New angle on greeting Kmart card shoppers - K Mart Corp.'s Auburn Hills, Michigan prototype store's greeting card department

Discount Store News, Feb 1, 1993

The new greeting cards department at Kmart's Auburn Hills, Mich., prototype store aims to provide shoppers with a destination stop for cards, party supplies and small gifts.

The retailer, with the help of its supplier, Sangamon, designed a department to maximize greeting cards, party goods small gift sales through a subtle but deliberate attempt at cross-merchandising.

"We're trying to get some bonus sales with the new layout," said Tony Val, a Kmart divisional vice president. We want to make it [the greeting cards department] a true card/gift shop."

For Kmart and other mass merchants, the peaks and valleys of greeting cards sales are smoothed out with party goods. By cross-merchandising small gifts in the card department, a program of suggestive selling takes hold providing level sales patterns over a 12-month period. The result of such a program may also encourage additional sales beyond simple add-ons for a real bonus to the department and the store.

Val and Sangamon's Thomas Tisdale, senior vice president, marketing and sales, said it was still too early to assess the performance of the department, which has only been in operation since last November. However, they are pleased with the early results and said Kmart is giving the department a three-month test, which ends in February, to decide if the program will be rolled out to all new and newly refurbished Kmarts.

Sangamon won out over Kmart's other greeting cards suppliers--American Greetings and Ambassador--because the Taylorville, Ill.-based supplier offered Kmart "the newest and best" plan of the three, said Val. Kmart stores are supplied by all three vendors in a program that attempts to distribute the business equally. Each store is supplied by a single vendor.

At Auburn Hills, the 23-foot by 23-foot greeting cards department was relocated from various locations throughout Kmart's store network to a high-traffic area in the front of the store at the crossroads of two power aisles. Such a positioning opens the card department to shopper traffic in three directions along major routes through H&BC, food, candy and snacks, books and fashion accessories.

In addition, the greeting cards department was set at a 45-degree angle, permitting customers a clear view of the merchandise from various aisle locations and a glimpse of the arty goods area along the back wall of the department.

Other new features of the card department include: * Seasonal endcaps; * A mini boutique for a children's card program under Sangamon's "For Kids Only" line; * Slot wall program for gift bags and some other wrapping products; * A new gift wrap, ribbon and bow program; * Color-coordinated canopy and card locator program.

Although the new configuration for greeting cards debuted at Auburn Hills in November, Kmart originally scheduled the department to open in Henrietta, N.Y. (Rochester, N.Y.) in fall 1991, according to Tisdale. The introduction of the angled department was delayed for a future store closer to Detroit to permit executives easy access. At the time, Tisdale said Auburn Hills "wasn't even a glimmer in Kmart's eye."

When Auburn Hills was proposed, Tisdale said Sangamon represented the angled card department with modifications. A "real cooperative effort" between the two companies eventually led to the current program now installed at Auburn Hills, Tisdale said.

The idea for an angled card department originated with Kmart prior to Henrietta, Tisdale said, in an effort to give the area the look of a card and gift department.

Kmart didn't abandon its desire for a card/gift shop look, however. And when the Sayville, N.Y., store was posed-dubbed Oak Park Sangamon won the supplier position with a proposal that eventually led to-Kmart's first attempt at a card/gift shop look. The Sayville store featured a canopy over the entire card area with banners hanging from the ceiling to distinguish it as a specialty card and gift shop within the store.

The distinguishing characteristics of the department in the Auburn Hills prototype is its position and layout; the area is essentially the same size as other Kmart card departments. Department size was increased in the late 1980s, from about 96 linear feet to the current 144 linear feet to 160 linear feet today in the majority of Kmart stores.

Each store carries the same merchandise, about 3,000 skus.

Card prices are the same, too, between $1.50 and $1.65 per card, sold at a 10% discount below suggested retail. The average retail gross margin, at 45% to 50%, is probably earmarked for improvement with the cross-merchandising program set in place.

However, subtle changes were added to Auburn Hills in the form of new programs.

Perhaps the one Sangamon is most proud of is wall for the gift wrap, gift bag area. This program was the result of conversations between Kmart and Sangamon over the best way to present the merchandise. Usually merchandised above the department along the entire everyday card run, Sangamon altered the program to a self-contained, 3-foot area along a main power aisle across from H&BC, a first for a discount store.