GM report

MMR, May 30, 2005

Hard Times for GM

NEW YORK -- The general merchandise business continues to be challenging in the mass market. This year's survey of 32 product categories tracked by Information Resources Inc. during the 52 weeks ended February 20 reveals few bright spots (sales through Wal-Mart Stores Inc. are not included).

Only six segments registered dollar sales growth, while five listed gains in unit volume. The winners included baby accessories, food and trash bags, hair accessories, household plastics (which posted a narrow uptick in units), paper towels, and household cleaner cloths--the only category to turn in double-digit increases.

Air fresheners, one of three categories to be tracked only through supermarkets, also experienced strong growth, especially on the dollar side. The other two, candles and lighters, both were down.

The strong showing by cleaner cloths, or wipes, can be explained with one word: convenience. A new study from Cleveland-based Freedonia Group Inc. projects that domestic demand for consumer and industrial wipes will grow nearly 6% annually to reach $1.9 billion in 2009. Household cleaning, hand and body and other types of consumer wipes are expected to produce the strongest growth.

A number of factors that are behind the downturn in specific categories can be identified. Such segments as blank audio/video media and film are all the victims of rapid technological change that is producing new consumable media in each of those segments.