Helping Non-Foods Become a Better Category

Michael D. Sleeper, President/CEO, Imperial Distributors, Inc.

Sometimes I feel General Merchandise and Health & Beauty Care isn’t getting as much attention these days as it should.

Even a highly rated consultant, whom we admire, hardly ever mentions GM/HBC in his dispatches to Retail Wire or in his books, the latest of which is entitled, “Inside the Mind of the Shopper.” By name, he is Herb Sorensen, and by reputation, he has consulted with the likes of Procter & Gamble and Unilever through his study of shoppers with their in-store reactions and their overall shopping experiences.

He doesn’t shirk from taking unpopular stands.  For instance, he opposes the belief held by many supermarket executives that the longer a shopper stays in a store, the more he or she is likely to buy.

Sorensen contends that for many–if not most shoppers–time is of the essence, and for them, the faster shopping goes, the better.  He says that the thinking that slow-down shopping is best for the store is behind some poor decisions.

As an example, he cites the fact that practically all supermarkets display milk in the back of the store, believing that—mechanical requirements aside–that it’s a good location by exposing shoppers to hundreds of items. According to Sorensen, this strategy won’t work with the many time-strapped shoppers who would rather take a hike to a drugstore or convenience store than take the long hike for milk in most supers.  The solution, of course, is for supers to install secondary refrigeration, up front, for easy access to milk and juices.

While he doesn’t single out non-foods, Sorenson’s broad citations are often appropriate to it. For example, his dictum that supers should focus more on quick-trip shoppers leads to the checkouts, where both GM and HBC typically have pegged displays of last-minute shopping needs: Batteries for GM and for HBC, small sizes of headache remedies, and items for stomach distress.  It’s important to stay in stock with these products, especially at busy express lanes, where in-a-hurry shoppers tend to go.

Another Sorensen “rule”—that products should be placed precisely where they will sell best–has a virtual component in non-foods.  It’s known as related-item selling and extends from tie-ins with grocery endcaps, to selling in the growing perishables areas.

The list of successful non-food tie-ins is long, but here are some examples:  In grocery, cereal bowls with breakfast cereal endcaps, paper towel holders with paper towels, and shippers of cold remedies in the tissue aisle(in season)…In the perishables areas, GM items enjoy a lot of profitable sales, especially in fresh produce with vegetable peelers; seafood crackers with seafood and in or near the fresh meat cases (in season), packaged cedar planks  for barbeque;  cheese knives or spreaders near the cheese case, and in the deli/ salad sections,  spoons and utensils for serving.

We appreciate Sorensen’s commentary on the web and in his book, and try to adhere to his principles.  But we hope he will also recognize the importance of merchandising GM/HBC by giving our categories the attention they deserve.  The success of non-foods makes us all more successful.

For comments or questions, contact us by phone at 508-756-5156, or e-mail: msleeper@imperialdistributors.com

3 Steps to Boost HBC Performance

Michael D. Sleeper, President/CEO, Imperial Distributors, Inc.

Unless you are highly focused on your Health & Beauty Care (HBC) department, you might think the department’s sales are satisfactory, especially considering the state of the economy.

But the reality is that supermarkets are losing HBC market share to other channels. This has been the case for some time. HBC is a multi-billion dollar business, and the loss of a single share point to other channels means hundreds of millions of profitable dollars are going elsewhere.

But if supermarkets focus on HBC, a real turnaround is attainable. Here are three steps toward reaching that goal.

Step 1:  Private Label

Perhaps the biggest missed opportunity is a lagging emphasis in private label.  This may seem contradictory but, the fact is that supermarkets with limited HBC private label assortments will usually achieve less than 5% penetration, while a full range of HBC private label should produce 12% penetration. Putting more effort behind private label supported by good “compare and save” signing will build overall HBC growth.

Step 2:  Promotions and TPRs

Off-shelf feature promotions and TPRs are HBC musts.  Again good signing moves merchandise. The rules of thumb are–TPRs without signing will sell three times normal shelf movement; TPRs with signs should generate six times the normal movement, while end cap features with an ad will sell 12 times more.

Step 3:  SKU Optimization

SKU optimization means having the right items at the right time.  Being first to market on new items by just one week can generate up to 3% sales improvement.  New item cut-ins and planogram compliance can have an 8% benefit.  Assortment voids create the equivalent negative impact of stockouts.

So here’s hoping supermarkets will regain their rightful HBC market share.  It takes focus and commitment, but it’s well worth our attention.  We should all protect the business we’ve worked so hard to build.

For comments or questions, contact us by phone at 508-756-5156, or e-mail: msleeper@imperialdistributors.com

Congratulations to Ralph Crowley Jr, MFA Person of the Year

Michael D. Sleeper, President/CEO, Imperial Distributors, Inc.

One of Worcester’s favorite sons, Ralph Crowley Jr., CEO of Polar Beverages, is incredibly deserving and a wonderful choice to receive this year’s MFA Person of the Year Award which will be presented at the MT Washington Hotel on Memorial Day weekend.

It’s been many years since he and his brother Chris walked together to Lee Street Grammar School from their house on Metcalf Street bullying each other and taking pride in their titles as “Rotten Ralph” and “Cruddy Chris”. But make no mistake about it, despite their competitiveness, they were extremely loyal to one another, as they are today, which has played no small part in the extraordinary growth and success of Polar Beverages.

Ralph started in his family’s business at a time when beverage companies were a pennies business, very localized with bottlers in every town. He knew instinctively that the road to success for Polar was based on taking care of its customers. Ralph understands what it means to achieve customer success. His relationships run deep. He’s humble, bends over backwards and is truly devoted to each customer Polar serves.

Ralph’s visionary leadership combined with his entrepreneurial spirit and boundless energy has propelled Polar to become the largest family owned beverage bottler in the U.S. He’s committed to the industry having served as President of the American Beverage Association, worked with the Clinton Foundation to eliminate calorie beverages in schools and is a member of the Beverage World Hall of Fame.

His commitment to the Mass Food Association has been steadfast. When Chris Flynn needed him for the association’s long range plan, Ralph was there willing to lend his expertise. He can always be counted on, as one of the good guys, to support MFA.

But with all he’s accomplished, his family still comes first. His wife Joan and 5 children, Kathryn, Elizabeth, Ralph, Andrew and Sarah are the center of his universe.

So Congratulations Ralph….. Thanks for your dedication to our industry, MFA and the beautiful city of Worcester.

For comments or questions, contact us by phone at 508-756-5156, or e-mail: msleeper@imperialdistributors.com

Breathing New Life into HBC/GM and Seasonal Non-Foods…. It CAN be Done!!!

Michael D. Sleeper, President/CEO, Imperial Distributors, Inc.

In a recent business review for a strong six store independent, I was extremely pleased to see same store, year-over-year Non-Food sales up by 10%.

The results were even more stunning when we compared their Non-Food sales to the modest growth in their overall center store. And what was particularly revealing was seeing how this six-store independent’s Non-Food growth was achieved, especially in light of industry data which shows most supermarket chains experiencing declining share in HBC and GM.

Insights from our business review showed the increases came from specific initiatives driven by the retailer and our account manager, who worked closely together to achieve success. The review highlights were:

1. HBC promotional floorstand shipper sales grew by over 400%, supported by placement in high-traffic grocery aisles and circular ads featuring volume movers.
2. Private Label sales increased by 35%, supported with attractive signing, compare-and-save danglers and a 25% increase in PL shelf SKU counts.
3. Vitamin and Nutrition Bars increased by 25%, emphasizing the retailer’s commitment to health and wellness.
4. General Merchandise floorstand shipper sales leaped 180% by featuring in-line GM cross merchandising tied in with grocery promotions.
5. Dollar merchandise was emphasized by adding in-aisle cut-out sections including clip strips and power panels.
6. Seasonal-Non-Food Merchandise grew by 55%, backed by strong retailer participation and commitment while attending our Seasonal Shows.

To be sure, good partnering relationships played a major role and can never be overlooked in achieving stellar performance. The results speak volumes. In 2009, this six-store retailer’s HBC margin dollars increased by 16.5%. General Merchandise margin dollars increased by 13.3% and Seasonal margin dollars by 28%.

I have a sign on my desk which was given to me as a gift with an inspirational reminder that says a lot in four words: “It CAN be Done”.

In these challenging times, when supermarket independents are fighting hard to compete with major chains and major food chains are fighting just as hard to compete with other channels, it’s nice to know that with good partnering and solid execution, it not only “CAN be Done” but it “WAS Done”, breathing new life into HBC/GM and Seasonal Non-Foods.

For comments or questions, contact us by phone at 508-756-5156, or e-mail: msleeper@imperialdistributors.com

Breathing New Life into Supermarket HBC

Michael D. Sleeper, President/CEO, Imperial Distributors, Inc.

Today’s HBC and GM categories offer premium, mainstream and economy brands.  But it’s the growth rate of private label brands, compared to national brands, which have created a sea of change in sales for retailers.

Whether it’s the “new normal” or a sign of the current economic climate, private label brand growth is outpacing national brand growth by huge margins.  Private label brands increased by 10% vs. only 2% for national brands in 2009.  And Wal-Mart, the bell-weather of retail, has set their private label target at 40% by the year 2012.  Last year private label products reached 29% of center store sales.

National brands are fighting hard to win back consumers, but it won’t be easy.  Limited Assortment Stores and Dollar Stores are growing. Value tiered products for price conscious shoppers continue to expand and global sourcing is expected to increase at record levels in the foreseeable future. A recent consumer survey showed 70% of shoppers view private label brand quality equal to national brands. As one chain executive put it, “there’s no question that the economy has changed the psyche of our customers.”

So how are the national brand manufacturers likely to respond?

The strategies that national brand consumer product manufacturers are most likely to implement include; driving efficiency to lower product costs, promoting key brands to achieve sharper competitive retail prices, redeploying marketing funds for greater consumer value and maintaining a competitive advantage through innovation.

The competitive advantage for most national brand manufacturers is to invest in R&D in order to generate product innovation.  Traditionally, private label manufacturers have been less innovative, but very good as fast followers.  So how will national brands fight back?  Expect to see more new product introductions, stronger promotions and increased market funding. With private label’s momentum, national brands will have to fight hard to recapture market share.   Hopefully, this will be an opportunity for healthy growth to include HBC and GM categories.

For comments or questions, contact us by phone at 508-756-5156, or e-mail: msleeper@imperialdistributors.com

Breathing New Life into Supermarket HBC

Michael D. Sleeper, President/CEO, Imperial Distributors, Inc.

Has HBC lost its edge in supermarkets???

Have fresh and prepared foods taken over management focus while competition from chain drug and mass merchants grows tougher?

How much has our down economy impacted HBC in supermarkets?

These questions and others are making all of us take a hard look at ways to restore HBC’s rightful place in supermarkets.  It’s important reflection worthy of our attention and priority.

Progress begins with leadership and by spreading the realization that the HBC department is exceedingly important to overall store success.  This can start by identifying HBC success: showing sales and profit contribution, developing ongoing communication with store managers, non-food managers and supervisors and generating incentives for top performers at store-level.  Rethinking strategies while the economy is soft includes changing assortments by focusing on items that sell best.   Facings of smaller sizes costing less can be expanded with more space devoted to lower priced items and private label HBC.

Lowering price points on key items with the highest consumer repurchase frequency and assuring competitive retails with other outlets are critical.  Since top sellers create price impression, HBC should follow the same mantra as grocery: “A fast nickel is still better than a slow dime.” TPRs are a standard in virtually every HBC category, supported by impact signing.  Shoppers are always looking for specials; so let’s be sure that shoppers can see that the HBC department is loaded with value.  And of course, we want our HBC endcaps to show an element of décor that sets it apart from Grocery.  A poorly merchandised or unattractive endcap diminishes the impact of the department and sends a weak signal to shoppers.  Attractive, high impact HBC endcaps, deliver a strong price image. Other ways to breathe new life into Supermarket HBC include: micro marketing to customer segments such as catering to seniors, male shoppers and ethnic populations; cross merchandising between departments; optimizing checkout space, focusing on nutrition and wellness and early planning for major events.

It’s a classic story of renewal.  Creating a powerful look by improving merchandising will boost HBC performance and generate results that can be very different.

For comments or questions, contact us by phone at 508-756-5156, or e-mail: msleeper@imperialdistributors.com

Make HBC Your #1 New Year’s Resolution

Michael D. Sleeper, President/CEO, Imperial Distributors, Inc.

Here are TEN reasons why management should make HBC its top priority on the New Year’s Resolution To Do list.

1. PROVING ITS WORTH. If ever a store department proved itself worthy of confidence, it’s HBC.  During the Flu Epidemic in 2009, those supermarkets who stepped up to the HBC plate, increased sales while fulfilling their obligation to customers by stocking needed products in depth and providing good value.
2. HIGH PROFITS. Progressive Grocer published a Net Profit Study in which HBC’s contribution to store net profit far exceeded its share of sales.  Retail prices and percent gross profit are higher than most other store products.  The small size of most HBC items elevates the sales/margin per lin. ft. measurement.  HBC needs no refrigeration and has no spoilage expense.
3. EXCELLENT GROWTH.  Regardless of the recession, HBC unit sales promise strong future growth.  The department is underpinned by both nutritional and medical needs of the aging U.S. population. It’s estimated that in ten years, one out of three households will be headed by someone over the age of 62. Seniors have head to toe HBC needs, from hair coloring to eye glasses to corn pads and everything in between–vitamins, digestive remedies and pain relievers.
4. MORE NEW ITEMS. HBC is extremely dynamic, with more new items, new categories and new brands. Innovation, new formulations and advances in technology are all commonplace in HBC.
5. TRAFFIC BUILDING POWER.  While all HBC wanted items may not appear on everyone’s shopping list, some are in everyone’s mind. Oral care, shampoo and deodorants are used every day by practically everyone.  Few other products in the store can make that claim.
6. MAJOR SUPPLIERS. The number of major suppliers producing HBC products is formidable and includes–  Unilever, Procter & Gamble, Johnson & Johnson, Colgate-Palmolive, Bayer, Beiersdorf, Bic, Dial, GlaxoSmithKline, Kimberly-Clark, Novartis, Revlon, Schering-Plough, 3M, Wyeth.  Advertising, promotion, marketing and product development, represents billions invested by the HBC suppliers, year after year.
7. NATURAL & WELLNESS.  A good nutritional/wellness program with natural HBC products is a growth engine for the HBC department. Giving HBC more support is one of the clearest ways to express to shoppers your stores’ commitment to green, eco-friendly, natural and wellness programs.
8. POLITICAL SUPPORT.  Health care is a major domestic issue. Health Care products within the HBC departments are most likely to be involved in whatever happens to health care.  So, HBC departments should look sharp and be aggressively priced.
9. PRIVATE LABEL.  Private Label outperformed national brands in 2009 and found a new and bigger home in virtually every category segment.  Embrace Private Label to help transform your HBC categories.
10. MAKING HBC. The Food Channel represents 32.7% of a $41.2 billion HBC market.  Not too bad, but it could be better.  Making HBC your #1 New Years Resolution will create a Happier New Year for all!!

Wishing you the very best New Year in 2010.

For comments or questions, contact us by phone at 508-756-5156, or e-mail: msleeper@imperialdistributors.com

This Holiday Season, Think Positive

Michael D. Sleeper, President/CEO, Imperial Distributors, Inc.

What’s to be merry about this holiday season?  If you read the headlines, there‘s not much space for merriment.  With the economy still lagging, heavy unemployment and home foreclosures, supermarkets are facing even more challenges.

Wal-Mart and Target are both expanding their food offerings. Target has set a goal of expanded grocery and perishables in 350 more of its discount stores throughout 2010, following encouraging sales results at the first 108 stores with the program.

Walgreens and CVS continue to expand their grocery “consumables” while membership clubs, led by Cosco’s  550 stores, are pushing deeper into food, even accepting food stamps for the first time.  Family Dollar Stores are expanding their food offerings under an aggressive ad campaign.

However, there is a bright side.  The economy’s picking up a bit, banks are making business loans again, and the mood of the general public, while still not entirely optimistic, is more upbeat.  People are saying “the worst seems to be over.”

Supermarkets continue to drive larger customer counts with more people preparing meals at home.

And supermarkets continue to dominate in highly popular departments that provide them with a competitive edge.   Examples include:

• Service delis – practically none of the other classes of trade can boast service deli departments.
• Fresh meat and produce – are not found in chain drug or dollar stores.
• Service bakeries – provide exceptional appeal in combating other competitors.

But perhaps the greatest competitive advantage for supermarkets is through innovation.  Finding new ways to promote and merchandise include better health/nutrition/wellness programs, philanthropic endeavors and creative technologies.

Examples found in the pages of Supermarket News include a focus on Non-foods:

• Weekly specials available via a free Apple iPhone – enabling customers to see what’s for sale in real time.
• “Give at Home for the Holidays” promotions – where shoppers adopting a dog or cat will receive a $50 Gift Card toward purchase of pet supplies.
• “Courage Cards for the Troops” – which sends holiday greeting cards to local service men and women.
• 1,100 bicycles donated to fourth-grade students who were nominated by teachers for being outstanding role models in the classroom.
• Rewarding customers checking out with reusable bags with a $1-off coupon.
• Black Friday promotions with a stream of hot deals displayed on Facebook and Twitter with featured items including a 42-in. plasma TV, digital cameras and Huggies diapers.
• Devoting more ad space to Pharmacy, HBC and General Merchandise with flu testing and wellness promotions.

The spirit of the season can enhance the spirit of competition, which keeps us all going and growing.  So “this holiday season, let’s think positive.”

With cheerful BEST WISHES and HAPPY HOLIDAYS to all our supermarket friends and their families; it’s still the most wonderful time of the year!

For comments or questions, contact us by phone at 508-756-5156, or e-mail: msleeper@imperialdistributors.com

Fighting the Flu with an All-Out Merchandising Effort

Michael D. Sleeper, President/CEO, Imperial Distributors, Inc.

The “common cold,” has always been a force behind the cough and cold department in supermarkets.  But today, the flu season is loaded with more urgency and a wider assortment of items to help an increasingly anxious public.

In addition to the seasonal flu, the main worry now is a new strain that threatens more Americans with concerns that the Swine Flu or H1N1, could morph into an even more dangerous form later this year.

In the interim, retailers must do what they can to offer products that will diminish the possibility of catching the virus and help families cope with the virus if contracted.

The New York Times pointed out in a recent editorial that, while there’s no reason to panic, people should take normal precautions, including washing hands, restraining their coughs and staying home when they are sick.  That’s probably good advice, but omits mentioning the many flu-related products that have already accelerated in sales demand.

For swine flu, those with young children, as well as young adults 25 and younger, are more at risk. Seniors 60 and up are thought to be less at risk, having been ‘Inoculated’ through exposure to flu viruses in the past.

Our own reports find that cough & cold sales are running several times above the average vs. this time last year, and hand sanitizer sales are so heavy that it’s tough to stay in stock.  Besides the obvious lines of cough and cold medicines–augmented these days by natural, private label and homeopathic items increasingly aimed at children–the list of flu-fighters features a wide range of HBC product. They extend from vitamins to lip medications, soaps, to pain killers and sleep aids.  In General Merchandise, hot items include surgical masks and latex gloves.

The grocery aisle is also seeing bigger sales gains with facial tissues, liquid bleach and spray disinfectants. Many other anti-flu friends are found in a wide range of products that fit into the wellness category.  In this group are fresh and prepared fruits and vegetables, vitamin-enhanced drinks (including milk with vitamin D), breakfast cereals, yogurt and nutrition bars. In fact, under a Wellness flag including a Good Nutrition banner, Grocery has a multitude of flu-fighters, literally from soup to nuts.

And herein lies a test of store flexibility between departments.  Specifically, we’re referring to cross-merchandising, chiefly between GM/HBC, grocery and perishables.

Considering the impact of  this year’s flu season, it would not seem out of bounds to declare an all out cross- merchandising offensive in displaying flu-related HBC items tied into grocery endcaps with  floorstands, power panels and shelf extenders.

What better way to inform shoppers that we care, than by supporting them with a flu-fighting crusade that demonstrates we are fighting the flu with an all-out merchandising effort!

For comments or questions, contact us by phone at 508-756-5156, or e-mail: msleeper@imperialdistributors.com

Holiday Merchandising

Michael D. Sleeper, President/CEO, Imperial Distributors, Inc.

Thank goodness, there’s finally some sunshine peeking through these tough economic times.

Despite the unsettling statistics on joblessness and the unusually cold and wet summer, the good news is that the holiday season is different.  It’s not dependent on weather.  During the festive holiday season, shoppers are joyful, generous and are ready to buy.

A national survey of 1,000 households by Information Resources Inc. (IRI), indicates that this year’s holiday shopping will improve.  Simply put, consumers are more optimistic.  Some specific finds from the survey:

• Matching quality to name brands (60%) remains a leading reason for switching to private label.
• Ninety-two percent of consumers will be doing their holiday food shopping at grocery stores, based on sales and discounts, product selection and variety of items in stock.
• More than 90% of shoppers are making gift-giving a priority, up nearly three percentage points from last year.
• More than 98% of shoppers will make spending time with family a priority at the holiday season, and 93% of consumers’ holiday plans include getting together with family and friends over the dinner table and at parties.

So, things are looking up for supermarkets for this coming season.  But what about non-foods?  The answer is simply that the success of supermarket non-foods during the holidays will depend on what retailers decide to do.

Opportunities include:

STOCKING STUFFERS: Most items in HBC and GM are suitable for promotion.  In GM, pet supplies, magazines/books, soft goods, stationery and housewares are all proven winners.  For HBC, hair care, skin care items (including men’s shaving and toiletries) are perfect for gift-giving.  Even toothpaste or toothbrushes can be good stocking stuffers.

DRESS UP THE HBC ENDCAPS: With the Christmas spirit, spreading holly decor, tinsels and garlands, and holiday-themed signs, on HBC and GM endcaps will stimulate impulse purchases and draw more shoppers into the department.

NON-FOOD CHRISTMAS NEEDS—Greeting cards, gift-wrapping, scotch tape, mailers, serving trays and platters, are just a few of the supermarket offerings that consumers will need for the holidays. Stationery items like wrapping paper, boxes, tapes, gift cards and bags, deserve special visibility on endcaps, shelf extenders and clipstrips.  Of course, holiday meals call for cooking and baking items with additional shelf space and floorstands.

BUT THE KEY, as always, is merchandising and promotion. Beyond good selection, competitive pricing and strong feature items, placement of special displays, signing and special effects can make a big difference in optimizing non-food sales during the holiday season.

So as the big season approaches, get into the Holiday Spirit early this year with non-foods.  It’s a huge opportunity that can overtake some tough economic times.

For comments or questions, contact us by phone at 508-756-5156, or e-mail: msleeper@imperialdistributors.com