How GM Drives Store Profitability

By: Tom Duffy, Senior Advisor, Industry Relations, FMI

If a rising tide lifts all boats, then general merchandise (GM) is a wave that’s helping retailers stay afloat and on course with bigger baskets and rings.

According to Mark Deuschle, president of Denver-based GM manufacturer and distributor Navajo, Inc., it isn’t as much about conveying to shoppers why they should buy general merchandise – they already get it. “When given a proper assortment with some prominence in the store, they want to and will buy general merchandise,” he declares.

That habit is poised for even greater potential. While consumers are spending more time in physical stores than they did during the pandemic, they are shopping more efficiently. From the customer’s standpoint, why tack on another errand to buy light bulbs or batteries when you can pick those up along with foods you’re buying for dinner?

Beyond convenience, GM can bolster profitability in a number of ways.

The novelty factor:

As retailers seek to enhance the store experience in a competitive omnichannel environment, GM can be part of an overall surprise-and-delight journey. “In many cases, GM is part of discovery. There tends to be a lot of innovation in GM and people enjoy the hunt and excitement they find in it,” points out Deuschle.

Whole package:

Traditional food retailers can tap into consumer interest in holistic wellness and care by complementing their basic health offerings with products and services that span things like stylish eyewear and self-care products.

Season’s greetings:

The share of GM tends to grow ahead of special occasions. It’s not unusual for charcoal to be cross-merchandised near the meat department during grilling season or for greeting cards and wrapping paper to be featured before the holidays, but thinking out of the box for such displays and promotions can propel even more sales of foods and nonfoods alike.

Tech time:

Another opportunity for profitability within the broader GM category is technology. Making it easy for shoppers to find cell phone accessories, for example, can enhance a store’s reputation as a broader resource. Cellphone-related SKUs are particularly strong sellers at the checkout stand.

Deuschle emphasizes that the general merchandise opportunity is there for the picking. “The GM category in general is growing, whether it’s at a hardware store, a discount store or another retail location. People are buying GM – it’s just where they are buying it that’s up for grabs,” Deuschle points out.

Brick and mortar retailers can effectively compete with online merchants to grow their share of general merchandise, he adds: “There is a belief that these categories are being dominated online, but they are not dominating all categories. Also, there is the important aspect of impulse purchases – when the shopper thinks, ‘I didn’t know I needed that,’ but did.”

To differentiate themselves in GM, retailers can focus on providing offerings that meet shoppers’ tastes and standards. The combination of selection and value is the ultimate driver of sales and, hence, profitability.

Finally, if GM matters to shoppers and to retailers, it also matters to CPGs. As Deuschle points out, “Success at retail is driving innovation, and the more innovation that comes of it leads to new products, ideas and opportunities. It’s a true cycle.”

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