The five nonfood initiatives that follow on the next page to a large extent emerged from outside forces that will continue to shape shopping habits. With the movement to self-care caused by escalating health care costs, retailers are realizing that immunizations are not just seasonal but can be a year-round disease prevention strategy and one that is profitable.
The recession has been particularly tough on small, independent pharmacies that lack the resources to invest in technology to improve their operations. The subsequent credit squeeze has forced independent pharmacies to consider buyouts. Bigger supermarket chains see an opportunity here to grow their pharmacy profile.
Due to diminishing disposable income, shoppers returned home in droves to cook meals. Although this may be seen as a retro trend, many observers believe cooking at home may be long term especially if paychecks don't bounce back. Grocery retailers are in an ideal position to boost their cookware sales and make it easy for their shoppers to cook at home.
Few would argue against the public's concern over planet Earth's sustainability as long lasting with weather patterns dramatically changing and natural resources becoming scarce. More shoppers will choose to patronize those retailers who deliver a clear message that they support environmental and social sustainability initiatives. Nonfood merchandisers can do the same in their product selection.
Another area of rapid transition is in digital entertainment delivery systems. Supermarkets have gone from dedicated video rental departments to the $1 rental kiosk. However, they need to stay attuned to the developing digital delivery online.
IMMUNIZATION SERVICES are offered by about 75% of supermarket pharmacies. Such services are profitable not only as an additional source of revenue but as a means to secure more pharmacy patients and drive traffic into other departments of the store. Now some chains like Ukrop's Super Markets are expanding services beyond the traditional start of the flu season in October by offering travel immunization clinics, and adult and children immunizations throughout the year.
“I see more supermarket pharmacies becoming involved in immunization programs,” said Bruce Kneeland, a pharmacy consultant based in Valley Forge, Pa. “The primary reason is that they need to find ways to capture the attention of grocery shoppers and convert them to prescription customers. Vaccinations — of all types — are one great way to do this. When people read about and participate in an immunization event at the pharmacy, they finally ‘get-it,’ that the pharmacy is there, professionally staffed and able to save them time, effort and energy by filling their prescriptions as a natural part of their routine visits to the supermarket.”
Food Marketing Institute reports 42.5% of supermarkets administer immunizations through certified store pharmacists, 37.5% through outside nurses and 15% through outside contractors.
Pharmacy Ownership Transfers
INDEPENDENT pharmacies are struggling to survive in a restrained economy as they face a fall-off in scripts, a need to invest in technology and continued pricing pressure from chain drug stores. Combining the present economic environment with the aging of independent pharmacy owners often results in attractive opportunities for supermarket pharmacies to acquire and then roll up independent and small chain locations.
Hy-Vee, West Des Moines, Iowa, is one supermarket chain on the hunt for such acquisitions. “We are on a regular basis talking to local pharmacies, and have had dozens of mergers over the last few years, and will continue to do that as long as it makes sense to the local pharmacists and the local business,” Ric Jurgens, chairman, president and chief executive officer, told SN earlier this year. “It's a good marriage: They are looking for a succession plan for their business, and we are looking to grow our pharmacy business. That has been a very good strategy for us, and one which we will continue to pursue.”
Other grocery chains pursuing a similar strategy include Spartan Stores, Grand Rapids, Mich., which acquired 15 pharmacies under the buyout deal of VG's Food Center and Pharmacy.
In October, Roundy's, Minneapolis, announced it planned to buy the pharmacies located inside its Pick 'n Save and Copps stores from Aurora Health Care, a not-for-profit Wisconsin health care provider. Houchens Industries, Bowling Green, Ky., also picked up a two-store independent, Sheldon's Express Pharmacies, earlier this year.
Domestics Gain Momentum
THE RECESSION DROVE consumers home to cook.
According to Mintel data released this year, more than half of consumers are eating out less, and 72% of consumers who cook regularly do so because it is the cheapest option available.
Whether this trend has a holdover effect after the recession remains to be seen.
Nonetheless, it presents an opportunity for retailers to help make it easier for their shoppers in the kitchen with cookware and other utensils.
Offering a value-oriented private-label line in cookware can be especially profitable for supermarkets. Earlier this year several chains rolled out a new Domestix cookware line from Topco with 50 different items.
“Not only do supermarkets need to provide the nutritional elements for living a healthy lifestyle but they should also be seen as a resource for the cookware that you use to prepare those products,” said David McConnell, president and chief executive officer of GMDC, Colorado Springs.
Develop Nonfood Sustainability Strategies
WITH GLOBAL warming looming in the headlines last week in conjunction with the International Conference on Climate Change, sustainability and being good stewards of Earth will be important even for nonfood retailers in promoting merchandise that demonstrates sustainability, recycling, lowering energy costs and fair trade.
Whole Foods, Austin, Texas, remains at the forefront of this movement and continues to be recognized for its social responsibility mission, which the retailer has integrated into the shopping experience. Earlier this year Whole Foods became the first national retailer to offer Forest Stewardship Council-certified paper bags at its checkout counters. It declared February as “Whole Trade Guarantee Month” to celebrate its continued commitment to sourcing socially responsible products from more than 25 developing countries. One percent of Whole Trade product sales goes to the Whole Planet Foundation with the goal of creating economic partnerships with the poor in developing-world communities that supply Whole Foods' stores with products.
Wegmans Food Markets, Rochester, N.Y., also sells gifts with sustainable characteristics. Last holiday season the chain featured MiYim Certified Organic Toys that were made in China, but held to rigid toxicity standards. Fair Trade Tea mug gift sets, made by an Indonesian craft producer, were imported by World of Good, a not-for-profit company. Other items included candles, kimono robes and a salt-and-pepper mill set.
A recent consumer shoppers study, conducted by the GMDC, Colorado Springs, indicates that the environment is important particularly in categories such as household cleaning where ingredients are a key factor in purchase patterns of consumers concerned about their family's well-being and environmental issues.
Adjust to New Entertainment Digital Delivery
DIGITAL TECHNOLOGY is changing at lighting speed. Entertainment products and services are struggling to keep up with the evolving technology and online delivery services that take customers out of the stores.
Best Buy recently launched high-speed Internet service in partnership with CinemaNow, which has deals with the major movie studios, for customers to rent and buy movies online.
The software making it possible for consumers to shop CinemaNow's video library will be included on all the Web-connected devices sold at Best Buy's stores. Consumers who buy flat-panel TVs, Blu-ray players, personal computers and mobile phones from Best Buy would be able to get downloads of videos the same day they are released on DVDs.
Supermarket retailers who have enjoyed great success with $1 rental kiosks from Redbox, Blockbuster Express and others need to pay attention to the rapid changes taking place on the digital entertainment delivery front and be prepared to make adjustment to consumer demand.