Strictly by the numbers, nonfood sales are limping into 2006.While not true for every retailer and every category, statistics reported by the major data companies Information Resources Inc., Chicago, and ACNielsen, Schaumburg, Ill., have shown a gradual erosion of sales over the last few years, mostly attributed to the aggressive growth of other retail channels.Wal-Mart Stores, Bentonville, Ark.,

Strictly by the numbers, nonfood sales are limping into 2006.

While not true for every retailer and every category, statistics reported by the major data companies Information Resources Inc., Chicago, and ACNielsen, Schaumburg, Ill., have shown a gradual erosion of sales over the last few years, mostly attributed to the aggressive growth of other retail channels.

Wal-Mart Stores, Bentonville, Ark., has been relentless in its expansion with supercenters, while drug stores continue their rapid buildup, and specialty players, like dollar stores, also have eaten from supermarkets' pie. Some chains, like Kroger Co., Cincinnati; H.E. Butt Grocery Co., San Antonio; Giant Eagle, Pittsburgh; and Hy-Vee, West Des Moines, Iowa, have recognized the potency of creative nonfood offerings in countering these challenges.

Retailers -- successful or not -- are looking for ways to reassert their strength in nonfood. SN presents five initiatives that can help differentiate their offering in health services, pharmacy, health and beauty care and general merchandise. These are:

Test or expand nurse-staffed health clinics as part of the store's whole health offerings.

Establish a Medication Therapy Management program to better service Medicare beneficiaries.

Expand the selection and refine the merchandising of men's health and beauty care products, taking advantage of a fast-evolving trend.

Make a commitment to digital photo imaging as part of the one-stop shopping environment essential to supermarket success.

Upgrade spring/summer seasonal program by enhancing merchandising and taking advantage of new sourcing opportunities.

There are more opportunities out there that different retailers will take advantage of, but for others, this checklist is a starting point for the year ahead.


In-store clinics are bringing supermarkets closer to the ideal of providing a complete health solution to customers.

Food retailing has been increasingly seen as a vital link in the health chain. Pharmacies can complement the nutritional focus of selling food while bringing a health care professional into the store environment.

The advent of the nurse practitioner with prescription-writing capabilities has brought the latest development in health care to supermarkets: the in-store clinic dedicated to the timely treatment of common maladies.

"The supermarket is the ideal place to do this because there are so many other healthy things within the store," said Roy White, vice president, education, of the New York-based Educational Foundation of GMDC, Colorado Springs, Colo.

"This is an enormous opportunity for providing a convenience for the customer for which there is a great demand right now," said Jim Wisner, president, Wisner Marketing Group, Libertyville, Ill. "Accessible health care simply is not so accessible any more. The cost, time and effort involved in going to see a doctor for routine kind of maladies is almost prohibitive. Being able to offer those services in the store is an idea whose time has more than come."

Wisner said the clinics bring new business to the store and a competitive point of differentiation.

Dan Alaimo


Supermarket pharmacy executives are establishing Medication Therapy Management programs to better serve Medicare beneficiaries and grasp an opportunity for reimbursement.

The question is how to provide MTM without disrupting regular pharmacy operations.

While the Medicare Part D Prescription Drug Benefit, which begins in January, allows pharmacists to be reimbursed for providing patients with drug management services, it does not require payment.

"The challenge at retail is that the government has yet to give a definitive answer regarding payment, so if it is not worked out quickly, consumers will expect MTM but we may not get reimbursed for it," said John Fegan, senior vice president of pharmacy, Ahold USA, Braintree, Mass.

The answer for Ahold is to begin educating pharmacists now. "We are focusing on educating pharmacists on the Medicare program and we have a group of pharmacists reviewing MTM protocols," Fegan said.

Ukrop's Super Markets, Richmond Va., has placed MTM pilots in a few of its stores in preparation for the program. The chain adopted this model to test for consistency.

"If you're going to be administering MTM in all of your pharmacies, there needs to be structure for setting up appointments and setting aside time to perform them," said John Beckner, director of pharmacy and health services, Ukrop's.

"We need to put protocols in place to communicate with physicians and maintain a total scale of lab work, since that is the metric for determining if someone is improving," said Bruce Kneeland, president, PharmacyConnections, Valley Forge, Pa.

Wendy Toth


A fast-growing segment of several categories, men's health and beauty care products have been rapidly moving beyond the elitist and somewhat stigmatized "metrosexual" characterization and entering the mainstream.

The acquisition of Gillette by Procter & Gamble, Cincinnati, will put more marketing muscle behind men's grooming products in the future, but introductions like body sprays for young men, and more sophisticated skin and hair care products for aging baby boomers have already lit a fire under these products, retailers and other experts told SN. The combination of new products, marketing support, consumer awareness and demand will make men's HBC products an area that supermarkets will have to pay greater attention to in 2006. Staying on top of new introductions that appeal to males and the core supermarket female shopper buying for the men in her life also could help make up for some of the deficits they've seen in other categories, industry observers said.

"Men are taking better care of their skin, and more products are coming out for men's hair care, skin care and body care," said Susan Spring, HBC/GM buyer, W. Lee Flowers & Co., Lake City, S.C. "We are going to have to create a section in our stores that addresses that."

Besides the highly promotional and technology-driven shaver category, for which more big advances are expected in 2006, this includes targeted skin care products for wrinkles, a renewed focus on hair color for men, and shampoos that address concerns like men's hair thickness.

The success of body sprays appealing to young males bodes well for overall HBC categories as these boys will grow up and be more accepting of body care products. In turn, their younger brothers will embrace them more readily, sources said.

"The simple issue here is that there is a cultural change afoot to where a greater use of grooming products, other than traditional items, has become far more acceptable to men," said Jim Wisner, president, Wisner Marketing Group, Libertyville, Ill. Endorsements for such products come from "manly" celebrities like Dennis Miller and Mike Ditka, he said.

"That is making more guys comfortable about being conscientious about their grooming and about the products they use," he said, adding that another trend is the growing Hispanic population that culturally is very attuned to cleanliness and grooming.

"Like most things, it is the retailers that get out there with the right product mix and aren't afraid to try and promote new products that are going to capture a disproportionate share of this market," said Wisner. "Guys are creatures of habit in terms of where they like to shop and buy things, so if you can capture that business early on, then it is probably more likely to stay with you."

Dan Alaimo


Although supermarkets continue to move more slowly into digital photo imaging than other channels such as drug stores and mass merchants, in-store kiosks and online services are in high demand and could help offset the drastic fall-off retailers have seen in film-based product sales.

With the growing popularity of digital cameras, customers are looking to print their photos in a way that is both cost-effective and convenient. However, some retailers are investing conservatively into this field because of the expense involved in installing the equipment for digital prints.

"The profitable approach is with kiosk deployment," said Gary Pageau, group executive for content development and strategic initiatives, Photo Marketing Association International, Jackson, Mich. "Kiosks take up less space while producing good numbers."

While some nonfood executives have difficulty justifying the investment in the new equipment, others told SN that they can't afford to sacrifice the shopping trip represented by the digital image customer.

Since the kiosks operate with minimal staff support, retailers would not have to worry about finding other employees to handle development or printing, said Pageau.

"As people get more involved with digital photography, they look for more to do with their images," he said. "The online photo business gets half of their revenue on products such as customized mouse pads and mugs."

Overall, supermarkets' share in the film market has declined: The market share stands at 9.5%, down from last year's 11%, according to PMAI.

"This reflects the conservative stance supermarkets have taken with film processing," said Dimitrios Delissm, PMAI's director of marketing research.

When it comes to digital imaging, supermarkets, can justify asking a slightly higher price for prints because of the convenience they offer, he said.

Darla Mercado


Supermarkets have always sold seasonal merchandise, but the sophistication of the offering, the merchandising and the sourcing has greatly improved in recent years. Some chains still need to take full advantage of the competitive opportunity, especially with spring and summer seasonal items, sources told SN.

Hy-Vee, West Des Moines, Iowa, has been recognized as a leader in this area with the ambitious tent sale program it runs in most stores. Other chains, notably Kroger Co., Cincinnati, and its various divisions, also have aggressive seasonal programs, and smaller companies like Pueblo in Puerto Rico recently revamped programs.

"Hy-Vee is doing a good job with seasonal because they move so much outside during the spring and summer," said Jeff Manning, president, F&M Merchant Group, Lewisville, Texas. "They set up these huge tents outside of the store so they can display everything from gardening tools to lawn mowers to fertilizer." The chain has also sold big-screen televisions.

"Retailers should move spring and summer products outdoors -- to the front of the store and out into the parking lots. You get a lot of visibility; everything is out in the open, and everyone can see the products," Manning said.

Among the spring/summer season trends identified by retailers and other experts contacted by SN are selling more high-ticket merchandise, especially in outdoor furniture; more cross-merchandised tie-ins with other categories to take greater advantage of the food offerings in the store, such as barbecue food and nonfood products; and displays that take advantage of any open space available, whether in-store or on the sidewalk.

Sourcing seasonal products demands greater attention and provides the opportunity for supermarkets to participate in the worldwide marketplace, notably products from China. This results in higher quality products at lower prices than stores have been able to offer in the past.

For example, Unified Western Grocers, Commerce, Calif., cooperates with other companies to purchase product in Eastern Asia, said Larry Ishii, general manager, GM/ HBC. With relationships built up over the years, the supply sources and intermediaries have come to understand the needs of the wholesaler's retail customers.

"Through that process, we're able to leverage our combined volume to buy things that individually none of our companies might have been able to get at the right price," Ishii said.

Dan Alaimo and Darla Mercado