LIFE IN THE E LANE

WENDY TOTH

Most consumers don't leave home without one or two electronic devices — cell phones, iPods, PDAs, digital cameras — all of which need accessories for optimal performance.

Among them: batteries, chargers, headphones, cases, memory and many others. For supermarkets focused on providing a diverse product mix and convenience for their customers, these little add-ons are a perfect fit, retailers and industry analysts told SN.

While still a developing category among many retailers, large nonfood-focused operations like Kroger Marketplace and H-E-B's Central Market carry a wide selection of these items, SN found.

About 17% of electronic accessory buyers are spur-of-the-moment shoppers, throwing batteries in the cart while in the checkout line, according to the Consumer Electronic Association's most recent “Accessories Market: Insights and Opportunities” study. Another 34% do minimal comparison shopping when it comes to accessories, it reported.

“I'd say these two groups of consumers are the segments grocery stores should be targeting,” said Tim Herbert, senior director of market research at CEA, Arlington, Va. “Most shoppers at grocery stores are going for food and household purchases, but could be interested in consumer electronics accessories if the products were available and convenient to buy,” he said. Herbert warned against locking this kind of merchandise in a case that requires the store manager or other personnel to open as a hindrance to sales.

For Stop & Shop Supermarket Co., Quincy, Mass., which carries computer memory flash drives by SanDisk, Milpitas, Calif., as well as private-label digital memory drives and some “generic” brands of headphones, these products are placed openly

with more traditional electronic GM items such as batteries, film and audio-visual accessories, according to Robert Keane, spokesman for the retailer.

“We keep these items in a general merchandise section towards the middle of the store,” he said. “For instance, it makes sense for us to have digital camera memory cards next to film, taking up some of the hooks that used to be occupied by film.”

Schnuck Markets, St. Louis, may be doing the same in the near future, according to spokeswoman Lori Willis. “There is a possibility that, down the road, these electronic devices [digital memory cards] may overtake the popularity of film, but that is not the case at this time. Historically, we have really steered away from this business due lack of sales and high inventory costs.”

Schnucks is, however, carrying cell phone accessories, Willis said. Despite a lack of significant demand for electronic accessories, the retailer is offering these items “for the convenience of our customers.”

Impulse Buys

“Earphones are possibly becoming as much of an impulse buy as Snickers bars,” said Ellen Davis, spokeswoman for the National Retail Federation, Washington. Many supermarkets need to compete with mass discounters as a one-stop shop, she said.

“The retailer should think about what customers might need on their way out that can be provided without a lot of counter space or security. For instance, you can't have iPods out on the shelf — that kind of product needs to be behind a staffed case — but electronic accessories are not as expensive and might fit in with the convenience product mix that is already in the front of the store.”

Many shoppers simply don't have the time to make it out to Circuit City or Best Buy for these kinds of items, said Jim Wisner, president, Wisner Marketing Group, Libertyville, Ill. “It's an opportunity to really interface with the customer with a product they won't find in as many outlets as they normally shop,” he said.

Supermarkets should market these on an impulse basis, he said.

Imperial Distributors, Auburn, Mass., supplies this category as an accommodation for two supermarket customers, Al Jones, senior vice president of procurement and marketing, told SN. For Imperial, the products haven't provided the positive results that had been hoped for.

“I believe the average customer is going to shop in the large electronic stores or the mass market retailers for these categories. Accessories for cell phones, iPods or digital cameras are hot, but because the consumer wants variety and selection, they shop where they buy their equipment,” he said.

At Publix Super Markets, Lakeland, Fla., the thinking is much the same. “We have a little bit of interest in these categories but don't see a lot of demand in the area, so we don't put a lot of emphasis on it,” spokesman Dwaine Stevens told SN.

Many new users are coming into the consumer electronics market all the time, Wisner said. “This trend could mean that accessories are a way of striking while the iron is hot.”

Strategic Planning

Stop & Shop is planning to advertise its electronics section in the fourth quarter and expects to see the first spike in electronic accessory sales by the middle of this month, Keane said. This sort of promotional activity, especially near the holidays, can play a big part in selling such products, industry sources said.

There is a small increase in accessory purchases around the holidays, CEA's Herbert told SN. The upturn is usually accounted for by “products used with other products that are given [as presents] at a high rate,” he said. This year, CEA's holiday study shows that consumers are most likely to buy TVs, PCs and videogame systems, he said.

“As such, we will see increased sales of cables, joysticks and controllers.”

Schnucks focuses on merchandising its cell phone accessories by carrying them on its gift card and phone card racks, Willis said.

Merchandising with gift cards is the right move to make, according to NRF's Davis. “Gift cards are very popular and many people like to buy something to go with the gift card,” she said.

This year's holiday gift card study from Comdata Stored Value Solutions, Brentwood, Tenn., found that for the 2007 holiday season alone, the average gift card purchaser expects to spend $203 on gift cards, up from $186 in 2006.

With that, “for many, the joy of giving and receiving gift cards is still enhanced by the presentation, and gift card givers are getting creative,” said Bob Skiba, executive vice president and general manager of Comdata.

Some of the more interesting ways gift cards have been received, according to survey respondents, are: a playing card box full of gift cards; a gift card inside a new pair of shoes; and one inside a box of Valentine's Day chocolates.

“So for an iTunes, Best Buy or Circuit City card, you want to add something tangible to go along and an electronic accessory is a good, reasonably priced gift,” Davis said. “Feeling like you need to wrap something is very popular, especially for the older generation and those who want to give themed gifts,” she added.

For any store looking to diversify its product mix, increase margin and attract more impulse buys, electronic accessories make sense, Davis said. “Batteries, gum, gift cards — electronic accessories could be next.”