Supermarkets are homing in on what might be called the category fighters in the nonfood grocery business. These are the feisty nonfood segments such as the traditional stick goods and kitchen domestics, or hot licensed children's goods that are consistent in producing profitable impulse sales with good turn rates at food stores.
Retailers such as A&P, Big Y Foods and Carr Gottstein Foods have evaluated these sections closely and have found that such categories can be merchandised as a wedge against the competition because they offer greater profits and customer stopping power.
As Bill Vitulli, vice president of government
and community relations at A&P, Montvale, N.J., explained: "Stores actually lose money on groceries, and especially on high-velocity items like coffee and cereals, used as a customer draw. So you hope to make it up with domestics, stick goods and licensed kids' products that carry 30% to 40% margins."
Vitulli said when "we run a special on boneless chicken breasts at $1.99 per pound from the regular $3.49, people make the comparison and realize how much they are saving. However, in housewares, you can get the going retail without giving the products away, and in that way we subsidize the foods specialed at low retails."
Gary Schloss, vice president of general merchandise at Carr Gottstein Foods, Anchorage, Ala., noted, "Stick goods enable us to capture general merchandise volume away from competing retailing formats. In expanding the mix we can sell brushes people may not have thought they needed, but when they see them in the store, they'll pick them up."
Retailers also have become more aware of the sales potential of licensed children's products as is currently being demonstrated by toys associated with Disney's "The Lion King." According to Jan Winn, director of health and beauty care and general merchandise at Big Y Foods, Springfield, Mass., "The Lion King toys are flying out the doors in plush, framed prints, puzzles, coloring and sound books, and magic markers. These are going so fast it's incredible."
But retailers noted that there are several important criteria for running a successful licensed kids' program. Price points are critical. The products must have good turns, and items must be carefully selected.
The 44-store Riser Foods chain, Bedford Heights, Ohio, is concentrating more on children's licensed goods, but on a selective basis.
Jim Fiedler, director of nonfood at Riser, mentioned price points as a factor in the successful merchandising of licensed products. Fiedler will introduce new licensed goods based not only on their popular demand, but they must be "absolutely under a $10 price point."
Fiedler added that kids' licensed plush characters based on movie themes "are what's in big demand. But, the retails have to be right, and based on store demographics. If the retail is too high and over $10 the item could be too pricey. Then, you start to get shopper resistance."
The chain gradually has introduced licensed items at a few 80,000-square-foot stores and is planning future rollouts at others. "Licensed items seem to be going over real good, especially in the big popular themes from Disney."
Winn of Big Y also pointed to retail prices as important in moving licensed children's goods. "The key in running a licensed kids' program is keeping the retail price point range within a comfortable level for consumers. Pricing our line starting at $1.49 for Lion King coloring books to the higher sound storybooks, gained very strong acceptance with our customers."
Another factor is choosing licensed products with good turns, such as World Cup Soccer caps, which sold "reasonably well" at Big Y, said Winn.
Winn is anxiously awaiting the October release of "Snow White" to the video market as sales are expected to surge in Snow White-themed products. "Whatever you can buy that's related to that video, without getting too crazy retailwise, is a home run," she declared.
Last winter Big Y also did well with regionally themed University of Massachusetts and University of Connecticut T-shirts.
"Because those schools' had very strong basketball teams that were doing so well, we brought in the shirts, which have very strong ties to the community."
Schloss said he carefully assesses children's licensed goods "even in well-recognized national manufacturers, studios or cartoon characters, because not every single item with a license on it will sell that well."
He said plush animals, by far, are the best-selling licensed items for Carr Gottstein. "Plush always seems to do well for us at the lower end under $9 to $10."
Getting in hot properties and selling out quickly is the approach Carr Gottstein takes in handling licensed goods, Schloss noted.
"We try and make sure we're backing the correct products. Aladdin and The Lion King were big for us, and although Snow White is coming out soon with licensed products, that's the one you must be careful with," urged Schloss.
Carr Gottstein is "getting in and out quickly without reordering and buying in amounts based on our projected needs. We tend to focus on products from companies that spend the money to back their items like Disney. We know they have been proven winners," he added.
A&P's Vitulli said timing is an important part in cashing in on licensed products. "In general merchandise you've got the staple items like stick goods and kitchen domestics. Fad items you must jump on while they are hot in licensed products like the Lion King and Jurassic Park and dinosaur-related items."
Yet retailers like A&P are remerchandising the "old standby mop and broom and kitchen soft goods departments because of better margins, and complete selections give customers a reason to shop at our stores rather than at a competitor like a club store," said Vitulli.
Big Y is in the process of assessing its stick goods and recasting mops and brooms into more viable product areas.
Winn said the mop and broom variety "is a very important area and one of the high-velocity turning categories. As the customer buys everything off our grocery shelves, it's kind of a natural and logical tie-in to have the mops and brooms and brushes available, too."
A new 30-item smaller brush and broom assortment in its controlled-brand Topco label has prompted the retailer into remerchandising its mops and brooms.
"These items will represent better cost to us, values to our customers and more competitive retails in the items using a private label.
"We'll incorporate these new items in the planogram and look at all the players in the section, with the idea of scaling back some duplicated selections. We merchandise stick goods on a flat Peg-Board, with all products faced out to make the department very easy to shop," Winn said.
Big Y's 8-foot kitchen domestics section, described as "neat, clean and organized in updated colors," performs well, Winn said. "We're making certain our products are updated and that the colors are correct and in a wide variety."
Carr Gottstein revamped its entire kitchen domestics line last month by eliminating all single packs in favor of the larger multipacks containing two or three items in dishcloths, hand and dish towels, and three-piece sets that include a kitchen mitt, dishcloth and dish towel. "The new multipacks have given us a whole new department look," said Schloss.
Carr Gottstein also has started merchandising larger five-count and 10-count packs of kitchen towels and larger multipacks of kitchen mitts and hot pad mitts.
"We were finding people were buying one or two towels anyway, and we decided to make it easier by getting that extra ring through the multipacks."
This fall, the chain will run more extensive in-and-out bath and hand towel promotions in a multipack package, usually two towels and four wash cloths.
The chain anticipates that remerchandising of its 4-foot to 8-foot kitchen towel sections will result in 20% to 30% higher sales.
In stick goods, Carr Gottstein boosted the number of stockkeeping units to 200 from the former 150-item mix.
As a result, "our stick goods sales are doing extremely well and running at least 20% ahead since we instituted the changes this spring and revised the category to larger 12- to 16-foot departments from smaller 8-foot sections," said Schloss.
The more abundant space permits "us to merchandise wider assortments of the kinds of smaller and incidental hand brushes that you'd find in almost every kitchen cupboard. The variety ranges from scrub to smaller vegetable brushes," said Schloss.