Stater Bros. Introduces Eco-Friendly Grocery Bags
San Bernardino, Calif. Stater Bros. unveiled on Earth Day last week the company’s new environmentally friendly grocery bag.
The new grocery bag is made from 100% recycled paper and is currently available in all 165 Stater Bros. supermarkets.
“It has always been Stater Bros. policy to do everything we can to help preserve the environment,” said Jack H. Brown, chairman and CEO of Stater Bros. Markets, in a statement. “This is our largest and most used paper grocery bag, and we are glad that our customers can now feel good about using it.”
In addition to the 100% recyclable paper bag, Stater Bros. also offers reusable bags to customers for 99? each.
Cleaner, Faster, Friendlier
There was a time not so long ago when clutter was king at Wal-Mart. Tall shelves filled with inventory defined departments that were identified by small signs. Palletized displays filled the aisles and suppliers created all manner of eye-catching promotional displays to drive sales of their brands at off-shelf locations, while clipstrips were used extensively to drive impulse purchases. There was an emphasis on retailtainment and in-store demonstration events were encouraged. Clutter communicated value, encouraged shopping throughout the store and led to increased transaction sizes. Clutter, although it wasn’t called such at the time, was a good thing.
Not anymore. Clutter has become the enemy at Wal-Mart and the fight against it is being waged on many fronts, with significant implications for branded product suppliers and the companies who provide products and services to help them execute merchandising initiatives. At first, efforts to eliminate clutter and consequently improve the in-store experience were focused on basic operational considerations. Wal-Mart eliminated shelf risers that held excess inventory as a means to improve customers’ visibility throughout the store, in addition to improving the retailer’s return on assets. That change gave stores a cleaner look while new sign packages that aided navigation made the process of shopping faster. Improvements to the checkout process implemented last year made the entire experience friendlier as wait times were reduced.
While those changes were significant and impacted the experience, more significant changes are yet to come as Wal-Mart moves forward with a strategy to save customers money so they can live better in an environment that is clean, fast and friendly. One of the ways that will happen is by providing a store experience that is easier to shop and where the emphasis is on the Wal-Mart brand. Elements of this strategy have already been seen in a number of prototype stores with modern color schemes and prominent department signage where aisles have been cleared of feature displays and dump bins filled with impulse items. Because such displays have long been a fixture of Wal-Mart’s merchandising strategy, their elimination creates a dramatic effect on the store environment.
That was the case two years ago when displays were eliminated from the main aisles at a prototype in Plano, Texas. Then, last fall, drive aisle displays were eliminated from another prototype in Highland Village, Texas. More recently, a new supercenter northwest of Little Rock, Ark., near the community of Maumelle, opened with a similar clean-store strategy. There are anecdotal reports of the strategy being employed elsewhere and a series of 20 additional stores featuring the clean-store look are scheduled to open in the coming months in markets throughout the United States as Wal-Mart looks for additional insight into customers’ perceptions of the strategy and the impact on operations and sales.
The concept of fewer displays in stores, or the outright elimination of pallet promotions in main drive aisles, would likely take years to roll out to the entire chain, given Wal-Mart’s size and the significance of the change. Fewer displays would also create a ripple effect on the firms that design and create the displays, as well as the merchandising service companies suppliers often hire to ensure that once displays have arrived at their intended locations other aspects of in-store execution are handled properly. Although it is a bit counterintuitive, the elimination of secondary displays could result in the services of merchandising firms becoming more valuable.
“Those changes make the shelf exponentially more important than ever before,” said Brian Baldwin, senior vp, Wal-Mart team leader with Acosta Sales and Marketing. That’s because secondary merchandise locations always served a dual purpose. They helped create excitement in the store and were used to create a value proposition, but they also served as a form of safety stock, since many product categories in Wal-Mart achieve a rate of sale that makes keeping them in stock on a typical shelf a real challenge.
“Suppliers have to make sure the shelf is right all the time,” said Ken Drish, vp of business development with Crossmark. “If you are getting display space in stores, it is even more important to make sure features are being properly executed. And if you are not, then the shelf position is even more important.
Companies such as Acosta, Crossmark, Advantage Sales and Marketing, Premium Retail Services and others are traditionally thought of as merchandising service organizations, due to the nature of the services they have historically provided. However, as Wal-Mart’s strategies have changed and technology has advanced, the capabilities provided by these companies and the caliber of people employed have also been upgraded.
“One of the key things our manufacturer partners are looking for is to help bring education about their products all the way down to the store level so associates can understand the benefits of a specific brand,” Baldwin said. “All our associates are equipped with tablet PCs, so with that technology we are able to execute education initiatives as well as other services more efficiently than we were ever able to do in the past.”
Acosta is also working with a third party on a predictive analysis capability so its employees can get to out-of-stocks before they occur. A similar capability was also recently developed by Premium Retail Services. “So much of the merchandising industry has been built around out-of-stocks, but it tends to be reactive in nature,” said Pat Lockridge, vp of business development with Premium Retail Services.
As a result, during the time it takes to retrieve data and dispatch a person to the store to take corrective action, the retailer’s automatic replenishment system may have resolved the situation. “What we have done is built a demand based merchandising system that essentially forecasts phantom inventory and lets suppliers forecast where out-of-stocks are likely to occur so merchandising efforts can be deployed in a proactive, rather than reactive, manner,” Lockridge said.
With or without a decision by Wal-Mart to reduce or eliminate secondary displays, the nature of work provided by merchandising service companies was already changing. The skill sets required of people performing in-store work are more advanced these days. They use the latest technology to perform increasingly sophisticated tasks on behalf of suppliers that feed into Wal-Mart’s experiential objectives. That may mean improving the speed to shelf of new items, aiding in the assembly and maintenance of new fixtures and customer communication programs and ensuring the successful execution of new product launches for which the window in which success must be demonstrated has been narrowed.
In addition to the changing nature of in-store work and the potential for fewer displays, another major adjustment for suppliers regards what displays actually look like. Wal-Mart has begun the process of implementing a style guide that requires displays to feature Wal-Mart branding and the increasingly familiar “Save money. Live better.” tagline in addition to the supplier’s own branding message. Going forward, the goal is to carefully regulate all manner of communications of displays including font size, the placement of brand logos and the colors used.
It is an alien concept for many of Wal-Mart’s suppliers who for years enjoyed an almost Wild West atmosphere when it came to the creation of displays. That’s why the publication of a style guide last fall was an unsettling development for many in the supplier community, since the only concerns previously involved compliance with shelf or pallet specifications and ensuring that displays were sufficiently sturdy to withstand the rigors of the supply chain and the store environment. Beyond that, creating displays for use in Wal-Mart stores was an exercise in creativity, and securing placement in a store meant satisfying the whims of a buyer in the merchandising organization. That’s no longer the case as buyers can still authorize the placement of a promotional vehicle, but now the design of the display must fit within a framework as determined by Wal-Mart’s marketing department.
As with any change, now that Wal-Mart has revealed additional strategies on its quest to operate cleaner, faster and friendlier stores, some of the changes are creating a disruptive and troublesome adjustment period. Wal-Mart has imagined an in-store environment that is free of clutter in its various forms, where desirable and attractively priced merchandise is easy to find and the value proposition “Save money. Live better.” is clearly and consistently communicated throughout the store.
Some of the changes along this path are proving unsettling and will continue to be a source of concern and opportunity for suppliers and service providers. They also appear to be necessary changes for a company that several years ago recognized it needed to break the mold of business as usual. Today’s customers demand convenience and they have little tolerance for any retailer that provides a store experience that doesn’t respect that overriding concern. In addition, the pricing gap between Wal-Mart and other large retailers is no longer sufficiently large that Wal-Mart can risk alienating shoppers with the cluttered store experience that worked so well in the past.
As home slump lingers, hope turns to ’09
NATIONWIDE RT REPORT—No piece of the retail industry has felt the pain of the soft economy as much as the home improvement sector. Yet even while home improvement retailers and manufacturers are working on their contingency plans for the balance of 2008, they can take solace in the fact that sales are expected to decline at a slower rate between now and the end of the year, as the housing slump winds through a second year and culminates in what many are hoping will be a rebound in 2009.
One year ago this month, Lowe’s and The Home Depot reported their first sharp drops in same-store sales to signal where things were headed, with 2007 first quarter sales falling 7.6% at Home Deport and 6.3% at Lowe’s. And while both chains are expected to report at least a 5% drop in same-store sales when they release first quarter results in late May, they should at least be better than last year.
Goldman Sachs analyst Matthew Fassler touched on this trend in a research note that noted stocks for the chains will “trade through normalized valuations when earnings visibility improves,” adding that he expect positive sales to return in the first quarter of 2009.
NPD Group analyst Mark Delaney agreed that the numbers will probably look better this year but said it’s a small consolation. “At least it’s a comparable year and they’re comparing apples to apples, ”said Delaney. “But that’s a real ‘glass half-full’ way of looking at it.”
The bottom line is that even though the bar has been lowered for home improvement retailers, they’re still expecting sales to fall even when matched against weak 2007 numbers. Home Depot, which reported its first ever decline in year-to-year sales in 2007 sales, expects same-store sales to decline in the “mid to high single digits” for the year while Lowe’s is projecting a 5% to 6% decline.
But there’s hope on the horizon after this year. According to the HIRI/Global Insight forecast for home improvement products, sales are expected to fall 1.5% in 2008 following a 2% drop to $306.7 billion in 2007—the first decline since 1991. The report attributed the ongoing slump to “the sharper than expected decline of housing market activity and the general slowdown in consumer spending.”
Sales will rebound, albeit slowly, in 2009 on the strength of a “housing market now expected to show only a gradual recovery initially.” The report predicts a 2.9% increase in sales in 2009 followed by accelerated jumps in sales averaging 6% from 2010 through 2012.
And there are some product categories that are still growing. According to the National Gardening Association, sales of lawn and garden products increased 3% to $35 billion in 2007 driven by more consumers doing their own lawn work rather than hiring someone else to do it.
Delaney says retailers hunkering down for the next eight months will be promoting more affordable categories like lawn and garden and getting more creative in stores with back-to-basics merchandising, an approach that will pay dividends in the long run. “One of the positive offshoots of a bad economy is that it forces retailers to take a closer look at the inside of their stores,” said Delaney.