Is fresh killing the center store?

Discussion
Mar 06, 2015

Are American’s healthy eating habits leading to a decline in center store sales in grocery stores? Has heightened demand for local products, widely perceived to be healthier, tastier and fresher, also worked against the center store?

Many center aisle brands have been challenged for growth while fresh and non-processed perimeter products are thriving.

The critical cereal category is particularly being hurt by on-the-go breakfast options such as granola bars and Greek yogurt as well as latest diet fads emphasizing high protein and low carbohydrates. More regular visits to mass merchandisers, clubs or dollar stores, which are known for lower prices, are seen affecting categories such as laundry and cleaning supplies.

According to its 2015 The Playbook, Kraft said the perception is that shoppers are "generally satisfied" with the center store, but the reality is that shoppers spend little time there. The CPG giant notes that according to a Video Mining study from Acosta from 2013, shoppers spend only 18 percent of their average grocery trip of just 13 minutes in the center store. That compares to 39 percent on the perimeter and 44 percent spent navigating the store and waiting in checkout lines.

At the same time, the center store contribution is often undervalued. Findings from Willard Bishop and Nielsen Insights show that the center store accounts for 73 percent of total dollar sales in the grocery channel.

In reimagining the center store, Kraft advises changing the layout in a few key ways:

  • Organize by meal occasion
  • Connect perimeter with center store
  • Inspire and engage shoppers within the aisle

Madix, a display speclist, in a list of recommendations to lift center-store sales, suggests breaking up and staggering traditional long aisles and adding pyramid and recessed shelving, highlight lighting, sampling stations, and lifestyle graphics and signage. The firm also recommends using end-caps to push impulse rather than promotional items.

In its white paper, "Center Aisle Phobia," WayfinD, the quarterly e-magazine from WD Partners, railed against flimsy, stand-up cardboard displays, coupon dispensers, uninspiring floor graphics, and "static and monotonous" merchandising. Wrote WayfindD, "People like novelty, surprise, permanence, and symmetry no matter where they are. Even in a grocery store."

What do you think is behind the decline in center store sales? What should retailers do to address this situation?

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19 Comments on "Is fresh killing the center store?"


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Gib Bassett
Guest
3 years 2 months ago

This was a topic among others at the 2013 St. Joseph U. Food Industry Summit, which I summarized here:

Consumer preferences for fresher fare are what is hurting center store sales. For packaged goods living in the center, linking their products to related fresh ones using tactics such as recipes is probably a good strategy to pursue. I know brands like Kraft and Campbell’s attempt such efforts. Grocery channel partners should collaborate better with center store suppliers to help tie a shopping experience together that cuts across categories, in my view.

Tony Orlando
Guest
3 years 2 months ago

The center store sales are dropping due to the large number of formats all selling the same thing, and low-cost staples are everywhere. The winners are the stock-up stores for the center store, which are Aldi’s Save-A-Lot, Walmart, dollar stores and clubs. Traditional supermarkets will not win this battle, as they can not compete on cost coming in.
This fact has not gone unnoticed as improvements in perishables is where the action is. Keep improving the fresh goods and keeping a keen focus on bakery-deli can make your stores a destination point. Private label deals on staples can help, but unless you are a Kroger or Wegmans, it will be tough to get that center store growing again, unless you are willing to give the product away, which won’t work either.

Dr. Stephen Needel
Guest
3 years 2 months ago

The decline in center store sales is pretty small and may be driven by declines in frozen (in favor of fresh). The time-in-section measure is not a good indicator. It’s often easy to shop in the center store because we’ve mostly learned how to lay out products in a reasonable way. I don’t think that what declines there are are the retailer’s fault as much as the manufacturers’ fault—if you’re not making products that people want, they’re not going to go there.

Joan Treistman
Guest
3 years 2 months ago
I believe that retailers should be thinking about overall revenue and then analyze their trends by various segments within that top-line designation. Center store sales reflect one store segment made up of a selection of products and brands. How does that align with consumer perceptions? My guess is that shoppers have a point of view that’s dominated by access to products they need and want (in that order). A focus on improving center store sales may not have the impact on overall sales that retailers aim for because it may be a secondary prompt on that list of needs and wants. Now if center store sales equals brands that yield greater profitability for the retailer, the motivation for improvement and strategy are different. The objective then should be to determine how to integrate those brands into the areas that dominate the shoppers’ consideration set and typical purchases. The article reinforces the understanding that convenience and time saved directs traffic, maybe not all of it but enough to re-think product placement. Store layouts are training grounds… Read more »
Mohamed Amer
Guest
3 years 2 months ago

Let’s not confuse visuals with content or assortment. Consumers are reading the list of ingredients and are put off by what they find in them. The center store was a huge hit more than fifty years ago because it brought convenience to preparing meals. Today, meal preparation and consumer expectations have changed dramatically.

Yes you can make the center store more lively, interesting and open (how many grocery aisles feel like you’re entering a long dark cave?!), but without a mindset change on what goes in these cans and boxes the result will be less than desirable—declining comp sales. Over time, the healthy lifestyle mega trend will push grocers and their partners to re-imagine the center store.

One grocer that seems to get it is Trader Joe’s. Their version of center store offers variety and ease of shopping in a small footprint store and has transformed the way people go about preparing their meals—and they’re having fun doing it!

Ron Margulis
Guest
3 years 2 months ago

A tactic that may save center store food items is co-merchandising with appropriate fresh items. I see this more and more in ShopRite and Kroger—pita chips and tuna next to hummus, spices next to the meat case, even coffee next to the half and half.

It’s a different story for the non-food items, especially commodities like soap and paper towels. Move to a replenishment model for these items and have them available for pick-up when the customer gets to the store for their fresh shopping.

Ben Ball
Guest
3 years 2 months ago

What’s hurting center-store sales?

  • Apathy: Nothing new there is ever really very new.
  • Protein/gluten free/low carb/bad press for “processed foods.”
  • A return to occasion-based eating vs. meal planning and pantry staples.
  • Retailers finally figuring out how to do “fresh” everything better.

The suggestions for improving center store sales given are all proven approaches to incremental improvement via better product presentation to the consumer.

But then, the deck chairs looked better on the Titanic when they were rearranged too.

Tom Redd
Guest
3 years 2 months ago

I think the decline in center store is overplayed. Doing some of the basics relating to display and integrating center store items needed to serve a meal, bake, etc., helps. But from where I shop (since I am handed a list and told GO!) the center store is doing fine and there are fewer health nuts. A majority of America is not going “fresh crazy” and falling into the marketing pit of of “natural” or gluten free. Most of our fine country does not know what gluten is or who our Vice President is (per Jay Leno).

Happy weekend and happy hangin’ in the center store.

Liz Crawford
Guest
3 years 2 months ago

The perimeter is growing and the center is shrinking. Soon many grocery stores will be redesigned (a la Fresh Market) to include more square footage for fresh perimeter, including RTE foods.

My prediction for center store grocery is that many brands will evolve into fresh versions of themselves. Imagine canned soup turning into fresh, boxed pasta now turned into par-boiled pasta in the refrigerator case, jarred salsa turned into fresh chopped salsa. In fact we’ve already seen players in each of these categories making the switch. While many of these product introductions need refinement, these are the kinds of moves needed to survive this sea change. Those who don’t make the transition will either become extinct, or be forced to adapt to conditions where only a few SKUs survive.

Robert DiPietro
Guest
3 years 2 months ago

The center core decline started in the late-’90s with expanded deli and home meal replacement for convenience. Now the consumer is looking for healthy and fresh, and center of store equals processed.

Bringing in some sampling and highlighting healthy choices in the middle of the aisle may be worthwhile.

Robert Hilarides
Guest
3 years 2 months ago

Health and fresh trends juxtaposed against negative perceptions of “processed foods.” Rise of local and socially-driven consumption. Flattening of the globe, ethnic and epicurean interests. Declines in impact of national advertising. Power shift toward the consumer/shopper. Retailers’ differentiation strategy and focus on perimeter growth. Other channels’ (e.g., drug, dollar) site maximization strategy bringing in food. There are certainly a lot of headwinds for center store grocery.

Many good solutions have been raised across the posts, but one other approach for some retailers is the expansion of “local” and differentiated products. Sacrificing some assortment breadth on second and third “national brands” to expand the focus on unique and local offerings in center store categories can allow the retailer to retain most of the promotional support of the big guys while reengaging the local shopper with products relevant to them. Think about the Costco regional model or HyVee store manager influence.

Mark Burr
Guest
3 years 2 months ago
Perfect assessment, Ben Ball! But rearranging everything is sometimes exactly what is needed. That’s not to disagree that nothing new is really new there, but then again it can be, depending on how you arrange it. If fresh and center store aren’t partners, why have both? Do you have center store like many supermarkets do just to see if something might sell? That’s a large part of the issue. Check the movement on most items in center store in a larger supermarket and I venture to say you will find that over 70 percent sell fewer than 12 units per week. Is that a case for rationalization? In some cases yes, but it’s more of a case for category management and store flow. In many instances retailers are not re-evaluating their positioning, flow, shelf space and assortment to compliment the dynamic of fresh. If that were so, the current supermarket would likely flow and shop completely differently than the conventionality of today. The two should be partners in capturing the dynamic, not adversaries, or there… Read more »
Gene Detroyer
Guest
3 years 2 months ago

Fresh isn’t killing the center store, the manufacturers are. I remember seeing a comparison of labels for Oreos from many years ago (40 or 50, I don’t remember exactly) and Oreos today. Something as simple as Oreos had gone from about four ingredients to 10. As long as companies make processed, reprocessed and re-reprocessed food products, today’s more educated consumer is not going to buy them.

For the non-food products, their are great alternatives in price and convenience. Costco and friends, the Fresh Directs of the world and Walmart online, Diapers.com, et al., can take care of everything else.

What the retailers should do is continue to focus on every other part of the store and let center store be a convenience for those shoppers who who need it. Why fight the trend?

Mark Heckman
Guest
3 years 2 months ago
For most food retailers, center store still represents between 50%-60% of the business. It has been under siege by the expansion of fresh foods, the proliferation of new retail channels, (drug, dollar, mass, DIY) expanding into staple food categories, and of equal importance, a time-starved shopper. I agree with the other panelist who content that center store may be dying the death of a thousand cuts, but it is certainly not on life support yet. With that said, center store could certainly use a shot in the arm. Many of the suggestions that other panelists have offered are viable. Among them are changing the length and ergonomics of the gondola shelf. Certainly technology can come to the rescue as well. With digital signage and emerging digital pricing technologies, the center store aisle can become more inviting and even interesting to shoppers. On the flip side, the presence of a large center store and its ability to carry depth of categories and variety often goes under appreciated. While shoppers tend to continually buy from a relatively… Read more »
Paul Sikkema
Guest
Paul Sikkema
3 years 2 months ago

My local Super Walmart just finished moving every item in the grocery section. No surprise liquor now has its own full aisle. What was surprising is they didn’t move the “fresh foods” like produce back with the milk. Does that mean center store is not as big of a problem for them?

Vahe Katros
Guest
3 years 2 months ago

1. The world has changed
2. The marketplace and the ways people shop has changed
3. Your audience has changed
4. The neighborhood has changed
5. The attitudes towards center store products has changed

What should retailers do?
a.Increase promotions and fire the advertising agency
(or)
b. figure out how they must change either with our without their current vendor partners.
(or)
c. Shut down stores that are in the places that have changed and focus on places that have remained the same, nix the tofu and party like it’s 1999!

Li McClelland
Guest
Li McClelland
3 years 2 months ago

People are just increasingly leery of all the processed and over-processed foods in the center store. Quick example: Through three generations our large extended family has had green bean casserole served at every Thanksgiving dinner since the 1950s. Wouldn’t be that holiday in our family without it. But this generation of cooks has updated the ingredients. Gone are the canned beans and in are fresh haricots verts. Gone is the gelatinous canned Campbell’s mushroom soup. In is the sauce made from chicken stock, real cream, fresh sliced mushrooms, butter, flour, and garlic. Multiply this kind of transition by millions of families and millions of other recipes and you’ll start to better understand the situation with center store.

Jeff Rice
Guest
Jeff Rice
3 years 2 months ago
Center store is not the perimeter’s ugly kid sister. While center store has declined, it still offers huge potential for those paying attention to the changes in consumer behaviors. Retailers can return their center store to center stage using these five tactics. 1. Shoppers talk with their wallets. So listen more closely.Loyalty data, credit card data, and transnational data can bring new techniques into attitudinal and behavioral consumer segmentation. 2. Don’t overlook the obvious.Disproportionate growth is coming from natural and organic products, yet product innovation in this area has been slow for center-store players. Therefore, retailers should challenge their center-store trading partners to beef up their product and packaging innovation. 3. Private label.Private label and center store go hand in hand. Therefore retailers should be asking manufacturers for merchandising and pricing strategies that include branded goods and private label. 4. Total storeRetailers must encourage manufacturers to expand their views and understanding beyond their category. Category managers need to understand how their category fits within the aisle and within the store. Once this is understood, they… Read more »
Dan Lyons
Guest
Dan Lyons
3 years 2 months ago

This article is well done. Thanks!

My observation is that leading and innovative grocery retailers have known this for quite some time now. Center store has been a concern for food retailers for quite some time.

Fortunately for some, customer loyalty program data/insights, fine tuned SKU rationalization processes and space re-allocation at store or cluster level have helped retailers unveil new merchandising opportunities across the store, perimeter and center store.

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