Alive and Kick­ing

Cen­ter store isn’t dead — but it does need a cre­ative boost.

Progressive Grocer (India) - - Editor’s Note - By Randy Hof­bauer

Many have claimed cen­ter store to be “dead” or “dy­ing.” But gro­cers need not fret: Such news ap­pears to be, for the most part, a lot of doom and gloom. Al­though the perime­ter of many re­tail stores is start­ing to ac­count for larger sales, cen­ter store is still con­tribut­ing to over­all growth, Schaumburg, Ill.-based re­search firm Nielsen notes. Look­ing at the 52 weeks end­ing Aug. 22, 2015, cen­ter store ac­counted for $709.4 bil­lion in sales across the United States, up $56.7 bil­lion from 2011.

“In fact, cen­ter store sales have ben­e­fited from many of the same trends driv­ing growth in the perime­ter,” says Jor­dan Rost, VP of con­sumer in­sights at Nielsen. For in­stance, while bread sales have been flat over the past four years, those of tor­tilla wraps have grown at nearly 8 per­cent. Vine­gars and liq­uid cof­fee and tea also have ex­pe­ri­enced ris­ing sales.

The bad news, how­ever, is that Mil­len­ni­als, an in­cred­i­bly large gen­er­a­tion that’s gain­ing spend­ing power, aren’t mak­ing cen­ter store pur­chases as much in the su­per­mar­ket chan­nel as they are else­where, such as mass mer­chan­dis­ers or dol­lar stores, says John Owen, se­nior food and drink an­a­lyst with Chicago- based mar­ket re­search firm Min­tel. This could spell trou­ble for many tra­di­tional gro­cers, which now need to come up with new ways to at­tract this in­creas­ingly valu­able de­mo­graphic to cen­ter store.

So, in time for 2017, here are five things gro­cers can con­sider do­ing to “spruce up” cen­ter store:

1 De­liver so­lu­tions, not just prod­ucts:

Since con­sumers to­day have ex­pe­ri­enced the ease of on­line cu­ra­tion, they now of­ten seek more so­lu­tio­n­and oc­ca­sion-based shop­ping off­line, too. New ways of re­think­ing cen­ter store in­clude or­ga­niz­ing around themes such as break­fast, school lunches and en­ter­tain­ing, as well as sec­ondary place­ment in the faster-grow­ing perime­ter de­part­ments to cre­ate com­pre­hen­sive so­lu­tions, says Jim Holbrook, CEO of Stam­ford, Conn.-based brand­ing firm Day­mon.

“Loblaws in Canada cre­ated a Pres­i­dent’s Choice In­sider Col­lec­tion des­ti­na­tion, with prod­ucts curated by theme: Dine, Brunch, Min­gle and Gift,” he ex­plains. “Sim­i­larly, in its new Mar­ket 32 for­mat, Price Chop­per is re­con­struct­ing cen­ter store around meal so­lu­tions, mov­ing cook­ing sta­ples — e.g., oil, spices, pasta — from in-aisle to their own mer­chan­dis­ing units along­side fresh.”

Adds Steve Abdo, SVP of mar­ket­ing firm Cat­a­pult In­te­grated Ser­vices, in West­port, Conn.: “At Kroger, there was com­mu­ni­ca­tion in dairy with of­fers for ce­real and milk, cof­fee and creamer, crack­ers and dip. In each case, [it’s] ty­ing a cen­ter store brand to a dairy de­part­ment brand in a sim­ple, rel­e­vant way that in­cents shop­pers to pur­chase cross-cat­e­gory.”

Cen­ter store is an area where Mil­len­ni­als are more likely to say they would buy items on im­pulse, Min­tel’s Owen adds. So when sug­gest­ing cross­cat­e­gory pur­chases, gro­cers may be able to sug­gest more cen­ter store prod­ucts than they would items in other de­part­ments. Sam­pling, too, helps here to pick up in­cre­men­tal sales, as Mil­len­ni­als show a de­sire for try­ing be­fore buy­ing in this sec­tion.

And given that meal so­lu­tions are all about con­ve­nience, adding other forms of con­ve­nience also can help drive sales. Michael Tyson, CMO with High­land, Ind.-based gro­cer Strack & Van Til, notes that in the new year, his team is adding not just meal so­lu­tions, but also click-and-col­lect and home de­liv­ery op­tions.

2 Add click-and-col­lect or home de­liv­ery op­tions

As the months go by, it be­comes in­creas­ingly hard to pic­ture a world of gro­cery re­tail, es­pe­cially in larger metropoli­tan ar­eas, where a time-starved con­sumer doesn’t have the op­tion to or­der gro­ceries via smart­phone and have them de­liv­ered or avail­able for pickup nearby. In fact, 34 per­cent of CPG re­tail­ers to­day of­fer ei­ther click-and-col­lect or home de­liv­ery (di­rect or third-party), ac­cord­ing to the 2016 “Trends & Re­search Re­port” from Re­tail Leader, a Pro­gres­sive Gro­cer sis­ter pub­li­ca­tion. And among the 66 per­cent of re­tail­ers not of­fer­ing such ser­vices, more than six in 10 re­ported, to some de­gree, the like­li­hood that they would of­fer such ser­vices within the next two years.

While such ser­vices pro­vide a num­ber of com­pet­i­tive ben­e­fits to gro­cers, one in par­tic­u­lar can be a boon to cen­ter store: con­tin­u­ous au­to­mated re­plen­ish­ment, a new type of shop­ping trip ob­served by Pat Walsh, VP of sup­ply chain and busi­ness de­vel­op­ment with Ar­ling­ton, Va.-based Food Mar­ket­ing In­sti­tute (FMI). Cen­ter store is home to a lot of fre­quently pur­chased sta­ples, and be­ing able to sim­ply set up auto-re­plen­ish­ment for any­thing from cof­fee and ce­real to pa­per towel and tooth­paste not only takes items off shop­pers’ gro­cery lists, but also cre­ates loy­alty and reg­u­lar sales for gro­cers.

“I think there’s a lot of op­por­tu­ni­ties to grow the cen­ter store in the tra­di­tional sense,” he ex­plains. “It just may not nec­es­sar­ily mean that all that growth will come in a bricks-and-mor­tar en­vi­ron­ment.”

3 Draw them into the aisle, then wow them

The en­trance to an aisle should of­fer an en­tic­ing taste of what’s in­side. For in­stance, Bashas’ has been adding up­graded, de­signer end-cap fix­tures that cre­ate a bou­tique look at the en­trance of cen­ter store aisles, en­cour­ag­ing cus­tomers to en­ter and fur­ther ex­plore what each aisle has to of­fer, ac­cord­ing to Ash­ley Shick, di­rec­tor of com­mu­ni­ca­tions and pub­lic af­fairs for the Chan­dler, Ariz.-based gro­cer.

“We are also ac­tively eval­u­at­ing the cen­ter store shelf tags to en­sure that they are mak­ing an eas­ier, more in­for­ma­tive, in­ter­ac­tive and en­gag­ing shop­ping ex­pe­ri­ence,” she notes.

A help­ful re­source gro­cers can use here is Smart­la­bel, a pro­gram launched last year that makes it eas­ier to find more in­for­ma­tion about prod­ucts, says Jim Flannery, ex­ec­u­tive SVP, op­er­a­tions and in­dus­try col­lab­o­ra­tion with the Gro­cery Man­u­fac­tur­ers As­so­ci­a­tion, in Wash­ing­ton, D.C. Via the scan of a bar­code, shop­pers can get in­stant ac­cess to hun­dreds of prod­uct at­tributes.

With an in­creas­ing num­ber of places to shop, it’s more crit­i­cal than ever for gro­cers to dif­fer­en­ti­ate and cap­ture shop­per at­ten­tion, es­pe­cially in cen­ter store aisles. In­cor­po­rat­ing in-aisle mul­ti­sen­sory ex­pe­ri­ences that at­tract and en­cour­age prod­uct in­ter­ac­tion ex­tends time in cen­ter store and in­creases bas­ket size.

“Out­side of food, in­cor­po­rat­ing emerg­ing tech­nol­ogy in non­food cat­e­gories, like Whole Foods’ Whole Body in­ter­ac­tive mir­ror in their health and beauty sec­tion, pro­vides a fun and en­gag­ing way to rec­om­mend new prod­ucts to shop­pers, based on their ‘aura,’” Day­mon’s Holbrook notes. “I’ve seen many cre­ative ways to bring en­gage­ment into store aisles, and some are so sim­ple, yet ef­fec­tive.”

Strack & Van Til’s Tyson notes the im­por­tance of con­vert­ing “quick trips” into “longer, ex­cit­ing trips.” Cen­ter store, by in­form­ing and ro­manc­ing shop­pers, can do this.

“We need to con­vert sec­ondary shop­pers into pri­mary shop­pers,” he says. “Know­ing the cus­tomer di­rectly by store is key to en­sur­ing th­ese op­por­tu­ni­ties are met.”

Shop­pers are look­ing to fill their shop­ping carts with health­ier items, which pro­vides nu­mer­ous op­por­tu­ni­ties for all gro­cery stores. Over­all, in­te­grat­ing nat­u­ral and organic sec­tions and prod­ucts to the cen­ter store is chang­ing the look and feel of ev­ery aisle. — Ash­ley Schick Bashas’

Fo­cus on health­ier eat­ing

Whether prod­ucts are nat­u­ral or organic, free from al­ler­gens or loaded with su­per­foods, con­sumers are flock­ing to items with health-and-wellness ben­e­fits faster than ever. And gro­cers see a “huge up­side” if they’re quick to re­spond, Nielsen’s Rost ob­serves.

“Shop­pers are look­ing to fill their shop­ping carts with health­ier items, which pro­vides nu­mer­ous op­por­tu­ni­ties for all gro­cery stores,” Bashas’ Shick says. “Over­all, in­te­grat­ing nat­u­ral and organic sec­tions and prod­ucts to the cen­ter store is chang­ing the look and feel of ev­ery aisle.”

This ap­plies even to pet food, which is gain­ing more space in cen­ter store, she adds. Pet own­ers think of them­selves more as “pet par­ents” and want only the best for Fido or Mit­tens. There­fore, more health­ful and nat­u­ral op­tions here are fa­vored.

But free-from, nat­u­ral and organic prod­ucts don’t have to be the only ones po­si­tioned as health­ful. Many tra­di­tional canned foods can be mar­keted as con­tain­ing all of the nu­tri­ents found in their fresh coun­ter­parts, but also avail­able year-round and con­ve­niently pack­aged.

Canned fruits and veg­eta­bles, for in­stance, are picked and packed at the peak of fresh­ness and are as nu­tri­tious as — or even more nu­tri­tious than — their fresh coun­ter­parts, says Katie Toulouse, com­mu­ni­ca­tions man­ager at the Pitts­burgh-based Canned Food Al­liance. Ad­di­tion­ally, canned beans are a con­ve­nient source of fiber.

“Last year, we pro­vided over 60 su­per­mar­ket di­eti­tians with tool­kits to help them com­mu­ni­cate the ben­e­fits of canned pro­duce within their stores. This in­cludes a What’s In­side the Can dis­play for use in store demos or in me­dia seg­ments,” she notes. “Its ac­com­pa­nied by an on­line tool­kit that of­fers seven themes. Each theme has a recipe, talk­ing points, a sam­ple Tweet and a con­sumer-friendly ed­u­ca­tional hand­out to sup­port the theme.”

Of­fer des­ti­na­tion pri­vate brands

Con­sider that in 2015, 97 per­cent of Mil­len­ni­als said that they were more likely to buy store-brand prod­ucts over name-brand ones, Min­tel re­search shows. Also con­sider that 70 per­cent of Mil­len­ni­als who pur­chase store brands be­lieve that the prod­ucts are of higher qual­ity than they used to be, and 42 per­cent even be­lieve that store-brand goods are more in­no­va­tive than na­tional-brand ones. Now, in an area of the store that could use a shot of in­no­va­tion, couldn’t unique, qual­ity store-brand items have the po­ten­tial to boost sales — es­pe­cially among the highly val­ued Mil­len­nial de­mo­graphic?

“In an era of brand ag­nos­ti­cism, re­tail­ers have tremen­dous op­por­tu­ni­ties to bet­ter lever­age and cap­i­tal­ize on their pri­vate brands,” Holbrook points out. “Uniquely po­si­tioned to bet­ter ad­dress the needs of their trad­ing area, pri­vate brands are evolv­ing from na­tional-brand equiv­a­lents to des­ti­na­tion brands, align­ing with the lat­est culi­nary and wellness trends.”

For in­stance, San An­to­nio-based gro­cer H-E-B brings hyper­local food and fla­vors to pri­vate brands via its TX Street Eats prod­uct line of foodtruck-style foods. And Nether­lands-based Ahold Del­haize, at its U.S. ban­ners, cre­ates “ar­ti­fi­cial scarcity” through its “Lim­ited Time Orig­i­nals” cross-cat­e­gory plat­form, bring­ing to­gether unique items across the store based on sea­sonal fla­vor pro­files such as Li­mon­cello and Hon­ey­crisp Ap­ple, avail­able only for a pro­scribed time.

“Th­ese types of ap­proaches to pri­vate brands,” Holbrook ex­plains, “can help drive traf­fic while boost­ing sales — and prof­itabil­ity — of cen­ter store.”

Bashas’ Shick agrees: “Pri­vate la­bel brands con­tinue to break bar­ri­ers as they move past a priceonly mer­chan­dis­ing strat­egy. Pri­vate la­bel items have be­come more cat­e­gory-spe­cific, like Topco’s Sim­ply Done brand for noned­i­ble prod­ucts, and are at­tract­ing new cus­tomers in dif­fer­ent ways through in­creased mar­ket­ing and brand­ing ap­peals, like Topco’s Culi­nary Ad­ven­tures brand that tar­gets the Trader Joe’s prod­uct im­age.”

CLASSY CAPS Bashas’ has added de­signer end caps that cre­ate a bou­tique look at the en­trance of cen­ter store aisles, en­cour­ag­ing cus­tomers to en­ter and ex­plore fur­ther.

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