CPGmatters: New Opportunities for Growth in Grocery Center Store
Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.
The center store of the typical supermarket accounts for 75 percent of sales and 77 percent of profits, according to the Willard Bishop consulting firm. But there’s potential for even more, says new research from VideoMining Corp.
Using unobtrusive video cameras in the ceiling and software to track customer movements, the study found that one of four customers walks through the center store on a typical shopping trip without buying anything.
The study found that the length of the typical grocery shopping trip is just under 13 minutes. But nearly half the time is spent on non-shopping related activities like navigating the store and checking out. The center store’s share of the total trip time is less than 20 percent or two minutes. Non-buyers spent nearly the same amount of time as buyers in each center store department. This "willingness to shop" implies opportunity for improving shopper conversion, according to Tom Sullivan, president of VideoMining.
Mr. Sullivan said grocery’s center store tactic has typically been to compete on price, specifically low price. But the study found that retailers and their brand partners can convert these non-buyers with better signage, navigation cues, displays and shelf layout.
"Although grocery retailers need new, creative ways that differentiate the shopping experience, our research shows that their biggest growth opportunity by far is increasing conversion by shoppers already in their store," said Mr. Sullivan. "Understanding ‘shopper leakage,’ which is when shoppers stop, engage, and contemplate a purchase but walk away empty-handed, represents huge growth potential. In many categories, shopper leakage is greater than shopper conversion."
The research found that some departments are more efficient with shopper time than others. For example, categories such as alcoholic beverages, pet, coffee and tea, baby and frozen food are more efficient with shopper time — sales generated per minute of shopper time significantly over-indexes. Meanwhile, soup, beauty, personal care and snacks are potential candidates for improving the shopping experience.
The research was conducted in the fourth quarter of 2011 utilizing VideoMining’s syndicated Grocery Store Panel. The panel consists of stores from ten banners from six leading supermarket chains, equipped with up to 150 cameras per store. In this initial phase of an ongoing shopper insights program, two million shopping trips were analyzed from a subset of the panel stores.
Discussion Questions: Which tactics do you think will improve conversion rates for center store aisle trips? How necessary are price-driven signs to spur center store purchases?