THE NEW ERA 2006-05-08 (6)

LIZ PARKS

It's been shunned by shoppers and has lost square footage to perimeter departments. Now, many retailers are turning the spotlight on the center of the store.

"It has become clear that it's time for retailers and manufacturers to take the Center Store real estate and make it exciting again," said Stephen Sibert, group vice president for industry and membership development for the Grocery Manufacturers Association. "Today, you see retailers identifying lifestyle opportunities and changing their Center Store formats to create a more theatrical experience that resonates with various lifestyle preferences."

Pleasanton, Calif.-based Safeway is introducing a plan to make the center aisles more competitive through eye-catching displays and fixtures, greater product variety and aggressive price/promotional activities like 10 for $10 promotions, spokeswoman Teena Massingill said.

Marsh Supermarkets in Indianapolis has two Center Store strategies, one for its "lifestyle" stores and a modified version of that approach for its conventional stores. Both are designed to make the Center Store "sexier, easier to shop, fun, and very easy to be perceived as providing great value," said William Loneman, senior vice president of merchandising for Marsh.

Vendors often play a key role in such revitalization efforts. Stop & Shop/Giant is working with them to drive Center Store sales through marketing and promotional programs that "reward customers for purchases made in the dry grocery aisles," said Amy Murphy, merchandising program manager for the Quincy, Mass.-based retailer.

"Collectively, we're getting together to develop the right triggers and rewards that we think are going to motivate and change consumer behavior," Murphy said.

Marsh has worked with such manufacturers as Kraft, General Mills, Procter & Gamble, NestlT Purina, Nabisco and Frito-Lay, Loneman said. "We're working diligently not only to implement best practices but to get ahead of trends."

Like a number of leading retailers, Marsh also shares consumer card loyalty data with major consumer packaged goods makers. Those companies analyze that data and give Marsh product mix, packaging and merchandising recommendations for key categories such as baby diapers, pet and cleaning. They also create exclusive promotions that Marsh can pass on to card holders, Loneman said.

One of Marsh's direct-store-delivery vendors completed a consumer clustering analysis for Marsh on a category-by-category basis. Based on that analysis, Marsh can allocate space to categories based on what customers bought within specific market clusters. This lets Marsh tailor product segments to its various markets, Loneman said.

Grant LaMontagne, vice president of sales for the Clorox Co., said retailers and vendors are striving to create "events."

"It's not trying to sell a transaction but a consumer-centric solution that creates excitement," he said. "The consumer perceives that the store offers great value."

If a supermarket display of barbecue-related products, for example, could be compared to a movie or play, the meat, fish, chicken or pork would be the star, and in a nearby perishables aisle would be all the supporting players - a mass display containing Center Store products from soda, beer or wine to condiments, paper plates, snacks, cooking tools, cookbooks. Attention-grabbing graphics would provide the scenery.

Clorox also has created several cross-selling programs that are designed to draw traffic back to the center aisles. In a current one, supermarkets cross-merchandise Clorox Disinfecting Wipes in a display in the pharmacy. Clorox gives pharmacists free samples and informational brochures to distribute to customers.

Observers said such events help build Center Store sales by drawing shoppers to the center aisles after the event and helping supermarkets recapture commodity sales that they might have lost to mass merchants.

"We have seen long-term category lifts of 15%-20% from event programs, which means that consumers are going back into the Center Store regularly to repurchase these items," LaMontagne said.

Other vendors have created ways to make the aisles more entertaining with customer research-based displays and fixtures.

That was the case with Campbell's gravity-fed shelving for the soup aisle, the I.Q. Shelf Maximizer.

Installed by Campbell's retail sales teams in more than 15,000 supermarkets, I.Q. Maximizer has increased sales while decreasing labor costs for retailers, said Denise Morrison, president of Campbell USA. It also makes it easy for store associates to spot holes when shelf stock has been depleted.

Campbell is introducing a Convenience Maximizer for its microwavable soups and is testing a Ready-to-Serve Maximizer and a Broth Maximizer, both scheduled to roll out later this year.

Because the sets are category management tools, they are designed to hold all the soup brands that a retailer stocks, including private label. Morrison said the organizers have provided a "significant" lift to the soup category as well as Campbell's brands.

Similarly, Gillette created a new display designed to connect with consumers as they walk the aisles.

The company created an interactive demonstrator display for the launch of its new men's razor, Gillette Fusion, in January.

The so-called "razor bubble" demonstrator, designed to show off Fusion's innovative features, provides an up-close look at the five-blade shaving surface, with both the front and back of the Fusion razors magnified five times.

Gillette also used Fusion's colors and physical characteristics to create a shelf frame and a header card that advertise the brand name to shoppers as they pass by.

Other traffic-stoppers included a colorful floor graphic with the Fusion logo and a product strip, which contains razors attached to a slim strip that can be placed in locations where men often shop. Supermarkets have placed the product strips and floor graphics in secondary locations, including the beer section during Super Bowl promotions and the candy aisle in advance of Valentine's Day.

Communicating price value remains a critical part of the lifestyle strategies. While dressing up the Center Store, many retailers realize that consumers might take one look at their lifestyle efforts and think: Nice store; must be expensive.

Loneman credits the sales and profit growth in the Center Store of Marsh's two oldest lifestyle stores to strategies such as mass displays, sign and tag programs that reinforce the stores' price/value image.

Stop & Shop/Giant works with vendors to develop price promotions designed to motivate perishables consumers to shop the center aisles, too.

In a recent promotion with P&G, for example, shoppers who spent $30 on featured P&G products at checkout received a $15 reward off their next produce purchase. The reward was designed to thank customers already shopping the produce section while providing an incentive to shop the Center Store where the P&G items were displayed, Murphy said.

Successful revitalization programs require a solid understanding of shopper behavior. To that end, supermarket retailers and vendors also are conducting research to identify how people actually shop a store and the marketing implications of those findings.

Two years ago, four large supermarket chains permitted PepsiCo to put local positioning system transponders on the base of their shopping carts and baskets. The devices tracked customers as they shopped the test stores.

PepsiCo's Frito-Lay division then blended that LPS data with the retailers' customer loyalty card and other consumer data. The result was a program that includes a store-specific planograming/assortment tool. The program should begin rolling out in more than 10,000 stores by the end of this year, said Greg McIntee, Frito-Lay's vice president of customer strategy.

In addition, Frito-Lay is sending cultural anthropologists into stores of a large, national retailer to observe how consumers shop, with plans to integrate the findings with earlier research.

How well retailers and suppliers apply these insights will to a large extent determine whether shoppers give Center Store favorable reviews.

Balancing Style, Value

INDIANAPOLIS - In their efforts to revive the Center Store, retailers often focus on dressing it up. But in today's price-conscious times, the trick is to do it without making it look expensive. Marsh Supermarkets here thinks it's found a way to do that with its three "lifestyle" stores.

Reversing the conventional supermarket model, the lifestyle stores took into consideration the way shoppers think about food, with produce in the center and pantry and other fresh departments in the perimeter. Center Store products are cross-merchandised in these shops, with dry cereal next to milk with the breakfast foods, and canned seafood in the fresh seafood shop.

"We did some unique things in our lifestyle stores," said William Loneman, senior vice president of merchandising for Marsh, which recently agreed to be acquired by an affiliate of Sun Capital Partners. "When we first opened them, customers loved them or found them a bit confusing since they are different."

Marsh said that while initial sales were good, the stores weren't getting the incremental sales that mass merchandising makes possible. The retailer has since picked up additional sales by putting a greater emphasis on mass displays and communicating value in the center aisles.

Among other things, the company:

Created more space for mass displays of products like diapers, pet food and soda.

Removed shelves with slow-turning items to make space for pallet displays.

Allocated space for displays meant to intercept shoppers as they walk the store. They typically highlight special values, such as three items for $5, five for $5, and so on.

Put in signs and shelf tags to call out price/value offerings.

"The fixtures in the lifestyle prototype tend to give an upscale perception, which, in turn, tends to increase your price perception," Loneman said. "We found that, at least within the Center Store, we needed to negate that."

Loneman said that in Marsh's traditional supermarkets, perishables represent 35%-40% of total store sales, with Center Store items, which include general merchandise, accounting for 60%-65%.

In the lifestyle stores, when first open, the ratio is nearly 50-50. But after 12 months, the ratio resembles that of the traditional stores, in line with Marsh's objectives. He said store sales continue to grow, along with customer acceptance.

Changing Channels

Trips to supermarkets are declining as alternate channels use Center Store products to pull in customers.

Channel:% change in household trips, 2001-2004

Supercenters35%

Dollar stores18%

Warehouse clubs10%

Drug stores0%

Grocery stores-5%

Mass merchants-15%

Source: Grocery Manufacturers Association's Center Store Revitalization study, October 2005; ACNielsen Homescan Panel data