How Scott's plays HBA hardball.
With the active participation of top management and store-level personnel and close cooperation with its supplier, Scott's has developed a sophisticated HBA program that takes a backseat to no one.
The rationale for a strong HBA program is explained by Grocery Merchandiser David Dickerson, who oversees the department: "With today's low-ball pricing of grocery products, we need HBA's profits more than ever. In turn, HBA needs our full attention. It's still a highly impulse section, but shoppers today expect to find a first class department in their supermarket as part of one-stop shopping."
Scott's operates three warehouse units and nine conventional stores. All are heavily food oriented and most of the conventional stores features service delis and bakeries. The conventional stores average 25,000 square feet and the largest unit comprises 60,000 square feet.
HBA's sales distribution, including sanitary goods, is "well above" 3% of sales from sections averaging 40 linear floor feet in the conventionals and up to 124 feet in the largest store. (This figure does not include sanitary goods, an end-cap for men's toiletries or promotional ends.)
Margins range from 21% to 23%, a fairly low figure, because of Scott's desire to meet or beat the competition's prices. "We don't match the shelf prices of the mass merchandisers or some of the chain drugstores," Dickerson admits. "We count on one-stop shopping convenience plus good merchandising, a wide assortment and strong promotion to bring in the business."
In setting up the pricing of both shelf and promotional merchandise, Dickerson works with Tawfic "Tuffy" Tillawi, vice president of American Merchandising Assoc. in Van Wert, Ohio, which supplies most of Scott's general merchandise and all of its health and beauty aids.
American produces a monthly promotional bulletin that, like its order book, encompasses a selection of eight price zones. "I can easily pick and choose or change our items' pricing," says Dickerson. "This flexibility is the operational keystone of our pricing strategy."
All earned advertising and bill-back monies are separately accounted for and remitted quarterly. Last year Scott's received $50,000 in these allowances. "It's thanks to these monies," says Dickerson, "that we're able to support our HBA advertising like the chains."
According to Tillawi, American has developed "a smooth system" for receiving and transmitting qualifying tearsheets.
Incidentally, Dickerson does not depend totally on American's informational input on deals and new items as he occasionally schedules appointments with HBA brokers and manufacturer salespeople.
Scott's also participates in the service merchandiser's deal-buying program whereby "intensive" purchases can be made with shipments split over four or more weeks. Taking advantage of forward-buying on deals helps keep prices low and Scott's gains from an extended promotional tool which can also be profitable, Tillawi points out.
Promotions are prepared eight weeks ahead. Once they're decided on, American mails slicks to Scott's advertising department. HBA regularly receives four column inches for about seven items on the second page of each week's three-page newspaper ad. There is also a quarterly push in which HBA gets about a fourth of the first page.
This solid, sustained HBA advertising is supplemented by a three-quarter page on page one supporting Scott's tie-in with American's annual anniversary promotion. The promotion, which runs the first two weeks in June, is one of American's special contributions and is participated in by most of its 100 supplied outlets.
American's president, David Kriegal, notes that the anniversary promo is now in its eighth year and centers on a store display contest. Last year's top prize of a $500 boat was won by one Scott's store. Other prizes awarded included: a 19-inch color TV and a 35mm camera.
The announcement of the winners takes place at another American special event, an annual golf outing. After golf, a full-course dinner is served. HBA clerks, store managers and top company executives are guests of American in a crowd that last year totaled 240 people, including vendors. Monhtly Meeting Sparks Motivation
Perhaps the most important element in Scott's multi-faceted HBA program is its monthly HBA meetings.
The meetings, held on the third Thursday of the month, gather HBA clerks and their store managers. The sessions, co-chaired by Dickerson and Tillawi, start at 9 a.m. and run for about two hours.
While upcoming promotions, new items and price changes are the primary topics, there's always time for general discussion.
Also present and participating is a representative of top management: Nick Ciocca, vice president, retail operations.
"We get it all together at these meetings," says Dickerson. "Any shortcomings--such as insufficient time to stock and order properly--are aired. And with Nick on board, there's more of a move to follow up in making necessary adjustments. His presence also underlines HBA's importance to the company and helps motivate everyone."
Discussion is encouraged and both Dickerson and Tillawi admit they learn from the comments. Says Dickerson: "The people at store level know what sells best in their stores and what sells poorly. Their input is invaluable. Sometimes we'll adjust our promotional program planning on the basis of their comments." He adds that "a spirit of interstore competition" also enters into the meetings, which adds to the motivation.
At store level, Scott's clerks order (all items in three's), stock and display HBA, while American does the chores on general merchandise. When help is needed, members of American's field staff fill the gap and serve as supervisors, particularly in checking new items and facings and in assisting in shelf remerchandising. The firm also provides three to four weeks training in shelf work for new HBA personnel and helps with display building for about two months.
Every one of Scott's conventional stores has at least one HBA endcap for off-shelf display, reflecting the chain's promotional commitment. Men's toiletries are displayed on an end facing the checkout concourse. This gives HBA more inline shelf space and provides prominence to razor blades, which were shifted from the checkouts four years ago.
New developments at the shelf include more space for cosmetics and hair accessories. A new, expanded program for vitamins is being contemplated. American merchandisers are working on plans to replanogram a portion of the remedies section to add another shelf for the burgeoning number of new items.
On the informational side, Dickerson receives an item-by-item, store-by-store 13-week recap of purchases from the supplier and an inventory analysis every 13 weeks from an outside firm. If an item's promotion is heavily over-ordered, he can ask American to pick up the excess and write a credit.
"We are careful not to abuse this," says Dickerson. "We certainly don't want to bleed anyone. We're like partners. HBA is very important. We need all the help we can get."
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|Title Annotation:||health and beauty aids|
|Date:||Mar 1, 1984|
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