Do grocers need to reset the center store?
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Kellogg, Kraft Heinz, General Mills and other major food brands are seeing their sales slide due to a consumer preference for more natural foods. But the declines are more directly caused by supermarkets.
Many grocers are dedicating more space to healthier options, including wholesome prepared meals, private labels and in-store dining, all of which crowd out national brands in the middle aisle. Few events may accelerate this change as dramatically as Amazon.com’s acquisition of Whole Foods.
Private label foods, which are becoming a staple for more retailers, are penetrating packaged foods in greater numbers and with more natural ingredients, threatening to shoulder out big food brands.
In response, many manufacturers are reformulating recipes to include cleaner ingredients, either for the kitchen or the shelf. Recently, Kraft Heinz partnered with Oprah Winfrey on a line of comfort foods called O, That’s Good, all of which are free of artificial flavors and coloring.
Many big food companies are also creating or buying up healthy labels. General Mills bought Annie’s Homegrown; Pinnacle Foods owns Evol and Earth Balance; Unilever, owner of Ben & Jerry’s, is investing more in natural ingredients. Meanwhile, Tyson and Perdue are now producing chicken and meats in line with Whole Foods’ clean label standards.
But if the middle aisle is shrinking, where will these healthier options be stocked?
I think the solution may be a new merchandising categorization that blends all healthy foods — packaged and fresh — to reflect the shopper’s path. Think of the refrigerated salad dressings in the produce aisle. All-natural cereals can be displayed near organic milk and berries, sugar-free condiments near the fresh meat case, and canned soups near whole-grain, fresh breads. Those labels that make the cut will simply meet the shopper’s desire for honest nutrition at a fair price.
It would require a complete shakeup of the food store format, and such change might not be well met, but small format stores can serve as tests. After all, smaller food footprints will likely become byproducts of the transition to fresh.
DISCUSSION QUESTIONS: What do you see as the pros and cons of intermingling healthy versions of packaged and fresh foods in grocery aisles? What do you see as the hurdles preventing grocers from rethinking their layouts in this way?