Rethink Center Store
The retail industry has consistently innovated to drive sales, creating new store formats, new services and new ways to communicate with consumers. But few innovations have targeted center store, leaving it — and many store brand products — vulnerable to value retail players.
In response to two broad industry trends, category management and channel blurring, many retailers have focused the majority of innovation and investment on specific departments or categories. A narrow focus tends to create competition between categories and departments, between center and perimeter. But center store matters, and retailers that ignore it do so at their own peril. The key to growth lies in structuring the entire store to better meet shopper demands.
Nielsen's research shows that for the grocery channel alone, the lack of center store innovation resulted in a significant number of lost trips — amounting to a $23 billion lost opportunity and nearly $8 billion in lost gross profit dollar sales — over a five-year period.*
A new model for winning trips and driving shopper loyalty calls for retailers to focus on what Nielsen calls the demand landscape. This model requires an understanding of true shopper demand or, simply put, understanding how shoppers plan their shopping missions based on need. Once retailers understand customers' missions in and around their stores, they can create mission-based solutions targeted to those shoppers.
Take, for example, a shopper on a mission to prepare tacos for his or her family. In the current category management model, that shopper needs to go to the meat counter for the ground beef, the dairy case for the cheese and sour cream, the produce department for the lettuce and tomato and the dry grocery section for the salsa and taco shells. Think about how many other missions take place without any assistance from the store itself. How many other times are we inadvertently making shoppers' lives more difficult?
Retailers have a significant opportunity to develop more meaningful mission-based solutions across all formats to increase shopper trips and build customer loyalty. But you must understand which missions to serve. You could begin by acting now on four important trends.
1. Meal solutions. It won't be long until we see fully integrated meal- or event-driven store sections that include an assortment from across the store, along with written or video-driven recipe centers. Potential mission-based store solutions cover breakfast, lunch and dinner; snacks and desserts; and seasonal events such as summer barbecues. And don't forget: Your store brands could play a starring role.
2. Non-food missions. Many missions involve much more than just food; they are tied to party occasions such as birthdays, the Super Bowl and graduations. Moreover, some missions don't include food at all, but drive trips for spring cleaning, health ailments, beauty care, back-to-school or at-home entertainment needs.
3. Convenience. Convenience will continue to be a strong driver of innovation across the store. For example, more and more retailers are adding online ordering with curbside pickup. Other retailers have experimented with home delivery options and drive-through windows, with some success. Displays with your store brand staples such as milk, bread and eggs — right in front of the store — also please shoppers focused on convenience.
4. Technology. Examples of innovative technology-driven shopping solutions include in-store kiosks that convert lists to a shopping "roadmap," cart-mounted product locators, coupons loaded on loyalty cards and smart phone apps for meal planning, list generating, aisle location and more.
It's time for the CPG industry to change the thinking around center store. The winning retailers will be those that are flexible and adjust formats to cater to shopper needs at a mission level, not simply a category level.
Straight Talk delivers monthly store brand insights from The Nielsen Co., New York. Todd Hale is Nielsen's senior vice president, consumer & shopper insights.
'Center store matters, and retailers that ignore it do so at their own peril.'