HONING NONFOOD

Supermarkets became a lot more savvy this year in merchandising high-margin nonfood categories.Grocery chains responded to time-pressed shoppers looking to make their shopping trips more efficient with complete, dedicated nonfood departments. They rolled out extensive variety, added new segments to satisfy lifestyles, and repositioned nonfood in synergistic ways that take better advantage of the entire

Supermarkets became a lot more savvy this year in merchandising high-margin nonfood categories.

Grocery chains responded to time-pressed shoppers looking to make their shopping trips more efficient with complete, dedicated nonfood departments. They rolled out extensive variety, added new segments to satisfy lifestyles, and repositioned nonfood in synergistic ways that take better advantage of the entire grocery store.

The level of sophistication grocers reached in nonfood merchandising in 1997 clearly contained elements borrowed from specialty and alternative retailers as channels of distribution continue to blur.

In health and beauty care, pharmacy became more fully integrated with HBC and major chains sought out high-growth segments, such as vitamins and supplements; bath; and aromatherapy to build into shopper destinations.

Seasonal selling events, which mass merchandisers and drug chains have turned into a science, were fine-tuned into a strategic ordnance by grocers.

In video, retailers opting not to get into rental installed full-blown in-line sell-through sections, with some chains buying directly from studios. Those involved in rental pushed ahead in driving more business and greater profit through shared-revenue deals. Retailers also looked to DVD, launched this year, to invigorate their video offerings.

The following is a summary of the various tactics that were pursued by major supermarkets in 1997.

The Pharmacy-Health

Connection

Grocery chains continued to add more pharmacies despite margin pressures placed on prescription sales by managed care and third parties. A&P, Harps Food Stores, Shaws Supermarkets, Grand Union Co. and Giant Food were among chains expanding pharmacies at new and remodeled units.

According to the latest statistics from the Food Marketing Institute, Washington, the number of pharmacies added by supermarkets is expected to grow by 11.5% in 1997, and square footage is projected to reach a high of 650 feet. This follows three years where the number of supermarket pharmacies have grown by double-digit percentages.

Albertson's, Boise, Idaho, was in the forefront of integrating pharmacy with HBC by introducing its Better Care Center. The format repositioned its pharmacy and HBC departments at the front of the store's traffic pattern. HBC gondolas were moved closer to pharmacy to create a "drug-store-within-a-grocery-store" concept. Shelving is low profile so shoppers have a clear view of the pharmacy.

Following a similar pattern, Balls Food Stores, Kansas City, Kan., introduced "The Corner Drugstore" in a Hen House Market, located in Lee's Summit, Mo. It was prominently featured at the front in a store-within-a-store format.

As more shoppers pursue self medication, it makes sense for grocery retailers to create clearly defined areas that meet all of shoppers' health care and nutritional needs.

A nonfood concept that drew strong interest was the "Do-It-Yourself-Health" study, released this spring by the Educational Foundation of the General Merchandise Distributors Council, Colorado Springs, Colo. The study looked at how supermarkets can best capitalize on consumers' need to maintain their health and well being. A wellness solution model was proposed targeting health-enhancing foods, supplements and natural remedies, over-the-counter medications and self care wares. Under the concept, these health-related segments are incorporated into the total store environment.

There is evidence that grocery retailers are already devising solution selling concepts as chains create boutique departments and, in some cases, stand-alone stores devoted to an entire health-wellness category. Dorothy Lane Market, Dayton, Ohio, for example, opened its Spa Store -- containing vitamin supplements and body care products -- adjoining its grocery store.

The drug industry is countering with a strategy of its own to stem the loss of front-end business. Under a three-year project conducted by the American Greetings Research Council, Cleveland, drug chains are testing the "Well Worth It" strategy. Building upon a loyal prescription-customer base, the strategy rewards prescription shoppers with discounts on front-end merchandise.

Other grocery chains making dramatic statements in HBC include Wal-Mart Supercenters, Bentonville, Ark., with its OneSource, a self-contained 1,100-square-foot nutritional center, positioned at the front of the store with pharmacy and HBC. The chain is currently testing seven of these departments.

Acme Markets, Malvern, Pa., added an enlarged aisle of vitamin and nutritional supplements to its superstore format. The 84-foot section has been repositioned in a high-traffic area close to HBC with its own space. Wooden cases give the department an apothecary look, distinguishing it from HBC.

Grocery chains also continued to make a splash with bath and aromatherapy. Big Y Foods, Springfield, Mass., introduced 32-foot bath/beauty sections at two stores this summer. Fred Meyer Inc., Portland, Ore., added an extensive aromatherapy section at 113 units in its store-within-a-store nutrition centers.

Game Plan

For All Seasons

Supermarkets reserved prime sales space for Mother's Day, Valentine's Day, spring cleaning, outdoor/summer, back-to-school, Halloween, and the fourth quarter. They further capitalized on these events with unique promotions.

Kroger Co., Cincinnati, in its Louisville, Ky., marketing area, ran a Mother's Day sweepstakes offering shoppers a chance to win a year of free maid service. For Halloween, it mailed a flyer to households within a three-mile radius of 36 stores that tied Halloween in with greeting cards, pharmacy and cough-and-cold with cents-off coupons.

In Wooster, Ohio, Buehler's Food Markets held a press event to showcase one store with "Ohio's largest Halloween retail display."

Such efforts were spurred on by the second phase of the "Seasonal Best Practices" study, published last year by the Educational Foundation of the GMDC. The second phase of the study detailed back-to-school, Halloween and Valentine's Day. It provided retailers with an event planner that benchmarked weekly projections for seasonal events.

Supermarkets appeared undaunted in testing new nonfood concepts or products to attract shoppers to one-stop shopping. Everything from candles -- which are proving to be a mover -- to music kiosks, Fuller brushes, dry cleaning and propane gas service have been introduced at some chains.

Among the more unusual concepts: A ShopRite unit in Cherry Hill, N.J., set up a bridal gift registry for weddings or new households where shoppers can order themed gift baskets, some of which feature only general merchandise or health and beauty care products. Montvale, N.J.-based A&P has begun testing a 154-foot young children's department made up of Disney, Lego and educational products.

The movement in new-product categories is upscale, with higher-priced items such as cookware appliances. A&P continued to expand its 84-foot Kitchen Shop, which features about 50 kitchen appliances, in its larger-format stores. Rice Epicurean Markets in Houston launched a 3,000-square-foot Kitchen Works department to compete with the likes of Dillards and Williams Sonoma.

In the Dallas-Fort Worth marketing area, Kroger has gone as far as to merchandise $1,200 computers this fourth quarter.

In pet care, grocers continue to devote large dedicated space in an effort to compete with specialty superstores. Zallie Supermarkets, Clementon, N.J., rolled out a 190-foot PetRite center, supplied by Wakefern Food Corp., Elizabeth, N.J. In Mauldin, S.C., Bi-Lo, an Ahold-owned chain, added more 108-foot pet supply centers. Big Y Supermarkets, Springfield, Mass., which features 136-foot Paws Professional Pet Food Centers, hosted a monthlong veterinarian pet care event where shoppers could have their pets implanted with an ID microchip at half price. Other chains hosting vet clinics included Kroger and Pittsburgh-based Giant Eagle.