CPGmatters: Major Marketers Collaborate with Kroger to Simplify Shopping for Beverages, Snacks

Discussion
Aug 11, 2009
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By Dale Buss

Through
a special arrangement, presented here for discussion is a summary of
a current article from the monthly e-zine, CPGmatters.

Kroger is testing
a new display idea for one of its most popular categories: beverages. The
idea behind the former initiative is to create a handy destination that
brings all the beverages in the store together in a four-aisle section
where signage and color codes help shoppers select their drinks quickly
and easily.

Kroger launched
the Refreshment Center concept last winter at an unspecified number of
its roughly 2,500 supermarkets in 31 states.

Ocean Spray has
joined Dr Pepper Snapple Group, Coca-Cola, Gatorade, Lipton and Tropicana
as major participants in the Refreshment Center concept.

Gondolas are
reserved for specific categories that are identified by color: green for
Ocean Spray and other juices, red for carbonated beverages, blue for water
and sports drinks. Color-coded floor strips and other indicators help identify
the categories. In-line headers carry lifestyle images and appropriate
phrases. The juice headers, for example, say “healthy, fruity, flavorful,” while
sports drinks “restore, refuel, replenish.”

“The color coding
makes Refreshment Center visually appealing, and it was the most obvious
way to go,” Steve Logan, sales manager of the Kroger team for Ocean Spray,
told CGPmatters. “And
we were all for the informational wording. Where waters wouldn’t necessarily
need that kind of thing, we thought, ‘Let’s tell the consumer at point
of purchase what juice is all about.’ Our brand is all about tasting good
and being good for you, so we wanted to differentiate it from, say, coffee.
And Kroger wanted to make it simple, not complicated. They didn’t want
the categories to argue.”

Ocean Spray sales
at Kroger stores overall were up by more than 10 percent for the year ended
in May compared with a year earlier.

Products from
Ocean Spray and other brands including PepsiCo’s Lipton and Tropicana are
housed in semi-permanent floor stands. Outer gondolas span the length of
the department in the stores experimenting with the Refreshment Center
housing carbonated beverages and water, while the interior aisles feature
shorter gondolas, two of which run into coolers devoted to energy drinks
and New Age beverages including enhanced waters and teas. End-caps include
permanent three-sided displays from Coca-Cola and PepsiCo’s Gatorade. Generic
displays showcase beverage brands as “Weekly Features.”

Mr. Logan believes
bringing all beverages together in a Refreshment Center makes sense. “Traditionally,
they’re scattered throughout the store, but this puts all the choices in
one area for shoppers. And there are high levels of relationship among
all these beverages. Consumers don’t necessarily have a switching mentality
when they enter the area; you’d be surprised how highly complementary the
relationships are among different types of beverages,” he said.

Kroger also has
been experimenting with a similar aisle-arrangement program in the snack
aisle, using color-coded graphics to identify six distinct categories,
such as orange for “Multi-Pack” and green for “Sensible Snacks.” PepsiCo’s
Frito-Lay unit gets special attention in this initiative, with aisle signage
calling out its specific product lines.

Discussion Question:
What do you think of Kroger’s Refreshments Aisle? Should grocers be making
more unified statements around categories such as beverages and snacks?
In particular, would more consumer education be beneficial around these
categories?

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21 Comments on "CPGmatters: Major Marketers Collaborate with Kroger to Simplify Shopping for Beverages, Snacks"


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Dr. Stephen Needel
Guest
11 years 8 months ago

It’s a good thing they are spending a fortune on color-coding because I have a hard time telling water, carb bev, juice, and sports drinks apart. Now I don’t have to worry.

Ryan Mathews
Guest
11 years 8 months ago

What’s the problem that’s being solved here? Is it that Coke drinkers couldn’t find Coke? Or is it that water buyers couldn’t find water? Or is it that there’s a need for a fixture to let large demand SKUs cross-sell lower demand SKUs?

Without understanding the answer to the question, I’m left with one of my own: “Does the world really need yet another beverage merchandising fixture?”

Anne Bieler
Guest
Anne Bieler
11 years 8 months ago

This will be another step in the right direction–making products easier to find! For beverages, this makes excellent sense.

When thinking about beverages, shoppers likely think about them as a department rather than as a category, so groupings will simplify shopping. Beverages are heavy, loading them into the cart at the same time also follows a more logical shopping path.

Marketers have been working on improving “findability” for their products–retailers who clearly sign locations will help ease this shopper frustration.

Ben Sprecher
Guest
Ben Sprecher
11 years 8 months ago
I am reminded here of the Hawthorne Studies of the 1930s (and, yes, I know the validity of the study is being hotly debated), where research showed that increasing light levels in a factory increased productivity, at least for a while. However, once workers became accustomed to the new light levels, productivity returned to normal. So the researchers lowered the light levels back to the original levels, and to their surprise, productivity *increased* again. The conclusion? The mere act of changing the environment has a positive effect on people’s productivity, regardless of what the change is. Obviously, Kroger is not trying to influence factory workers–it’s trying to drive sales–but I think the analogy holds. Change anything substantial in the store layout and (assuming you don’t confuse and alienate shoppers), you’ll see a temporary sales bump. The real measure will be whether the sales increase is temporary or permanent. Another issue is edge cases–there are an infinite number of ways the store can be sliced into categories. Is chocolate milk a beverage or a dairy product?… Read more »
Len Lewis
Guest
Len Lewis
11 years 8 months ago

How about some interesting beverage merchandisers that can be used in other places within the store to boost sales. For example, low profile beverage cases or shelves near the deli or smaller in-aisle displays in the rest of the store. Doesn’t have to be a major commitment to space but enough to spark consumer interest and sales.

Gene Hoffman
Guest
Gene Hoffman
11 years 8 months ago

Kroger is like a driven artist that constantly tries to move ahead of the flow. This time it’s with a four-aisle, color-coded Refreshment Center that allows shoppers to select their beverages quickly. But–I have never had any trouble finding my preferred soft drinks, water, juices, ades or even snacks quickly. Do I need more help or am I ahead of the game?

Perhaps those shoppers who aren’t artists really need things color-coded for them so the other shoppers might not think they’re stupid. Whatever; as Refreshment Centers arise and as the world turns, this dilemma shall pass.

Richard J. George, Ph.D.
Guest
11 years 8 months ago

While I tend to agree with the earlier comments re: the real need for this initiative, I like the idea of clustering products on consumer needs vs. marketer planograms. If in fact the latent consumer need is thirst quenching, refreshing taste, wellness, etc, than merchandising all beverages in a single point of the store seems to make sense.

While I recognize the role of key beverage as well as snack manufacturers in this experiment, if the result is shopping simplification and the metrics indicate that this is the outcome, I think this could be a model for other categories and subsequent store design. For too long, stores–particularly supermarkets–have been designed without the customer’s shopping experience adequately addressed.

Steve Montgomery
Guest
11 years 8 months ago

Beverages are up–good. May or may not be a sustainable increase, but what happened related sales, market basket, total sales, etc.? Doesn’t the new world of category management have a broader definition that what happened to “my” category?

Mel Kleiman
Guest
11 years 8 months ago

Making things easier for the consumer is always a good move. Why would we put similar or related items in different places. This does not make it easier for the consumer but maybe it forces them to walk all over the store to get what they want. The way most stores are laid out remind me of a typewrite key board that is designed the way it is because typist were faster than the machines so they figured out how to slow down the typist.

In today’s world shoppers don’t go where it is slower they go where it is faster.

Great move.

James Tenser
Guest
11 years 8 months ago
I suppose I’m in the “Hawthorne Effect” camp too, because I suspect that it’s the environmental change that stimulates shopper interest, not some innate superiority of the departmental design. But OK, even if the purchase behavior bump from the Kroger refreshment centers is not permanent, it does add value in at least two levels: First, the innate logic and respect shown by organizing some departments around the shopper mission: “I want/need liquid beverages in containers. What are my options?” This might easily translate into: “I need to take care of my pets…”; or “I need to make dinner tonight…”; or I want to buy organic packaged foods…”. Second, changing up the store environment to add interest and head off shopping narcosis is often a good idea. Changes (like diagonal lines) are inherently interesting to the human brain. If we lead shoppers to pause and think differently about their wants and needs, it opens up an opportunity to persuade them to buy more. The caveats are: We already arrange parts of our stores around these shopper… Read more »
John Rand
Guest
John Rand
11 years 8 months ago
Good heavens, this is a blast from the past. The very early stages of category management (before it degenerated into a race to fill in endless templates and poisoned the word “partnership”) made the very obvious point that a category (substitutable and interrelated product in the mind of the shopper) was often artificially fragmented by buyer, department, delivery mechanism, and historical development in ways that made absolutely no sense to shoppers. Of course drink boxes and bottles and cans and soda and juice and on and on was one of the most obvious and egregious examples. The problem, then and now, is not that it makes more or less sense to bring them all together. The problem is it is a two-fold nightmare to do it. Operationally, it means ripping the store apart and reallocating almost all of it, as the dominoes of category space all fall apart when you move all of these together. The second problem is actually that shoppers are comfortable with the familiar. As insane as any store layout may be,… Read more »
Lee Peterson
Guest
11 years 8 months ago

I’m all for center-store innovation, especially with the goal being to simplify and clarify for consumers. Center-store shopping is a rote process now for most people, including CPG companies, which makes it impossible to increase sales without hitting someone over the head, which creates more clutter (you get my drift). Glad to see it and it’s about time.

Now, next step: MAJOR SKU reduction.

Ralph Jacobson
Guest
11 years 8 months ago

While this effort is not rocket science, nor is it the first time this has been done, I applaud the continued activity to inject life into stagnant, over-merchandised categories. The good news is that when you change the look of a section of the store, you immediately get a bump in volume. It remains to be seen if there will be any long-term benefit to this project. If it is controlled and measured against stores without the aisle reset, perhaps there will be some tangible reason to pursue this further.

Mike Romano
Guest
Mike Romano
11 years 8 months ago

Am I missing something here? Is this a revolutionary concept? My local grocers have been doing this for years. Not sure what is different about this.

Ed Dennis
Guest
Ed Dennis
11 years 8 months ago

It will make a difference initially and much will be said about increased sales of beverages. However, beverages are low margin items. What is going to happen to sales in the rest of the store because Kroger makes it easy to buy beverages and snacks (especially during the summertime). It sounds like what they are doing is building a Convenience Store inside the Kroger. DUH!

Carol Spieckerman
Guest
11 years 8 months ago

I love this concept for many reasons:
1. With all of the talk around brand rationalization and the potential for an explosion in orphan brands, Kroger’s Refreshment Center sets a new standard for brand synergy and category merchandising.
2. The Refreshment Center exemplifies the shopper-centric mindset; products will be merchandised the way shoppers shop vs. the way buyers buy.
3. I would think that concepts like the Refreshment Center help mitigate SKU rationalization. Take a seemingly confusing and over-assorted category, bring it all together in one section and merchandise it psychographically/by need states vs. by price or brand.

Could it be any more right for the times? I don’t think so!

Roger Saunders
Guest
11 years 8 months ago

Retail is “theater,” and the Consumer has to be continuously engaged in the environment. Kudos to KROGER for taking a leadership step, as they consistently do. It demonstrates that the innovation is not limited to single-site retailers, as well as the fact that category teams of retailers and manufacturers, working together, can better serve consumers, and their own top-/bottom-lines.

Jennifer Keller
Guest
Jennifer Keller
11 years 8 months ago

This will definitely make it easier to purchase in the beverage aisle in stead of being told to find it in the Coke or Pepsi aisle. Most consumers don’t know which brands fall within each of the parent brands.

Bill Hanifin
Guest
11 years 8 months ago

My only issue has been why grocers separate “water” from “sparkling water” and “sodas.” I have found in many cases that shoppers have to make two trips down separate isles to cover those bases.

It seems that the solution presented here is brand specific. I would be more enthusiastic if Kroger was viewing these changes as an element of store design and making it easier overall to fill the basket with all the liquids shoppers seek.

Imagine if the current concept were extended to multiple categories and brands. There would be so many colors and tapes on the floor, that one would be tempted to call the police to find the graffiti vandals!

Shilpa Rao
Guest
11 years 8 months ago
Retailers do need to change environment/create a new look to excite customers and keep them coming back for more. After studying the customer behavior in-store, one of our clients, a pharmacy chain, transformed their beauty category much in the same way as Kroger is attempting today. They moved beauty to the center, revamped the fixture, spotlighted certain brands to create a new look. They got beauty in a new light–literally–and succeeded. Making products easy to find is always good. However, it’s also essential to educate the customers about the change. Not all customers would get it at first go that orange stands for multi-pack. A customer, who is accustomed to shopping the way beverage aisle was before, would be a little confused for the first time. Hence some guidance to the customers is necessary to pep up the sales. Also it’s important that Consumer decision tree is considered when such color coding is done. If not, it would do more harm than good, confusing the customer. Another advantage I could think of for color coding… Read more »
Aman Nanda
Guest
Aman Nanda
11 years 8 months ago

Any sort of store redesign has internal benefits for the retailer. So the Hawthorne effect actually applies to its own employees in terms of making sure nothing is out of stock because of poor stocking execution – a critical issue for beverages.
As far as the Hawthorne effect on shoppers is concerned, my interpretation of the effect is that changes in environment CHANGE behavior. So it’s equally possible that sales could suffer because of a reset. I have seen this in proprietary research for the beverage category. As a result, I feel it is more important to get the layout, design and accessibility right rather than make it just about creating new news.

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