While supermarket shelves have historically been dominated by national brands, grocers have no better weapon than their private-label portfolios to help abate Center Store leakage into other channels of trade.
All it will take is the right pricing strategy, promotion, packaging, product demonstration and unique merchandising and display tactics, industry sources told SN.
Nowhere does today's grocer have more control than over the private-label items on his Center Store shelves, which provides a tremendous opportunity for the reinvention of a department that has sometimes been referred to as a "dead zone."
"The Center Store is the area the retailer can control, and once some kind of battle plan is understood, they can then use the Center Store to achieve things which you can't do if you have to negotiate with 20 different, well-known, national-brand manufacturers," said Brian Sharoff, president of the Private Label Manufacturers Association, New York.
"The question is whether or not a retailer has taken control of Center Store and, once they control it, has begun to use techniques of signage, promotion and cross promotion, which the retailer controls. Are they using that to stimulate the Center Store experience?" Sharoff pondered. And control is most certainly needed in today's competitive retail environment.
"There definitely has been Center Store leakage to clubs and dollar stores and specialty stores and, yes, we have felt that leakage," said David Hayden Sr., senior vice president, Western Family Foods, a private-label supplier based in Portland, Ore.
He told SN that pet food is the current category in danger of being leaked to the mass merchandiser.
"Even though the pet stores have been around a while, we're just starting to feel that leakage now. We felt the paper already; we felt the soap already. We can't afford to have these superstores and clubs leak every aisle."
Western Family's defense tactic is going to involve playing with various pricing strategies with respect to its private-label pet food offerings, Hayden told SN. Lowering prices while still being able to offer temporary price reductions is the goal.
Promotion goes hand in hand with consumer incentives like price breaks, and as Catalina Marketing Corp., St. Petersburg, Fla., works with retailers on various couponing promotions, the inclusion of private label increasingly becomes a component of such promotions, according to Trish Brynjolfsson, vice president of retailer marketing at the targeted marketing services firm.
"As we're seeing new management coming in from [consumer packaged goods] into the retail side, they are realizing not only do you have to create the chain as a brand but the private label as a brand within that brand, and use that to your advantage.
"If you get [shoppers] hooked on your private-label brand, that may actually change the overall pattern of where they shop," she pointed out.
Catalina advises retailers to use a multi-tiered approach to transaction-based promotions. Some of the components of such an approach can include competitive trial coupons, which are coupons for a private-label item that are triggered off of a national-brand purchase; a continuity coupon, which prints when the competitive trial coupon is redeemed; and an own-user coupon, which is a low-value coupon distributed to loyal private-label buyers as a means to prevent them from straying to another brand.
According to ACNielsen Scantrack data provided to Catalina Marketing, for the 52 weeks ended Sept. 1, 2001, private-label dollar sales and units were up in all core departments in the food, drug and mass channels. These departments included dry grocery, alcoholic beverages, deli, dairy, nonfood grocery, general merchandise and health and beauty aids. Some of the increased interest in these private-label areas can be attributed to package design innovations, an essential component of the store-brand line.
"It keeps the consumer interested," Hayden said. "With the new printing process, all of a sudden those frozen items look really good. That revitalizes people to say, 'Hey, maybe the stuff inside is good."'
Because it is their own brand under their own control, retailers can "play the packaging in one category off of the packaging in another category rather than the packaging being done on a category-by-category basis," Sharoff said, which adds some excitement to the center aisles.
"The retailer can do more through packaging with mix and match and cross merchandising because you control them. You've got to be willing to be innovative and creative in your own Center Store," he added.
Setting up the middle aisles as destinations to lure customers in also provides retailers with an opportunity to dazzle them with private-label offerings once they are in the Center Store, said Bernie Rogan, spokesman for Shaw's Supermarkets, West Bridgewater, Mass.
Some of the destination aisles at Shaw's include its Wild Harvest health food store-within-a-store and its World Market displays, which feature a mix of both national and store brands.
And, according to Rogan, Center Store is a great place to beef up things like signage as well due to the shelf-stable contributions to bottom line sales.
"[Center Store is] still the heartbeat of our own brand. The number of products and amount of sales that can be attributed to Shaw's Own brand -- the heart of it is in that center part of the store," he said, noting that items like Shaw's creamed corn and Shaw's french style cut green beans are big sellers.
"We haven't forgotten that to go off merrily into the perishable side," he joked.
According to Hayden, one of his creative retailers keeps promotional sections in line. "He takes a 4- or 8-foot section out of the middle of a gondola and slaps in 50 cases of soda pop, cake mix, candy. I think that's a good idea; it's an old idea revisited."
What makes this display tactic particularly beneficial is that the retailer uses half store brand and half national brand in the display, Hayden said.
Expanding upon conventional merchandising and display tactics may help the retailers of today stand out in the crowded grocery industry and add some uniqueness to their center aisles.
In fact, the actual design of the Center Store aisles is perhaps one of the biggest obstacles modern retailers may need to overcome in order to hold on to consumers shopping the dry grocery categories.
"There definitely is a question whether or not the traditional successful supermarket grid is in fact inhibiting Center Store products. The grid is a good grid; it has stood the test of time. But it's very much department by department," Sharoff said.
"It's all very efficient, but whether in fact it is so rigid that it does not encourage purchasing of products and innovations in the center of the store is what I think store designers are grappling with."
Sharoff said he can envision a supermarket in which a type of pentagon-shaped sampling station area is placed in the center of the Center Store, making it a destination in and of itself.
"Sampling, with the Own brand, it's the way," Rogan agreed. "Plus the BOGOs and the other things that we can do with our own products," he added.
And, as Sharoff told SN: "There are lots of ideas, and exploring those ideas are what retailers need to do. The grid is not set in stone -- I have yet to find a supermarket grid in any of the Mayan ruins."
