Supermarkets looking forward to a holiday feast are unlikely to be disappointed.
A survey of retailers by SN found that the strong national economy and strategic retail promotions are expected to help fuel a good holiday season, despite increasing competition from many types of store formats.
Retailers are linking turkey giveaways to customers' frequent shopper spending levels. They are promoting special holiday programs in perishables and general merchandise and playing up novelty items for new selling opportunities.
Chuck Cerankosky, an analyst at McDonald & Co., Cleveland, said, "The economy is strong enough to support a pretty good level of holiday entertaining. I don't see any signs of customers cutting back.
"I do a lot of traveling, and it's hard to ignore all the help-wanted signs all over the country. Regional and local economies are healthy nationwide."
Cerankosky said the trend toward frequent dining out tends to produce a reaction around the holiday times, with people doing more, and more elaborate, home cooking.
"In the final two months of the year, you have at least three eating holidays," he said. "It's a traditional time of home entertaining that's almost always centered around a meal. Even with all the dining away from home, this is a time when people prepare food at home and use their latent gourmet skills. And the supermarket companies are more than happy to help by providing and promoting seasonal products -- turkeys, standing rib roasts, elaborate desserts."
From a financial standpoint, however, Cerankosky noted that every retailer's holiday might not be happy and bright. "Overall, there should be growth in the fourth quarter," he said. "This will be most apparent at companies that have been doing well all year long. If you're struggling in the first 10 months, it's not going to get all that much better in the end of the year. The competition doesn't go away."
Jack Brown, chairman, president and chief executive officer of Stater Bros. Markets, Colton, Calif., said his company plans to emphasize promotions on perishables and general merchandise from the fall through the end of the year.
Since acquiring and remerchandising 43 former Albertson's stores earlier in the year, Brown said Stater has expanded its selection of produce, in part through the installation of triple-deck cases in two-thirds of its stores, "so we're pushing hard on the variety and selection in our produce departments."
In addition, Stater added service meat departments at the 43 acquired stores -- the same as it offers at all stores -- "and it's our goal to have meat from our stores on as many holiday tables as possible at Thanksgiving and Christmas this year," Brown said.
Stater is also broadening its selection of nonfood merchandise, primarily on a promotional basis. Brown said the company will offer more promotions on small appliances and housewares, including vacuum cleaners and dish sets.
He said Stater did a large volume in Razor scooters during August and September, priced at $49. Once the chain sold out, however, the promotion was over "because it's my experience that you get into trouble on the re-orders. So we sold through on what we ordered, and the scooters just raced out of here."
He said average order sizes are up slightly from a year ago, "which is a reflection of the economy -- customers are feeling good about where things are right now." In addition, average sales at the acquired stores are up from where they were when Stater took over the stores last spring, Brown said.
Although competition remains intense, he said the four major chains in southern California -- Kroger/Ralphs, Safeway/Vons, Albertson's and Stater Bros. -- "are fully satisfied with their results."
Meanwhile, across the country in Sunbury, Pa., Weis Markets is running a turkey promotion for the third year in a row -- club-cardholders who spend a total of $250 between Sept. 24 and Nov. 4 get a free 12-14-pound frozen turkey, and those who spend $400 during that period get an 18-20-pound Weis premium turkey.
According to Dennis Curtin, Weis spokesman, the company has been "pleased with the results -- it's a very effective promotional program, and customers like it a lot."
Curtin said competition is more intense this year than in previous years. "What's becoming increasingly clear in our marketplace is that you can separate the successful companies from those that are falling behind -- the successful ones are investing in their store base and not letting grass grow under them, and they are promoting aggressively, and we are very much in that category."
Free turkeys are also on the menu at a Midwest regional chain. Ron Pearson, chairman, president and chief executive officer of Hy Vee, West Des Moines, Iowa, said his company will repeat a series of Thanksgiving promotions it has used before, each involving turkey giveaways. Stores that offer loyalty cards will distribute free turkeys to cardholders based on their level of purchases during the prior year, he said, while some stores that do not offer cards will give free turkeys with each ham purchase and others will hold prize drawings to give away free turkeys.
For Christmas, Hy Vee intends to expand several programs that have been successful in the past, Pearson said, including more promotions on general merchandise items. "We sold a lot of general merchandise last year, and we will continue to increase our offerings because we have more stores in the 60,000-70,000-square-foot range, and we've been able to improve our GM sales every year."
One item that will get expanded space is candy, which Hy Vee considers a GM item, Pearson said. "We'll feature larger displays, including more space for higher-priced boxed specialty candy, which we think is a great growth area. We've seen the market for boxed candy grow steadily."
He said Hy Vee also expects to offer various toys and gift items, including some jewelry -- "things where we continue to find new selling opportunities," Pearson said. "We've also sold huge amounts of nice sweaters in the past, plus sweatshirts with holiday pictures or sentiments on them, and we'll expand that this year."
Hy Vee also expects to expand its offerings of luncheon meats and cheeses in its service delis, "and the amount of specialty trays has grown dramatically and become a major business for us," Pearson said. He said the company offers trays featuring turkey, ham and prime rib dinners priced at $29, $39 and $49 or higher. The most popular at Thanksgiving is the $39 turkey dinner, featuring a 12-pound bird and all the trimmings, including dessert, though the company also has a smaller turkey available on the $29 platter.
"The turkey trays are more popular at Thanksgiving, and the ham and prime rib trays are more popular at Christmas, and that business is growing," Pearson said.
He said he expects consumers to spend "as much as they did last year, if not more, because the economy is still very good in all seven states in which we operate."
He said competition has intensified "more than ever" over the last two years, with virtually all of it coming from Wal-Mart and Target supercenters, with Wal-Mart moving north and Target south in the midwestern United States. "Last year we saw 28 new supercenters open, and this year we've seen 25 more in our area. I've never seen a period where one type of competitor opened as many stores."
To compete, he said Hy Vee tries to build personal relationships with its customers, using friendliness, service and more variety, particularly in perishables. "We think we can operate cleaner, neater, friendlier stores and let customers know we're more caring operators," Pearson said.