COW-TOW

Today's dairy aisle has grown to become more of a brand-oriented department, and managers are discovering new ways to promote the category, retailers and industry observers told SN.Still, there's a lot of work to do, since specific identities for category mainstays like fluid milk and eggs are only now gaining something resembling a brand name. Consolidation within the dairy industry is the main engine

Today's dairy aisle has grown to become more of a brand-oriented department, and managers are discovering new ways to promote the category, retailers and industry observers told SN.

Still, there's a lot of work to do, since specific identities for category mainstays like fluid milk and eggs are only now gaining something resembling a brand name. Consolidation within the dairy industry is the main engine behind such movement, but progressive retailers aren't waiting for manufacturers to help steer them from a commodity-based approach to promotions and merchandising.

Those retailers who don't allow their dairy departments to operate as a self-service station of necessity can find the potential for sales and profits is greatly increased, industry representatives agreed.

"In my experience, the dairy department by and large is undermarketed," said Jeff Manning, executive director of the California Milk Processor Board, Berkeley, Calif. "The case as a whole is underpromoted as a product, given its importance to the store."

Stew Leonard's, Norwalk, Conn., has built a three-store franchise on the concept of a unique shopping experience that showcases the retailer's dairy roots. Demos are an everyday occurrence and in-store entertainment is everywhere, from animated figures in the aisle to live bands on the weekends.

The stores are laid out as one continuous aisle, a meandering path that takes customers through every department and past several action stations, including a dairy plant inside the Norwalk flagship store, where consumers can watch the milk they purchase as it is pasteurized, homogenized and packaged. The plant is enclosed along two sides by glass windows that show each stage the milk goes through as it arrives in the store from the chain's Connecticut dairy farm.

Customer accessibility to the dairy plant is based on a philosophy of sampling, demonstrations and customer service, said Craig Hartmann, dairy plant manager of the Norwalk store. All the perimeter sections follow the same principle _ customers can see what's going on, and in most cases, try many of the products. The concept is "show and tell and sell," he said.

"I don't care if it's dairy or you're cutting meat or cutting fish, the concept is the same: We bring in fish whole, cut it up in front of the customer and put it in fresh cases. They know they're getting fresh products."

The show-and-tell concept shapes the presentation of all departments.

Customer education is also a component of the retailer's dairy merchandising strategy, though it can serve as entertainment in itself. Next to the dairy processing display, a continuously looping video depicts how the retailer gets its milk, from the baby calves to milking machines to distribution trucks.

To reinforce the image of freshness, the refrigerated section is immediately adjacent to the dairy processing display. The refrigerated section is where traditional cases are punctuated by a number of live and interactive store elements, including a mooing cow, dancing milk cartons, and a train that runs throughout the section overhead. Chickens laying eggs, and a cow band playing country tunes are visible in other departments as well.

Children pause much longer than they might if their mothers were simply grabbing a half gallon of whole milk. Here, they can pull on a string to make the cow moo and watch the "Farm Fresh Five" milk carton band while drinking samples of dulce de leche milk, a Latino-inspired chocolate milk flavored with caramel. Children are key to building sales in the dairy aisle, and the retailer makes the most of its entertaining atmosphere to keep them interested, Hartmann said.

"Where kids go, their parents follow," he said, noting the various animatronic stations throughout the store, as well as life-size characters like Wow the Cow who wander the aisles, even on a Wednesday. Samples are offered daily in the dairy aisle and all other departments.

Of course, most retailers do not have a milk plant in their stores, but there are other ways to make consumers linger in the dairy aisle.

"Cross merchandising is important for the total store," said Manning. "It helps the brands, but it is particularly important for the store because it drives up the value of the shopping cart. If you have a customer who puts graham crackers, peanut butter, cookies and cereal in their cart and then goes and buys a gallon or two of milk, the total value of that cart goes up."

Manning said he has seen successful cross-merchandising and promotional programs using the well-known "Got Milk" campaign his organization created a number of years ago. He has seen cereal and cookie companies successfully use a freestanding display of their product signed with a "Got Milk"-related tag line. Those cross promotions work, he said, because they not only sell the grocery product but also drive shoppers into the dairy aisle.

Another successful campaign featured "Got Milk" stickers on roughly 100 million Dole bananas in the produce section, tapping into three potential departments -- produce, dairy and center store.

Stew Leonard's has conducted similar cross-merchandising campaigns in reverse, using the side panel of their cardboard milk cartons to drive traffic to the bakery using the same cookie/milk connection.

Fiesta International IGA, Raleigh, N.C., a store that caters to a largely Hispanic customer base, has used cross merchandising to good effect with eggs. Someone is assigned full time to keep cross promotions in the whole store up to date and well stocked, said Frank Gonzalez, president of the retail operator, which also owns one other IGA, and four convenience stores under the Fiesta International Express banner.

For example, Fiesta has merchandised eggs in the deli section, next to the bacon; yogurt with breakfast and lunch meats; and hot sauce and black pepper in the egg section, he said.

"We do a lot of cross promotions on a regular basis ," Gonzalez said. "They constantly change, and that's what keeps things lively in the dairy aisle."

Cross promotions are an important part of an overall strategy that Gonzalez said he always follows regarding his dairy aisle. Indeed, he estimates the dairy department accounts for 12% to 16% of total-store sales. There are about 128 feet allotted to each of the dairy departments of his two main stores. The department is particularly important for his markets and need a larger footprint, since they carry larger quantities of eggs and milk, two staples of the Hispanic diet.

Sampling was critically important in building the dairy business, Gonzalez said, but the company has backed off on that approach somewhat due to space constraints. Merchandising is emphasized. For example, this Fourth of July store associates used the red-and-blue tabs on the gallon-sized milk containers to make the shape of the American flag in a 24-foot wall section, visible to consumers as they entered the dairy section. The company at the same time ran a promotion on gallons of milk at $2.49 each for the week, and that boosted sales significantly, he said.

"We had an increase of 32% in milk sales that week, which are normally strong anyway." he said.

Effective as a tool to boost dairy sales, cross merchandising nevertheless presents several challenges, said Carol Christison, executive director of the International-Dairy-Deli-Bakery Association, Madison, Wis. It's important that a retailer promote cross merchandising from the top down.

"The dairy department is not a service department," she said. "Store personnel are most concerned with stocking the shelves as quickly and efficiently as possible. "But great merchandising is also possible. Just look at stores like Stew Leonard's."