NEW ENGLAND STORES SEE NONFOOD AS KEY TO SURVIVAL

BOXBOROUGH WOODS, Mass. -- In a highly competitive New England marketplace, independents and small chain supermarket operators are looking at nonfood as an essential element in their survival."Right now nonfood has more bottom-line contribution than my meat department," Albert Lees 3rd, president of Lees Supermarket, Westport, Mass., told some 120 sales reps gathered here for a year-end meeting of

BOXBOROUGH WOODS, Mass. -- In a highly competitive New England marketplace, independents and small chain supermarket operators are looking at nonfood as an essential element in their survival.

"Right now nonfood has more bottom-line contribution than my meat department," Albert Lees 3rd, president of Lees Supermarket, Westport, Mass., told some 120 sales reps gathered here for a year-end meeting of Imperial Distributors, Auburn, Mass.

To help the nonfood distributor achieve its sales goals this year, especially on seasonal merchandise, the distributor hosted a retailer roundtable at the meeting. Besides Lees, it included Suren Avedisian, general manager at Omni Foods, Chestnut Hill, Mass.; Brian McHale, category manager of nonfood at Roche Bros., Wellesley Hills, Mass.; and Jay DiGeronimo, president of Victory Super Markets, Leominster, Mass.

All the retailers who participated are smaller operators with stores that range from 11,000 to 60,000 square feet. In their various marketing areas, they are competing against Stop & Shop , Shaw's Supermarkets, Big Y Foods and Price Chopper Supermarkets as well as the deep discounters and drug chains.

The panelists said they were all committed to growth of nonfood even given their space limitations. "As the Wal-Marts get into food, we've got to get more and more into nonfood to really come at them and fight them," said DiGeronimo of Victory.

Avedisian, who has an 11,000-square-foot store, said the key to success will be getting the right balance between food and nonfood. In a small-store format that can be tough, he concurred.

"We need to have the right products in the right stores at the right time to be successful," said McHale of Roche Bros. "We need to trade the customer up to a higher ring."

The following reveals how these smaller-store retailers will approach nonfood in the coming years and what role distributors like Imperial will play in the process.

IMPERIAL: How can seasonal nonfood become more important in your store?

LEES: Go a little bit more upscale. We sell ourselves short in what our customers really want. Williams Sonoma is really all over the world, but we're still selling Ekco pots and pans, which is great, but there's an opportunity in the marketplace for some higher-scale products.

McHALE: We need to have the right products in the right stores at the right time to be successful. We need to trade the customer up to a higher ring. Don't necessarily go for the cheaper 99-cent item. It's not going to fly in Wellesley.

We have to focus on seasonal. Halloween has grown to be huge, especially in my neighborhood, and we have to take full advantage of those kinds of opportunities. Get the whole store involved and make it a full-store event with seasonal candy and pumpkins. Merchandise it in a huge area of the store. That's displaying the product.

That's the problem, we want to sell more product, but we only have a specific amount of space on the floor. Therefore, we need to manage that space better and put in better items that will sell and turn quicker in specific stores.

DiGERONIMO: The most important thing is to get into the seasons early. Customers may not necessarily buy the Christmas stuff that's out there in early November, late October, but they know you have it. Sometimes they forget food stores carry seasonal products. Get it out early so they see it. It creates a lot of demand.

AVEDISIAN: Improved selection is critical for us as well. Having the right items in the right store. When you have stores that range as low as 11,000 square feet there's not a lot of room for nonfood.

Timing is critical. If you don't have that product out there early, the customer doesn't think of you as the source.

IMPERIAL: How can the nonfood distributor/wholesaler help you increase the sales of seasonal merchandise in your stores?

McHALE: We have to identify the star performers. Imperial's got to be more specific. They have to identify the "A" items.

I'd also like to see themed events, specifically in January after the Christmas sale. The stores are empty, the shippers are down, there's no excitement. Bring something to the table for January and see if we can build some sales.

DiGERONIMO: Themed events are a great idea. Also the candy companies always have a promotion, a contest with our grocery managers. The cookie vendors are good at that too. We allow the managers to decorate the stores and these guys have more creativity when you let them go. Run contests with the stores based on percentage increases in stores. If you tied a seasonal event with promotions and some prizes for the grocery managers, I think we'd have a real good combination.

Give us the variety and the things that consumers want for different seasons. You have to bring us up front and don't bring us last year's seasonal items.

AVEDISIAN: It's been said that item selection is critical. Get us new items and what is hot right now. What experiences have you seen in other areas of the country? That's what's going to make a difference in improving the sales.

LEES: As an independent we don't have a staff that devotes and focuses a lot of time on a particular area. Imperial can help us create an entire program as opposed to disjointed things. It would be a heck of a lot easier for us to plug in a module as opposed to just saying "well here's 60% now, let's try to put together the other 40% to make it a total program."

IMPERIAL: What constitutes success in selling seasonal nonfood in your stores?

DiGERONIMO: Great sell-through. I think we clearly like the idea of the nonguaranteed. It's allowed us to be much more competitive. What we like is selling this stuff half-price off after the season is over. It's a good way for you to recoup something rather than storing the stuff.

Part of the problem is that as you wind down, you have to be careful. All of a sudden, I don't want to order in any more; for the last week or two I don't want to be stuck. However, you're going to lose your chance to sell the product at the peak of the season because everyone's afraid to get hung with excess product. So, I think we've worked out a good system to clean up, to keep those displays up through the season.

A successful program is making a statement, even if it means doing a loss leader, just like the grocery department. We need to put some of these items in the ad even at reduced gross profit so the customers know we have particular items. Success obviously is how much sales we get and did we improve over last year. But again, getting first to market with the right product is really the determining factor as to how well the promotion went.

AVEDISIAN: Yes, great sell-through is critical. Another element of success is the sale of related merchandise. If we're able to tie in some regular grocery items and regular nonfood grocery, whether it be wrapping, or foil or things like that into that display and get better sales through related merchandising, that's made the entire event a lot more successful for us. If all we do is just sell the seasonal merchandise without the extra incremental sales in other areas, we've missed the boat.

LEES: Besides sell-through, general customer satisfaction spells success to me. The customers' eyes have to light up when they see a promotion or else they're not going to buy. They're still in our store primarily for food so we need unique products and a little bit more creativity for customer satisfaction.

IMPERIAL: Do you see any changes in your nonfood mix or merchandising as we approach the turn of the century?

DiGERONIMO: We all would love larger stores to be able to bring in a wider assortment. It's clear that the trend is toward a greater mix of nonfood and it is not going to stop in the future. As the Wal-Marts get into food, we've got to get more and more into nonfood to really come at them and fight them.

AVEDISIAN: What do you lose when you give more space to general merchandise? What do you have to give up in that store? There's only so much space. There are more grocery items; people keep on asking for them. So what do you give up? It's trying to get that balance and in an 11,000-square-foot store, it's pretty tough.

LEES: We are looking at all of our items a little bit differently because of our frequent-shopper card program. We don't look at them in aggregate sales as much as we look at what our best customers are purchasing. That gives us a little bit more flexibility. Hunt's spaghetti sauce is a good example. We'll sell tons of it. But we don't sell a lot to our best customers and we only sell it when it's on sale, when we're losing money. So what's the value if we are not selling that item to the customers that produce 85% of our gross sales and 92% of profit? You've got to have it, but why take up 6 linear feet on a shelf?

Anyway, having said that, we are now looking very strongly at the nonfood category again, because of the increase in sales and also the contribution to the bottom line. We're looking at opportunities and finding out what's working and what isn't with our best customer group, the top 30% to 40%. The reality is that the frequent-shopper card provides space opportunities throughout the store. We are going to be able to pick up more space for general merchandise and other nonfood within the grocery aisles because we'll be able to reduce space on the items that have less appeal to the customers who are keeping our lightbulbs on.