TULSA, Okla. -- Hale-Halsell Co. here will roll out a program in June that is designed to establish a low-price image in nonfood for its stores.
The program involves expanding the general merchandise mix in key categories and cutting general merchandise profit margins in half. In addition, the company will increase off-shelf displays, promote its in-and-out seasonal aisles and support resets with bi-weekly ads in the food section. Bob Hawk, Hale-Halsell president and chief executive officer, said the new program will help recoup general merchandise sales that have been lost to Wal-Mart.
"We'll be pumping up our general merchandise with wider product choices and better prices," he said. "While beating Wal-Mart on price is hard, if your retails are too high you're throwing signals for customers to shop at other retailers." The new format, which is scheduled to be complete by September, is expected to increase general merchandise revenues, boosting the category from 3% of total store sales to about 5%, said Wilburn Davis, sales manager at Anderson Wholesale Co., Muskogee, Okla., which supplies the program.
Hale-Halsell, a wholesaler and retailer with 52 corporate stores, plans to cut everyday general merchandise profit margins from 40% to 20%. It will also pare down nonfood promotion margins to between 5% and 10%, according to Davis.
"Lowering the margins will move [the category] closer to Wal-Mart and Target," Davis said.
The company will increase by 20% to 30% its variety of stick goods, pet supplies, film, batteries,
foil bakeware, automotive supplies, kitchen tools and cookware.
Hawk cited the heavy concentration of Wal-Mart stores and supercenters in Hale's Oklahoma, Texas, Arkansas, Kansas and Missouri marketing areas.
"If the rest of the country thinks competition is tough now, it doesn't know how intense it can become with Wal-Mart opening stores in their areas," Hawk said. The company is also sharply reducing its health and beauty care margins.
According to Paul Stephens, Hale's director of marketing, the corporate stores and about 98 independent retailers Hale supplies with grocery and nonfood in a centrally billed program will significantly increase off-shelf displays, in-and-out seasonal and unadvertised in-store promotions to maximize product exposure and lift general merchandise sales 20% to 25%. The independents, said Stephens, trade under a variety of different banners and are expected to take the same approach in building a stronger nonfood image. He said Anderson will offer the same program to the independent stores as well. Although the independent retailers will determine their general merchandise supply source, most will shift to the program Hale uses at its corporate stores, Stephens said.
As the corporate stores are reset, they will start to roll out new bi-weekly food ads, playing up more general merchandise in traffic-building products. "Ad specials will feature items such as four-packs of light bulbs and two- and four-packs of alkaline batteries, which will be offered at slightly above cost with about a 5% profit," Davis said. Seasonal promotions including in-and-out shippers will be set up in their respective aisles, with foilware and other baking implements merchandised in the baking aisle at Thanksgiving and Christmas, as well as being cross-merchandised at the high- traffic front end at larger stores, he said.
Cleaning implements and small brushes will be promoted in housewares in April and May, barbecue tools and accessories in the spring and summer, and back-to-school supplies in the fall, Davis added.
