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
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?
And why did the chicken cross the road again? I don’t want to trivialize this important research but sometimes, just sometimes, customers cross the center store because…they are trying to reach the other side (either the frozen section or the cash registers) and that is the shortest path. It would be good to know how many shoppers are actively shopping vs how many are actually en-route to somewhere else.
The industry — as illustrated by this story — always seems to beg the real question. The right question is when are supermarkets as a class of retailers going to learn that the 1960s, ’70s and ’80s are not only gone — they’re never coming back?
The problem is popular culture. Lifestyles have changed. If efficiency is a matter of somehow calculating dwell time, purchase rates and square footage I guess you can keep hoping tweaking the existing model will change the nature of the endgame.
Here’s an idea. How about blowing up those sections, trimming them down and then merchandising to contemporary shopper needs? Of course people spend more time in the center store than in the bakery. It’s bigger! But, bigger isn’t necessarily better. Want to keep trying to sell canned goods in a take-out world? Then price probably is your best bet.
Want to change the way you merchandise stores and think about the shopper and how they live their lives? Then you just might sell a higher volume of selected center store items.
The opportunities outlined are interesting, but must be taken into the context of the trip mission. Most of center store sales occur on “stock up trips.” Most shopping trips are “quick trips” and “fill-in” shopping — most of which occurs on the perimeter of the store or in a destination aisle such as liquor or baby.
The fact that shoppers are traveling from point A to point B and pass through the center store is certainly an opportunity for impulse sales. But getting a shopper to stop in those situations is roughly akin to getting a horse to stop between the pasture and the watering trough. Both are places the horse wants to be, while what is in between is not.
First, be skeptical of the data — they are mixing lots of trip types together and we’ve seen before that this data needs to be split into quick trips vs. larger trips. We might expect that conversion rates are lower for quick trips — I’m grabbing something for dinner tonight — than longer trips. And that means larger trips probably have a conversion rate in the ’80s or ’90s — you can’t get much improvement. And their measure of efficiency is tied to the price of a package, so not particularly useful. This means one easy way to increase efficiency is to raise prices. Lots of bad analysis here.
Did this research take the intent of the shopping trip into account? If the purpose of the trip was a quick trip to pick up a few specific items, the duration would be short, most or all of the center aisles missed, and only targeted items considered. If the purpose of the trip is a stock up trip the duration is likely to be longer and more of the center store visited. There are likely to be more short trips than stock up trips keeping the average numbers low.
What could be done to generate more center aisle visits? Figure out what your consumers are purchasing on the short trips. Then determine what items in the center store may be related to or attractive for consumers purchasing those identified items. Then rearrange the store to make those combined purchases more convenient for the quick trip shoppers.
Today’s shoppers are not like their grandparents, but supermarkets still adhere to traditional methodology. Stores should reexamine their center store fixation and create a new, contemporary paradigm and make it more compatible to the eat-out-of-the-house world.
Price-driven signs are a spiritual pickle that are preserving the supermarket from complete decay.
The best way to increase conversion in center store is to increase clarity of offering. This is much easier said than done, but some clear-cut needs are; SKU reduction, product separation and definition and signage simplification.
Research we have done shows that when products or categories are symmetrically framed, chances of increased visitation shot up. Information like that leads you to believe that a series of shops in center store could be more effective than the endless sea of signs and products customers face now.
In any case, it’s clear that a major simplification is the real key. A total re-think/re-do. There obviously needs to be much more ‘live’ testing done.
To paraphrase the Moody Blues, increasing center store purchase incidence is a question of balance. Visual is the only sense that we can use here, and too much or too jumbly can cause overload. Too little results in inadequate communication.
This is not just about signage. Shelf layout is a big communication tool. In the examples listed above, the more successful categories are usually aligned by subcategory or similar product type. The less successful categories in these examples are usually arranged by brand. Planograms that are aligned with shopper search logic should help sales in any part of the store.
One caveat here. The snack category study results could be tempered by will power influence.
It’s real estate … and theater.
Ever drive through adjoining suburban or urban communities that have very similar housing stock, and yet one community’s appearance seems markedly nicer? You know, well-landscaped, flowering shrubs, investment in trees, well organized, an attractive appearance to the neighborhood?
Same holds true for grocery stores. As retail grocers’ boxes have increased in size from 30,000 square feet to 60, 80, 100,000+, they have made marked improvements to their store perimeters. Yet, they have too often missed out on the center store by offering long, forboding aisles to walk your way through. Who wants to go down the path, especially if they are unsure of what might not be found there?
The BIGinsight Monthly Consumer Survey asks consumers the key reasons why they shop a particular grocer most often. Naturally, price, selection, location, and quality are the leading items mentioned by 60%+ of all Adult respondents. However, only 21.3% mention store layout and 20.2% mention store appearance as leading reasons.
Contrast that with the scores that leading regional grocers like New York’s Wegmans, St. Louis’ Schnucks, and Texas’ H-E-B garner from their customer base. Fully 35.7% of Schnucks shoppers call out store layout as a plus, and 26.0% of them applaud store appearance. H-E-B store layout is cited by 30.2% of their shoppers and store appearance is appreciated by 29.7%. And, Wegmans has an impressive 40% of shoppers who are pleased with the store layout and 46.4% with the appearance to say it is a major reason to shop the store.
Make the center aisles an adventure, not a chore. Mimic these leading retailers, or take the time to shop a Stew Leonard’s in Connecticut or a Jungle Jim’s in Cincinnati — those two are theater, and give consumers a reason to shop all parts of the store. In the process, they get longer shopping times.
It’s real estate. Make it appealing to the eye, just as you’re doing it with the produce, meat, and deli areas. Pull the CPG groups in — they want to innovate right along with grocers.
Sounds a lot like the PathTracker studies we began twelve years ago, with pretty much the same results — including the millions of shopping trips. A Wharton study of our data showed that as much as 80% of the shopper’s time in-store is wasted. (The Traveling Salesman Goes Shopping.)
In my presentations I often point out that the primary purpose of an aisle, for the shoppers, is a means for getting from where they are to where they want to be. That’s what aisles are for, to ordinary people. Retailers and their suppliers are so self-obsessed that they scarcely notice the simple, obvious truths.
They think of aisles as places to display merchandise. For sure, they are. But that is a secondary use from the shoppers behavioral perspective. And several additional multi-million dollar studies are unlikely to have much impact on this.
I agree with many of the previous comments. Has it been taken into consideration that I might simply be going from point A to point B and the middle of the store is the easiest route to travel?
The only thing that will improve center aisle traffic is moving the merchandise out of the center aisle. Ultimately, I believe that the way to improve basket size is to change the layout of the store completely. The way most grocery is organized today makes “center aisle avoidance” an easy habit. Many shoppers don’t know the new items offered there, because they don’t have an opportunity to see. Let’s see more experimentation with layout.
Lots of great comments. One way we have found to improve center store, is to understand how customers shop them. Important adjacencies yesterday may not be relevant today … and what’s right in one store may not be right in another.
While customer data is “best” for getting these decisions right, just using basket level data is “better.”
Reinvention of center store has been a focus for some time among major retailers and their collaborative supplier partners. Comparison is almost always made with the excitement of the perimeter offerings, and the challenge is how to export that excitement to the in-line gondolas of center store.
The ultimate solution requires a complete rethink of store design, unsuccessfully tried before and not likely to happen now or even in the near-term future. Short of that, the solution is for retailers to work closely with supplier partners to provide each category with the promotions, displays, products and concepts that best fit the category’s characteristics. P&G has done with quite well over the past several years with its renew concept for cosmetics, toiletries and beauty care.
Sadly, I believe that this part of the grocery store is most impacted by online shopping. Who really needs to see the bag of flour, or even the can of tomato soup, when they can peruse brand and price on line and select? It means that, unless we can create a true “value reason” or even a relationship with the consumer in these areas, via demo, consumer interations, samplings, etc., it is hard to fathom why a consumer really needs to go down those aisles.
Center store is the backbone of a supermarket’s business… as long as we’re talking about a traditional-format supermarket. I know this is not the case for well-known fresh/gourmet stores. However, there are age-old challenges that have not been addressed well in the traditional-format store “dry grocery” (As I still call them) aisles.
Shelf plan-o-grams do not reflect today’s shopper mindset. Categories could use a complete overhaul. Price still does drive volume, so keep price POP simple and compelling, and not too ubiquitous, making the shopper “blind” to all the excessive signing.
Keep product in-stock. Yes, that is still a challenge across the industry. There are more than enough tools, technologies and techniques to alleviate out-of-stock conditions today.