Opportunities to boost sales of both pocket and multipurpose lighters abound.
For supermarkets, the lighter category represents a paradox. On the one hand, it's a series of in-demand, low-cost products that generate a decent gross margin within the confines of a small footprint. On the other hand, the category must deal with how best to merchandise products to prevent sales to minors, and excessive shrink, both of which are inherent concerns. There's also the problem of how supermarkets can overcome a distinct competitive disadvantage in share of sales within the category.
“Pocket lighters are growing in supermarkets, although the growth lags that of the general market,” notes Adam Blumenthal, brand manager, lighters for Shelton, Conn.-based Bic Consumer Products USA. “Multipurpose category lighter sales are soft, and while sales in supermarkets are down, this sales decline is being driven primarily by drug stores and mass merchandisers, excluding Walmart.”
The lighter category is divided into two segments: pocket lighters and multipurpose (utility) lighters. In the pocket lighter (disposable cigarette lighter) segment, a Bic stock analyst and investor-day presentation reported that the majority of sales (52 percent) were generated by convenience stores, while grocery accounted for only 7 percent of sales; mass retailer sales were slightly higher, at 12 percent, while drug and discount claimed just 6 percent and 8 percent, respectively. Sales in this segment reached $837 million in 2009, according to Cambridge, Mass.-based Kantar Retail, at a time when cigarette sales in the United States are decreasing by about 2 percent a year.
The multipurpose segment (utility, fire log, barbeque and torch) has seen more of its sales migrate to the mass and drug channels, leaving supermarkets hungry for sales of these less troublesome lighter products.
“To optimize sales, pocket lighters should be merchandised at the front end of the store, where high traffic creates high visibility,” says Blumenthal. Front end placement is an obvious choice for lighters, but one that has always been a difficult choice for supermarket operators. Indeed, supermarkets' chief competition for lighters, convenience stores, generally sells them unpackaged and in bulk, accounting for more than 50 percent of overall lighter sales, or roughly the same percentage of sales that c-stores enjoy.
And though most supermarket operators avoid selling lighters as bulk items, packaged lighters, even pegged at the front end, can increase the product's footprint, making it harder to justify a wide assortment of lighter choices at the checkstand.
“In the case of pocket lighters, there are a lot of restrictions on sales to minors, so many food and drug chains have put them behind the courtesy counter, which has hurt sales” as a result of the impulse-oriented purchase nature of lighter sales, observes Mike Forys, president of Bell, Calif.-based Beacon Power.
Jim Mickelson, national sales manager of Brea, Calif.-based Easton Enterprises, concurs: “These are real impulse items on the checkstand, yet they are not an impulse buy when put behind a counter.” A possible solution to counter that trend and make the products more accessible, he adds, “is to package them in double clamshells.”
Appeal via More Variety
Mickelson further stresses that supermarkets should consider appealing to a broader range of customers with “more variety that could attract more of those impulse sales. There are more designs and logos available now at various price points. Supermarkets tend to stay on the high end, but if they brought in more variety, they could expand their price-point range and be more competitive.”
Expanding the range of products has the benefit of catering to a shopper segment that many of the convenience stores are also currently not reaching: women.
“Supermarkets should support key segments, such as designer lighters that satisfy the preferences of female shoppers by empowering them to personalize their lighter,” says Bic's Blumenthal.
Even in a category with a seemingly wide following, demographics can play a large part in the success of a particular retailer or even a store. For instance, in an effort to gain sales in the rapidly growing Hispanic market, Bic earlier this year introduced the Mexican Soccer Series, which proved successful, and during the first quarter of 2012, the company will launch the Hispanic Cultural Series. Bic has also teamed with the USO on the Support Our Troops Series, which, in addition to sporting patriotic themes, gives nine cents to the USO for every unit sold.
Lighters sporting logos have been popular for many years, but some retailers have found that the sales of these items tend to wane after a short period of time. Mickelson warns retailers to stick with the basics and be aware that logos — and especially celebrity lighters — will rapidly gain and lose popularity, and should be carefully monitored by retailers so as to prevent their being saddled with excess inventory of unpopular product.
“The best way for supermarkets to merchandise lighters is to create a permanent, visible home for them. Too often with so many other GM items vying for space, lighters do not find a permanent home to support their sales, and are many times placed in low-profile areas that do not serve to generate sales and profits,” says Mark Deasy, VP of sales and marketing for Ontario, Calif. - based Calico Brands, which has recently developed a Lighter Center that creates a permanent merchandising base for these items that helps maximize sales and profits. “With lighters being high-volume sales items, it is important to find a home for them within the store,” Deasy adds. Calico's Scripto brand recently introduced the Skulls Designer Series of five assorted artistic skull designs inspired by tattoo artork.
Giving pocket lighters a second placement in the store also helps increase visibility and sales. Whether merchandised at a lighter center or in a permanent spot in the GM aisle, lighters can additionally be clipped around the store, as well as in smaller, single-strip displays at the checkstand. Again, however, this type of merchandising scheme can be problematic for stores in localities that restrict the accessibility of younger customers to these products.
Multipurpose lighters don't have the same prohibitive access problems as their smaller pocket cousins. This means that they can be placed in the GM aisle and also in secondary positions. And since they're multipurpose items, there are ample cross-merchandising opportunities. “With utility lighters, placement means a lot,” says Beacon Power's Forys. “Utility lighters are an impulse item, so you should cross-merchandise them wherever there is a natural fit.”
Natural cross-merchandising complements to utility lighters could include fireplace logs, candles and barbeque items, as well as seasonal displays, especially in summer, fall tailgate season, or around Halloween and Christmas. Beacon Power has a Kingsford branded lighter series that it encourages retailers to cross-promote with charcoal and other barbeque products. The company uses coupons and FSIs to spur sales during promotions.
Many manufacturers have started to make twin-packs of multipurpose lighters available to supermarkets. Club stores and mass retailers have done well merchandising twin- and multipacks of utility lighters. The development of a multipurpose lighter with a flexible nozzle that makes it easier to access hard-to-reach places, such as gas barbeques and furnace pilot lights, can justify placement of these lighters within the hardware section.
Utility lighters have migrated from being just another GM product placed on the supermarket shelf as a convenience item to a product that can bring high-margin sales to retailers when properly merchandised and promoted. Much like pocket lighters, multipurpose lighters are now offering tie-ins to other brands, characters and logos. For instance, Calico now offers Budweiser and Bud Light utility lighters, and has also joined forces with the U.S. Army on a branded utility lighter series. Available in January 2012, the Scripto U.S. Army Utility Lighter is aimed at military families, veterans, collectors and anybody with strong patriotic feelings.