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The recent completion of Imperial Distributors' new 18,000-square-foot merchandising lab is a sign of what's starting to happen among the supermarket nonfoods wholesaler's customers: They're beginning to take a greater interest in the nonfood aspects of food retailing, and learning how to better leverage the department to better serve their customers.
The company serves chain and independent supermarket locations throughout the Northeast and Mid-Atlantic, shipping an average of 200,000 general merchandise and HBC products each day. But nonfood products are not the only thing Imperial is about. It also provides a host of merchandising, category management, and space-planning functions.
Indeed, there's almost nothing Imperial wouldn't do for its customers. As c.e.o. Mike Sleeper notes on the company's Web site: “Our corporate mission is shaped by the retailers we serve. We respond to their day-to-day operating needs as well as their longer-term vision. It is our team members who read the marketplace and shape and build our company.”
The following two case studies demonstrate the commitment and flexibility Imperial demonstrates in its retailer relationships, which the retailers agree are true partnerships in every sense of the word.
Roche Bros., a Wellesley, Mass.-based,17-store supermarket chain that runs stores under the Roche Bros. and Sudbury Farms banners, worked with Imperial to develop a seasonal general merchandise section that would give local Wal-Mart stores a run for their money.
Victor, N.Y.-based single-store operation Wade's Markets needed an expanded HBC selection to meet its customer needs. It also wanted to maximize the selling space it had through innovative cross-merchandising programs.
Although Roche Bros. and Wade's have different types of operations, each experienced Imperial's retailer commitment and achieved great results from the distributor.
Stealing back share
"If they're going to steal a bit from us, we're going to steal a bit from them." The "they" in this statement, by Bob Annand, director of grocery for Roche Bros. Supermarkets, is Wal-Mart, and the theft Annand is talking about is market share -- specifically nonfoods share in the areas the Massachusetts grocer's stores serve.
Grabbing back market share was the objective Roche Bros. had in mind when it approached Auburn, Mass.-based nonfoods supermarket wholesaler Imperial Distributors. As Annand sees it, nonfoods is one area where Roche Bros. can hit such competitors where it hurts.
"Mainline grocery has come under fire from the Wal-Marts of the world," explains Annand. "Everybody's selling Pepsi- and Coca-Cola. You either have to spend a ton of money to fight for your share back of those products, or you can take a little from them in other areas. Now if I'm selling a patio set or something like that, it's all incremental business that I didn't have last year. So I started carving out space in my stores."
While Roche Bros. has been an Imperial customer for the past 10 years, the retailer really got serious about nonfoods six years ago, when Annand freed approximately 100 linear feet of space for seasonal items such as Christmas, Easter, and summer products.
Roche Bros. started off slow, spending a total of $100,000 across the chain. The program was so successful, however, that Annand upped his stakes before the season ended.
"We went from the first year, where I bought $100,000, to buying $400,000," he recounts. "When you buy four times as much, for the same season, for the same number of stores, that's a big commitment. But then when we saw how well we did with that, we figured we could hit the accelerator. I could do $600,000, $700,000, $800,000, and just continue to grow." Early this month, for instance, he bought $1.4 million worth of summer seasonal merchandise.
As it does for Roche Bros., Imperial provides nonfoods product sourcing and category management services to Northeast and Mid-Atlantic supermarket companies ranging from large chains such as Ahold's Stop & Shop to one-store operations like Wade's Market.
For Roche, Imperial does internal reviews for each nonfood category, then submits its recommendations and planogram changes. Once everything is approved, the distributor helps execute these changes at the store level.
Imperial helps retailers source items in a variety of ways. Chief among them is its product shows, where it displays hundreds of items sourced from around the world. "The show I was at recently had roughly 700 items for next spring and summer," says Annand. "Imperial will go out and secure pricing on what they think are the best items for the season, and they'll have their show. I bring all of my managers to the show, and they'll pick and choose from those offerings to merchandise for that season. And since they have a lot of retailers behind them, it helps them import at better prices and full containers."
While Imperial analyzes market information data to find the best products, it also pays close attention to retailer input. "There are times when one of our buyers tips them off to something, and maybe we can't buy the full truck or full container, but they have other customers as well, and if they think it's a good item, they may balance off that truck or that container," says Annand.
The grill master
Case in point: Five years ago, Annand was walking the floor of the International Housewares Association show with one of Imperial's buyers, when they came across the Weber Grill booth. "Weber Grills are, like, $500 to $600 each," says Annand. "But I have some stores that are in affluent areas, and knew I'd be able to sell them. I told him we'd buy a truck or two. At first, both Weber and Imperial were a little taken aback by it."
But once Imperial's buyer recognized Annand was serious, he decided to back him on it. "[The buyer] said, 'If you think you can do it and you're going to be committed to it, then I'll be committed as well,'" recalls Annand. "Imperial bought $100,000 worth of them. That's their commitment to us. The first year, they helped us balance out those trucks by selling them to other retailers."
It's this commitment that has generated such a successful partnership between Imperial and Roche Bros. "I don't know too many distributors that would have gotten on board with a retailer on that, because it was so far out of the norm," acknowledges Annand. "At a large chain, for them to buy one item -- unproven like that -- won't happen, because they have to procure it, they have to pay for it. Imperial did it on my word. Were they skeptical? Maybe. But they knew we were committed, and they're committed to us."
That commitment is likely to be due in part to Imperial's knowledge of Roche Bros.' skill at good old-fashioned retailing. Weber Grills are MAP items, so retailers can't advertise them below the suggested retail. "But there's no saying what you can offer for service," adds Annand. "Now, I can't beat Home Depot or Lowe's on price, but I know they charge $25 to put a grill together. So I assembled them for free the first year of the program."
In the second year, Annand saw that mass merchandisers followed suit, assembling their grills at no charge. So he did them one better, adding free delivery to the sale. "Today, if you buy a Weber Grill from me, I'll put it together and bring it to your house," he says. "Five years since we started the program, we still buy 200 to 300 grills from Weber each season and sell through them every year."
Shoppers at single-store independent Wade's Market in Victor, N.Y. weren't satisfied with regular shampoo and conditioner. They wanted different products for dry hair and oily hair, and they wanted the products they had just read about in the latest issue of Vogue. But John Wade, the store's owner, couldn't get his hands on them.
"Our wholesaler carries all the core HBC items, but they aren't into the expanded lines," says Wade. "Take shampoo, for example. While our wholesaler may stop at six items, there are 12 needed to complete the section that we feel would be in our customers' best interests. We wanted to expand our selection of HBC to serve our customers' needs, adding things like a family-planning section or Dr. Scholl's, which they don't offer at all."
So in February he began working with supermarket nonfoods wholesaler Imperial Distributors of Auburn, Mass. to enhance his store's offerings. Imperial came in and worked closely with Wade's category managers over a two-week period to completely reset the store's HBC and GM departments.
By September, Wade had added more than 1,500 SKUs to his HBC department, including expanded lines of hair care and the latest cosmetics. "There's a person at Imperial who specializes in cosmetics," says Wade. "He came in himself, did the set, and made the selections -- working, of course, within the footage that we have. Now we have all the latest and most popular brands of cosmetics, and even offer bonus packs on some items."
Currently, in his analgesics section, Wade is working with Imperial on one of its recommendations, cutting down the height of a 24-foot shelf section and installing a pegged area containing complementary items such as pill organizers, thermometers, and various health-related accessories.
Such cross-merchandising programs have extended throughout the store. "The store is 51,000 square feet, the sales area is 38,000 to 39,000 square feet," says Wade. "We integrate a lot of things throughout the store, general merchandise especially. We have GM cut in at our front ends. We have clips strips, J-hooks. In the baking aisle you'll find the foilware -- the baking pans and things that you're going to need."
Imperial has a J-hook program, in which it analyzes a retail location and makes cross-merchandising recommendations. But Wade takes it a step further and cross-merchandises it with any other items he feels make sense.
There are times when Wade even has an item in more than one place inside the store. His shoppers' needs are his guidance. "For example, it's canning season, and people are looking for cheesecloth," says Wade. "Cheesecloth has other uses, such as polishing. But where do you put it in your store? In our case we put it in the canning section, but it's also clip-stripped over with the cleaners and the polishers."
While Wade's additional cross-merchandising may cause the occasional conflict between category managers, such differences eventually work out. "Imperial's program is designed not to cause conflicts," says Wade. "With our additional cross-merchandising, occasionally they occur. But ownership of the building and the operations -- you're talking to him. So sometimes it's not a democracy, it's authoritarian rule. I hate to say that, but it's true. I'm the final arbiter. If I think it makes good sense, we're going to do it."