There's been enough written about Center Store over the past few years to fill the shelves of a moderate-sized grocery chain. Much of the information paints Center Store as a struggling department reeling from blows by Wal-Mart and other discount operators. There's no shortage of advice on how to transform the traditional grocery aisles into prize-fighting form.
But the reality is more complex. Center Store, in fact, is already on a comeback road. However, the momentum is threatened by some old thinking among retailers and suppliers.
The new dynamics are spelled out in the 2006 SN Survey of Center Store Performance, a research piece and story that appears in this week's issue (Page 69). The survey was conducted through online polling and drew close to 200 responses from retailers, suppliers and others.
The findings make clear that companies are indeed energizing the grocery aisles. More than 60% of respondents expect health and wellness to be the dominant trend over the next year, and companies are taking action to be well-positioned. More than 50% of retailers plan to add or update private-label natural/organic products.
The survey also finds much activity on the ethnic marketing front, with retailers growing assortments and driving community promotions with bilingual communications.
The research piece also shows trading partners are willing to judge Center Store honestly and sometimes even harshly, a development that is good news because it gets to the truth faster. Along those lines, respondents stress the industry needs to do more to understand ethnic shoppers in order to further capitalize on this trend.
Overall, the SN survey builds a positive image of Center Store developments. Yet, it also uncovers some problematic attitudes that can slow momentum.
The first such attitude involves Center Store competition. Retailers typically point to non-supermarkets as the culprits in supermarket loss of grocery share. That may or may not be true. But the SN results show some respondents have found another culprit: supermarket perimeter departments that have grabbed square footage from grocery. That's about the most parochial point of view heard in a long time. There's nothing to be gained from pitting one department against another. Retailers instead need to look at the store holistically based on what best serves consumers and brings a financial return. If fresh food serves that role better, then so be it. That might spark initiatives to drive Center Store innovation or embrace cross-merchandising to bridge departments.
The second worrisome attitude by respondents involves pricing in the grocery aisles. The survey shows that a significant portion of retailers, about 19%, look to price as a primary lure to win back shoppers. That strategy, of course, negates much of the recent advice about placing the focus on differentiation over price. Maybe this price emphasis means retailers feel they can't benefit from differentiation until they are perceived as at least competitive on price with discounters. Maybe. But the price focus is problematic if it isn't joined by other strategies - such as service, innovative niches and educational efforts. Center Store needs more than one leg on which to stand.
