And That's Not All ...
Makers and marketers of “As Seen on TV” products have the economy to thank for their soaring, cultish success stories.
The Snuggie was no fluke. Nor was the ShamWow, the Bumpit or the Slap Chop. Makers and marketers of “As Seen on TV” products have the economy to thank for their soaring, cultish success stories. And now c-store retailers are cashing in on that success to jump-start the general merchandise category.
This Cinderella-in-a-Snuggie story started with a drop in the cost of TV airtime. By the end of 2008, many large companies were cutting their advertising budgets considerably—making way for smaller, direct marketers typically relegated to leftover slots to snatch prime commercial spots at big discounts.
This resulted in more consumers seeing ad spots for As Seen on TV products. (No company actually owns the name As Seen on TV, nor the logo, though it has been adopted as industry parlance and used by many different companies.) Retailers, who tend to stock products with strong advertising support, also started paying attention to items such as the Topsy Turvy and the Ped Egg. At once, consumers were turning these products into cult phenomena— organizing Snuggie Pub Crawls, logging millions of views of The Slap Chop on YouTube—while mainstream retailers such as Walgreens, Target and Walmart were loading their shelves with these impulse buys.
Now this industry of infomercials is turning its sights on c-stores retailers, who benefit from highly recognizable brands in a traditionally difficult category.
FROM INFOMERCIAL TO STORE SHELF
With the economic downturn, As Seen on TV products have tripled in growth to become a $350-billion industry, according to Matt Williams, senior vice president of national sales for Premier Products of America, Clearwater, Fla., which works with the direct marketers to create the right mix of As Seen on TV products for a particular retail chain’s customer base. And most of that growth has come from retail sales.
It starts with the inventor, who pitches his or her product to As Seen on TV companies such as Allstar Products Group, which markets the Snuggie and Bumpit, or Telebrands, marketer of the Ped Egg and reputed creator of the As Seen on TV logo. That pitched product is tested through commercials and infomercials. The figures from call-in sales are tabulated, and if they meet a certain quota, the item is presented to companies such as Premier to market to retailers. Premier works with Walgreens and 7-Eleven, among others.
“A lot of people think that most of the sales are generated out of call-ins, in reference to the commercials that are played on TV. But really, 90% of the people who actually buy the product buy it from a retail store,” says Williams.
“We see how many sales are generated over the phone, and that’s where we base our call on which products to put into which stores.”
This flip from call-in sales to retail sales has occurred over the past couple of years, says Williams, who helped create the As Seen on TV program for Walgreens and 7-Eleven. Since that first c-store transaction in September, Premier has also signed on Road Ranger and Holiday Stationstores. 7-Eleven’s As Seen on TV program began as a regional offer. Since the corporate offices in Dallas caught wind of its success, about 50% of stores nationwide have offered some level of the selection. “Our opportunity inside of our stores is to find new products and programs that can enhance what we already have. And this is something that we definitely didn’t have before,” says Kris Nelson, product director of nonfood items for the chain, which has 6,378 U.S. units.
C-stores may be a new avenue for Premier, but Williams says it’s a “no-brainer.”
“They are all impulse items,” he says. “It’s not like people go into these stores looking for As Seen on TV; they see it, it fulfills a need that pertains to them, and they purchase the product and it doesn’t break their pocket.”
The c-store channel is also new for Allstar Products Group, which has sold more than 20 million Snuggies worldwide. “Sometimes a product just hits the cultural radar, and Snuggie blankets did just that,” says Anne Flynn, vice president of marketing for Allstar.
Flynn says the company is not actively pursuing the convenience channel, but Premier is—and so is c-store distributor Core-Mark. The South San Francisco, Calif.-based company has placed Snuggies and ShamWows in some of its clients’ stores with success, and Matt Hautau, Core-Mark’s director of marketing, is working on a complete As Seen on TV program, set to launch in the third or fourth quarter. Hautau started paying attention to As Seen on TV after he noticed the drug channel designating prime shelf space to the category.
“Unlike a lot of the other categories— groceries, beverages and candies, where there is a lot of advertising behind it—when you get into general merchandising it kind of falls off the radar a bit,” says Hautau. “So this is a way to augment that.”
AS SEEN AT 7-ELEVEN
7-Eleven launched its As Seen on TV program in September, “just before the holidays, and the timing probably couldn’t have been better,” says Nelson. But sales took off right away and continue today: “Some of the biggest advertising that [direct marketing companies] do is in times like January, February and March, when advertising rates are lower.” The product mix at 7-Eleven stores—varying from franchisee to franchisee—is a combination of items receiving a lot of airtime (often seasonal products) and products specific to the store’s customer demographics. Items rotate based on the season: The Snuggie was a hit in colder months, while sales are now ramping up for the Topsy Turvy tomato planter, and also highdefinition sunglasses.
While 7-Eleven would not offer sales figures, “We are very pleased with the product line and the sales that we’ve seen at our stores, and we are continuing to work with Premier,” says Margaret Chabris, director of public relations, marketing and communications for 7-Eleven.
The partnership with Premier allows 7-Eleven to focus on marketing and merchandising at the store level. “It gives our people here more time to figure out how to communicate with the stores about the value of these products, because they’re presented to us by somebody who knows us and our business and consumer,” says Nelson.
THE ART OF THE IMPULSE
Creating an impulse is key to move product in the often-sluggish general merchandise category. Which is why, says Williams, As Seen on TV is finding such success in the channel.
“With any impulse item, wouldn’t you say that those who have the highest foot traffic win?” he asks. “Just like how a Snickers sells anywhere, it’s an impulse item. It’s the same exact concept.”
As with any impulse purchase, sales rely on placement. “They are not meant to be put within the category,” says Williams. For example, the Jupiter Jack, which allows drivers to talk on their cell phones via car radio, should not be placed in the automotive aisle, but rather on an endcap.
For 7-Eleven, the products often act as an impulse purchase for a planned purchase. “You always need a gift for somebody for some reason—Mother’s day, Father’s Day, a birthday. Or on the other hand, it’s just an impulse purchase for yourself,” says Nelson.
A BRANDED WORLD
When Core-Mark’s Hautau came over into the general merchandise category from licensed consumer products, he noticed the great disparity between the big brands in all the other categories and the largely nameless general merchandise category.
“It turns into an unbranded world where the perceived value for the consumer can just drop off the table,” he says. Not only has Hautau found that As Seen on TV has helped drive category sales, but it also does so at a higher price point than expected.
Even while drugstore retailers were selling the Snuggie for $14.99, Hautau saw c-store retailers tipping the $20 price tag with little resistance from consumers. Even beyond As Seen on TV, Core- Mark is looking for more branded impulse buys in the general merchandise category—including toys, for which he says parents are willing to pay an extra buck or two for to ensure their children’s safety.
Hautau sees promise in how the As Seen on TV category has done thus far, and points to the drug channel’s expansion of the general merchandise footprint over the past 10 years for future signs of promise.
“They compete at levels that they were never even trying to compete at,” he says. “And we’re right behind that curve, I think. There are a lot of changes happening with how c-stores are going to be retailing. This is a small part of it, but it’s indicative.”
Top ‘As Seen On Tv’ Products
Bumpit: plastic wedges placed under hair for a dramatic poof
Jupiter Jack: allows drivers to talk on their cell phone via car radio transmissions
Ped Egg: an ergonomic foot file that traps shavings
ShamWow: a towel that holds 12 times its weight in liquid
Slap Chop: a manual three-blade food chopper that works when you slap the plunger
Snuggie: a blanket with sleeves, worn over the front of your body
Topsy Turvy: a hanging planter that grows tomatoes, strawberries and other plants upside down
Windshield Wonder: a wand with a pivoting, cloth-covered head for cleaning the inside of car windshields
Category Watch: Energy
While retailers explore the possibilities of As Seen on TV, general merchandise is getting another potential shot in the arm from energy shots—one of the few silver linings in c-store sales in 2009.
By year-end 2009, dollar growth for traditional energy drinks had slowed to a trickle, while unit sales were negative. Energy shots, meanwhile, posted a nearly 58% jump in dollar sales and more than 55% leap in unit sales, according to SymphonyIRI Group, Chicago. Meanwhile, the category has sprung another branch: the micro shot.
“We’re not looking to compete with other energy products out there. What we’re looking to do is actually broaden the energy category as a whole,” says Lisa Krinsky, CEO of IntoCell, which makes DynaPep, a 4-millileter energy shot. According to Krinsky, the company holds the patent on the formulation and delivery system of DynaPep, which is a plastic, twist-tip ampule of adrenaline-inducing phytochemicals. (Prior, Krinsky had founded a pharmaceutical research firm, from which she stepped down in 2005.)
DynaPep was launched in October 2008 and currently is in approximately 40,000 locations, including 7,000 CVS locations. Krinksy’s ultimate goal is to create an entire rack of “Dyna” products, including DynaSlim, DynaCalm and DynaMune.
The energy category has been pushed and pulled by the c-store industry. NACS has developed a new subcategory in health and beauty care (HBC) called liquid vitamins, supplements & energy shots (4 ounces or less) to differentiate sales volume and growth in energy shots from vitamins and supplements (nonliquid). DynaPep, for its part, is considered a dietary supplement. Because of the unique categorization, energy shots do well merchandised in a variety of places, and some stores create special footprints just for energy products.
But the real opportunity, says Krinsky, is of course the impulse locations: “We do very well when situated at the cash register.”
The Art of the Impulse
Tips for pushing impulse sales, based on the success of As Seen on TV:
Merchandise products that are supported by strong advertising.
Carry products attached to a well-known brand.
Know when to place a product within an aisle with the rest of its category, or on an endcap or checkout counter.
Impulse items can be purely impulsive, or they can be an impulsive solution to a planned purchase, such as a gift.
There is no such thing as market saturation for impulse items; those retailers with the highest foot traffic will sell the most product.
Take advantage of fun products that have become cultlike phenomena among consumers.