Nonfoods Talk: Taking baby steps
By Seth Mendelson
Fewer babies is not a great sign for the grocery industry. Retailers can protect themselves by stressing other key nonfoods segments. The U.S. population grew by about .72% last year, the lowest rate in more than seven decades, according to the Census Bureau. Believe it or not, that is the good news. The bad news is that .72% growth may look great in coming decades as the population ages and women have even fewer babies. That information should not sit too well with retailers—including grocery stores—that sell all types of products geared towards babies and toddlers. It can also be devastating across many other categories ranging from pet care to toys and school supplies. Growing populations usually translate into growing sales at retail. Conversely, slowing populations can put a serious damper on economic growth. Just take a look at Japan, where the population is actually declining. As I often write in this space, retailers need to take a close look at demographic trends in order to stay ahead of the curve in terms of merchandising and marketing. Fewer babies means less diaper, baby bottle and baby food sales. In the long term, fewer kids running around will ultimately mean less need for school supplies and even cough/cold medicines. And do not forget that a large amount of pets are purchased by families. Frankly, this could become a mess in no time at all. Retailers must react now to these changes—the current ones and the ones predicted in the future. An older population should mean a greater emphasis on the products that these consumers use more of, particularly in the over-the-counter categories and such segments as housewares, home/office and hardware. Bed, Bath & Beyond announced earnings in early January that set the company’s stock down by more than 10%. Analysts say that BB&B’s ubiquitous 20% off coupon was being used too much by regular consumers and leading to little incremental sales. The result was a hit on profits to the point that Wall Street really noticed. It will be interesting to see how BB&B’s top brass is going to react to this financial results and what they are going to do to build profits while not hurting sales. I needed some new light bulbs in early January but did not realize that I had to bring my entire bank account to buy the replacement bulbs. Yes, LED lighting has arrived and, in the long run, it is going to be very good for the environment and save consumers boatloads of money on reduced electric costs. However, paying $25 to $35 for a single bulb seems not only ridiculous; it is definitely going to turn a lot of consumers off. Now it is up to the various lighting companies like GE Lighting, Philips and Sylvania to get the right information into consumers’ hands about these products and how they are going to help them over the long haul. Retailers are going to have to help if they want to cash in on this category. Not only will they need to have a broad selection of product, but they will have to carry product at various price points to give reluctant shoppers as many choices as possible. My sense is that this is a perfect spot for private label products to steal some market share by coming in a few bucks cheaper than the national brands. It promises to be an interesting category over the next couple of year or so. It should also translate into big sales for those retailers who take the time and effort to correctly merchandising the lighting category.