Center Store: Ground Zero

Albert Einstein said, “In the middle of difficulty lies opportunity.” And once grocery retailers get past the difficulty, they’ll find more opportunity in center store.

With such a complex mix of products – from CPGs and OTCs to RTDs and UHTs – a center store is going to be made or broken based on how it’s managed and how it’s priced. In this month’s Center Store Trend Alert, we take a look at SymphonyIRI’s analysis of how the center store’s standing as an evolving battleground for traditional grocers facing increasing competition from the likes of mass merchants, warehouse clubs and drug stores.

Further, the growth in private label – already well under way but further fueled by the lingering economic downturn – has branded manufacturers on high alert as they jockey to perfect pricing and positioning strategies for their brands, rightly so.

To wit: More than 60 percent of U.S. consumers in the first half of this year continued to shift to less expensive private labels in all product categories, including the hard-to-penetrate personal care and baby care segments, according to an August survey by Epsilon Targeting. That’s a marked increase over Epsilon’s May 2009 survey, in which 51 percent of respondents said they purchased private label personal care products, and 13 percent bought baby items.

“This is an opportunity for national brands to turn to their vast resources and find new ways to engage their customers one-to-one,” said Epsilon VP Warren Storey. “National brands have the ability to leverage rich data in new ways, across all communication channels from direct mail to mobile. The information is there – where their shoppers buy, when, and how they respond to promotions. As the economy returns, national brands must leverage this intelligence and apply it to pricing, product placement and special offers. Marketers must leverage this data to identify and provide incentives, such as coupons and samples, to consumers who would switch back.”

This should also be a call to action for grocers with strong own-brand programs. In other words – the national brands are on to you, and they’re going to mobilize all their resources to beat back the growth in PL and preserve their legacy brands. So savvy grocers need to stay on their game and continue to give their shoppers more reasons than just price to reward you with their loyalty by continuing to buying your exclusive house-label products.

Despite the deep pockets and vast resources of national CPG players, grocers have a crucial weapon in their arsenals – their own stores. Every day, you have an audience of thousands, ready to be queried about their wants and needs, and sampled with your own brand wares.

But be sure to learn not just what they’ve done last month – find out what they want next week and next year.