Imperial Distributors

Commentary From Our President

“New” Supermarkets Take Off With Expanded Non-Foods

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

So many changes have taken place in supermarkets that to call the stores ‘new’ would seem almost unnecessary. But the changes have been a matter of degree, rather than revolutionary. Still, when you add them all up, supermarkets emerge so much stronger and so much more competitive that recouping market share seems inevitable.

Today’s “New Supermarkets” have been launched in turbulent and often troubled waters. But considering that the supermarket was born during the dark days of the Depression, adversity is when they do best.

Today’s supermarkets have a number of expanded departments and merchandising concepts in which non-foods play an important part and, in several instances, even lead the way to new and fruitful directions.

Here are just some of the ways new supermarkets and non-foods have adapted to today’s competitive demands:

Fresh and Prepared Foods. The emphasis on greatly expanded fresh produce and prepared foods represents the single most significant change powering supermarkets today. It includes enhanced meat, seafood and bakery sections, cheese and olive displays, coffee service, and features big blocks of space and trained personnel devoted to providing “menus” of hot and cold specialties. These range from a wide variety of freshly-made salads to four-course, ready-to-go meals, and, what’s more, sit-down eating areas are found in a growing number of stores for customers who want to enjoy fine fare on-premises.

The large fresh offering puts supers completely one-up against chain drugstores and mass merchandise department stores.

Non-foods within fresh and prepared foods represent a “triple merchandising play” for GM/HBC by (1) adding dollars to store sales through impulse purchases; (2) adding dollars to the bottom line due to high margins and low operating costs, and (3) by enhancing the store’s overall image through its contribution to one-stop shopping.

GM items in fresh and prepared foods are essentially cross-merchandised. They include selected items in seafood, on fresh meat cases, in fresh produce, at the hot coffee station, with the cheese display and on deli counters. GM items range from cookbooks to serving platters to knives and slicers. All told, GM within fresh and prepared foods can easily aggregate to $250.00 per week per store.

Return of the Center Store. The backbone of the supermarkets is responding well, thanks chiefly to a wide variety of new grocery and non-food products. These added items require a lot of shelf space, which supers are providing in today's larger stores. Among top categories in space gains and and/or in new items are canned soup, breakfast cereal, bottled water and specialty/craft beer.

In today’s new and exciting supermarkets, health and beauty care has grown more in shelf space than any other major center-store department.

Greatly expanded Pet Care departments, combining pet food and nonfood pet supplies, have become standard and provide strong support to the center-store resurgence. General Merchandise categories relating to food service and food preparation are also major draws for the center store. Other prominent nonfood center-store categories include toys, greeting cards, housewares, stationery and magazines and books.

While several new categories are also located within the center store, two forces are powering a tidal wave of new items: Private label and “Green” products.

PRIVATE LABEL. Shoppers have seen Private Label in supermarkets for decades, but it’s only in the past few years that they have been buying them in significant quantities--and in some categories, buying more house brands than national brands.

What’s happened, of course, is that Private Label suppliers, responding to calls from retailers, have improved both product quality and packaging. Armed with house brands that sell at low competitive prices, supermarkets have brought new life into the center store.

For non-foods in the center store, Health and Beauty Care has gained dramatically with house brands. More than 600 HBC private label items are available for stocking, which can easily achieve 10% of HBC’s total sales. Moreover, HBC’s private label is now being augmented by eco-friendly SKUs.

In General Merchandise, the private label business has moved beyond batteries and light bulbs and is making significant inroads in such categories as stationery, pet supplies, kitchen gadgets and several niche lines.

“GREEN” PRODUCTS. Including fresh meat, frozen foods and dairy, practically every department in the store has been affected by the emergence of natural/organic products. The “greening effect” is seen though such wording on packages and in ads as: l00 calories or less, 94% fat-free, 0g trans fat, cholesterol/gluten-free, eat smarter, healthy food, all natural, grass fed, etc.

Health and beauty care has a plethora of products boasting natural/organic on their labels and in advertising. Moreover, HBC retailers and suppliers are actively promoting Wellness in health-supporting products, an increasing number of which combine the best of two worlds, featuring natural/organic ingredients on private label packages.

HBC's non-food partner, general merchandise, also has many items riding the green bandwagon. Prominent in a list of such categories are light bulbs with long-life fluorescents, new batteries also with long-life claims, “natural” paper and cloth napkins, and, most recently, departments or kiosks for refilling computer ink cartridges.

All in all, there is plenty of evidence to support our headline: “‘New’ supermarkets take off with expanded non-foods.” With changes that are specific and prolific, there should be no doubt that supermarkets are stronger than ever among channels in the retail arena.

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

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