Nonfoods Talk: Right on Target

The giant mass merchandiser is boosting its nonfoods assortment and it is likely to pay off at the cash register.

By Seth Mendelson

In late July, I decided to purchase an Amazon Kindle electronic book reader as a gift for a friend. Knowing that Target had an exclusive arrangement with Amazon to sell Kindles in its stores, I went over to the nearest Target, in Wayne, N.J., to buy the product.

They were out of stock, apparently because Amazon was  getting ready to release an updated model in late August.

But I still walked out of the store with something. It was the simple fact that Target—at least at this particular store and I understand at more and more of its refurbished units—has it right when it comes to merchandising the health and beauty care and general merchandise categories.

In this day and age of retailers saying that they do not want to go too far with nonfoods, Target has apparently decided that the various nonfoods categories can serve to attract consumers and make money for the chain. Built near a vibrant pharmacy department, Target offers a wide range of products across many different HBC and GM categories. More importantly, the category is well-displayed, using bright lighting to highlight the packaging and signage to make it easier for shoppers to pick the products they want.

This is no small feat for the Minneapolis-based chain. Target, as is well documented, has fluctuated between emphasizing private label and national brands for years. The changing policies have baffled suppliers and industry observers alike, and have created some confusion among consumers about Target’s strategy.

But it now appears that national brands have, at least temporarily, won the battle and, from this angle, that is the right approach.

Supermarket retailers need to follow Targets’ nonfoods strategy. Target officials apparently realize the benefits of the nonfoods categories to their business model. Yet, they also understand that to be successful with the category, they have to make a commitment to it in terms of space and product assortment.

In the general merchandise section, Target, like other mass merchandisers, has the ability to incorporate many more departments than a supermarket can. With apparel as an anchor, the chain can go very deep with GM products and still find a tie-in with other sections. Still, one can tell a commitment in several categories—­including toys and pet care—where grocery stores can compete.

Grocery retailers thinking about expanding or cutting the size of their nonfoods sections need to visit one of these Target stores.

­More and more HBC manufacturers are trying new things to get the consumer’s attention. For example, Novartis announced in the early summer that it would give away as many as 250,000 bottles of Triaminic Fever Reduce Pain Reliever, a new liquid children’s medicine.

It is a quick reaction to the problems over at Johnson & Johnson, the industry leader in the children’s medicine business. J&J’s McNeil Consumer Healthcare division was forced to recall millions of bottles of children’s Tylenol earlier this year. That has opened the door for competitors and Novartis is stepping in.

From this angle, J&J’s products are simply too big and too respected to not rebound over time. But Novartis’ move is a great attempt to grab market share.

Interestingly, retailers are saying that they see more suppliers taking measured steps to increase the awareness of their products and to get consumers to at least try them. It is also a strong attempt to fight off the store brands, which have gained ground as more consumers look for ways to cut their expenses.

Sometimes, as Novartis has discovered, it takes giving away merchandise to totally win over consumers. Sometimes, a cents-off coupon or even in-store displays can make the difference. The bottom line, however, is that any publicity is good for grocery retailers, particularly in the HBC section.

Seth Mendelson can be reached at 646-274-3507, or at smendelson@groceryheadquarters.com.

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