Cleaning supply sales up in nonfood - Food Merchandising for Non-Food Retailers supplement

Discount Store News, July 4, 1988

Cleaning Supply Sales Up In NonFood Most chains buy their cleaners on deal. On promotion, margins average 20% and everyday, they average 40% in this profitable category.

K mart used to be the most aggressive nonfood promoter of household cleaning products as traffic builders, but now everyone in nonfood is featuring cleaners, from small independent drug stores to the Sam's Wholesale Clubs that average $50 million a year in sales.

According to Kline & Co., a marketing consultant firm based in Fairfield, N.J., household product sales are down in food stores, by 2% to 5% depending on the category, but they are up significantly in nonfood outlets.

Nonfood chains are promoting the category more often, they are increasing the number of household cleaning skus in their private label lines, they are building more ends featuring cleaners, and chains with large stores are putting them out on floor stacks and pallets.

The fact that the category is down overall in food stores, say buyers and nonfood brokers, is not a problem for the nonfood industry. "You are looking at a multibillion category," says broker Rick Bloom, who manages the Crofton, Md., branch of Watt & Company, "and there are plenty of people buying cleaners."

"It's a very attractive category with women shoppers. The nonfood stores are using cleaners both as a convenience department for their shoppers and as a traffic builder. And both ways, it's working well. With everyday margins of 40% to 55%, it's a very profitable regular department."

Buyers and brokers also say there is a lot of flexibility in the category in terms of what sells well. National brands like Tide, Clorox, Dawn and Wisk always do well, but so do some of the lesser brands like Real Pine, Bab-O and Purex.

"For some of the bigger brands like Tide and Clorox, there is a lot of price sensitivity," said a source for K mart. "These are items that most women buy one or two times a month, and they know the prices on these brands, so when we undercut the food stores by 20% or 30%, we generate a lot of traffic.

"On the other hand, women also buy a lot of cleaners on price alone. Bab-O is not Comet, but if we feature it at five 14-oz. cans for $1 as we often do, we can turn a lot of product. And because we're only buying on promotion, we can even make some money."

Some of the lesser known cleaners like a Murphy's Oil Soap also do very well in nonfood stores. Buyers say there is virtually no feature activity on a brand like Murphy's from the food stores, so they don't have to worry about banging heads when they feature it.

Drug chains, in particular, have been aggressively promoting Murphy's lately, and Art Silver, President of Silver Marketing in Berlin, N.J., says that it has been "blowing out the doors."

"When the nonfood chains promote Murphy's," he said, "they feature the 16-oz. size at 99 cents to $1.09. Food stores generally charge about $1.29 for it every day. The key to turning the household chemicals in nonfood is pricing it considerably lower than the food stores. The chains are finding that when they go out with something like Murphy's at the right price, it blows out the doors."

Murphy's Oil Soap is showing a 30% increase in my nonfood sales," says Burt Houseworth, President of Key Stone Brokers in Oradell, New Jersey. "But, in fact, the entire category is showing growth in the mass market stores. Every major chain is promoting cleaners, and there's more couponing and more multiple promotions going on than I ever remember seeing."

Drug Emporium stores in Philadelphia have done so well with the Murphy's Oil Soap on promotion that they have now added four skus to their everyday planogram.

One source says the average store is generating about $400 a month with that item. Because a lot of the product is bought on deal, the source says the margins are averaging about 18%.

Drug Emporium also does a fantastic business with detergents, dish washing liquids, bleach, fabric softeners and furniture/appliance cleaners. Many of their stores give the category about 36 ft of space, plus ends, case stacks and floor stacks.

"We get a lot of traffic in our stores and the women recognize that our prices are below the market so we get great turns. We also buy a lot on deals so we get good margins. Overall, cleaners are a very profitable category for us," says Bob Lyons who manages the northeast division of Drug Emporium.

Most drugstores, give the department less space, however. The typical range is from about 12 to 32 ft. Many discount stores give the category as much as 36 to 48 ft., plus end caps and floor stacks. On promotion, discount stores are generally more aggressive with price than drug stores.

"We promote many items as close to cost as possible," said the manager of a Caldor in New Jersey.

"We want to make a statement to our consumers that we stand for value, so it makes sense to make a price statement with something as visible as a household cleaner."

Dart Drug in the Washington, D.C. market has a similar philosophy. Their stores promote household cleaners almost on an everyday basis, and they have given it as much as 50 to 60 running ft. in their stores.