Progressive Grocer - November 2008 - (Page 104)

Nonfoods Deck the halls…or all hands on deck? An economy in turmoil and an acute lack of consumer confidence could put a potential damper on holiday general merchandise sales. By Bob Phillips T 104 he economic woes currently wracking the United States and the rest of the world will certainly extend through the holiday season, according to most economic experts. In the grocery channel, perhaps the category most at risk is general merchandise, which traditionally receives a lucrative holiday bump. This year, however, most retail players and experts are expecting the current economic slump to continue—perhaps even to intensify—likely leaving holiday GM sales wanting at a wide range of retailers, from upscale to conventional and beyond. “We’re hoping that sales are in line with last year’s figures, although we know that many people will be cutting back because of the struggling economy,” admits Lon Schwake, GM category manager at St. Louis-based Schnuck Markets, Inc. “Holiday sales will most likely be down in nearly every sector of the gift and housewares categories, across the country,” concurs Rodney Melillo, director of kitchens and gifts for Carson, Calif.-based Bristol Farms, a unit of Supervalu, Inc. that caters to an educated, affluent clientele. “Sales that have been trending soft in the industry all year should remain [so] through the end of the year and, unfortunately, beyond.” While the doom-and-gloom crowd might paint the fourth quarter of 2008 as a financial Armageddon, data from The Nielsen Company reveals that the downward trend in GM sales actually began a • Progressive Grocer • November 2008 Film and cameras suffered the most precipitous stumble, down 31.4 percent to $127.4 million in 2008, from $185.7 million in September 2007. “I don’t think a lot of people are having their digital prints done in stores,” observes supermarket guru Phil Lempert, who’s also a columnist for PROGRESSIVE GROCER. “They’ll buy a $30 printer and do it at home themselves.” According to Bristol Farms’ Melillo, virtually year ago, when the stock market was at its highest all segments of the general merchandise category, point ever—which might indicate that the current including housewares, tabletop, serving pieces, and slump, while severe, is part of a natural cycle that candles, have faced a “perfect storm” of their own over the past year, thanks to the rising cost of raw will one day swing upward again. According to Nielsen, general merchandise sales materials—stainless steel in particular—as well as in supermarkets with $2 million or more in annual plastics, ceramics, beeswax, and paraffin. “Couple that with the increased labor costs in sales (excluding supercenters) dipped 4.1 percent China, a shortened Chinese manufacturing year over the 52-week period ending Sept. 6, 2008. [because of the Olympics], and diesel fuel and shipA ‘perfect storm’ ping price increases,” continues Melillo, “and the This is a reporting period encompassing the result is unprecedented cost increases in 2008. As summer holidays of July 4th, Memorial Day, one importer told me, the container that used to and Labor Day, and Mother’s Day, Father’s Day, cost $1,200 to ship is now running $6,000.” Valentine’s Day, and Super Bowl Sunday, as well A 500 percent increase in costs has a way of as Halloween and the winter holidays in 2007. slowing down even the most powerful seasonal These are all periods that traditionally see short- train. In fact, the biggest problem with durable term spikes in general merchandise and seasonal goods is that they are, well, durable, without a sales, as Americans celebrate with festive gath- real need to be replaced. erings and/or gift giving. “In years past it was easier More ONLINE Furthermore, among nine to get a customer to switch to key subsegments of the GM a new-color tea kettle, or try a Get additional nonfood info at category, six have seen a drop new wine opener,” explains Progressivegrocer.com/nonfoods in sales over that same period. Melillo. “When the greater A H E A D O F W H AT ’ S N E X T www.progressivegrocer.com http://www.Progressivegrocer.com/nonfoods http://www.progressivegrocer.com

Table of Contents for the Digital Edition of Progressive Grocer - November 2008

Progressive Grocer - November 2008
Contents
Front End
Nielsen’s Shelf Stoppers/Spotlight
Market Snapshot
Lempert Report
Independents Report
Cover Story: Store of the Month
PG Industry Event
Private Label: What Economic Downturn?
Private Label: Critical Mass
2008 Category Captains Awards
Beverage Alcohol
Meat Snacks
Meat Trends
Produce
Holiday General Merchandise
Equipment Innovations

Progressive Grocer - November 2008