Pharmhouse promos add spice to sales; pricing strategy creates craving for salty snacks - food manufacturers' promotions boost snack food sales - includes related article on nuts - Food Merchandising

Discount Store News, Feb 20, 1995

Salty snacks are a growing category at the 14-unit Pharmhouse chain. In 1994, the category was up 5% at the Manhattan-based deep discounter. Buyer Ray Sanger said the growth was primarily due to increased manufacturer promotional activity.

"Frito Lay has been more aggressive with its drug business,' said Sanger. "I guess they realized that they were missing that business since they concentrate so heavily on the supermarket channel."

Other manufacturers followed. "Herr's, Keebler and Wise all had sharp promotions," said Sanger. "Even the mom-and-pop companies were willing to do deals with us."

Sanger said that this year, Frito Lay offered the drug trade two-for-one promotions that had previously been exclusive to supermarkets. Although Pharmhouse doesn't promote those deals as two-for-ones, the chain hits the price point for single purchases.

Hitting recognizable discount price points is key to Pharmhouse's strategy for the category. While nearly every manufacturer has taken a price increase of 10 cents per bag, Pharmhouse stays competitive by discounting prepriced salty snacks at 10% every day. "We go deeper on some promotions whenever we feel that we need to," Sanger said.

In order to make the most of promotions, the chain devotes an average of 28 ft. in-line to the category.

Pharmhouse also gives additional footage to the category in the form of power ends and towers in other locations throughout the store. Grab bags of small snack-size bags priced at four-for-$1 or two-for-88 cents are often used to generate impulse purchases near checkouts.

While Sanger said that holidays such as Thanksgiving and the Fourth of July and events like Super Bowl Sunday create peaks in sales, he is able to create his own sales increases with hot promotions. "We're able to generate item movement that's as strong as holiday numbers by running strong promotions," he said. "Our self-display activity is very high."

Good store door delivery allows Sanger to make the most of items that are moving quickly through stores. And scanning and a perpetual inventory system allow the stores to have the products they need and to tailor their mix to individual store demands.

The category continues to thrive at the chain despite a dearth of new products. Honey mustard pretzels turned out to be a short-lived trend. "That's a dead issue now," Sanger said. Pretzels in general, though, continue to be the hottest salty snacks on the market. With consumers obsessed with cutting fat from their diets, pretzels, which contain no fat, have become a guilt-free snack.

Manufacturers have scrambled to introduce reduced-fat products and consumers have responded favorably. And Pharmhouse's Sanger sees no sign of that trend slowing at his chain.

"These products have created a new category. The best part is that they are not cannibalizing sales of other snacks," he added. "I suspect that consumers who would otherwise stay away from these products are now able to purchase them."

Unshelling nuts' potential

The high ticket of nuts has caused consumers to stock up on quantities of nuts for entertaining or self use. To that end, wholesale clubs are selling a great deal of nuts.

During a recent visit to B.J.'s Wholesale Club in Watchung, N.J., for example, nuts were found in shoppers' baskets at three out of 11 checkouts.

The nuts selection at B.J.'s includes Pioneer Pride 2 lbs. of cashews priced at $7.99. A mixed assortment of 2 lbs. was $6.99.

The pricey Mauna Loa nuts made famous in Hawaii are priced at $6.79 for 12 ozs. Shoppers at B.J.'s noted that a can half that size was priced the same at supermarkets. "It is a good deal here," said a Watchung, N.J., consumer.

The 20-ft. nuts collection also includes Golden Gourmet macadamia, 15 ozs. for $6.79.

The best-selling grouping, according to store personnel, is the 36-count Planters, priced at $7.99. The tub was also merchandised on a nearby endcap.