By the start of this week, most grocery chains should be well into their holiday seasonal merchandising. However, this wasn't always the case.
In the past two years since the General Merchandise Distributors Council, Colorado Springs, Colo., first released its "Seasonal Best Practices" study, major food chains have embraced the notion of seasonal selling by dedicating large-aisle space and cross merchandising related goods throughout the store. The results have proved profitable for an industry that for too long overlooked this opportunity while drug stores and discount chains for years made this a strategic part of their business.
"You have to learn to be a whole-league dealer. The failure to plan seasonal events when the big boys are playing the game is what many are dealing with," said Harold Lloyd, president, H. Lloyd & Associates, a supermarket specialist and marketing consultant, Virginia Beach, Va.
With supermarkets carrying such a high volume of foot traffic and a large number of frequent customers, their aisles are a natural place to encourage such impulse buys. Yet, industry executives say many chains still have not fully grasped the potential this market holds. Most have dabbled with Easter candy and Halloween masks, but many have ignored the string of other holidays and events that could boost sales even further -- especially given the increasing orientation of American popular culture toward shopping around such "special occasions."
"There are a lot of second-tier holidays like Valentine's Day and Mother's Day that the stores are overlooking, profits they have given up to the discounters. It's natural for shoppers to come into grocery stores looking for holiday items, so it should be natural to throw other items at them in these areas too," stated Lloyd.
One of the problems had been that grocers lacked the structure of seasonal planning that would help bring supermarkets up to speed with their competitors, executives noted. GMDC's Seasonal Best Practices report provided that structure by outlining the 16 basic seasonal events. It provided standards for event dates and types of merchandise that should be displayed, as well as what the GMDC considers "the two most important benchmarks" -- percent of annual general merchandise seasonal sales and gross profit after shrinkage and markdowns.
"Grocers need a template and guide on how to get from one season into another, how to get the space they need to stock enough merchandise to be effective and how to plan far enough in advance to be fully prepared for each season," commented Roy White, GMDC's vice president of education. "Our report was meant to educate grocers on recognizing the signals for selling periods and help them better plan for seasonal merchandising."
So far, the general merchandise that is becoming integrated into supermarkets' seasonal planograms include predictable items such as gift wrap during the Christmas season, grills and charcoal over the Fourth of July and bins stocked with stuffed bunnies during the few weeks before Easter. But some grocers are beginning to branch out into largely uncharted territory for the food industry, bringing in unexpected items along with traditional seasonal orders. Wegmans Food Markets, Rochester, N.Y., for example, imports high-quality ornaments and dolls found mostly in Christmas specialty shops.
"Seasonal merchandise is often such an impulse buy, and tie-ins are the key for us because we're a supermarket, and not a store where customers plan to buy certain items. So we have to have these items in the stores when the customer is most likely to buy them," said Teresa Hansen, seasonal buyer for Spartan Stores, Grand Rapids, Mich.
Hansen cited the challenges in seasonal merchandising. "The biggest thing is that we work so far out. We have to know what the trends are and make sure we have items in the right place at the right time. We have to know what colors and styles are in each season. Buyers here at Spartan keep up to date on current trends and styles and attend shows and conventions so we know way ahead what the demand is going to be."
And, noted Hansen, seasonal merchandising can be risky and subject to unexpected factors that can change sales patterns. For example, "weather definitely plays a role in selling seasonal items. If it's too cool, our fans won't sell and if it's raining we won't be selling many barbeques. Having seasonal items in the store at the right time is crucial."
Without a general merchandising manager or seasonal manager in place, some experts contend, most stores won't be able to push seasonal general merchandise to the maximum.
"A lot of supermarkets have someone in floral or another department overseeing seasonal general merchandise and it doesn't get the respect it deserves," said Lloyd, the consultant. "Most great companies have a vice president of general merchandise who is in charge of these areas in stores. You need a manager of general merchandise or someone who is specifically responsible for seasonal merchandising to make it work. The top management of companies need to have a commitment to nonfood too, but not a lot of them have the corporate support or a general merchandise manager or someone to set up the displays."
However, Lloyd mentioned large chains, including Kroger Co. and Meijer, that do have general merchandise oversight at a vice presidential level or above.
"The bigger chains who have been able to bring in people from other channels to work on seasonal merchandising are learning about it a lot quicker than some of the smaller chains," said Nick Palios, a spokesman for Richland Markets, a small, six-store supermarket retailer in Ceres, Calif.
"Some smaller stores will probably never have someone who just does seasonal. It will probably be someone with a dual responsibility, like someone in greeting cards, someone who is geared around those types of items, anyway," he added.
Besides the luxury of having a single point person orchestrating seasonal, a store-wide team effort also is required for success. "To take seasonal merchandising right through to the top requires departmental collaboration," noted White.
"Seasonal is so much a nonfoods issue, so the next step is to make grocers see that nonfoods is an important part of the picture, and stable, and that we have plenty of history proving what seasonal can bring in," said White.
Indeed, seasonal is a complicated strategy that requires a team effort to maintain displays and promotions. As previously noted, it also requires extensive planning, keeping up with changing trends and timing the flow of merchandise into and out of the store. There are conventions to attend, space allocations to plan, dispersement of seasonal items throughout the store and determining the amount of merchandise needed for the length of time it will be in the store. Far too often, Halloween candy and Thanksgiving paraphernalia sit on grocers' shelves through the start of the Christmas season, which, according to the GMDC study should begin November 1.
However, White said, "drug stores are into Halloween one month in advance and have fully stocked aisles that take in sales -- sales that supermarkets could have taken by nature of their business. Seasonal general merchandise has been one of those missed opportunities for grocers," said White.
"Grocers are working on seasonal on much more of an organized basis than before and we would like to see them organizing this area in advance and making annual planning a permanent process. The goal is to organize seasonal products so products are in stores before the season starts and are out of stores when the season is over."
Supermarket chains also run into the problem of not wanting to "eat" profits just to lure shoppers into their stores. "If we would buy shippers of children's videos, for example, we would sometimes end up selling them for less than we paid. Retailers like Wal-Mart and Target have that loss planned into their pricing module, and if they lose money in one area, they'll make it up in another," said Palios.
"Things like that have made me leery about getting into some of the seasonal items because we want to sell through and don't want to have to reduce a lot and sell items at half price after the event. We aren't as used to this type of loss," he added.
Finding the space and manpower to executive the seasonal strategy is another challenge for supermarkets, especially smaller chains. Many stores are limited to stocking end-caps and stand-alone racks to house additional items for seasonal. But, with seasonal sales on the rise in supermarkets, many grocers are cramming in new items that are sure to catch the eye of impulse shoppers.