How should retailers reinvent the center store?

Discussion
Photo: RetailWire
Jul 25, 2017
Mark Heckman

Through a special arrangement, presented here for discussion is a summary of a current article from the Mark Heckman Consulting blog.

For the past decade or more, supermarkets and their brand partners have frantically worked to devise new incentives to lure the shopper from their current behavior of remaining on the perimeter to venture down the long and arduous aisles of center store. But any transformation of the center store has to begin with an honest assessment of the factors that diminish the area’s relevance.

From the shopper’s view, negative issues include:

  • Configuration: Shoppers become visually overwhelmed looking down the long aisles;
  • Item Count: Too many SKUs makes it difficult to find items;
  • Visual Clutter: Overuse of large signs, shelf tags and other POS materials clutter the shopper’s view;
  • Size: Too much floor space consumes shoppers’ precious time.

The entire physical concept of “center store” has become “unnatural” for consumers when compared to their experiences either online or in smaller specialty stores.

A logical first step to rethinking the entire concept of center store involves re-categorization.

Retailers need to provide easy access to the top “immediate use” selling items. At the same time, operators should look to reduce SKUs of “scheduled use” items (paper towels, pet food, diapers, etc.) and instead encourage shoppers to use home delivery or in-store pickup (BOPIS). Many slower moving items — unfortunately the vast majority of inventory — could be removed from the store and made only available online. Infrequent sellers that have high affinity with top-selling, immediate-use items could remain on the shelves.

Within the trend toward smaller stores, the process of re-thinking which items are kept and discarded becomes critical.

After the re-categorization of items, the layout must be re-organized to provide multiple opportunities for shoppers to pre-order in-store for immediate consumption or simply pick up to take home.

Retailers could position top selling-immediate use items where shoppers can more easily access them while top-selling scheduled use items would be made available closer to kiosks. While reducing inventory and clutter, the shopper gains easy and practical means to access additional items via kiosks for either same trip pickup or delivery to the home or office.

While very basic, this configuration of center store categories facilitates a quick trip when one is warranted, but also efficiently accommodates larger trip sizes when shoppers’ needs change. Any approach must recognize the convenient alternatives now available to shoppers.

DISCUSSION QUESTIONS: How do you think the center store should be reinvented to cater to the behavior of today’s shoppers? What do you think of the suggestions offered in the article around SKU-rationalization, in-store kiosks and linking online to the in-store experience?

Braintrust
"With a smaller center store, the current perimeter of the store could be expanded and romanticized, similar to European street markets."
"The death of the center store has been greatly exaggerated! Center store products have been the staple of the grocery biz for more than 150 years."
"COS is not so much a shopping opportunity as it is a replenishment task."

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13 Comments on "How should retailers reinvent the center store?"

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Lyle Bunn (Ph.D. Hon)
BrainTrust

The center store declares more than anything what that store is. It spoke volumes to me recently when a large hardware store placed a customer information desk with inventory visibility displays at the center of the center aisle. Consumers form opinions quickly about the store as they unconsciously answer the questions, “who are these people?” and “what do they want from me?” The center aisle declares, “this is who we are and what we want to contribute to your life.”

Steve Montgomery
BrainTrust

There is a difference between shopping and buying. The changes proposed in the article lend themselves to buyers where heretofore the supermarket industry has concentrated on shoppers.

There is one principal difference between the two. Buyers know what they want before entering the store and want to get to it and get out as fast as they can. Shoppers may know some of the items they need, but also find as they traverse the store that they find other items that they may want.

I realize this is an over-simplification but I believe the concept is valid. I also think more people are shifting to the buyer side of the aisle (sorry about that). The industry will have to adapt or run the risk of continuing losing volume to smaller formats and the internet.

Will Kesling
Guest

I think these are very valid points. As a store, I would want to know the percentage breakdown of shoppers vs. buyers — how much money do we make from each and who is the primary user that we should be designing for?

Richard J. George, Ph.D.
BrainTrust
This article really captures the ongoing challenges to the center of the store (COS). COS is not so much a shopping opportunity as it is a replenishment task. How many COS SKUs do you really need to physically inspect before placing one into your cart? The data still demonstrate the importance of COS, namely, center store today represents 75 percent of total store sales, 50 percent of profits. Yet customers only spend 18 percent of their time interacting with products there. The time to rethink the COS is long overdue. If the article’s recommendations are implemented, the resulting impact would be a smaller COS footprint. My view is that many of the COS products will be purchased online from the brick-and-mortar retailer and delivered to the store for direct placement into a consumer’s vehicle. This will then free up consumers to shop enhanced and exciting perishable departments, then proceed to a designated area and have their online purchases placed into their vehicles. With a smaller COS, the current perimeter of the store could be expanded and romanticized, similar to European street markets, with stalls/displays of delicious fresh fruits and vegetables along with gourmet cheeses, artisan breads, fresh flowers — as… Read more »
Brandon Boston
Guest

As a Millennial shopper I view the center of the store as a “no shop zone.” The food items located in this area have the perception of being unhealthy and the dry goods are much more infrequent ticket items. While there is value in choice, often grocery retailers are bogged down by endless SKUs. I look at Aldi as a shining example of a business model that helps the customer save money through simplification and agility. If a brand with a higher equity on freshness followed suit I believe that would be a winning combination.

Gene Detroyer
BrainTrust

Great comment Brandon. Unfortunately, the toxicity of the center store has become a cloud over the entire conventional supermarket. The center store in conventional supermarkets made Whole Foods possible.

Dr. Stephen Needel
BrainTrust

Here’s the problem with these suggestions: Most people are not shopping online first. And we often see SKU reduction tests with bad category results. I’m not suggesting that the center store can’t be improved, but there is a lot of demand for variety. In all our tests, the percent of shoppers who tell us there’s too many offerings are trivial — I’m not sure this is as much of a problem as Mark portrays.

Will Kesling
Guest

I think I would like a complete map of shopping patterns and how they relate to the physical space in a store.

Also the type of store makes a big difference. For example, when customers visit a big box home project store, like Lowe’s or Home Depot, they may be there for very specific tasks. Thus, my assumption is their paths would closely map to those tasks., i.e they are remodeling their bathroom.

Now compare that to a grocery store where the customers often buy similar items each trip. i.e., milk, cereal, etc. Their paths may have a predictable pattern.

In terms of kiosks and linking online I would want to know, what goals do we hope to achieve by doing this?

Interesting article and conversation.

Ralph Jacobson
BrainTrust

The death of the center store has been greatly exaggerated! Center store products have been the staple of the grocery biz for more than 150 years. They aren’t going away anytime soon, regardless of what some pundits may say. Yes, SKU rationalization and pricing optimization are two tools that can drive incremental movement, margin and revenue. Integration of faster-moving categories for impulse buys also helps. I’ve seen great promotions of center store products that can enhance the trendy recipes focused around fresh foods. There’s still plenty of life left in this backbone of a category.

Dan Raftery
BrainTrust

As usual, Mark Heckman raises several valid points, as do many of the folks posting comments. The Brandon Boston comments highlight an often overlooked complication — younger shoppers view center store as a place to avoid. One of the best re-designs I recall was done by Dominick’s back when they were a market leader. Fresh and shelf-stable categories were separated into two halves of the store. Shoppers could stay out of a large portion of the footprint if they so chose. It worked for both shoppers and buyers.

Glenn Cantor
Guest
27 days 25 minutes ago

A few thoughts on reimagining the center store:

  1. Retailers can still display “scheduled use” products on their shelves, but provide options to purchase these items both in-store AND through home-delivery. This would encourage impulse purchases or enable price promotions while offering convenience to the shopper.
  2. Retailers need to figure out a way to combine non-food healthcare into nutritious perishables. Vitamins and supplements should be integrated in with perishable food items that provide the same benefits to give shoppers a holistic offer of wellness.
  3. Retailers should sub-rent entire departments to branded manufacturers who have a story to tell shoppers, similar to the way that CVS Pharmacy is now part of Target. For example, Campbell’s Soup would create an exciting, in-store presentation that would attract shoppers to their section. (Jungle Jim’s does this in their Cincinnati stores.)
Carl Boutet
Guest

“Low consideration retail” is ripe for disruption by a more automated & cost/time effective fulfillment model. Ideally, this should make the remaining high consideration/discovery based experiences that much more engaging.

Michael La Kier
BrainTrust

Agree with many of these comments that call out Center of Store as a the “No Man’s Land” between the front of the store, fresh produce, dairy and meats. A zone that many feel they dare not enter. It is ripe for change from a shopper’s perspective. But this, like many retail issues, are clouded by “how things have always been done” in the industry. What would retail profitability look like if slotting fees and promotional allowances went away for the high number of items that might be replaced in a full revamp?

But putting your head in the sand is not a solution either. Grocery will be disrupted. That is a fact. The question is: will you do it to yourself, or will someone else do it to you?

wpDiscuz
Braintrust
"With a smaller center store, the current perimeter of the store could be expanded and romanticized, similar to European street markets."
"The death of the center store has been greatly exaggerated! Center store products have been the staple of the grocery biz for more than 150 years."
"COS is not so much a shopping opportunity as it is a replenishment task."

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