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The supermarket industry is off-center. While resources and merchandising efforts have been concentrated on the high-profile perimeter perishables departments, the industry has taken its eye off the traditional "center store" grocery aisles, allowing the vultures to swoop in. Sales are being picked off by mass merchandisers, supercenters, drug stores, convenience stores, pet stores, dollar stores, limited-assortment stores, restaurants, and takeout joints, as well as those very same perishables departments.
"Traditional grocers are focused more on the perimeter departments and have added more upscale items as a way of differentiating it," says Pat Turpin, managing director and head of the Food & Beverage Group at USBX Advisory Services in Santa Monica, Calif. "I think that strategy makes sense, but at some point they either need to reconstruct the store and shrink the center store, allowing for much bigger perishables departments, or they need to reinvent center store -- one of the two."
"Much of the focus in recent years has been on the perimeter, to a large extent at the expense of center store," says Mark Baum, e.v.p. of the Grocery Manufacturers of America in Washington, D.C. "Yet we feel very strongly that there should be a growing importance placed on center store. It is still the engine in grocery. It has the lion's share of sales." He adds that center store also still accounts for a large portion of sales growth.
And the folks at Supervalu are determined that it stay that way. The Minneapolis-based wholesaler has classified grocery categories into two classes: "attack" categories in which supermarkets have seen a 1 percent or more erosion, and "defend" categories, which the company sees as being at risk of losing sales in the future, like cereal and coffee. "What we do is apply good category management principles across those categories, take a look at the SKU assortment and how we're promoting those products," says Michael Jackson, e.v.p., president, and c.o.o., Distribution Food Companies at Supervalu.
Supervalu examines the anchors, or Key Value Items (KVIs), in the category and makes sure that they're priced accordingly. "You think of those as transaction starters," Jackson says. "You have to be right on those, so we're sure we're priced right on them." Items are priced according to the mass channel, category killers, and other key competitors. "Then we put the KVIs into Scripted Ends, where we put together display-planning tools and merchandise the end caps to expose consumers to the KVIs, or some of the products in those categories that we want to use to draw them back into center store."
Jackson says that to date, the bulk of the erosion has been in nonfood grocery categories, like laundry detergent and paper products. The program has been successful, with sales up as much as $1.50 per customer in center store items. "We've still got the store traffic," Jackson says. "The key is to get the customers back into those aisles when they are buying in a mass merchandiser, supercenter, or someplace else. The key is building the sales per transaction."
That requires investing in center store. "As an industry, we focused on the perimeter and perishables departments, and maybe we neglected the center store somewhat," Jackson concedes. "If we put half as much focus on center store again, which we're starting to, we can bring it back. But we've got to put the same energy into it like we did with the perishables."
Some of that energy also has to be put into teaching consumers what to do with those center store products. Cooking is rapidly becoming a lost art. Today there's a whole generation that doesn't have the knowledge -- or desire -- to cook.
"There is a decreasing percentage, year over year, in the number of households that actually prepares a meal fully from scratch," says Turpin. "Stats now show the typical household is looking for a meal that can be prepared in less than 12 minutes. Consumers are time-starved."
"Most high schools got rid of home economics about 20 years ago," says Bill Sinnott, group president of Ryan Partnership, a consulting firm based in Wilton, Conn. "I think one of the things you need to do is to tell people what to do with the products. Maybe it's as simple as recipes or serving suggestions, but I think it's critical to get the message out: This is a can of soup. All you do is open it up and add some water. It sounds simple, but there are a lot of people who don't know that."
The industry can play a role in making basic cooking fun again, says Denise M. Morrison, president global sales and chief customer officer at the Campbell Soup Co. in Camden, N.J. "There's an opportunity for an educational program in schools where home economics has been eliminated with budget cuts," she says. "That was the place where young people were essentially taught how to cook. There might be some industry initiatives around -- like sponsoring a class -- that could be pretty interesting."
Or it could be as simple as using the store itself to make it easier for the consumer to cook. "There are some stores I've been in where they actually have copy in the aisles, built into the architecture of the section, that gives the consumer instructions such as 'Have you tried this recipe?' and lists the ingredients or makes a suggestion as to which wine goes well with a particular food."
"Some of our members do offer cooking schools," says Michael Sansolo, s.v.p. of the Food Marketing Institute in Washington, D.C. "It is a very creative solution that can be used to win over the next generation of shoppers who've grown up cooking less than any previous generation. We're going to have to be more creative. Many retailers are running ads about the ease with which you can make a meal. Nutrition is big and menu planning is big, and it certainly seems to be a win-win there.
"We have a lot of shoppers who are not as skilled in the kitchen as their mothers or grandmothers were," Sansolo continues. "So anything we can do to show them how easily something is made and how good it tastes, that's a way of just reminding the shopper, 'We have stuff here that you want to eat.'"
Some of the most interesting revitalization of center store is being done overseas. Morrison cites the United Kingdom's Tesco chain as an outstanding example of a retailer that gets it right. "Tesco has a consumer-centric model, and everywhere you go in that store, be it perimeter or center, everything is done with the consumer in mind," she says.
Stateside, some thought leaders are also taking action to reinvigorate center store. At the GMA's annual Greenbrier conference in June, plans were approved to launch a joint industry project with FMI that will develop ways for the supermarket industry to win back lost market share.
"We're really looking to recast a much more holistic approach to the principles of merchandising as a catalyst of change among trading partners, planning, and implementation of center store strategies," says the GMA's Baum. "We'd really like to ensure that we get some real insights, mostly consumer-driven, and recommendations from the drivers that have had the most dramatic impact on center store shopping occasions."
The association's request for proposal (RFP) is being constructed to develop technology to capture those consumer insights. "Basically [The RFP is] built around consumer behavior and the overall shopping experience, store design, and in-store marketing and merchandising opportunities," Baum says. "Category management and shelf issues would be at the heart of execution."
The hope is that such an action will improve the shopability of the store.
"One of the most important things a retailer can do is to improve the shopability in center store -- create excitement, which means that consumers no longer shop by rote," says Baum. "Maybe they can set up center store kiosks. Whoever said it had to be only horizontal and vertical aisles? Make the store more shopper-friendly, which means making it easier for consumers to find what they are looking for, re-examining adjacencies by category, and maybe designing a lot of those schematics with consumer shopping preferences in mind. Shoppers are looking for excitement, and deterring them from their routine shopping pattern creates that excitement."
In retail parlance, "excitement" is often referred to as "theater," and what could be more theatrical than a mini shelf monitor showing a recipe? Morgan Hill, Calif.-based Digital View has done just that by using flat-screen technology with proprietary players to deliver media messages at the shelf and point of decision. The 6.4-inch units can even employ sensors to turn on the monitors as the shopper approaches. "What's exciting is that the price of this technology has come down significantly, making it economically feasible for a brand or retailer to have full-motion video and interaction right at the shelf," notes Stuart Armstrong, c.o.o. at Digital View's New York office.
"We can put a display in the meat department suggesting various wines that could go with beef, pork, etc.," Armstrong says. "Now I am getting that consumer to think about a meal instead of a single item, and now I am moving them across the supermarket and engaging them in a department that they might not have gone into otherwise."
Last year Digital View teamed with Kraft to install 1,000 units in the coffee aisles of stores around the country, to promote and educate consumers about Kraft's Starbucks brand. "It was called the Starbucks Interactive Unit, and there was a 200 percent lift on sales," observes Armstrong.
Higher sales aside, perhaps the biggest benefit retailers get from a Digital View type of system is sheer simplicity. Because the units are built with solid-state technology -- no moving parts -- clerks no longer have to load tapes into VCRs and shoppers don't have to face an annoying blue "Press play to start" screen. But that's just one of the changes in store in center store.
"Center store, like the supermarket itself, keeps evolving," says Sansolo. "It's real important that we keep reminding the consumer of that."
That includes promoting new products. "We believe that innovation is critical to success, and we have jazzed up our innovation pipeline in a big way," says Morrison. She adds that Campbell's backs its new products with adequate advertising and merchandising support, but retailers can do their part to help.
"What about a What's New section?" she asks. That would be a section, perhaps replacing the Wall of Values found in many stores, where all new products would be merchandised. "That way you train the shopper to go to that section first and see what's interesting, and get them to try it," she says. "That also buys the retailer some time to find a permanent home in the planogram, because if the sections are being planogrammed on a different schedule, you at least get the speed to shelf."
General Mills is doing its part to revitalize center store by keeping its products current and adding as much excitement and news as possible, like its new Betty Crocker butter recipe cake mixes, pourable frostings, and Carb Monitor dessert mixes. Last year a new Betty Crocker Kitchens complex opened at corporate headquarters in Minneapolis, enabling the company to develop new recipes, products, and materials for its Web site. General Mills has also been updating the titles in its venerable Betty Crocker Cookbook line. "Some of our newer titles are 'Easy Family Dinners' and 'Three-Ingredient Cookbook,'" says spokeswoman Pam Becker. "They're really geared to people who need to get things out on the table fast."
And the faster they get things on the table, the more time they have to spend with their families -- and to shop in center store aisles.