American consumers love electronics. Consumers’ attachment to smartphones, tablets and laptops, as well as their migration to convenient “one-stop” channels, has created opportunity for supermarkets in categories that are no longer exclusive to specialty and mass retailers.
If the products are priced right, merchandised effectively and on trend, consumers are just as willing to purchase them in their local supermarkets as in any other channel. Higher retail prices and double-digit margins are two compelling reasons to take a good look at these categories.
The Arlington, Va.-based Consumer Electronics Association (CEA) estimates that sales of consumer electronics (CE) accessories, driven by the popularity of tablet and smartphone accessories, headphones and earbuds, totaled $8.5 billion in 2014.
More supermarket retailers are invested in the category. Research from Solon, Ohio-based ECRM indicates that the supermarket channel is the second most active (right behind mass) in advertising electronics products. Nearly three-quarters (74 percent) of ads in this category are price only-based, according to ECRM, with Samsung the most actively advertised brand in the category.
Retailers can generate impulse purchases with the right product mix and aggressive pricing. CEA research shows that nearly 30 percent of consumers who make unplanned CE accessory purchases say store displays have the biggest influence on their buying behavior.
“The most successful way for food and drug retailers to get into the category is with free-standing displays or power wings, especially near the registers,” advises Mark Mesrobian, EVP of Narragansett, R.I.-based Complete Sourcing Solutions, maker of the Symtek brand of mobile accessories.
According to Mesrobian, Symtek products, which retail for $5 to $15, are delivering margins from 45 percent to 60 percent. “For grocery retailers, that’s huge,” he notes. One of the brand’s most successful programs is its TinyTek grab-and-go line, which can be merchandised near checkout and retails for less than $10.
All of Symtek’s products are Apple-licensed, a distinction that’s becoming increasingly important. “In grocery, it can be all about price,” says Mesrobian. “But retailers don’t like returns, so it’s smart to offer a better-quality product.”
Alan Zisser, director of operations at New York-based Tzumi (whose products are also Apple-certified), points out that space can be a challenge for supermarket retailers, so it’s important to key in on a few best-selling items. Rochester, N.Y.-based Wegmans Food Markets includes the company’s Pocket Juice portable phone chargers in its in-line 3-foot electronics section, located adjacent to the chain’s stationery and card departments.
A mix that includes car chargers, home chargers and cables in three of four colors is optimal. “Our best-selling color is pink,” says Zisser. CEA research shows that about half of consumers (48 percent) are interested in personalizing their accessories through color (67 percent) and design options (62 percent). Zisser adds that price points from $14.99 to $19.99 are the “sweet spot for retailers to move product and still make a margin.”
Wegmans’ mix also includes screen savers and tablet and phone cases, as well as a selection of earbuds and headphones. CEA estimates that sales of headphones were up 20 percent in 2014. Sony and Philips are the top two vendors in the category, according to data from United Kingdom-based Futuresource Consulting.
Wearable Fitness Devices Taking Off
Technology is also playing an increasingly bigger role in health-monitoring devices. CEA asserts that wearable items (fitness activity bands and other health-and-fitness devices, in addition to smart-watches and smart eyewear) will be a key category to watch in 2015 and beyond.
“The digitization and sensorization of consumer tech is having a pronounced impact on the way people manage their health,” affirms CEA spokeswoman Danielle Cassagnol. “Technology is an enabling force. It democratizes health care by allowing each of us easy accessibility to myriad medical innovations that were just a few short years ago only available to us through a physician, including blood pressure monitors. This is empowering the consumer toward more personalized health care.”
CEA research indicates that one in 10 Americans owns or uses a wearable fitness activity tracker; 81 percent have purchased or received their fitness trackers in the past 12 months. Unit sales of wearable devices are expected to jump 61 percent, and dollar sales are expected to surge 133 percent to $5.1 billion in 2015, according to the trade association.
Improvements in sensor technology and the reduced cost of production have resulted in a stream of new health-monitoring and -tracking devices entering the market. The products are making it easy for consumers to have a more comprehensive view of their vital signs, easily share data with health care professionals or caregivers, and take an active role in managing their health.
“The category has been growing significantly since 2011, when these products began entering the market,” says Mimi Huggins, a spokeswoman for San Francisco-based Jawbone, maker of the Up line of fitness trackers. Huggins adds that while there once were one or two manufacturers, there are now many options in this space.
As in any competitive category, the proliferation of products has made them more affordable to the average consumer. Jawbone recently introduced the Up Move tracker, an easy-to-use entry-level model that retails for $49.99. Wrist strap accessories retail for $14.99.
The device counts daily steps and can also be worn in bed to accurately track sleep, including hours slept and sleep quality. Up Move connects wirelessly with Jawbone’s Up app via Bluetooth Smart, syncing regularly to track progress throughout the day and night. The app’s intelligent guidance and insight system, Smart Coach, helps provide a deeper understanding of how diet, sleep, activity and other choices affect overall health and suggests changes users can make, as well as motivating users with personal challenges like drinking eight glasses of water per day, or taking 2,500 more steps.
“Consumer acceptance is growing in this category as technology and accuracy have improved,” says Leon Wong, VP of marketing at Fremont, Calif.-based Salutron Inc., manufacturer of LifeTrak fitness monitors. LifeTrak’s line of monitors retails for $59 to $129 and is currently sold in drug and mass chains.
Wong thinks supermarkets have a distinct advantage in the fitness monitor category. “More and more devices are incorporating food data into apps, allowing consumers to scan UPCs and download nutritional information,” he observes. “Food is such an important part of health and fitness that these products are a natural fit for supermarkets, especially those who have nutritionists on staff.”
Personal Grooming Offers Opportunity
In the personal grooming category, men’s hair and beard trimmers have soared in popularity as facial hair continues to be fashionable. The NPD Group estimates that dollar sales of the products are an estimated $301 million, an 18 percent increase over 2013 dollar sales.
“The men’s facial trimmer category has seen a dollar sales cumulative annual growth rate of 14 percent from 2011 to 2014,” notes Debra Mednick, home industry analyst for Port Washington, N.Y.-based NPD. “It’s one of the few personal care appliance categories with this level of a positive track record.”
According to Steven Yde, director of marketing for Sterling, Ill.-based Wahl Clipper Corp., since 2007, the company has quadrupled sales in this category. “Last year alone, we were up double digits, marking our ninth straight year of record growth,” he says.
Mednick observes that while the mass channel captures the lion’s share of sales in this segment, competition from other channels, such as drug and beauty, has slowly been stealing share.
Yde, for his part, sees opportunity for supermarkets in products offering innovative features. “Wahl’s popular Lithium Ion Total Grooming kit and Lithium Micro Groomsman, our top-selling personal trimmer, are affordable, high-demand products that are ideal for supermarkets to carry,” he says. The Groomsman retails for $19.99. Idea Village’s Micro Touch Max retails for as low as $9.99, allowing supermarket retailers to keep prices low.
Items that perform best tend to offer multiple attachments outside of just various comb lengths, asserts Mednick. “Two-foil shavers and nose/ear trimmers are beginning to become commonplace in the facial trimmer package, since they are a great value proposition,” she says. “While the majority of sales are from lower-priced items, some trade-up is evident, with demand growing for high-end trimmers, which offer sleek styling and new technology.”
“More and more devices are incorporating food data into apps, allowing consumers to scan UPCs and download nutritional information. Food is such an important part of health and fitness that these products are a natural fit for supermarkets, especially those who have nutritionists on staff.”
—Leon Wong, Salutron Inc.
“The most successful way for food and drug retailers to get into the category is with free-standing displays or power wings, especially near the registers.”
—Mark Mesrobian, Complete Sourcing Solutions