SN SURVEY FINDS OPTIMISM ABOUT CENTER STORE GROWTH

David Merrefield

The grocery section of the supermarket has long been something of a football kicked about here and there, depending on the requirements of higher-profit perishable or service departments.

At the same time, though, the center of the store represents supermarket retailing's heritage, remains a strong profit contributor, and is the reason many shoppers go to a supermarket. So it's important the department retains a prominent place in the food retailing hierarchy.

More than that, there's a lot of work going on to make that a reality, according to results of a proprietary industry survey conducted by SN editors. The survey was taken by means of SN's Web site, www.supermarketnews.com. The idea was to gain opinions about center store performance issues. It attracted nearly 200 responses from various industry sectors. For more on the breakdown of responses, and on results of the survey itself, take a look at the news feature that starts on Page 43.

For our purposes here, let's focus on retailer responses, which represent about a third of all responses. The news is good concerning the prognosis for center store. Among retailers, about 53% expect the sales performance of the section to improve by the time this year is out, as compared to 2003; another 18% expect sales to remain the same, and 30% expect sales to decline. (I'm rounding some percentages, so those numbers and others to follow won't tally to exactly 100%.)

Those results mean that a big 71% of retailers responding expect center store to do better, or, at minimum, no worse, this year against last year. Now let's look at the degree to which center store sales increases are anticipated. Nearly 9% anticipate significant increases of 10% or more; 11% foresee increases of 7% to 9%; 29% anticipate increases of 4% to 6%; and the bulk of retailers, 46%, expect increases in the 1% to 3% range.

In all, those are very promising expectations, so let's proceed to see what methods are being put to work to make those expectations reality.

As for product, those cited as contributing growth are natural and organic, diet and health, private label and frozens. As for marketing, strategies preferred to draw traffic are advertising, high-volume pricing incentives, sampling, cross merchandising, in-store signs and cooking demonstrations. (Both products and strategies are cited in order of preference.)

Now, let's take a look at a few other factors, the most important of which are those aimed at differentiating any given supermarket retailer's center store section from others. The preferred method cited by retailers is a loyalty program. That's increasingly becoming table stakes to stay in the game. Others mentioned are private label, updating assortments and improving store layouts.

Background efforts that can be applied, cited in their order of importance, are category management, technology, supply chain management, activity-based management and trade promotions. Strangely, when asked to specify which of these activities is lacking at their companies, retailers produced a similar list of needs, in this order: category management, technology, supply chain, activity-based and trade promotions.

The bottom line is there's much optimism about center store and good identification of methods to spur growth. But there's also much work left to be done before its full potential is realized.