By Carol Radice
Through a special arrangement, what follows is an excerpt of a recent article from Grocery Headquarters magazine, presented here for discussion.
It doesn't take a turnaround specialist to tell grocers they're facing some extreme odds when it comes to preserving or even earning back their share of the general merchandise (GM) market. It's a cold, hard fact that over the last several years competitive pressures and expanding perimeter departments have clearly squeezed the space available for many GM categories.
For what it's worth, grocers are not alone in their struggle. In 2006, drug stores and even mass discounters experienced sluggish GM sales, as well. However, optimists say there may be some light at the end of the tunnel and 2007 could prove to be a turning point. Observers say grocers' increasing willingness to look to unconventional products and merchandising strategies is beginning to make the difference between building future sales in the category and being defeated.
Focusing on products and categories that address lifestyle needs will be a critical piece of future success. So, too, is the recent focus on finding quality products that are interesting, different and not traditionally thought of for supermarkets.
"We continue to believe that a strong and aggressive seasonal program is a must for retailers who want to insure that consumers don't go elsewhere when seeking out these high-impulse and high-margin items," said David McConnell, president of GMDC.
GMDC also sees big prospects for a number of GM categories that tie into the burgeoning health and wellness trend.
"Living a healthy lifestyle today includes growing consumer awareness of the environment and how it impacts the health of families. This consumer has an increased interest in categories such as light bulbs, household cleaning products, home health care kits, batteries, books, magazines and water softeners," said Mr. McConnell.
In addition to addressing lifestyle concerns, the ability to reinvent GM categories based on local market needs will be integral to grocers' success with the category, said Jim Hertel, managing partner at Willard Bishop.
"Grocers increasingly understand that impulse purchases can be defined differently in GM," added Mr. Hertel. "Hot prices on in-and-out seasonal merchandise - like lawn furniture sets and gas barbecues for summer and color televisions for Christmas - add excitement and an element of treasure hunt such as clubs have used so well."
Particularly playing to the local theme, Wegmans offers gift baskets featuring products made in Buffalo, Rochester or other local markets. Its 'Eat Well, Live Well' positioning is also a winner. "They recently supported their online wine column with a discussion of why the right stemware needs to be paired with wines. And oh, by the way, that stemware was available at Wegmans," said Mr. Hertel.
Mike Sleeper, president of Imperial Distributors in Auburn, Mass., sees a push in GM in-store strategies to do more with upscale, stylish, higher-priced offerings, especially in kitchen items. On the other hand, he said, are the dollar categories that have been a very high growth area for his company.
"Clearly, the items that are synergistic with food are having the best success as destination departments for grocers," said Mr. Sleeper.
Discussion Question: What do you see as the opportunity to revive general merchandise sales at grocery? What strategies and/or tactics discussed in the Grocery Headquarters article or elsewhere do you see as being most effective in generating new opportunities in GM for supermarkets and other food merchants?