Fuel prices have consumers focused on energy-saving lighting products, industry executives told SN.
How they are going to respond to the latest volatility in the petroleum market is anybody's guess, but because consumers have seen prices go up as quickly as they've gone down recently, supermarkets can count on a continued sensitivity to the cost of energy.
The result, said retailers and wholesalers interviewed during a recent GMDC conference, is the growth of such items as compact fluorescent lights, long-life bulbs and other products that promise cost savings.
Meanwhile, the continued proliferation of specialized lightbulbs as a part of the decor of new homes and recently purchased lighting fixtures is contributing to bigger dollars and profits in the category. Secondary items like night-lights and emergency light sources in case of power outages also have been adding sales in the past year, and hold future potential, nonfood executives said.
"Long live the ever-promotable soft-white, four-pack," most would agree, but they would also quickly add that longer-life and specialty bulbs are a whole lot better for the bottom line.
It's reached the point where many in the industry need to rethink their terminology, said Charles Yahn, vice president, merchandising, Associated Wholesalers, Robesonia, Pa. "It is changing from the lightbulb section into a lighting section," he said.
Lighting is a basic category for supermarkets, said Larry Ishii, general manager, GM/HBC, Unified Western Grocers, Commerce, Calif. "It's a must-have, and promotion is all-important," he said.
"The four-pack will always be our workhorse, but we need to be creative in looking at the other items in the category that help drive extra sales, and be very creative in promotional activity to be more competitive in the marketplace," Ishii said.
UP AND DOWN
"When energy costs go up, people look for energy-efficient bulbs that last longer and make their electric bill go down," said Robert Passikoff, president, Brand Keys, New York. "But this is cyclical, so when the price of gas and energy falls, everyone except those trying to lead green lives will probably go back to using basic lightbulbs."
Retailers should not expect an immediate reaction in the lighting category to falling fuel prices. "It is not as volatile as gas prices at the pump. It is a reaction of the consumer to these trends," Passikoff said.
"It is a step to being more energy efficient and it makes people feel better," he said.
The lightbulb category is following many other traditional product areas covered by Information Resources, Inc., Chicago, with dollar sales in food outlets down 5.8% to $338 million for the 52 weeks ending Sept. 10. Reflecting the higher grosses of specialty items, unit sales declined further, 8.7% to 131 million. The trend for combined supermarkets, drug stores and mass merchandisers (excluding Wal-Mart) was similar, with dollar sales down 6.8% and unit sales dropping 10.9%.
Many attributed the decline to stores like Home Depot and Lowe's. "We've seen a decline in our lighting products now that the home improvement centers have lightbulbs front-and-center in many cases," said a nonfood executive with a Southeastern retailer.
"They are displayed well and they always have it on the floor. It's a huge opportunity and challenge for the supermarket retailer to get that same type of consistency and promotion on their lighting products," he said.
"The toughest competition we face in lightbulbs is from the home centers," said Jack Serota, vice president, GM/HBC, Price Chopper Supermarkets, Schenectady, N.Y. "They do a fabulous job because they can devote 100 to 150 feet to lightbulbs where I'm lucky to get 16."
In the past year, compact fluorescent lights have been a top growth area of lighting for Price Chopper, he said. "Everybody is aware of oil prices and wants to conserve energy. With lightbulbs, compact fluorescents are one of the best ways to do it because they run so much cheaper."
On the other hand, these and other long-lasting bulbs cut down on the replacement cycle and repeat purchases, Serota said. "It's a difficult balance. Do you push that item or push your regular lightbulbs? [In the end,] you have to offer the customers what they are looking for, and have everything out there to give them a big selection," he said.
The compact fluorescents are the subject of more and frequent marketing efforts. "We're seeing a lot of promotion on the CFL bulbs, along with promotions on the soft whites," said Debbie Deitke, director, business management, GM, Topco Associates, Skokie, Ill. Mixed displays of the different types of popular lightbulbs help build sales for retailers while creating opportunities for consumers, she said.
Rosauers Supermarkets, Spokane, Wash., heavily promotes the lightbulb category, including the fluorescents, said Nate Acheson, GM/HBC buyer-merchandiser. "We are very aggressive with lighting," he said.
With sales of compact fluorescents hot, along with other specialty bulbs, Valu Merchandisers Co., Kansas City, Kan., stepped up its use of temporary price reductions, said Bill Dunkle, category manager, general merchandise. "With most supermarkets, the soft white is still 50% in the category, but it shouldn't be. We should be selling more of the other bulbs," he said.
"Our whole strategy is to change the planograms, put all the specialty bulbs out, get the prices right, while focusing the ads more on the specialty bulbs, floodlights and others instead selling the soft white all the time," Dunkle said.
The manufacturers are improving the fluorescent bulbs so they don't take as much time to warm up and reach full power, while prices are coming down, said Al Jones, senior vice president, procurement and marketing, Imperial Distributors, Auburn, Mass. Utilities also support the purchase of these with rebates and other offerings. "So with all of that put together, those products are coming on strong," he said.
"We are getting away from the basic lightbulbs and moving customers up to more energy-efficient bulbs and we are getting higher rings," said Sammy Snell, director, GM/HBC, W. Lee Flowers & Co., Lake City, S.C.
Delivering On Decor
Four-pack soft-white lightbulbs will remain the cornerstone of any retailer's lighting category for the foreseeable future, but an increasingly diverse array of products are challenging planogrammers' skills.
Energy-saving fluorescents are part of the picture, as are long-life bulbs, but the biggest variety is in decor-related items that are part of many new homes and replacement lighting fixtures.
"Clearly, you need to promote the soft whites, but there are a lot of opportunities to take advantage of in specialty lighting, and we do a nice job with that piece of the business as well," said Jan Winn, director of GM/HBC, Big Y Foods, Springfield, Mass.
"Home decor [lighting products] have been growing because they are a relatively inexpensive upgrade to a house," said Robert Passikoff, president, Brand Keys, New York.
"The market is becoming much more diversified," said Al Jones, senior vice president, procurement and marketing, Imperial Distributors, Auburn, Mass. "There are so many different kinds of bulbs out there for specialty lighting products, you have to offer more variety now than you ever did before."
"Lighting will continue to be a steady category - bulbs are going to continue to burn out and people are going to continue to replace them," said Charles Yahn, vice president, merchandising, Associated Wholesalers, Robesonia, Pa. But product trends are changing. "As more new homes are built, there will be more types of specialty bulbs," he said.
One specialty area that is easy to overlook is night-lights and appliance bulbs, said Larry Ishii, general manager, GM/HBC, Unified Western Grocers, Commerce, Calif. Some may think of these as marginal items, "but they are important SKUs in the category," he said.
"There's a lot of new innovation in night-lights," Winn said. There also are new items for emergency power outages, and some that combine a night-light function with an emergency flashlight, she noted.