WINNING APPROACHES TO THE SALES CHALLENGE

David Orgel

It's that time of year again.

The fourth quarter. The holidays.

There's lots of optimism, as can be seen in a holiday sales story on Page 1 of this issue. But it's still too early for retailers to know if their sales figures will be worth celebrating. This year food retailers have on their side a good economy that is still fueling consumer purchases. But there's a danger that sales comparisons will be haunted by the ghost of Y2K past. A year ago Y2K stock-up buying was instrumental in producing strong sales gains. This year there is no such advantage. Moreover, many operators are now in a more competitive retail environment, with additional supercenter rollouts and promotional activity.

But the recent actions of some retailers indicate there are still many winning merchandising scripts being written, stemming from creative and practical approaches to the revenue challenge. Some of these are holiday-specific strategies, but most are simply decisions based on market fundamentals. Here are some of the recent directions being taken around the industry, some of them first noted in recent issues of SN:

Positioning Upward: Many a conference speaker will tell you that positioning is everything. Target has learned that lesson well. This operator is hoping to drive sales and solidify its upscale-supercenter stance with a mix of better wines and quality food labels, such as La Brea artisan breads, Phillippe Starks OAO organic foods, Starbucks coffee and Krispy Kreme doughnuts. The goal: Target is expecting 3% to 5% long-term comps, according to one analyst.

Selling Dollar by Dollar: No matter what a retailer's master plan it must react to market events on a daily basis. Wal-Mart is challenging associates to highlight certain key items for opportunistic sales. It is offering tire gauges at checkstands in the wake of the heavy publicity over tire safety problems. And it is emphasizing weather-stripping and other energy-saving devices as a reaction to spiraling energy costs. Wal-Mart is devising programs to lift sales by what it calls "a buck at a time."

Borrowing from the Clubs: Some supermarkets know the value of borrowing from the membership warehouse club playbook that emphasizes the need to generate excitement through in-and-out merchandising. One observer told me that during a recent visit to a relatively small Safeway unit in San Francisco he was delighted to find wristwatches sold up front and scooters as part of the impulse-item assortment. A lot of kudos goes to a retailer who can generate that kind of customer excitement in a smaller unit.

Other retailers are also focusing on promotions of nonfood merchandise to bring more diversity to the shopping experience. Stater Bros. Markets is offering more promotions on small appliances and housewares and succeeded with a large-volume one-time sale of Razor scooters.

Spreading Holiday Cheer: Many operators are finding they don't need to remake their entire stores to get customers to take notice during the holidays. Take the case of Supervalu's Cub stores unit. It has found a winning tradition in its annual Cub Fresh Holiday Open Houses, which bring customers into the stores in advance of the season to sample deli and bakery items and, increasingly, a wide variety of other products as well. The event gives shoppers a big-picture view of all the store's seasonal items at a point when customers haven't yet committed their dollars.

There are plenty of other retailers doing lots of other fine things to boost sales. Merchants will probably find that some of these ideas will be strong enough to rerun next year or spin off into new hits.