With dedicated focus, supermarkets can regain lost market share from the profitable general merchandise category.
Evolve or perish.
It is a basic business tenet. No longer can a retailer be defined as a food store, mass merchant or drugstore. As the lines of retail continue to blur, traditional grocers have the opportunity to regain a former stronghold—general merchandise (GM) sales.
Industry observers say many grocers have already made inroads within GM. “For those that continue to make a commitment to GM, and that doesn’t always mean space, but an intelligent approach to the category, they are faring very well,” says Mark Deuschle, vice president, business development, chief marketing officer for Colorado Springs, Colo.-based Global Market Development Center (GMDC).
In today’s environment, a retailer cannot be everything to every shopper. To get the most out of GM sales, there are some categories that grocers should pay closer attention to than others. Products that pertain to food are a perfect fit, say observers. “Why would a grocer give up on household kitchen gadgets or cookware,” says Deuschle. “If there ever was a more natural fit… food storage, food preparation, those are all categories where grocery should dominate.”
Products that satisfy a trip mission, such as those geared toward baby and pet are also areas that should garner grocers’ attention. For categories not quite as logical, it is often incumbent on manufacturers to generate consumer interest, because most retailers likely will not. Observers say almost any category can provide value and be a traffic driver if managed properly—but retailers have to want it to work.
“I am absolutely convinced that for supermarkets, with the right category, and with the right attention from the retailer and the manufacturer, with that many consumers making that many trips, there are ways to grow GM sales—and do it in a profitable and efficient manner,” says Jerry Lynch, president of the New York-based International Periodical Distributors Association.
Of course most consumers’ GM purchases at grocery are still of the impulse variety. Though supermarkets are destinations for consumers, David Strumeier, executive vice president of sales and marketing for the Travelocity division of Avenel, N.J.-based Mizco International, says successful grocery management teams have done a good job recognizing the impulse psychology of the GM consumer.
“When consumers are in an aisle, they pass items fast,” says Strumeier. “The retention span is 1 to 5 seconds. There are a few components that will captivate consumers in that time frame which will make them stop and shop for a GM item. One is trend. The other is price. So the cost conscious consumer will walk into a supermarket, will look at GM through an impulse perspective and think ‘is this the right trend, is this the right product and does it satisfy my need? Does its price dictate that it is such a great value that I am going to buy it right now?’”
He says it is that mindset that has made Mizco’s Travelocity brand products so successful at supermarkets. The Travelocity consumer electronics line includes mobile car chargers, home wall chargers, mobile phone accessories, smart phone and iPad tablet accessories. On the purely travel side, products include eye masks for travel sleep, luggage tags, passports holders, travel organizers, travel pillows and travel bottles, among others.
“We make carrying our products effortless for retailers,” adds Strumeier. “We specialize in power wings, side panels and planograms for the grocery store and we offer 100% replenishment. So if a retailer has an item that is selling well they can get back into it on a monthly basis. This way the retailer doesn’t have to bear the burden of housing to much inventory.”
Capturing migrating customers
One of the keys to driving GM sales at grocery is by increasing awareness. Consumer migration away from the specialty channel has created just such an opportunity for grocery in the greeting card aisle. To take advantage of the opportunity, Frank Cirillo, spokesperson for Cleveland, Ohio-based American Greetings, says success in the category can be achieved with a focus on constant freshness and innovation.
“We regularly work with our retailers to optimize the card department’s location,” says Cirillo. “Many of our partners have adopted the practice of centralizing the card department within the center store adjacent to registers, which creates tremendous awareness and positions the department efficiently within a shopper’s overall trip.”
The greeting card section also provides retailers with the opportunity to cross-merchandise several other GM categories. Colin Littler, vice president of marketing for Design Design, says the Grand Rapids, Mich.-based company offers a complete program featuring Design Design branded products in addition to its line of greeting cards.
“We have a ton of greeting cards, but we have those other key categories, like paper, tape and packaging, and we can transform an area into a huge profit center,” he adds.
Another category that fits in perfectly with females, the primary supermarket shopper, is candles. Like most GM categories, candles provide retailers with high profit margins. Unlike most other GM products, candles are consumables, which lend them to brisker turns.
According to observers, the category’s impulse nature also fits in perfectly with supermarket shoppers. To keep things fresh, Candle-Lite, a Cincinnati-based division of Lancaster Colony Co., which is based in Columbus, Ohio, recently introduced four collections. According to Mark Cunningham, vice president of sales and marketing for Candle-Lite, Escape is the next evolution of spa and aromatherapy type candles. The Fresh Fruit line features 10 fruit and berry fragrances and comes in a decorative plastic lid. Sheer Simplicity is a white wax luxury, on trend collection of eight fragrances in an 8.5-ounce jar. “This product, which retails for $8.99, compares to specialty store products with a $20 or higher price-point,” says Cunningham. The last collection, Authentic Luxury, featuring 11 colors and fragrances, is a highly scented, three wick line with silver metal lid.
“Grocery has about a 75% share of the candle category,” says Cunningham. “It is an affordable luxury, making a nice gift for oneself, housewarming gift or home accent.”
Warmth of home
Home accents are becoming a growth segment for retailers and manufacturers. So much so that battery giant Energizer now offers lines of flameless wax candles and household lighting. “Energizer has a history in lighting technology, so this is a natural extension for the brand,” says Lou Martire, vice president of trade development for the St. Louis-based company.
Energizer has three distinct household lighting collections—Ambiana, Edge and Glas—that Martire says offer a variety of features and diverse designs that fit consumers’ needs and unique décor styles. “The collections have received a lot of positive feedback,” he adds.
This summer Energizer Flameless Wax Candles, which are made from real wax, will be available in popular scents and colors fashioned in votive, pillar and glass-jar styles.
Closer to its core offering, Martire says Energizer is driving sales with USB chargers, more powerful batteries with extended shelf-life and hearing aid batteries.
Observers say that personal products, such as hearing aid batteries, are areas that supermarkets have room to grow. One in particular is men’s grooming. However, to do so they need to make a better commitment to the category.
Steve Yde, director of marketing for Sterling, Ill.-based Wahl Clippers, says studies show that about 60% of men grow facial hair at some point during the year and 40% have facial hair year-round. “A lot of these guys are doing grocery shopping in supermarkets but go to mass for personal care durable goods, because supermarkets are just not showing commitment to the category,” he says.
Wahl’s product line includes a lithium ion trimmer that Yde says is the No. 2 selling product in the category. However he understands that a with a $40 price-point it might not appeal to all retailers, especially those just getting into the category.
“For a retailer just getting into the business we have impulse buy items such as a $10 personal trimmer, battery beard trimmers under $20 and hair clipper kits in the $20 to $30 range,” says Yde.
To promote product, Wahl has taken to traveling around the country in a 40-foot mobile barbershop visiting fairs, concerts and the like. “We are going to communities with a grassroots guerilla marketing approach, saying ‘We are here, these are our products, we are here to help you with personal care.’ So we do a lot of interaction with consumers as well as retailers,” says Yde.
Other categories that grocers should keep an eye on include hydration products, coffee accessories and promotional storage, says Mike Rojewski, North American sales director for Cool Gear International, based in Plymouth, Mass. “Retailers that can cover the basics, feature the new and growing categories and those that can tailor to the local consumer base are doing well,” he adds. “As well as those driving the new innovation.”
Taking the “general” out of general merchandise
Most general merchandise products carry higher margins and provide more profits for retailers than practically all of a grocer’s food departments. So why it is that most grocers continue to pilfer space from GM in favor of fresh and prepared foods as well as any number of other less profitable sections?
In many cases, grocers were forced to respond as other channels—particularly mass, led by Target and Walmart—began selling fresh foods.
“As the push for fresh came in, we have seen some decline on space allocation,” says Mark Deuschle, vice president, business development, chief marketing officer for Colorado Springs, Colo.-based Global Market Development Center (GMDC). “That’s not always a rational decision, but because there is no information or way to defend or argue for GM sales, it is almost like the easy button for retailers to say, ‘Hey, we need four feet, where are we going to take it from? Well, we don’t know if this is going to help or hurt us, but we are going to take it from GM.’”
GMDC, in conjunction with Nielsen and Radian, has nearly completed a study that observers say should shed some light on the true value GM provides retailers—and grocers specifically. “Why is it that we have a hard time defining GM?” asks Deuschle. “The main reason is there is just no data.” According to the study, GM products account for about 25% of all sales across all channels. Deuschle says GMDC will start providing retailers with data and insights as to the value of GM, including benchmark performance standards for all of GM, as well as major categories that fall within the broad definition of GM. Deuschle says the data, which will be broken down into three “levels” should be available sometime in May.
Level one takes the multimillion SKU’s that make up GM sales and creates a category hierarchy for the industry to establish as a standard for what categories make up GM—for example, baby, pet or household—there are 18 in all. Level two breaks down the categories even further, for example kitchen gadgets would fall within household. Level three further breaks down kitchen gadgets into products like spatulas and the like. A breakdown of brands is not included.
“We will identify some level of consumer response as well,” says Deuschle. “Like, how do consumers view GM? One thing that gets lost with retailers sometimes is that consumers do like to buy GM.”
Jerry Lynch, president of the New York-based International Periodical Distributors Association, says it is important that GM manufacturers are armed with category information when meeting with retailers. “Today, retailers have so many places that they can focus their attention on, [GM manufacturers] better be good at their game to make sure they are getting the attention,” he says. “In the past, GM has been handicapped by not being able to provide retailers with similar information that other categories can. That could and should change.”
Energizer shares consumer trends and research with retailers through its Shopper Based Solutions (SBS) program. According to Lou Martire, vice president of trade development for Energizer, the SBS program places a premium on finding the right location for Energizer products and organizing a shelf that is appealing to consumers.
“We do not rely on instinct and intuition,” he says. “We do a great deal of consumer research that tells us what works. This initiative has driven conversion, trade-up and multiple purchases. Most importantly, we have found that retailers adopting the SBS strategy enjoy above average category sales growth.”