Deciding What’s Broken and Fixing It

Discussion
Jun 14, 2005
George Anderson

By George Anderson

David Orgel, editor-in-chief of Supermarket News, writes that grocers and manufacturers agree that there is something broken in the Center Store. What they do not agree on, however, is what is broken.

Retailers, for example, are more likely to see a lack of space as a problem than suppliers. Manufacturers are much more likely to believe that slotting fees reduce innovation and inhibit upside performance.

Disagreements between trading partners over strategy and tactics exist elsewhere. Mr. Orgel writes that while “retailers and manufacturers both favor cross merchandising as a chief weapon, retailers cite advertising and in-store signage as primary tools while manufacturers give more weight to sampling and cooking demonstrations.”

Moderator’s Comment: What is broken in the Center Store of supermarkets and how can it be fixed?

The first problem that needs fixing, as Mr. Orgel correctly points out in his editorial, is getting both retailers and manufacturers on the same page. Once
that is accomplished, then the parties can begin working together to address the other challenges they face.

George Anderson – Moderator

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16 Comments on "Deciding What’s Broken and Fixing It"


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Herb Sorensen
Guest
15 years 8 months ago

So supermarket shopping itself is in serious decline, with the center of store just being the most vulnerable component. As long as it’s all about manufacturers’ interests vs. retailers’ interests, expect to continue to see a downward spiral. Some of those interests do NOT represent shoppers’ interests, and they’re the ones with the money.

Detailed study of exactly who is coming into the door of the store and what they are doing there, and how they are doing it, would show that a great deal of the center of store is a mistake, beginning with the narrowness and regimentation of the aisles. And that’s just the no-brainer beginning . . .

Stephan Kouzomis
Guest
Stephan Kouzomis
15 years 8 months ago

It’s the consumer that must be addressed, in order to find out
what they prefer and not, about the center store. And then, it is the retailer who must break out of the ancient format of the center of the store. New thinking and testing with no boundaries is needed by, more than likely, non grocery
people and/or the creative grocery types who are willing to investigate, spend time and energy, to better their business in the center of the store. Examples like Marsh, Nugget, Harris Teeter, Publix, and a couple of eastern Penn. Family-owned supermarket chains are the leaders in attacking the center of the store… consumer-wise and operationally!
Time to be a new creative and consumer driven thinker? Hmmm

Bill Bittner
Guest
Bill Bittner
15 years 8 months ago
The first question – “Is something really broken, or is the increased competition from other channels having its natural impact no matter how well the center store is operated?” I think center store is taking the brunt of the impact from the alternative channels. This is why the focus on “fresh departments” is necessary to attract consumers. The mistake may be thinking that once they are in the store, they will visit elsewhere. Consumers know that many center store items are available from other channels and may either not feel the need to purchase them or have already stocked up on them from somewhere else. So how does the supermarket get the consumer to purchase more shelf stable products during their visit to the fresh department? I agree, cross merchandising can help, but it almost has to be reversed from the traditional effort. Shelf stable items must be placed in the fresh areas, where consumers making a “fresh pickup” are enticed by the shelf stable item. I believe the signage is important, but it must… Read more »
David Livingston
Guest
15 years 8 months ago

For me, the center store is boring, even in some of the better supermarkets. Stores tend to put the least skilled employees in this area. Except for price, there isn’t much difference from one conventional store to another. Generally, there is no customer service available. Center store is like the stepchild department. It’s sort of like a football game. This is where all the blocking and tackling is done. The razzle dazzle running is done in the perimeter departments. I don’t think the center store is broken. Boring perhaps, but not broken.

Mark Burr
Guest
15 years 8 months ago

I think it’s fairly simple. The merchandising is decades upon decades old, while innovation has become second nature to the perimeter. Center store product mix has become diluted and needs to be streamlined, in many cases. Re-thinking the concept of the aisle in the supermarket and introducing new and innovative merchandising could create a lot of excitement. In any event, this type of change couldn’t make it any more difficult to find items than it already is today.

When you always do what you always have, you’ll always get what you always have. It’s been decades of repetition. The answer, in some cases, for the perimeter has been a bit of theatre. I’m not so sure that is the same answer for the center store, however, change is woefully overdue.

Mark Barnhouse
Guest
Mark Barnhouse
15 years 8 months ago

These ideas all make sense, but for me the key is in store layout and design. No, the center store isn’t irreparably broken–but it’s so, so, so boring. The key is true creativity–eliminate the right angles, the endless aisles, and the cost-effective but mind-numbing general illumination provided by fluorescent tubes. Incorporate diagonals (even if they waste space), vary display height, use track lighting in combination with general illumination (a la Whole Foods and other specialty retailers), and maybe even push the whole center store to the periphery. Farmer’s market-format stores such as Henry’s, Sprouts and Sunflower have done this, opening up the center store to perishables. It’s a lot more exciting than being confronted with 10-20 gondola aisles all at the same height.

Richard Alleger
Guest
Richard Alleger
15 years 8 months ago

The Center Store is not broken. The perimeter of the store has grown so much in excitement, offerings and demand that the Center Store pales in comparison. As attention is brought to Center Store, the excitement will pick up…but there is always going to be some level of “up and down” the aisle as people gather their staples.

Len Lewis
Guest
Len Lewis
15 years 8 months ago

I doubt if retailers and suppliers will ever truly be on the same page because of mutually exclusive goals–one wants to sell all products; the other just wants to sell their own.

However, terms like aisle and price optimization, as important as they may be, are not going to help. First of all, supermarkets are not just facing alternative formats–they are one. Second, the center store is going to continue bleeding until you do something for the consumer. That something is not just stocking and restocking the shelves. It’s about making the center store more than just a repository of ingredients.

Cross merchandising is a good start. But I believe that more can be done to make center store an idea and meal development center for customers and not just a disparate lineup of products.

Julie Pierce
Guest
Julie Pierce
15 years 8 months ago
Things in general have changed and supermarkets are making more attempts at making the entire experience self-service. In the departments that generate the interest in the customers’ meals, there is a lack of expertise as consumers are expected to find out for themselves what to do next. When customer service included a personal touch, it was much easier to take the consumer to the level of having the confidence to try an item where now they tend to stay with proven items. If I, as a meat department employee, have the knowledge of the meats and what they can be used for, I may be able to channel my knowledge into other areas that the consumer might use for the meal that they are interested in. The sale of ground chuck can spur sales in a number of other areas when suggestions are made directly to the consumer, but with no one there to make suggestions, there is a lack of interest in what goes with it aside from buns and ketchup. The cost of… Read more »
M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
15 years 8 months ago
The demise of the broker system contributed a great deal to the brokenness in Center Store. Until about fifteen years ago, local and regional food brokerages were responsible for the relationships between grocers and the manufacturers of Center Store products. Yes, there were some manufacturers’ reps, but by and large it was the stalwart men and women of the various food brokerages who could be found prowling retailers’ shelves at nearly any hour of the day to make sure all was right with their principals’ products. They schmoozed the store managers, built displays, and were a significant source of free labor when grocers needed complete shelf resets. And need we mention street money? Today, brokerages still represent brands, but consolidation has all but eliminated small-to-medium brokerages. The resulting mega-brokerages drastically reduced service to the grocers to cut costs, and individual brokerage reps became simple order-takers responsible for several brands instead of just a few. Thus, the personalized broker service available to help move Center Store products declined dramatically. And along with it, the creativeness and… Read more »
David Mallon
Guest
David Mallon
15 years 8 months ago

Consumers still love brands. They are happy to buy them at Wal-Mart, Costco and Dollar General. Perhaps the symptom, i.e., a problem with the center of the store, is being misreported, therefore, any diagnosis will miss the mark.

Consumers prefer to buy the brands (which grocers stock in center store) elsewhere much of the time. Why? Certainly the non-competitive price (and hi-lo price games) of grocery retailing is one, if not THE major factor. Grocers must give consumers a reason to want to buy brands at their stores. There isn’t one today.

Gene Hoffman
Guest
Gene Hoffman
15 years 8 months ago
Loyalty to petrified opinions of too many retailers and suppliers never yet created a sustainable era of center store innovation nor the resuscitation of the center store, which is steeped in tradition, underwritten mightily by CPG companies continually starved for more in-store real estate, and the tradition-boundedness of store operators pressurized in the logistics versus the human dynamics of today’s retailing. What will it take to break this chain of entrapment to free the creative energies of today’s retailers? New Retail Thinkers — men and women who do not know or accept what other people think or have thought; people capable of focusing specifically on today’s consumer flow without being decision-tilted by outside monies, Wall Street and other outside influences. Such people will have the fearless spirit of the entrepreneurs of the past and they will also have to endure a contemporary sense of violation, for what is truly NEW and DIFFERENT can be viewed as dangerous or even subversive to the vested interests of retailers, manufacturers and investors steeped in accumulated equities.
Tony Orlando
Guest
15 years 8 months ago

I’d love to have more Center Store sales, but unless we can buy competitively, forget it. I have a Dollar General next door to me, and people flock to it like a shrine. I cannot give the perception of value, because our wholesaler pockets a lot of greenbacks for the inside margins. Costco and, unfortunately, Sam’s Club give me much better deals than my wholesaler, and I pass along the savings. Cheater packs on national brands sold exclusively to these dollar formats and mass merchandisers have decimated Center Store sales across all traditional supermarkets.

My gross margins in grocery are the thinnest ever, and I still struggle to sell Tide, P&G items, paper goods, and household cleaners. So….I’ll work on selling more perimeter items and try to slow down the erosion of Center Store items. If only I could get a hold of the same items the other classes of trade have. Hmmmmm…just wishful thinking!

Ron Margulis
Guest
15 years 8 months ago

First off, they are sales and marketing agents, not brokers. We went through a lot of effort changing the name of the National Food Brokers Association to the Association of Sales & Marketing Companies almost a decade ago, and I will keep hammering the point that this segment of the industry does much more than just broker product.

Now, to the center store. The key to reinvigorating center store sales is excitement. Retailers need to deploy tools that make the center store as interesting to shop as the perimeter. Among these tools are demos, cross-merchandising (within the center store and with perishable departments) and promotional technologies like kiosks and in-aisle video. Equally important is having someone in the aisles at all times — I like the idea of setting up a service center in the grocery/HBC/GM aisles. Retailers need to show their commitment to fixing the center store challenge by devoting the appropriate level of resources.

rod taylor
Guest
rod taylor
15 years 8 months ago

Conventional grocers do nothing to educate their customers about how to use the products in the center store area. I went into my local Kroger at Thanksgiving and there wasn’t a single recipe anywhere in the store. People don’t know how to cook and the retailers aren’t helping.

Go into a scuba diving store and they’ll sell you gear, but they’ll also sell you certification and diving vacations. Bookstores sponsor readings and signings. Hardware stores sponsor “how to seminars.” Grocers have self checkout.

Some forward thinkers are starting to change things, but most of the larger chains are hidebound by old dinosaurs who just can’t believe that Wal-Mart, and not them, rules the aisles. Until America’s grocers realize that they have to reinvent themselves, I see a continual skid in the center store.

Charles Magowan
Guest
Charles Magowan
15 years 8 months ago
I see three issues here: 1. Zero sum and negative sum games, such as the contest to determine who will bear the costs/risks of introducing a new item. In these cases, the trading partners have competing interests with respect to the allocation of risks and returns and they will have partisan views of “what’s wrong.” 2. Positive sum games, such as the improvement of the trade promotion business processes. In these cases, the trading partners have an incentive to collaborate in order to grow the business (before reverting to #1) to determine who gets what out of the improved business. Such situations can improve the outcome for both sides, even if only one party is taking constructive action. Yet… some may still be unhappy about it if they feel that the distribution of the new gains isn’t fair. 3. Social dilemmas, such as the “Stag Hunt” where the rational first choice strategy is for both parties to collaborate but there is a fear that the other party won’t follow through. In these cases, there is… Read more »
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