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12/11/2020

Center Store Solutions: 6 Ways Grocers Can Grow in 2021

Lynn Petrak
Senior Editor
Lynn Petrak profile picture
The use of lighting and artful displays, like this one from Madix, creates a boutique-like atmosphere in the beauty section.

The center store experienced a dramatic revival in 2020 as a result of pandemic-driven buying behavior. However, 2021 promises to look very different, and will bring with it new challenges and opportunities to grow sales in what is expected to be a more normalized demand environment, thanks in large measure to the pharmaceutical industry’s development of COVID-19 vaccines.

Exactly when the pandemic ends may be unclear, but grocers have plenty of visibility into trends that will influence center store categories. For example, trends toward customization, transparency, and a balance of indulgence, wellness and responsibility will remain in play and even intensify. Meanwhile, new and increasingly digital shopping behaviors accelerated by the pandemic are expected to persist.

Against this backdrop, the center store promises to be more dynamic than ever, and a place where grocers have an opportunity to reimagine solutions to shoppers’ needs and position themselves as multipurpose, multioccasion destinations. In an omnichannel environment, making the store an ecosystem of interconnected elements can propel grocers ahead at a time of increased competition in both the e-commerce and brick-and-mortar arenas. Those interconnected elements can vary and depend on unfolding trends and world and national circumstances, but here are six ways that grocers can drive center store sales in the New Year.

1. Focus on the Center Screen

One of the most dramatic impacts of the 2020 pandemic was the sudden and massive shift to e-commerce, including click-and-collect and home delivery. E-commerce will continue to comprise a growing portion of grocers’ sales in 2021, according to research conducted by Toronto-based Mercatus. The digital grocery solutions provider forecast that online grocery sales will top $250 billion by 2025, for more than a fifth of all grocery sales, based on results of a consumer survey fielded last June. That’s a big 60% leap over pre-pandemic predictions.

“The growth of online grocery in 2020 and its predicted long-term impact, coupled with customers’ continued loyalty to brick and mortar, makes it clear that these avenues must complement each other in creating a great customer experience across a grocer’s entire brand,” says Mercatus President and CEO Sylvain Perrier.

That means retailers need to employ a shopper-centric “center screen” mindset in the center store, as that is increasingly where sales occur. As consumers buy online for store pickup or delivery, they’re straying from their previous and traditional habits of browsing the supermarkets and navigating carts from the perimeter to the center store aisle. Now they’re clicking tabs for categories like breakfast foods or grains and pastas, not in any particular order, to find groceries on their lists, and perhaps find and try new items.

Given this different mindset, grocers can grow categories typically found in the center store on their digital sites in creative ways, free from physical-store infrastructure constraints. Already, most stores with an e-commerce presence have set up their pages with featured deals and seasonal suggestions, and many use the screen to spotlight certain hot categories like organic, free-from or vegan.

As new models, e-commerce specialty stores have the flexibility to be inventive. New York-based e-grocer Hive sells more than 800 shelf-stable products online from a carefully chosen assortment of items based on sustainability and social responsibility factors. Another e-retailer, Brooklyn, N.Y.-based Pop Up Grocer, is a virtual pop-up that carries curated prescription boxes; each box includes a surprise limited-edition selection of up to 10 grocery items.

Hunter Williams, partner, retail consumer goods, for the New York-based consulting firm Oliver Wyman, poses another idea in a blog post on the topic of optimizing the trend of buying by scrolling. “Supermarkets can try to capture some of the growing online sales by setting up their own dark stores distribution centers that cater exclusively to online shopping,” writes Williams. “Or they can set up virtual center stores, where customers select items using images and barcodes and the products are held for them at the warehouse exit. Shoppers can then either collect their purchases on the spot or have them delivered. This approach is particularly suited to urban and suburban areas with dense populations.”

The screen is virtually a blank slate for grocers to come up with new ways to position categories and merchandise that makes them unique or relevant to their customers. Making the center screen a fresh, engaging experience where shoppers can easily find and order staples, and also enjoy the discovery of new items, involves teams of forward thinkers in technology, assortment, merchandising and marketing.

2. Endless Adjacencies

If floor plans in homes and offices are being opened up for new ways of living, aisles in physical stores can take a cue from architectural trends. Beyond trying to loop in shoppers with point-of-sale materials like floor decals and cooler clings, grocers can change up the actual center store space. Making changes a bit at a time instead of a costly whole-store remodel can be a way to test a different format.

Changes might be as simple as flipping packaged bakery items from interior aisles to shelves facing the in-store bakery, or canned and jarred fruits and vegetables near the produce section.

Douglas Madenberg, principal at Retail Feedback Group, based in Lake Success, N.Y., underscores the effectiveness of placement. “One key to making center store more helpful for shoppers centers on leveraging product adjacency,” notes Madenberg. “Not a new idea, but by locating solutions for specific occasions or recipes together, it makes center store items much more accessible to shoppers when they are thinking about meal planning.”

He adds that this can tie together brick-and-mortar and e-commerce sites. “In fact, in the online environment, this becomes even easier, since there isn’t a need to physically locate products together, so the possibilities for product adjacencies are endless,” says Madenberg.

On another level, layouts can be configured in new ways. “The space can be restructured,” suggests Williams. “Products can be organized around eye-catching themes, and private-brand products can be added that are not widely available online. At the same time, grocers can repurpose some of their center store space to boost the supermarket as a venue for socializing and discovery, thus increasing perimeter sales.”

Socializing may include “interior” floral departments or mini spaces used to demo fudge making or coffee roasting.  Or aisles may be opened up from the traditional gondola-run layout for multidimensional displays of just-arrived or locally sourced products.

“There is considerable opportunity for grocers to bring in locally sourced products that resonate with their customers, even as national-brand SKUs are generally being reduced,” points out Brian Numainville, principal at Retail Feedback Group. “In center store, this might mean local craft beers, syrups or jarred sauces.”

3. Inspiring End Caps

End caps have historically worked for sales and seasonal movement, but is it time to rethink this high-visibility piece of in-store real estate?

Perhaps an end cap mirrors the e-commerce screen experience, with signs reminding shoppers of digital ordering and, on the website, language reminding visitors of in-store specials. An end cap could also be a space for a pop-up store, with limited-time products that create a “get it before it’s gone” sense of treasure-hunt urgency.

With shoppers still seeking meal solutions, a grocer can use this prime space to showcase ideas for prepare-at-home meals — breakfast, lunch and dinner as more people continue to work from home. Beyond stacking meal kits or grouping together condiments and buns, think out of the box with vignettes for inspiring meal solutions that make shoppers stop and look, and also make it easy for them to grab what they need right there.

End caps are a good place to plug in technology, something that might appeal to younger shoppers. A TV monitor with a looping video can include information on products for storytelling appeal, or a recipe demo from a store chef.  If gas stations can put up such screens at the pump, retailers can leverage visuals in a new location, too.

Beyond TV monitors, end caps can have touchscreens that link back to the e-commerce site or to CPG websites that include more information on particular brands, or even to the granular product level.

4. Take-Home Advantage

With tough competition coming from the omnichannel and e-commerce arenas, grocers need to promote the convenience of getting household goods in the same shopping trip as foods and beverages, whether that’s online or in-store.

Make customers feel at home their home, anyway by creating a household destination that combines necessities like paper goods,  cleaning supplies and other staples, from batteries to tape to notebooks.  Use signage to create a home store within the store, and rethink merchandising, signage, lighting, and even assortments to offer soft-home impulse items.

Personal care and beauty can be rolled into this focus on home, and grocers can take cues from beauty and personal care specialists such as Sephora and Ulta, and consider this category more like a boutique, with a salon-like feel that could have trip-generating appeal.

5. Grab Potential by the Tail

Similar to household goods, there’s an opportunity to turn the traditional pet aisle into a better dedicated space to capitalize on favorable pet trends.

The trend of the humanization of pets was strong even before the pandemic sparked a flurry of pet adoptions and fosters. A new survey from McLean, Va.-based Mars Petcare shows that 30% of pet owners welcomed another new pet this year, and 50% report that they’re spending more time with pets as a benefit of working and studying at home. Another survey, from Charlotte, N.C.-based Lending Tree, reveals that a third of pet owners say they’ve increased their pet-related spending this year.

Retailers that want to bolster their center store aisles that have been devoted to pet food can add to their assortment products that reflect the humanization of pets among pet parents. That can mean free-standing refrigerators of chilled pet food, an expansion into organic and natural brands, or the addition of toys and fancier leashes and collars. A pet rewards program and a pet-centric section of a store circular and website/e-commerce page can make this pet destination more visible. Grocers can welcome pet food and treat suppliers for outdoor demos in the warmer months, and encourage pet parents to bring their dogs, cats or other pets to the store for special samples.

6. Fulfill Frozen Possibilities

The frozen department, which has had a resurgence due to innovative products and pandemic-driven demand, can also propel the center store forward into the future. Recent findings from Cleveland, Ohio-based Freedonia Focus Reports peg frozen foods to grow 2.4% annually through 2024, fueled by population dynamics and the appeal of premium and healthy frozen products.

In the brick-and-mortar store, infrastructure elements like displays and lighting can draw consumers to the frozen section and provide a nice backdrop for products to visually pop through the glass. Reliable cold-chain capabilities ensure that frozen products that are part of home delivery or click-and-collect programs meet consumer expectations, especially during a sweltering summer.

Here, too, products that solve problems will help fulfill the potential of frozen products. Many categories and brands are tapping into the ongoing demand for convenience and taste with foods and beverages that can be easily reheated or thawed, from cook-it-frozen seafood to single-serve smoothies that are a better value than foodservice-purchased smoothies. Many of these offerings also align with consumer interest in premium, organic/natural, healthy, and sustainably sourced and packaged items.

For example, Boise, Idaho-based Albertsons Co., recently added a new flash-frozen line of skillet meals that includes dishes inspired by both home cooking and global cuisines. National brands are also rolling out new frozen items, like Eggland’s Best new frozen omelets or Good Catch’s new line of chef-made frozen plant-based seafood products, to name just a couple of examples. 

Finally, even as the emergence of effective COVID-19 vaccines bodes well for the end of the pandemic in 2021, grocers have an opportunity to remind shoppers of the importance of maintaining a well-stocked pantry. Whether shoppers are buying online or in-store, grocers can emphasize the shelf stability of center store products and perhaps even create a dedicated area for items with a long shelf life.

“We know from our recent research that shoppers are increasing the time they keep boxed and canned items on hand, for example, from 43% indicating ‘a few months or more’ pre-pandemic, to 59%, as of October 2020,” says Retail Feedback Group’s Numainville. “So clearly, shoppers are using center store as part of their strategy for ensuring they have an adequate supply of food items available over a longer time. Not wanting to be caught unprepared again this may be a lingering habit.”

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