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With mass retail competitors depleting the margins on many key grocery items, David Rice, director of center store business units for Associated Food Stores (AFS), needed to find ways to sell more profitable items that would make up for those lost dollars.
The Salt Lake City-based cooperative wholesaler had already improved its perishables departments and presentation. But Rice didn't think that was enough -- he wanted a grocery solution.
"We want to try and be closer priced on an everyday basis to mass competition on grocery items," he says. "But our chain competition had better equipment in terms of merchandising. We felt we had to catch up."
To address this challenge, AFS last year launched a corporate program called "Merchandising for Profit," or MFP for short. "It's about capturing profitable impulse and companion sales through superior merchandising," says Rice. "MFP was designed to maximize purchase opportunities by our shoppers, promote more cross-merchandising sales opportunities, and allow us to aggressively merchandise impulse items."
To be successful, the MFP concept requires disciplined pre-planning, weekly ordering, and daily maintenance, with products that are seasonally relevant, highly impulsive, and profitable.
Merchandising was a crucial part of the plan. "To catch additional sales, you want the right fishing poles," says Rice. "That's where Tom Shea comes in -- he has some pretty cool fishing poles."
Tom Shea, president of Troy, Mich.-based merchandising display manufacturer T.M. Shea, met Rice at the General Merchandise Distributors Council's GM Marketing Conference last year. Even though Shea didn't have an appointment, and AFS' staff was extremely busy at the show, his persistence -- combined with Rice's eagerness to try new ideas for MFP -- forged a relationship that has benefited both.
"I fit him in at a different table, and he showed me a couple of things, and it gave me a vision of how we can do some things differently," recounts Rice. "He's been in the industry for a number of years. He's kind of like a mad scientist in a way, always coming up with new tools -- and he has some really strong ideas."
Rice settled on three of Shea's strong ideas to include in his MFP strategy: SwingStrips, PowerPillars, and POP developed to complement each.
SwingStrips are impulse/cross-merchandising fixtures that were developed to be more flexible, more visually appealing, and less obtrusive than traditional J-hooks.
"The SwingStrips don't lean against the product, so it allows visibility behind the impulse product, whereas the J-hooks used to cut into the product," explains Rice. "They were really tight against the shelf, and blocked the view of the products behind them. Night crews used to hate the J-hooks, and would pull them off and get rid of them whenever they could."
Rice leveraged the adaptability of the SwingStrip units to create cross-merchandising solutions for every department. "The swing hook program was initially used for impulse sales of mostly GM items, like selling hairbrushes next to the shampoo and conditioner," says Rice. "We've since developed other programs, such as one developed specifically for McCormick to get their spices into the meal solution areas. This year we began using the swing hook program in the seasonal aisles, for batteries and single-use cameras in high-impulse areas, and on the end caps, for additional profit opportunities."
Indeed, SwingStrips today appear in every department at AFS' 23 corporate stores -- one is displayed every 12 linear feet of aisle merchandising, and on every end display.
The effectiveness of the SwingStrips is in the numbers: During the first year of using them, AFS saw a 73 percent increase over the J-hook program's sales. Needless to say, the wholesaler's member retailers were impressed. So far, more than 150 of its 400 member stores have incorporated them into their merchandising plans.
Pillars of freedom
To complement the SwingStrips and add more impulse impact to the aisle, Rice just started a program using T.M. Shea's PowerPillars in nine test stores, with plans to launch them in all corporate stores in September.
PowerPillars, freestanding spinner displays that can accommodate pegged, shelved, and bottle product, were developed to provide a uniform look for promotional floor merchandising. They come in peg/shelf and dump bin versions, stand five feet tall, and have an 18-inch footprint. Each unit also has five casters, two of which lock.
"The PowerPillars allow us to keep a pretty decent standard while not making the aisle impossible to shop," notes Rice. "The aisles can get very cluttered with cardboard displays, which tend to fall apart easily....I jokingly refer to [them] as the retailer Humvee, because they're multipurpose and can do all kinds of merchandising."
At the same time, the displays help reinforce the corporate brand. Graphics were created for the displays to match AFS' decor and POP messaging.
"You can tailor them to whatever department you're working in," says Rice. "We have them merchandising produce; we have them in grocery; in the meat department, which allows us to add sauces and seasoning next to meat solutions; or in produce you can get croutons next to a lettuce display. You can get upscale kitchen gadgets like corn skewers next to the corn display. There are all kinds of impulse selling you can do. They're like mini mobile end caps. We're using them to get high-frequency impulse purchases, seasonal purchases, and cross-merchandising purchases."
PowerPillars have been just as effective as SwingStrips: Every test store using them has shown at least a 7 percent departmental sales increase, according to Rice. "The first test stores had one PowerPillar per aisle, and in the last three executions we're putting two PowerPillars in each aisle, which are typical 72-foot aisles," he says. "We use one in produce, and one in the meat department."
Signage that POPs
To help shoppers better navigate the store and find the MFP program's higher-margin items more easily, AFS is working with T.M. Shea to develop POP signage displays.
In the works are signs for the company's new organic and natural offerings, called NewLeaf, and for a new department that will encompass all women's health care needs in one location. "We want to set that off with POP navigation," says Rice. "We want to highlight women's health care within the HBC department to make it stand out from the other HBC categories."
For the SwingStrip program, AFS and T.M. Shea developed signage that attaches to the top of that fixture. Each sign is a large circle, colored to match the SwingStrip design and printed with call-out phrases such as "Want it?" or "Need it?"
"Those are incredibly impactful," notes Rice. "They're matched to the color scheme of their various sections, [and] are incredibly impressive. When the signs are up in the whole aisle, it draws your attention to them."
With the proven success of Rice's "fishing poles," suppliers are lining up to provide bait. "We really got the vendors' attention with the success we've had with the MFP program," he says. "Now that we have the PowerPillars in the nine test stores, our major vendors want to get more involved."
And with these vendors participating in the program by incorporating their graphics and signage into the new equipment, Rice expects to snag even more customers -- hook, line, and sinker.