TOP 10 GM

General merchandise is a monster business. With hundreds of niche product categories, thousands of small suppliers and sales data either unavailable or difficult to obtain, the general-merchandise business can be unwieldy, and a big challenge for supermarket buying executives. However, the payoffs in profit can be big.ion, or a 23% share. In the Top 10 categories listed below, supermarkets sold $2.6

General merchandise is a monster business. With hundreds of niche product categories, thousands of small suppliers and sales data either unavailable or difficult to obtain, the general-merchandise business can be unwieldy, and a big challenge for supermarket buying executives. However, the payoffs in profit can be big.

ion, or a 23% share. In the Top 10 categories listed below, supermarkets sold $2.6 billion, or a 17% share of the total volume. Some categories, such as foil pans, are often merchandised in the center store aisles and not solely within general-merchandise's domain. So this category was not included among the top 10.

BATTERIES

ANNUAL VOLUME

$552 MILLION

% CHANGE

10.5%

Battery manufacturers scored big successes with the introduction of their longer-lasting power cells for high-drain electronic devices. Category sales surged ahead 11.5% to $2.3 billion, which proves that technological advances drive battery sales.

All three channels benefited. Sales at supermarkets rose 10.5% to $552 million. Drug stores, which captured a slightly higher market share than supermarkets, generated $584 million, a 7% rise. Clearly holding a dominant category position, mass merchandisers enjoyed a 14% increase and pushed sales to more than $1 billion.

The two leading brands, Duracell and Energizer, continued to fight it out over market share and pitted their longer-lasting alkalines against each other. Rayovac, Panasonic and Sanyo continued to compete on price and value.

LIGHTBULBS

ANNUAL VOLUME

$434 MILLION

% CHANGE

- 2.4%

Surprisingly, the rise in new home starts and a growing acceptance of more costly halogen and specialty bulbs failed to affect overall lightbulb sales at mass-market outlets last year. Category sales remained flat at $1 billion, a minor 0.7% increase. This may indicate that superstores such as Home Depot, among others, are grabbing much of the specialty bulb business.

Supermarkets, with 42% of the market, and mass merchandisers, with 48%, did battle for a greater piece of the pie. Lightbulb sales at drug stores, which captured only 10% of the market, remained mostly an emergency buy for most shoppers. Sales at supermarkets declined 2.4% to $434 million, and drug-store sales fell 3.5% to $100 million.

However, home upgrades that used more sophisticated lighting products and an upturn in the economy appeared to benefit sales at mass merchandisers. Their sales went up 4.6% to $500 million.

Mass merchandisers generally operate larger lighting centers with wider assortments. But some supermarket chains are devoting more space and are turning their departments into centers that merchandise the higher-priced, energy-efficient products.

FILM

ANNUAL VOLUME

$332 MILLION

% CHANGE

- 0.7%

Aggressive industry promotions and extensive displays have given film products high visibility and driven demand, especially for popular 100- and 200-speed color films. However, the fierce price competition among the major suppliers may have affected dollar volume, which remained flat at $1.7 billion last year. There was only a slight uptick of 0.6%.

Supermarkets followed the category trend with a slight slip of 0.7% to $332 million. Dollar volume of $579.9 at drug stores fell by 2.7%. Mass merchandisers picked up the slack from the competing channels with a 3.8% sales gain to $784.2 million. During the fourth quarter, supermarkets go head-to-head with mass merchandisers and discounters by promoting film through multipacks, floor dump bins and cross merchandising in other departments. Mass-market retailers have an advantage in the sheer size of their film/camera departments. They also heavily feature film ad specials prominently in weekly circulars.

CANDLES

ANNUAL VOLUME

$300 MILLION

% CHANGE

16.7%

Candles have become a stellar performer for all mass-market channels, especially supermarkets.

Category sales posted an impressive 20% increase to $835 million. A number of social and economic trends have contributed to the boom in candle sales. People are spending more time at home to relax and entertain. Also, health-conscious consumers like to pamper themselves by creating a spa-like environment to soothe over-exercised bodies. Aromatherapy candles have become an important part of that experience. All the greeting card manufacturers now sell attractively packaged candles not only for everyday use, but as a fashion accessory as well.

Most leading supermarket chains have extended their candle offerings in various sections of the store, including the social-expression department; the air-fragrance aisle, as an extension of the body/bath section; and as separate end-aisle displays in health and beauty care. Sales rose 16.7% to $300 million with supermarkets capturing 36% of candle sales.

Although drug stores also were up 17% to $110 million, this channel is not a destination for candles, with only a 13% share of the market.

As is the case with many general-merchandise categories, mass merchandisers are generating half of the sales. Sales hit $425 million last year, a 24% increase.

PANTYHOSE/NYLONS

ANNUAL VOLUME

$269 MILLION

% CHANGE

- 6.3%

Perhaps the biggest effect on the pantyhose/nylon business is lifestyle changes. The introduction of casual dress codes in the workplace and the acceptance of pants put a damper on pantyhose sales, which fell 2.7% to $915 million.

Viewed as a commodity purchase, mass-market channels represent about 67% of pantyhose purchases, according to industry figures. Both food and drug channels lost dollars last year, while mass-merchandisers' sales were flat. Food stores, with $269 million in volume, took the biggest hit with a 6.3% drop in sales. Following right behind were drug stores, whose sales volume dropped 5.9% to $224 million. Mass merchandisers had only a marginal increase of 1.6%, accounting for $423 million in sales.

Leading pantyhose manufacturer Kayser-Roth, maker of the No Nonsense brand, was bought by Italy's Golden Lady, a European legwear maker.

In an attempt to revitalize the category, manufacturers are using new fibers like Spandex and blended nylon, microfiber and Lycra to produce products that last longer, are sheerer and don't run so easily. Graduated compression sheers also were introduced early last year. These products support the ankles with a lessening of support as they go up the leg, which is the opposite of regular graduated sheers. It's hoped such innovations can rejuvenate the legwear business. Meanwhile, socks sales are on the rise.

CLEANING TOOLS/MOPS/BROOMS

ANNUAL VOLUME

$220 MILLION

% CHANGE

- 0.6%

New ergonomic designs and better quality materials helped boost overall cleaning tool sales last year, 4.5% to $624.4 million.

Supermarkets had flat sales, down 0.6%, despite the fact that the $220 million category is heavily promoted in spring cleaning promotions. Many chains also remerchandised their stick goods sections last year and added upscale brands with higher price points.

Mass merchandisers dominate the category, taking a 57% share of market. Sales increased a healthy 8% to $354 million. Clearly, this category is not a factor at drug chains, which represent just 8% of market share. Sales at drug stores were off 5%, to $50 million.

SINGLE-USE CAMERAS

ANNUAL VOLUME

$150 MILLION

% CHANGE

24%

Fueled by their simplicity and ease of use, single-use cameras charged ahead 25.8% to $621.7 million in sales. New models introduced with faster speed films and changeable formats have given impulse purchasers more choices and added to dollar volume.

The popularity of one-time cameras and the convenience of picking up a daylight, flash or underwater model is expanding the photo base in all trade channels.

Supermarket sales advanced 24% to $150 million. Drug stores, which captured the biggest share of market, experienced equally robust performance, with sales up 33% to $246 million. Mass-merchandisers' sales volume rose 20% to $225.6 million.

The single-use camera is an exceptionally strong general-merchandise item and buyers expect further growth from the category.

BABY ACCESSORIES

ANNUAL VOLUME

$138 MILLION

% CHANGE

6.7%

Baby accessories grew 29.5% to $938.3 million, primarily from super baby supply stores and larger, more comprehensive baby general-merchandise departments in other retailing formats.

Expanded destination centers at supermarkets helped fuel baby-accessories sales to $138.4 million at supermarkets, a 6.7% increase. In a bid to grow baby accessories and other baby items, nonfood sections of supermarkets also have created baby clubs to reward frequent shoppers, and have expanded the department mix with apparel, swing sets and other higher ticket items.

Meanwhile, mass merchandisers are making a mark in the category. These retailers leaped ahead 38% and generated $723 million in category sales. With only an 8% market share, it appears drug stores have relinquished this category to other channels. However, their sales went up 8.5% to $76.7 million.

HAIR ACCESSORIES

ANNUAL VOLUME

$125 MILLION

% CHANGE

5.1%

Hair accessories are doing well these days with butterfly clips, elasticized hair straps, bejeweled bobby pins and rhinestone-studded barrettes adorning heads. The $715 million category, up 7% last year, is both trendy and functional. Better quality accessories also have helped to push dollars ahead.

This is one product segment that is not thought of as typically a supermarket item. But more combo chains have placed extensive assortments of hair accessories, as well as better quality brushes and combs, in their health and beauty care aisles. Supermarkets have a small share of the market at 17%, Sales were up 5.1% to $125 million.

While mass marketers capture more than half the category sales, drug stores are doing well with a 30.8% share. Drug store sales were up 6% to $220 million.

Mass merchandisers posted an 8% increase to $370 million.

BLANK AUDIO/VIDEO CASSETTES

ANNUAL VOLUME

$80 MILLION

% CHANGE

9.6%

With the exception of supermarkets, category sales of blank audio and video tapes declined 3% last year to $648 million. Sales were off at both drug stores and mass merchandisers.

The transition to digital formats is most likely causing confusion in the marketplace, especially for CD recording media. Consumer concerns in purchasing blank recording media are brand, duration, application and quality level, say suppliers. Therefore, manufacturers have attempted to make impulse buys easier through better packaging and displays.

Even though supermarkets have a 12% share of the category, they did post a healthy sales gain of 9.6% to $80 million. This may indicate suppliers targeted more supermarket promotions for their products. Meanwhile, discount stores with $391 million in sales are the leading sales outlets for category. However, their sales were off by 5%. Drug stores also showed a 2% decline to $178 million.