Grocers have done a great job attracting shoppers to the perimeter departments. Now they need to apply that expertise to the center store.
By John Lewis
Interested in increasing your store traffic, loyalty among your customers and overall store growth? Over the past few years, grocers have innovated in a number of ways to attract more customers: varying store formats fit different needs and spaces; coupling loyalty programs with gas savings to drive traffic; and installing in-store kiosks, smartphone apps and other new media applications that appeal to consumers’ passion for technology. With the majority of recent innovation focusing on either the perimeter of the store or the desired customer, few innovations have focused on center store.
Consider one fundamental fact: the center store—which generates 73% of total store sales and 77% of profit, according to the Barrington, Ill.-based consulting firm Willard Bishop—is actually showing declines on a same-store basis. Management practices that are solely focused on a product or category view of the market lead to a homogenous feel to the center of the store and more focus on price competition between similar products and categories.
The net result is that the traditional center store has become vulnerable to value retail players. Shoppers are fulfilling some of their needs in retail formats based on a product’s price. So cleaning supplies, once bought as part of the weekly grocery trip, might now be purchased at mass merchandisers, club or dollar stores offering lower prices. For the grocery channel alone, these channel blurring and consumer channel-switching trends equated to $23 billion in missed opportunity due to lost trips over a five-year period ended June 2010.
So what can grocers do to win back some of those trips? A new model for winning trips and driving shopper loyalty centers around what Nielsen refers to as the demand landscape. This requires a focus on true shopper demand. Simply put, shoppers plan their shopping missions based on need.
Shopper missions can encompass small or large trips, such as making a quick trip for medicine for a sick child, or planning meals for a week or a month. Once you understand customers’ mission in and around their stores, you can create solutions targeted to those shoppers. Sometimes those solutions might be new departments or shelf sets, while other times it could be different approaches to promotions or ads. Fulfilling mission-based shopper demand requires a shift from a product-centric category management approach to one that revolves around consumer-centric shopper management.
Four trends to act on now
There is tremendous opportunity for retailers to act on shopper-centric solutions and drive sales across total store. Consider these trends:
1. Meal solutions. It won’t be long until we see fully-integrated meal or event-driven store sections that include assortment from across the store (dry grocery, frozen, fresh, refrigerated and prepared foods) along with written or video-driven recipe centers. Think taco night or birthday parties—typical shopper needs. Other potential mission-based store solutions include breakfast, lunch and dinner, snacks and desserts and seasonal events such as summer barbecues or holidays.
2. Non-food missions. Many missions don’t include food at all, but drive trips for spring cleaning, health ailments, beauty care, back-to-school, pet or at-home entertainment needs. Another way you can rejuvenate center store is by establishing these mission-driven store sections. “Stores within a store” provide consumers with a destination where they can complete their missions.
3. Convenience. In addition, convenience will continue to be strong drivers of innovation across the store. For example, more and more retailers are adding online ordering with curbside pick-up. Other retailers have experimented with home delivery options and drive-through windows, with some success. Displays with staples, like milk, bread and eggs, right in front of the store, also please shoppers focused on convenience.
4. Technology. Likewise, technology can significantly improve the overall shopping experience. Smaller retailers, who might not have the space or budget to make wholesale changes to their stores, can leverage technology to provide a more convenient and satisfying shopping trip. 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 finder and more.
The magic lies in tailoring solutions to your local shopper needs. Shoppers want solutions that span the entire store, and winning retailers will be those who are flexible and adjust formats to cater to their needs at a mission level, not simply category-by-category. That means striking the right balance between perimeter and center store.
John Lewis is president, consumer North America, of The Nielsen Co., based in New York.