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CHICAGO -- In an encouraging turnaround after years of sluggish sales, center store products experienced 3.1 percent growth in the 52 weeks ending Aug. 12, 2007 across food, drug, mass channels including Wal-Mart, on par with total consumer packaged goods sales growth, according to a report from Information Resources, Inc. here.
The IRI Times & Trends report, "Center Store Revival: Retailers and Manufacturers Stage a Comeback," the key strategies driving this center store renaissance.
"Retailers have rediscovered the center store, realizing that a robust center store strategy complements the fresh food focus recently implemented by many grocers to differentiate their stores," noted Thom Blischok, IRI president of retail solutions, strategic consulting, and integrated solutions. "Product, packaging, and merchandising innovation, coupled with price increases to recoup rising ingredient costs, have been at the center of this revitalization."
The report found that among the drivers of center store growth are the creation of new health-and-wellness items, focused private label development, and improved localized assortment of center store products.
High-growth snacks and beverages offering wellness benefits are also bolstering the center store. Ready-to-drink tea, energy drinks, and trail mixes are all experiencing double-digit growth.
The retailer strategies are:
--Health-and-wellness positioning: Retailers are employing assortment and merchandising linked to a total store health-and-wellness positioning. Hannaford Brothers, for instance, rolled out its "Guiding Stars" shelf tag labeling initiative, which rates the relative nutritional value of products, enabling consumers to find healthier alternatives more easily.
--Private label: Retailers are increasingly considering private label a key element of their differentiation strategies. Safeway's highly successful O Organics private label line is integral to the company's Lifestyle store repositioning strategy.
--Relevant assortment: Retailers are customizing their assortment strategies to better meet the needs of local customers. Wal-Mart has undertaken extensive consumer research to develop "Stores of the Community" delivering a relevant assortment and a shopping experience to particular consumer segments.
On the CPG side, the strategies are:
--Product and packaging innovation: Manufacturers are rethinking product innovation and packaging to increase brand and category growth, with a heavy concentration on health. Major manufacturers such as PepsiCo, General Mills, and Kellogg are putting nutritional symbols on packaging to help consumers easily identify better-for-you items.
--Merchandising innovation: Manufacturers are experimenting with new ways of displaying products, in response to less display space on the store floor. Kraft's "Mom's Kitchen" cookie and cracker displays within and outside the center store create a unique shopper destination.
--Pricing: Price increases put in place because of rapidly rising ingredient costs have boosted dollar sales across many center store categories.
Small-format stores that focus on fresh foods but also offer a limited assortment of center store products are the next type competition grocers will confront, according to the report.
The findings of this report were compiled based on IRI MarketInsight and IRI InfoScan Reviews. To download the report, visit http://us.infores.com/page/content_access?t=2&i=37.