Center store isn’t dead — but it does need a creative boost.
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 solution and 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 West port, 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 cross category 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.
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