing formats, that price point may be too high for the food channel, and "99 cents or under is better suited for grocery stores."

In June, Harmons plans to enlarge its 12- to 16-foot lighting departments to 20 feet. "There's no money in soft white packs. The larger section will allow us to expand into more specialty bulbs and make up for the losses in handling soft white four-packs," said McCaleb.

There is a lot of new home construction in Utah, using new and different lighting, he noted. "The larger lighting sets will give customers a wider variety of more profitable specialty bulbs," he said.

Because of growing competition from Eagle Hardware stores and Home Depot, Harmons has had to gradually reduce its hardware sets to 40-foot sections. Looking ahead, McCaleb said any further hardware-department downsizing would open more room for housewares. "We'll eventually convert more of this hardware space to cookware and plasticware," he said.

The HBC department includes a 28-foot run of cosmetics, 20 feet of shaving items, 12 feet of analgesics, 16 feet of vitamins, 12 feet of dietary supplements, 20 feet of cough and cold remedies, 40 feet of body care products, 40 feet of shampoo, 8 feet of electric hair dryers and curlers, 12 feet of hair care accessories, 4 feet of condoms, 28 feet of feminine hygiene and 32 feet of dental care.

Hot HBC features have included 10-pallet displays of 15-ounce White Rain Classic shampoos in each store priced at 54 cents with an in-ad coupon, an item Harmons sells everyday for $1.39.

To supplement the volume from its Gibson greeting card departments, which range from 120 to 160 linear feet, Harmons has started to cross merchandise 4-foot in-line cutouts of baby cards in the baby aisle, and pet greeting cards in the pet care area.

To enhance one-stop shopping, the stores have a Harmons Boutique endcap containing small giftables priced from $15 to $20. Harmons will install its fifth one-hour photo minilab in its new Orem store. The minilabs are arranged near camera counters, which carry picture frames, film and photo accessories.

Because one-hour photoprocessing competition has heated up in the Salt Lake City market, Harmons now prices the fast film-developing service at $5.99 for 4-inch prints everyday.

The new Orem store will test shrink-wrapped matted art prints priced about $10. These will be positioned in the 28-foot school and home office department. Harmons has done well with framed art, and moved $34,000 in products during a two-week promotion after Christmas, said McCaleb.

Harmons offers 20 feet of portable stereos and audio and video accessories. Toys, games and puzzles priced about $10 are in 28 to 32 feet. The 36-foot book and magazine racks are near the front end. Batteries are displayed on permanent 4-foot endcaps and at 8-foot in-line sets, with specialty batteries at camera counters.