"Merchandising" comes from the word "merchant," or one who knows his customers well and meets their needs. Typically, for a retailer it means how the goods are offered for sale, what sort of display is used to attract the buyer. Yet merchandising also goes to the heart of a store's image.
Does a supermarket integrate or separate natural products? Does it go for mass displays? Special events in the parking lot? All are part of merchandising.
"I think we can do a better job by focusing more on the customer, and then developing a plan," said Richard George, chairman of the food marketing department at the Erivan K. Haub School of Business, St. Joseph's University, Philadelphia. Instead, he said, "a lot of times, we do something because someone gave us money."
Things change pretty quickly in food retailing, and it's a dynamic business that is more complex and competitive than ever before.
Or as one retailer said, "You don't know why you're doing good. You don't know why you're doing bad. You just keep shooting bullets. There are so many little things that happen over the course of a day's business that add up to how you're merchandising." That view may be widespread, but it illustrates George's point.
Some stores confuse merchandising with inventory, he said. Merchandising is designed to create image, so everything done in the store should be measured in terms of overall strategy, he said. "You shouldn't measure it in terms of turns," George said, "but when you see a display, you should be able to say, 'That really captures what our store is all about."'
On the other side of that position, Dahl's Food Markets, Des Moines, Iowa, has been finding great deals to "buy 'em big, stack 'em big and leave them up three to five weeks," said Ross Nixon, executive vice president and chief operating officer. He said the 11-store chain has had success recently with buying multiple truckloads of Gatorade and of paper products.
"You can't deceive the customer," Nixon said. "You can't make a big display to make people think it's a value. It really needs to be a value."
In this way, the buying process cannot be separated from the merchandising process, he said, since a retailer must actually have a great deal in order to make the customer perceive it as a great deal and perceive the store as one that offers great deals. Merchandising could encompass display techniques, signage, adjacencies, color, or the aroma of food cooking, be it a demo stand in Center Store or the store's bakery. Or it could involve physical changes in the grocery gondola.
Bill Bishop, a principal with Willard Bishop consulting, Barrington, Ill., told SN that in terms of Center Store, the sales operation he had been most impressed with recently is in some of the new Hy-Vee stores, based in West Des Moines, Iowa.
"What makes them different in the center of the store is that they have actually cut some sections for promotional product right out of the grocery gondola," he said. "They take product from the end display, put it on the shelf and sign it as promotional, and that adds some real excitement to the section." Bishop said it was his impression that these products were previously on the end display, but were moved when there was some additional merchandise left over that no longer supports the end or maybe a new end has appeared. He noted it's not displayed in two places at once, but as more of a trickle-down or flow-down effect.
Another effective technique is the use of a slightly curved outward edge of the gondola where specialty food is displayed. "It breaks the straight run, and that's kind of interesting."
Also, he said Hy-Vee does a nice job with private label. "They call out their private label by identifying instances when it's the best seller in the category, and it's quite an effective approach, calling it a Best Seller rather than Compare & Save," he said, using small white or beige cards that stand out even though they are no larger than 4x6 inches. Hy-Vee did not respond to a request to talk about it further.
Another trend Bishop noticed lately is a number of food retailers, including the Wal-Mart Neighborhood store format, putting more full pallet displays in the center of the store. "It's labor-saving and kind of exciting," he said.
The so-called Sea of Glass, the freezer doors, is said to be the toughest portion of the supermarket to merchandise. Steve Rauvola, frozen food manager, Lueken's Village Foods, Bemidji, Minn., said he uses bright fluorescent-yellow discount tags and is careful that they don't block consumers' view of the product inside the freezer case.
"We try to keep every category covered with those prices. We have the regular price showing and the discount price," he said. The tags give the brand name, then a description of the product, such as "shredded hash browns," then the discount price, "this flavor only," how much the consumer will save compared with the regular price, and lists the weight and UPC code of the item, all "so you can clearly identify what's on sale," Rauvola said. "If they have a question, they can compare the UPC information."
Frozen food decorations left over from last March were recycled in July 2002 for a prize-winning promotion by a Food Pavilion store in Arlington, Wash., which featured several days of entertainment in tents and on a Pepsi-Cola sponsored stage in the parking lot of the store, part of the Brown & Cole chain, Bellingham, Wash. The store and parking lot were decked out in red, white and blue for the Fourth of July event. "It was great fun, and it increased our sales by 14% over the same event the year before," said Earl Pedersen, grocery manager. Live music on the weekends and a "bouncy house" for the kids were part of it.
One of the special promotions was a dinner-for-four giveaway, called a "dinner walk." Tags with numbers on them were placed on the floor throughout the store. As time for the drawing drew near, customers were alerted that they'd better stand on a number. If their number was picked, they won dinner for four and chose whatever they wanted for the meal. A half-dozen or a dozen of these dinners were given away, Pedersen said, plus two bicycles. The whole event won the Best Center Store Merchandising award at the National Grocers Association convention in February in Las Vegas.
About three years ago the NGA, Arlington, Va., added the Web site category to its annual awards for good merchandising.
The retailer's Web page is also part of its image. According to a study, Fresh Trends 2001, 55% of consumers are using the Internet for health information, 46% for cooking and recipe information, and 21% to get nutrition information.
"It's all part of the way people can access you," said George. "A lot of chains thought it was for e-retailing, but there is so much more. The retailing aspect is still a relatively minor point, but what a way to address people's issues, like what's for dinner.
"It helps to solve lots and lots of customer problems," said George, who was one of the judges in the NGA contest. It's often an untapped opportunity for a retailer to be of service and to brand the store, he added.
Two winners in this year's Web site contest were Price Chopper, Schenectady, N.Y., first place, and Big Y, Springfield, Mass., runner-up, chosen because they went well beyond the weekly specials, with links to community events and other helpful aspects.
Big Y's frozen food section on its Web site during March, for example, incorporated links to the National Frozen & Refrigerated Food Association for recipes and food-safety tips. On the left side of the page were topics to be explored, such as This Week's Sale, Great Appetizers, Why Frozen is Better, Frozen Food Handling Tips and a frozen food storage chart.
Val Vivenzio, director of frozen food and dairy for the chain, said he believes the Web site does increase sales in his department.
"Merchandising in a store, you use endcaps and all sorts of vehicles that are visual, trying to attract attention," said Judd Kirklin, president and CEO, HomeTownGrocers.com, Northfield, Minn., designer of online shopping services and Web sites for retailers.
On the Web site, pop-ups are irritating and push customers away, he said. "In the grocery section, you have to be more subtle. You have to look for ways to present opportunities that do not cause irritation. If you are trying to promote ketchup, for example, you have to wait until they are thinking about condiments."
Grocery managers should help design the Web pages, Kirklin said.
Usually when he designs a supermarket Web site, he works with people on both the corporate level -- the lawyer, the accounting people and the information systems manager -- and the store level, to be sure they have a say in how products are going to be offered online.
Another electronic feature is found in the HealthNotes kiosk, used by a number of food retailers. It has a report format that gives the retailer a sample category management report, and can be used as a merchandising tool.
Completely anonymous, it tracks what customers are looking up as they go through the system. The retailer could print out the top 10, or any other configuration of what customers are interested in and presumably would like to see on the shelves.
"We also have 300 recipes in our system. If you notice a lot of them are getting printed, you might want to do an endcap and provide the ingredients. We have some smaller retailers that are doing this," said Amy Garland, senior marketing coordinator, HealthNotes, Portland, Ore.