As some forward-thinking food retailers dedicate more space to housewares, sales are beginning to rise.
By Craig Levitt
It is no secret that for years most grocery retailers have struggled to simply maintain their nonfood sales. However, as the lines of retail continue to blur, industry observers believe the time is right for at least one subsection of the nonfoods category to generate positive gains for food retailers—housewares.
As mass retailers such as Target and Wal-Mart continue to intrude upon grocers by selling food items, it is vital that grocers do all they can to not only keep the shoppers they have but attract new ones as well. Thus, many observers believe that turnabout is fair play and that food retailers should once again take a closer look at dedicating space to a housewares area that was once dominated by mass outlets.
“Housewares is definitely an opportunity that presents itself to food retailers,” says Perry Reynolds, vice president of marketing and trade development for the Rosemont, Ill.-based International Housewares Association (IHA). “Supermarkets’ competitors are getting into their business, why don’t supermarkets’ get into their competitors business? I firmly believe that housewares remains an opportunity for growth, customer capture and satisfaction from a supermarket retailers point of view.“
In these tumultuous times retailers in every channel continuously ask themselves how to get shoppers into the store. Supermarkets are fortunate enough to enjoy greater foot traffic than their competitors, thus they have a built-in advantage. When it comes to selling housewares, Ted Taft, managing director for Wilton, Conn.-based Meridian Consulting, says it would behoove supermarkets to play to their strength, which is of course food-related items.
“If supermarkets can create some synergies between housewares and the foods they offer; show that they are making it easier for shoppers while giving them more choices, that is a good thing and can only benefit housewares sales,” says Taft.
Reynolds agrees and uses the Thanksgiving time frame as an example. “I think that supermarkets are ideally positioned to capture that customer because they have got that customer literally at the decision point,” he says. “If a shopper is buying her Thanksgiving turkey, why wouldn’t she also be buying a carving set? Maybe it’s only 5% of customers that actually make a purchase, but I guarantee that carving set will make up the gross margin that the store is losing selling that turkey for $0.39 a pound.”
Of course a supermarket has to do more than simply throw a few pots, pans and cookie sheets onto the shelf and expect consumers to flock. Observers stress that while the opportunity to generate sales exists, retailers must promote and support the category. “Too often,” says Jim Wisner, president of the Wisner Marketing Group, based in Libertyville, Ill., “retailers don’t do anything to encourage incremental sales or encourage shoppers to make a purchase; or even think about buying housewares at the supermarket, it’s like dead aisle space.”
Most point to Wegmans as the gold standard when it comes to housewares. Observers say that one reason Wegmans has been successful is because they approach its’ housewares section as a lifestyle. Rick Sadofsky, chief sales officer for New York-based Built NY, says that plays directly into Built NY’s marketing strategy. The company is positioning itself as a design company that sells wine totes, lunch bags and beverage holders.
“The key thing to merchandising housewares at the supermarket is to bring the atmosphere out as a destination within the store,” says Sadofsky. “So many times you walk into a grocery store and the home section gets lost. It needs to be more viable, more appealing, more lifestyle focused. If it is, people will walk those aisles to buy product.”
Another key for success, say observers, is convincing consumers to accept the fact that they can pick up a basting brush, pancake turner or salt and pepper set at the supermarket. Once that initial barrier is cleared it is a small leap to other niche-type products within the housewares realm that aren’t tied to food. One such opportunity lies with travel and trip accessory products, say industry executives.
Recently, Avenel, N.J.-based Mizco International acquired the license to develop Travelocity-branded products. According to Stephen Mannoia, vice president of Travelocity sales for Mizco, the introduction marks the first time a line of Travelocity branded travel accessories has been brought to market. There are approximately 36 items set to be introduced in the first wave by the end of May. He says about 30 more products that will follow in the second wave of launches.
The first wave of products includes 3D Travelocity Gnome luggage tags with six designs of the Gnome (the basic Gnome, Roaming Gnome, Sparkle Gnome, Hula Gnome, Sombrero Gnome and a Gnome with an inflatable beach ring around him). Other products include TSA-approved luggage locks, luggage straps, world travel adaptors, travel organizers, travel neck holders as well as a line of charging kits. Mizco will also tap into its experience as a manufacturer of electronics related items and is developing Travelocity branded noise-cancelling headphone ear buds.
“We don’t just put products into the line to add breadth,” says Mannoia. “We put them in because they are the things that people need and use when they are traveling.”
Mannoia says retail prices range from $6.99 to $39.99 for the travel kits, but he says the sweet spot, especially for grocery, is between $7.99 and $14.99.
Unfortunately, many consumers don’t always think about purchasing these travel type items at the grocery store. That’s where merchandisers come in, says Mannoia. The Mizco line of Travelocity products is being supported with merchandisers in a variety of sizes and assortments for those retailers that may not be able to fit the product line into a planogram. Mannoia says the displays can be used as a power wing or endcap then be disposed of when finished.
“The merchandisers allow retailers to put the product in high-traffic areas,” says Mannoia. “So it may not be something someone initially went to the store for, but when they see it they are more likely to make a purchase.”
There is also an opportunity for retailers to take advantage trends throughout the rest of the store. For example, as food manufacturers and retailers continue to tackle the child obesity epidemic across the nation, Greenbrier/Scentex recently launched a line of placemats designed to educate and reinforce healthy eating for children. Nancy Byrne, director of marketing and creative services for the Summersville, W. Va.-based company, says that the placemats present a variety of cross merchandising opportunities for grocers.
Greenbrier/Scentex also recently launched a line of candles that Byrne says captures current color and fragrance trends. Byrne admits that housewares can be a tough sell at grocery, which is why Greenbrier/Scentex, supports its lines with in-depth market and category data. In the candle category for example, she says recent Nielsen data shows that while the category is down as a whole at food, drug and mass channels (a little more than 3%), grocery sales have declined only slightly (less than 1.5%).
Wegmans isn’t the only retailer that has done well. Byrne says Stop & Shop, Publix and Kroger have recognized the value of promoting the home fragrance and candle category.
“These retailers have dedicated a substantial amount of space to build a program, either with integrated merchandising, expanded store formats or strong perimeter departments,” says Byrne. “They are creating a ‘destination shop’ experience.”
“However, for most consumers, shopping housewares can be a confusing proposition at grocery. There are items throughout the store and dedicated space is lacking creating a hit or miss opportunity for the consumer. If a consumer has a need for a particular item that may not be on their food list, and they find it, and it delivers quality and value, they will buy it. The key is to make it easier for them to find by creating those destination locations while delivering a consumers message of quality and value.”
Quality and value are exactly what Rusty Boone, sales manager for Atlanta-based Home Comfort, says his line of indoor/outdoor rugs offers supermarkets. Though Boone admits the rug line is fairly expensive for the grocery channel, the 22” x 34” hand- embroidered accent rugs, which are made of 35% recycled material, typically retails for $29.99, he says sales at certain chains top-end stores have been successful.
“We first cracked Wegmans top-end stores,” says Boone. “We are now with Wegmans two years and our sales just keep growing. There is definitely a niche for higher-end products with stores that are trying to broaden their assortment.”
Focus on higher end
Home Comfort’s tack is a bit different as well. Boone says the company is not interested in selling to mass retailers such as Wal-Mart or Target, instead focusing on higher-end and specialty grocers. Generating placement in grocery was difficult at first, however. He says although many were interested, the big rack program Home Comfort offered consisted of 50 rugs and a $700 investment, which made some retailers skittish. To remedy that, Home Comfort now offers a small-rack program, which only requires a $300 investment.
“We have been looking at [the grocery] market for a long time and this market has come of age for our product,” says Boone. “Five years ago, I don’t know how much luck we would have had. Now we are the right product at the right time.”
Indoor/outdoor rugs may be a relatively new item for grocery stores; however observers say the housewares category as a whole doesn’t often see much innovation. While materials may change (i.e. from wood to plastic), a basting spoon is still a basting spoon. Tom Barber, vice president of marketing and product development for Rancho Cucamonga, Calif.-based Bradshaw International, says it’s time to change the way the category is viewed.
“The food people eat and the way it’s prepared is changing,” says Barber. “Ten years ago you couldn’t buy bagged salad; it didn’t exist. You had to buy a head of lettuce and either cut it up or peel it. Now everybody buys bagged lettuce. Thus a lettuce knife doesn’t belong on the wall anymore. Our roots are in food, so we are now developing housewares items with that change in mind.”
Examples of that forward thinking can be found in Bradshaw’s Good Cook bakeware line, which the company is extremely excited about. The line contains more than 500 SKUs and some of the most recent belong to what Bradshaw calls bake, take and serve—an expansion of the bake and take category. Bradshaw has three bake, take and serve offerings, a 13” x 9” bake pan, a cupcake pan and a pie pan.
“What’s unique about these items is they not only have a cover, but each has a component part of the bakeware that allows it to be served or presented,” says Barber. “For example, the cupcake lid houses a cupcake stacker and transforms into a cupcake tower. When you put the lid on the cake pan the handle is removable and becomes a server. These are unique and different to the industry and one of the things that speaks to our brand and the attention we have paid to the customer.”
Barber emphasizes that despite the fact that most current studies and reports claim consumers view housewares at grocery as simply a convenience category, thus reducing the need for branded products, there is a difference between perception and reality.
“A consumer doesn’t necessarily remember a brand when taking a survey,” says Barber. “It’s when they get a kitchen tool home, and after it spends six months in a drawer and works effortlessly, that’s when a brand is most important.”
Nor should retailers discount the billboard effect that a branded shelf program has on consumers. Barber says whether it is Bradshaw’s Good Cook brand or another brand, a branded program makes the customer feel like the retailer is dedicated to the category, making a greater impact at the precise moment in the store. “If a consumer walks down the chip aisle and there are no Lays, they shake their head and wonder what’s going on,” says Barber. “When they walk through the housewares section and can’t find the right brand or if the assortment just looks bad, they think, ‘maybe I’m not in the right spot,’ and they don’t make a purchase.”
Observers say that grocery’s margin dollars and potential volume in housewares, particularly kitchen tools and gadgets, are substantial, if done properly. However most agree that to be successful it takes more than just assortment, the “feel” of the section has to be right as well.
Michael Stoll, president of Newport, Calif.-based Urban Trend, makers of home and kitchen gifts and gadgets among other items, agrees that an opportunity exists for many of Urban Trend’s products to thrive at grocery, simply because of the foot traffic the channel enjoys. However, Stoll is a bit skeptical when it comes to grocery’s desire to make it happen.
“Five years ago supermarkets were giving more space [to housewares],” says Stoll. “We have seen that disappear. It has become a real struggle for us to get actual shelf space. The majority of our business at grocery has been via promotion during season or via clip strip. Grocery can compete with the Wal-Mart’s of the world if they just make the commitment.”