The opportunities for seasonal merchandising are ripe for the picking.
That's the central idea executives from GMDC, Colorado Springs, wanted retailers to take away from last year's “Seasonal Best Practices” study.
Four seasons later, GMDC feels it has proved its point. According to representatives from the organization, important new data on seasonal sales due this week validates the need for interdepartmental cooperation and a category management approach to seasonal merchandising, among other key points from the 2006 study.
Indeed, GMDC officials believe that the new seasonal information, to be released a week from today from the group's reconstituted Education Leadership Council at the General Merchandise Marketing Conference in Phoenix, validates last year's study as an important management tool, now and for the future.
“The book is filled with great information and covers all the key points,” said Anthea Jones, vice president of nonfoods and pharmacy for Bi-Lo, Greenville, S.C. “It's a great tool to pull out and refresh yourself.”
Supermarket retailers have always played up the major holidays, offering themed items and promotions around events like Christmas, Thanksgiving, Easter and Halloween. Increasingly, however, industry statistics show that there are opportunities to think outside of the box on seasonal sales — to branch out past the traditional holidays, and to bring a category management mind-set to seasonal merchandising.
Last year's seasonal study highlighted the potential of this market approach. One key point the study made, and that sources interviewed for this story emphasized, is that the modern-day supermarket is equipped to merchandise for all types of seasonal events. Stores have the coolers, sunscreen and grill accessories to accentuate summer. They have the pens, rulers and notebooks for back-to-school time.
Putting all these items together can capture customers' attention, and create a one-stop-shopping destination to increase basket size.
Over the past couple of years, the seasonal focus at Bashas', Chandler, Ariz., has spread outward from the traditional holidays and into event and weather-related merchandising, such as outdoor furniture for summer and back-to-school items closer to fall, said Mike Isom, director of general merchandise.
“I think we were in the same boat with other retailers,” said Isom. “We hit the five major holidays and called it a day. But we've found that back to school, for example, has become an event in and of itself. So what were maybe three or four holidays that didn't warrant a permanent location in the store have turned into 10 to 12 events cycling through to keep that fresh look to the customer. The seasonal department has become a destination department within our stores.”
“Double-digit growth in GM categories and other areas of the store are very achievable, so retailer focus seems logical to capture their share of that high-growth business,” said Dan Nelson, senior vice president, marketing and development, and chief operating officer of GMDC.
“Shoppers need to clearly understand that their store is a destination for [whatever season or holiday they are buying for], and having a high visibility area to reinforce the shoppers' one-stop-shopping needs is critical to winning their minds and purchase intent.
At Bi-Lo, cross-merchandising is a key component to seasonal sales, but everything comes down to basic execution, Jones said.
“I think the key is focusing on the basics and maximizing your ability to upsell your consumers on things they need when they are entertaining or relaxing with their family and friends during holidays and key events,” Jones said. “Not capitalizing on these types of opportunities will leave you wondering why your sales and profits may be suffering during the summer months and holidays.”
In addition, retailers and analysts emphasized the importance of going beyond cross-merchandising to create this in-store, themed destination. Isom said that Bashas' stores have a designated area that displays the current crop of seasonal products. Here, he explained, store managers will also put up umbrellas, a gazebo or Christmas trees, depending on the time of year.
“The nice thing about that is it creates a shop within a shop,” Isom said.
But it isn't enough to simply carve out space and fill it with products, according to Don Stuart, managing director with Cannondale Associates, a consultancy based in Wilton, Conn.
“The store needs to communicate that they have the products, the section needs to be easy to find within the store, it needs to be easy to shop, and it needs to be merchandised to include all the products that customers will want for that season of holiday,” Stuart said.
FROM THE TOP DOWN
The difficult part for retailers, of course, can be bringing all the necessary category managers together to craft a themed destination. This is why the initiative needs to come from top-level management who can promote cohesion, sources said.
At the heart of seasonal merchandising is the need to understand the customer, Nelson said. After all, holidays and events can create a swirl of emotions that are good for business.
“How can any supermarket not have an interest in serving their shoppers at a time when they are most emotional about their purchases?” he said.
“It requires a great deal of work, both in the planning and in the execution,” said Gerald Friedler, a long-time nonfood executive with retail and wholesale firms, who now works as an independent consultant in Boston and served as the lead consultant on last year's seasonal study, as well as this year's update. “But if it's done successfully, it can allow a company to build market share without spending a whole lot of money. They're using assets they already have.”
In addition to capitalizing on events, holidays and the weather, there are numerous opportunities for GM and HBC sales that are often overlooked, last year's GMDC study stated. When inclement weather strikes, draw attention to the umbrella selection. During allergy season, accentuate the pharmacy offerings by creating a separate pallet, or use signage to draw people to HBC.
“It isn't a case of building a new business, it's a matter of taking advantage of an opportunity that is already out there,” said Jon Hauptman, vice president of consultant Willard Bishop, Barrington, Ill. Hauptman was the project manager of the 2006 study.
“It's leveraging the resources of all departments and creating a single seasonal solution in the store — a solution that would have food and consumables, as well as other products,” he said.
“Everybody knows about allergy season, but not that many retailers promote to it,” said Larry Ishii, who is general manager of GM/HBC for Unified Western Grocers, a wholesale company based in Commerce, Calif., and the immediate past chairman of GMDC's Education Leadership Council.
Retailers and GMDC representatives said that the 2006 study has made a positive, if not entirely noticeable, impact.
Mike O'Shell, director of GM/HBC for the Penn Traffic Co., Syracuse, N.Y., praised the study as being well written and informative. He explained that his stores had instituted many highlighted seasonal practices before the study came out, but that he still uses it as a training tool.
“When I had a new category manager in GM, I gave a printed copy to her to use as a reference,” O'Shell said.
The data from “Seasonal Best Practices” opened a lot of eyes at the senior management level, said Hauptman of Willard Bishop.
“Senior retail executives who we talked to and who we presented the study to began including seasonal merchandising as a key component to their go-to-market strategy,” he said.
The ideas put forward by GMDC should work well for supermarket retailers, who often fail to creatively approach merchandising, said Stuart of Cannondale Associates. Operators often take a one-dimensional approach, neglecting to focus their efforts and think about marketing to the need within the need — not just Valentine's Day as a broad concept, but what drives people to buy for Valentine's Day, he said.
Additional reporting: Dan Alaimo
Jump Starting the Top Line
Fostering cooperation and thinking outside of the box apply to more than just selling seasonal merchandise. According to another soon-to-be-released study by the GMDC Education Leadership Council, these retail practices can also help drive revenue throughout the store.
Titled “Jump-Starting Top Level Growth — Phase 2,” the new study revisits the results of its 2005 predecessor, focusing on possible barriers and then recommending solutions. The problems and solutions are numerous. The common thread, however, is the need to reinvent and reevaluate strategies.
“You need to think across conventional boundaries,” said Ted Taft, lead researcher and managing director of Meridian Consulting, Wilton, Conn., which conducted the study. “When you do that, you have the ability to think about tactics that are bigger than what you can do in one category.”
Both the first study and its follow-up focus on four different areas of business management: strategy, process, structure and execution. Under the “strategy” category, for example, the study identified “expansion to additional product categories” as a top-line growth priority. A possible barrier, it noted, would be an outdated business model that wouldn't allow this expansion. Recommended solutions focus on quantifying the situation, building a consensus toward action, then taking and measuring direct action.
The study also includes case studies to illustrate its points. Among the examples included a retailing approach developed by Coinstar, Bellevue, Wash., to use the “4th Wall,” or front of the store; a GM/HBC manufacturer's steps toward “marketing through the retailer”; and how to learn from Toyota's emphasis on reinvention to drive sales for consumer packaged goods.
At the heart of everything is the need for cooperation across categories, according to Taft. This is why the initiative needs to come from top management.
Looking beyond the new study, Taft said that the success of GM/HBC is crucial to stimulating top-line growth.
“If you look at what the club stores do in terms of their average market basket vs. the typical grocery store, it's almost 2 to 1,” explained Taft. “Obviously, there's a huge opportunity to grow through smart nonfoods management.”