General merchandise is subject to the same challenges nearly all products are currently experiencing — supply chain issues and inflation. According to the NPD Group, April 2022 U.S. GM unit sales were 7% lower than a year ago, creating a 1% decline in sales revenue.
As Mark Deuschle, president of Navajo Inc., a manufacturer, distributor and one-source supplier of consumer goods, shared, “There has been a cascade of challenges causing manufacturers, distributors and retailers to change their approach to market.” For some, like Navajo, big inventory bets were placed on categories expected to perform well, while others (e.g., apparel, electronics and nonessential items) purchase decisions have led to bloated inventories and eventual deep discounting.
From a top-line perspective, this is troubling news for retailers already battered by the lingering effects of a 30-month pandemic and sputtering economy; however, looking more closely at category performance, some bright spots can be found.
Analyzing IRI seasonality data and corresponding indices, HRG identified several GM categories which consistently had a seasonality factor below the general merchandise seasonal factor in January 2022 through July. That indicates that these staples are in need all year round.
- Cat/dog litter.
- Food and trash bags.
- Paper towels.
- Pet food.
- Toilet tissue.
- Water softener/treatment.
Retailers must put a priority on drawing attention and driving traffic to these items that are always in demand, as they will generate repeat trips to their store.
Deuschle sees the following categories continuing their acceleration, based on his business: eyeglasses/readers, cooking utensils/housewares, travel/trial and phone accessories. Beyond Navajo’s business, he cited fashion and magazines among lackluster performers experiencing very little uptick.
Looking at average sales numbers in the IRI Seasonality Reports from 2020 and 2021 and through July 2022, the following have been consistent top-selling GM categories the past two and a half years:
- Pet categories, including food, supplies, treats and dog/cat litter.
- Categories related to food serving, consumption and waste: cups and plates, kitchen storage, culinary, foils and wraps, and food and trash bags.
- Staples such as toilet tissue, paper towels, facial tissue and batteries.
- A few categories that could arguably be classified as essentials: socks, candles and motor oil.
One GM category suffering from volatile times and shifting demographics is the greeting card category. According to the report “Greeting Cards — Global Market Trajectory & Analytics” from Research and Markets, the global market for greeting cards, estimated at $23 billion in the year 2020, is projected to decline to $20.9 billion by 2026, declining at a compound annual growth rate (CAGR) of -1.7% over the analysis period.
In HRG data, we continue to see a decline in greeting cards and associated items we collect data on (including stationery, address books, party supplies and more) from brands: Hallmark, American Greetings and Ambassador.
Greeting card sales may be experiencing a generational shift wherein younger populations are regular users of texting, social media and other digital platforms as a way of reaching out and don’t have the need to send cards through the mail. Deuschle suggests, however, that cards remain important for brick-and-mortar retailers with their continually refreshed assortments and ability to remind consumers of holidays and seasonal periods.
To take advantage of those GM items that are seasonal, retailers should use end-caps, displays and promotional avenues to let shoppers know you’ve got inventory. Use promotions and displays to offer creative ways of using items that might be thought of as seasonal to push sales beyond the time(s) of year they might be most popular. IRI
There’s no getting around many of these categories being seasonal, especially in certain regions of the country. For instance, there’s a limited window to stock and promote pool/spa chemicals in northern states, as there is with pavement de-icing products. However, there are a few that could become less seasonal with thoughtful promotions and passing along ideas for use beyond what might be thought of as traditional. Writing instruments; candles; photography supplies; and coffee, espresso and tea should be items that can be part of the shopping basket any time of year. It’s actually surprising that these are highly seasonal categories; however, the numbers don’t lie. Incorporate these items into end-caps and/or displays during slow times to put the idea into shoppers’ heads.
One final area of retail operations affecting the GM categories is the front end. Specifically, the transformation of the checkout area has caused many retailers to invest in well-crafted queuing systems and self-checkout technology. With strong reliance on impulse purchases, there were many predictions that GM categories may suffer; yet Deuschle indicated the lengthened shopper dwell time combined with well-merchandised queue areas have provided customers with impactful items resulting in improved sales volume for brands. This has been a welcome silver lining across the retail landscape. Deuschle said, “This reconfiguration has led to a more valuable and more profitable area for general merchandise items.” He added, “It’s certainly a positive indicator for GM.”
Colleen Volheim is the category research and analysis manager at Hamacher Resource Group.