Going to Home Depot . . . for toilet paper?
More retail chains are selling unlikely consumer products in a broad new strategy. Shoppers are confused as the lines blur.
Social-media marketer Valentina Monte stops by Home Depot (HD) every two months. It's her favorite place to buy toilet paper.
The 23-year-old digital native often buys books, clothes, shoes and concert tickets online and watches TV shows from Netflix (NFLX) and HBO Go. But she still treks out regularly from her New York City apartment to visit the do-it-yourself store and stock up.
It's confusing, but it's no accident. Home Depot is one of many unlikely retailers betting that consumer staples will boost sales and pull shoppers into their stores. While sales of most electronics and office supplies have rapidly migrated online, sales of soap and paper towels generally haven't, making them magnets for foot traffic.
As a result, shoppers at Best Buy (BBY) don't just find laptops and headphones. They can also buy Keurig coffee pods and Tide detergent. Customers browsing Staples (SPLS) can pick up legal pads, but they can also find shaving cream and deodorant.
Best Buy calls the strategy "floor optimization." Staples calls it "Beyond Office Supplies." Some shoppers call it puzzling.
"I couldn't imagine going to Staples for the purpose of buying deodorant, is it really good business?" said Bart Barber, a pastor in Farmersville, Texas, who recently visited a Staples store for computer supplies and was surprised by deodorant sticks near checkout. "I guess it's for the person who has run out but forgot to go to Wal-Mart (WMT) to get it."
It wasn't long ago that the largest American retailers had a simple strategy: Choose a category, build lots of huge stores and wipe out less-focused competitors. The lines are starting to blur.
Staples' marketing executive Alison Corcoran said expanding into deodorants and other goods that have to be replenished regularly is a logical step for the office supply giant. The chain is adding 1,600 new items, mainly business-related supplies, to its stores this year as it tries to reinvent itself and align with changing consumer tastes.
"Some of the new products are traffic drivers, others are a convenience play," Ms. Corcoran said. "We are trying to establish new patterns with our shoppers, who might be buying those paper towels somewhere else."
A similar strategy is taking hold at Best Buy, which is trying to use consumables such as Tide, coffee pods and home soda machine supplies to bring back customers who once stopped by every week to buy compact discs, movies and ink cartridges.
Scott Guthrie, who oversees SodaStream's (SODA) operations in the Americas, said nearly one-third of the people who buy soda machines will return to the same store when they need CO2 gas refills or syrup.
Stores "love these planned visits," because it increases the likelihood shoppers will pick up other items while in the store, he said.
Retailers are facing what may be a permanent drop in traffic as Americans increasingly shop online for everything from diapers to drywall. U.S. shoppers made 3.8 percent fewer shopping trips in 2013 than they did a year earlier, according to market research firm Nielsen, as strained consumers cut back trips to stores in part to spend less money on gasoline.
Consumer products companies are encouraging the retailers' moves, saying they have helped boost sales of their brands in an otherwise dour environment. Overall unit sales of consumer products have posted little or no growth in the U.S. for the past three years, according to Nielsen.
Home improvement and office supply retailers have sold consumer packaged goods for some time, but they have been adding more items and marketing them more aggressively in response to growth in the area. Staples this year has ramped up efforts to portray itself as a source of such products, even replacing the bent staple "L" in its logo with items like a broom and dustpan, or a bottle of Windex and a sponge.
Nick Vlahos, chief customer officer at Clorox (CLX), said home-improvement retailers are an important source of sales for the company's namesake bleach, disinfecting wipes and Glad trash bags.
"This channel in aggregate is driving more foot traffic," he added.
Clorox has also found, for example, when shoppers buy barbecue grills, they also tend to pick up bags of Kingsford charcoal, a product the company makes, or they may buy trash bags along with trash cans.
Home Depot's push into consumer staples came almost by accident, said the company's U.S. retail president, Craig Menear.
Employees in the garden department noticed cleaning supplies would boost the division's sales in the winter, when customers weren't buying potting soil and shrubbery, and suggested giving them more space. The company worked with Procter & Gamble (PG) to understand how to add cleaning supplies that would appeal to general consumers in addition to its professional customers.
"Once we made it more visible, it became a growing category for us," Mr. Menear said.
This spring, Home Depot launched its own laundry detergent under its HDX label.
Last year for Christmas, Ms. Monte, the social media marketer, asked her mother for a gift card to the home-improvement retailer.
It isn't the lumber or drywall she is after. While at the store, she might pick up "some small items, or I'll have a key made," she said. But otherwise, "I just go there for toilet paper."
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Who gives a damn about toilet paper and where you buy it.....MSN.
I want important issues to discuss, how about the release of 5 top Taliban officials from Gitmo. Why are there no comment sections on the government or this administration's policies??
I see this kind of cross-merchandising, with rare exception, as a reach that won't deliver much bang for the buck. Toiletries, even travel sizes, are a bigger reach for someone like Staples than Keurig machines/cups and Soda Stream. But they will still do more sales on this type of product than Best Buy, where bringing the stuff in translates to nothing but dead money.
Home Depot is different. You've got any number of potential opportunities to move traditional grocery store items, like toilet paper and cleaning supplies. Hurricane coming? Pick up some toilet paper with your plywood. Blizzard coming? Pick up your toilet paper with the shovel, snow brush, and rock salt. Grilling season over? Pick up some stuff to clean the grill along with your lawn and leaf bags.
What would be next for Home Depot? Expanding into camping/outdoors/emergency survival products. They already have a ton these kinds of products in these stores, provided you know what to look for and how to use it. It's just a matter of taking the next step up and expanding. I look at it this way: there's some serious sales growth potential when Wal-Mart carries Mountain House and Home Depot doesn't, especially when I could count the number of Wal-Mart employees who could tell Mountain House from Mickey Mouse on one finger. Here's how I'd merchandise the front end: put Mountain House on a front of store display, along with green tarps and your typical emergency fare like Sterno, flashlights, and batteries, when hurricane advisories are being posted. The store will not be able to stock Mountain House fast enough to keep up with demand.
Looks like Home Depot is acting like Wal-Mart. What's next a Taco Bell or Mickey D's along with a cell phone company? You can't run what you have!
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