Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters. This article is based on The Tipping Point for Center Store, a report from AMG Strategic Advisors, the consulting unit of Acosta Sales & Marketing.
As traditional retailers attempt to reinvent their perimeter with a more dynamic shopping experience and capitalize on natural and health/wellness trends, they have eaten into center-of-store categories and diluted overall store profitability.
A range of efforts to revitalize center store traffic are being deployed: everyday low pricing; using center store to sell upscale non-food items (for example, Wegmans); and moving to an "all-store" brand format while limiting assortment (Trader Joe's). We have also seen a shift in consumer/shopper focus. For instance, "owning" the organic/natural consumer (Whole Foods) or incorporating "store-within-a-store" (Target).
Beyond the healthy eating trend, the growing influence of Millennials and the U.S. Hispanic market as well as the expansion in cross-channel grocery shopping all must be considered if the center store is to return to a valued growth area.
The following are some strategic challenges that must be considered as retailers work with manufacturers to revitalize the center store. The nature of these challenges make it clear that there is no "quick fix." It will take time, considerable effort, trial/testing and thought leadership. Here are the challenges:
Holistic Understanding of Evolving Shopper Behavior: Retailers need to understand context for their shoppers' behavior; that is, beyond the economic factors, such as generational differences, a broad competitive landscape that includes all channels, and shopper item selection and de-selection once in the store.
Shopper Insights Required: Loyalty card data can help retailers understand the linkage of center store and the perimeter. There is a need to understand the leakage to other channels, including e-commerce. Where and why is there leakage and where do shoppers continue to have "pain points" in their shopping.
Merchandising Innovation and Aisle Reinvention: Retailers need to consider holistic, shopper-centric shopping solutions that factor in the reduced time in the store, and the continued value of convenience; for example, sections for "stay healthy," school lunch sections, barbeque destinations, aligning complementary categories such as marinades in the meat section, etc. Operators also need to consider in-aisle display space that will bring shoppers into the aisle — perhaps meal solutions or a display of new items featured in a destination in the middle of the aisle.
Product Innovation: Manufacturers need to continue to delight shoppers with relevant innovation, taking into account the changing face and needs of the growing shopper base; for example, Millennials' adventurous food palates, Hispanic interest in family options and healthier options.
- Center Store Growth - a Journey, not a Quick Fix - CPGmatters
- The Tipping Point for Center Store - AMG Strategic Advisors
JULY 8, 2013
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