Back to the Middle

Though the center store should conceivably be the heart of every retail environment -- it takes up the most square footage, is the section most shopped, and provides the greatest number of SKUs -- it stopped wooing shoppers ages ago. "Today, center store is somewhat generic," says Mary Westerhaus, director of in-store marketing for Omaha, Neb.-based ConAgra Foods. "Shoppers indicated recently in shop-along research we conducted that you could be in almost any store in any city and the center store would look the same." To remedy this, many major retailers have worked independently or with the help of major manufacturers to research center store issues, sometimes resulting in aisle reinventions and SKU rationalization studies. Alex Sodek, senior vice president of Kansas City, Mo.-based Decision Insight, thinks the grocery store's center is "a microcosm of consumer confidence and the economy," which lost its sizzle when channel blurring began. "Consumers were using multiple channels to have a selection on what to buy," he says. "The primary shopper could easily shop at Walmart or Costco. It had a huge impact. Because of that, grocery stores worked on the racetrack [the perimeter of the store] to heighten trends."However, the recession has brought shoppers back to the middle. Jeff Weidauer, vice president of marketing for Little Rock, Ark.-based Vestcom International, says shoppers only spend about 40 minutes on average in supermarkets, which adds to retailers tightening their focus on the center store. Westerhaus has estimates that are even more startling, claiming the average grocery store trip is only about 23 minutes long and shoppers are spending about $43 for 18 items during that time.Some retailers are starting to organize their center store more in accordance with how a shopper thinks, says Wayne Link, senior vice president of sales at Chicago's Red Dot Square Solutions, whether she is the type who is shopping with a list of products that will carry her all week or just determining what she'll serve for dinner that night. Hormel, Austin, Minn., is on the same wavelength. In an article titled "Convenience Continuum" in the August issue of Supermarket News, research from Cannondale Associates, Wilton, Conn., done in conjunction with Hormel revealed that shelf-stable convenience items weren't reaching their full sales potential. But it wasn't because shoppers weren't seeking simple meals: 68% of consumers interviewed post-supermarket trip reported that they were aware that convenience items existed, but only 35% knew where to find them in-store. Researchers concluded that center store merchandising should focus on convenience meal occasions. Taking cues from this development, Bob Samples, Hormel's director of category planning and support, says his company began to recommend that retailers display several suitable components together -- for example, items that would be perfect for brown bag lunches -- whether the products were Hormel or not. When implemented, the company found that consumers were actually buying more of their product and trying more variety. Many of the experts interviewed for this story commented that stores are shifting their focus toward selling breakfasts, lunches, dinners and snacks. And some highlighted stores that offer special sections in the center store, like Walgreens with its seasonal items aisle(s) and Walmart, which creates entire sections based on holiday themes. To differentiate themselves from competitors, Link says some stores are lowering shelves, while others are making their stores brighter and easier to navigate. SKU RationalizationLois Seidl, vice president of New York-based Meyers Research Center, says her company recently conducted an analysis that found shoppers like stores with the best selection, an easy-to-navigate layout, and an environment that makes them feel safe and not trapped. Product selection is often of utmost importance to attract and retain shoppers in all channels and, as Samples plainly states, companies constantly strive to put new SKUs on shelves because "innovation has always been a driver of sales." But retailers are finding that too many SKUs can have an adverse effect. He cites one example of a survey wherein shoppers gave a store low marks for variety, though the retailer actually offered a better selection than many of its competitors. Samples says it was because shoppers were probably confused or overwhelmed. Contrary to what may seem logical, even large brands like Hormel meet with retailers and recommend SKU reductions based on Nielsen and IRI data.Meyers created a product/consumer decision tree to help manufacturers of beverages, candy and canned goods discover whether an overabundance or lack of products exist. Weidauer says retailers like Kroger are using loyalty card data to understand shoppers and to provide a relevant product mix, while reaching out to agencies and research firms to determine which SKUs stay and which go. ConAgra partners with retailers using its SPACE (Simplifying Product Assortment Creating Efficiency) initiative to address SKU proliferation across all brands, while evaluating the relevance of its own items in the category. In it, ConAgra provides insights regarding consumer and shopper preferences and behaviors, proprietary analytics and modeling tools to project and validate the impact of making shifts in assortment on the retailer's overall mix, and provides an evaluation of leadership brands with high penetration and strong loyalty metrics.For retailers eliminating SKUs, Michael Shinall, CEO of Wilton, Conn.-based Meridian Consulting Group, has some advice: "You're missing the boat if you're lopping off the bottom hundred. We need a better understanding of what [shoppers] will buy if their favorites aren't there. The mistake we think the industry is going through is not looking at what's not substitutable."Lakeland, Fla.-based grocer Publix is "not reducing the number of SKUs available in our stores," says Maria Brous, director of media and community relations. "Part of servicing the customer is product availability. Our job is to create the right mix of products and balance." Not only is Publix not eliminating SKUs, but it continues to add to the mix with its growing list of private-label products, often targeted toward specific shopper segments. Sodek affirms that retailers believe private labels create strong brand equity and differentiation. "In the future, national manufacturers will believe that their biggest competitors are private labels," Shinall says, citing a recent Mintel report that found 27% of all food products introduced thus far in 2009 were private label, compared to the 13% introduced during all of 2005. Samples says Hormel chooses to view private labels as an asset to its brand: "Private labels can be helpful for us. We partner with them for meal solutions."But with more products, there's always the issue of limited square footage. "It's going to get tighter for these brands," says Mike Mikyska, vice president of business development for Display Boys in Irvine, Calif. "Seven years ago, where was the bottled water section? Now there's an 80-foot area for bottled water. Where did that space come from?"Selling the AisleWith fewer SKUs also comes a recommendation to reduce P-O-P and signage. Weidauer says these "aisle violators" have become counter-productive: "They need to be less intrusive, less about shouting and more about providing relevant information." He adds that 60% of baby boomers today have condition-specific ailments, so engaging shelf messaging should include health and wellness information, segregating items by features like "gluten-free."Meyers' Seidl has recently observed that people are complaining about clutter in the center store, but she doesn't necessarily think all P-O-P needs to be removed, just streamlined. "In certain instances, I've seen really nice P-O-P, some more integrated within the store -- things that seem to be part of the shelf." She cites racks for spices as an example. ConAgra has also done an excellent job, introducing in-line shelving to hold its Healthy Choice Fresh Mixers and Marie Callender's Home-Style Creations packages. Some stores have installed more permanent, upscale displays. Display Boys recently installed Kraft Meal Solutions endcaps in Smith's grocery stores throughout Las Vegas. Mikyska has seen stores adding upscale header signs, category callouts, lighting educational panels and shelves. His company also just redesigned the wine aisle for Los Angeles-based Ralph's, part of the Cincinnati-based Kroger family, building it over and around existing gondolas. He says customization is "absolutely critical," and cites two retailers, Kroger and Meijer, who were both recipients of coffee aisle renovations created exclusively for their stores. "Supermarkets are getting much more sophisticated and really working within a decor package," he says, citing Meijer as a chain that hires visual merchandisers and implements a style guide. Samples says there have been many cases where Hormel has partnered with competitors to make the aisle more practical. According to the aforementioned Supermarket News article, Food Lion is testing convenience-food aisle reorganization in 17 stores. It is using endcaps and signs hanging above center store aisles to direct shoppers straight to the convenience items. In that article, Samples says preliminary results seemed positive, though it was too soon to gauge the sales impact of full aisle revamps. He reported, "The more extensive the change, the greater the return."Hormel is also testing aisle reorganization with Jacksonville, Fla.-based Winn-Dixie Stores and two Family Fare stores, part of the Grand Rapids, Mich.-based company Spartan Stores. Samples stresses the importance of planning reorganizations not just based on the store banner, but down to the customers shopping in each store, citing the fact that different stores serve different ethnic groups and age groups. Research TacticsTo stay up-to-date on its customers' habits, Publix conducts focus groups and customer voice surveys and welcomes customer feedback via its consumer relations department. Brands like Hormel have a dedicated internal research team that conducts Internet studies, shop-alongs, shopper intercepts and focus groups. Red Dot Square uses 42-inch research screens in various locations to conduct virtual shopping experiments. Via computer, the company can change everything from the store's decor to the product mix and displays. It can also help companies with SKU rationalization studies by taking certain products off shelves to see where or if shoppers will go for a different item. "Virtual shopping is so quick and cost-effective that now manufacturers and retailers can test multiple 'what if' scenarios to find out which solution provides the best chance for success and quantify the benefit," Sodek adds.Red Dot Square worked on a project recently with Kimberly-Clark and Procter & Gamble to examine Safeway's baby aisle -- a space in the center store that was probably organized by someone who isn't a parent, Link presumes -- and found that stores were missing great co-merchandising opportunities. In the end, a themed center focusing on time categories (feeding, play, bath and changing) won out. But experts like Shinall suggest that any retailers' top priority should be to really try and segment their shoppers, rather than just looking at average demographics. "They have different patterns, needs and wants," he explains. "They should really better understand who the target shopper is and market to those groups. Notably, Walmart and CVS have done a good job of that."

Back to the Middle

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