Five Steps to Increase Non-Food Performance
As multi-outlet shopping has increased, supermarkets have lost some of their non-food market share to other retail channels, such as drug, dollar, mass, club and on-line. Given that non-foods represents $50 billion of sales in supermarkets, the loss of a single share point to other channels means hundreds of millions of profitable dollars are going elsewhere.
Supermarkets that focus on non-foods, treating it like a core category, can attain a real turn-a-round. Here are five steps toward reaching that goal:
Step 1: Private Label
According to a recent study, sales of private label and store brands have grown more than 18% over the last three years, more than twice as fast as national brands.
This points to a tremendous opportunity for supermarkets to capture high margin sales by expanding their non-food private label assortments, especially in the HBW category. Expanding private label should produce a 12-15% growth in sales. Putting more emphasis behind private label supported by “compare and save” shelf signing, and off-shelf promotional programs, will build overall HBW growth and performance.
Step 2: Promotions and Temporary Price Reductions (TPR)
Off-shelf feature promotions and TPR’s are musts for increasing sales and non-food performance. Eye-catching signage with prominently located displays help move more product. As a rule of thumb, TPR’s with signing should generate six times typical movement, while end-caps or off-shelf features with an ad will sell 12 times more. Including non-foods with grocery items in media circulars and on line ads, also communicates to the shopper that non-foods are important and available in the store.
Step 3: Trade Shows
Attendance at regional and national trade shows is invaluable and time well spent. These shows provide an efficient way to keep up with the latest trends and technology, explore new products, and see product quality, functionality and best-practice merchandising first-hand.
Trade events also provide an opportunity to plan and prepare seasonal and promotional advertising and marketing programs. These environments are also ideal for retailers and suppliers to share ideas, and to build long-term relationships.
Keeping current means being better prepared to meet the needs of the demanding shopper and changing retail landscape.
Step 4: SKU Optimization and Pricing
SKU optimization is having the right items at the right time and priced competitively. Retailers who know their shoppers’ preferences and needs, and who have the products to meet those needs, will build shopper loyalty, satisfaction and retention. It has been found that being first to market on new items can generate up to a 4% sales improvement. New item cut-ins and planogram compliance can have a further 8% impact on sales.
Step 5: Focus on Natural and Organic
A recent survey showed that natural and organic sales in all market channels grew 10% to nearly $91 billion, outpacing traditional grocery sales.
Today, consumers are more educated about health, wellness and environmental issues. They are willing to pay more for sustainable products that are, for example, free of sulfates, artificial preservatives, and genetically modified organisms; or that are made from recycled and recyclable materials.
Now that this movement has entered into mainstream supermarkets, non-foods manufacturers, both in HBW and GM, have begun to manufacture natural and certified organic products. Offering and clearly identifying these products within supermarket non-food departments, provides another opportunity to increase non-food sales and category performance.
By taking these steps, and making a commitment to treat non foods as a core category, supermarkets will begin to regain the non foods market share which we’ve all worked so hard to build.