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Latest IRI Study Finds Retailers and Manufacturers Reviving ''Center Store'' Sales

Posted on: Wednesday, 10 October 2007, 12:00 CDT

After years of struggling sales, "center store" products staged a rebound, growing 3.1 percent in the 52 weeks ending Aug. 12, 2007, across food, drug, mass channels, including Wal-Mart, on par with total consumer packaged goods (CPG) sales growth. The new Times & Trends report, "Center Store Revival: Retailers and Manufacturers Stage a Comeback," published by Information Resources, Inc. (IRI), focuses on the key strategies leading to a center store revival.

"Retailers have rediscovered the 'center store' realizing that a robust center store strategy complements the fresh food focus recently implemented by many grocers to differentiate their stores," said IRI President of Retail Solutions, Strategic Consulting and Integrated Solutions Thom Blischok. "Product, packaging and merchandising innovation, coupled with price increases to recoup rising ingredient costs have been at the center of this revitalization."

Additional findings of the report include:

Drivers of the center store rebound include the creation of new health and wellness products, focused private label development, and improved localized assortment of center store items.

Grocers successfully defended against center store share loss this year--a big win following a decade of share losses to supercenters, club stores and drug stores. Small format stores, which will focus on fresh foods but also offer a limited assortment of center store products, are the next frontier of competition grocery retailers will face. High-growth snack and beverage categories delivering wellness benefits are fueling center store momentum. Ready-to-drink tea, energy drinks and trail mixes are all enjoying double-digit growth.

Six Strategies Critical to Center Store Revival

"Our research revealed three retailer and three manufacturer strategies key to the revival of the center store," noted Blischok. "Overlaying these six strategies is improved collaboration between retailers and manufacturers to reinvigorate consumer interest in purchasing center store products at grocery retail."

Retailers are pursuing the following:

Health and Wellness Positioning: Retailers are addressing the growing demand for health and wellness benefits, and these efforts are extending into the center store through assortment and merchandising linked to a total store health and wellness positioning. Hannaford Brothers, for instance, instituted a "Guiding Stars" shelf tag labeling system that denotes the relative nutritional value of products, so that consumers can easily find healthier alternatives.

Private Label: Retailers have secured large private label gains in market share in several categories, especially in non-food items. Retailers are viewing private label increasingly as an important component of their differentiation strategies. Safeway's highly successful O Organics private label line is a key component of the company's "Lifestyle" store repositioning strategy.

Relevant Assortment: Retailers are improving their assortment strategies, tailoring them to better meet the needs of local shoppers. For instance, Wal-Mart has conducted extensive consumer research to develop "Stores of the Community" that deliver a relevant assortment and shopping experience to unique consumer segments.

CPG manufacturers are also implementing additional strategies that have improved center store performance:

Product and Packaging Innovation: Manufacturers are rethinking product innovation and packaging to drive brand and category growth, with a heavy focus on delivering health benefits. Campbell's Reduced Sodium soups and Quaker Chewy 90-Calorie granola bars were among the most successful new products introduced last year. Several major manufacturers, including PepsiCo, General Mills and Kellogg's are placing nutritional symbols on packages to help consumers easily identify "better-for-you" products.

Merchandising Innovation: Manufacturers are experimenting with new approaches for displaying products to combat reduced display space on the store floor. For example, Kraft is experimenting with "Mom's Kitchen," cookie and cracker displays within and outside the center store with the look and feel of a kitchen, creating a unique shopper destination.

Pricing: Price increases implemented to address rapidly rising ingredient costs have boosted dollar sales across numerous center store categories.

About the Report

The Times & Trends report is available from IRI, the leading global leading provider of consumer, shopper, and retail market intelligence and insights for the consumer packaged goods (CPG), retail and healthcare industries. The findings of this report were compiled based on IRI MarketInsight™ and IRI InfoScan® Reviews. To download the report, visit http://us.infores.com/page/content_access?t=2&i=37.

About Information Resources, Inc.

IRI is the world's leading provider of consumer, shopper, and retail market intelligence and insights supporting 95 percent of the FORTUNE Global 500 consumer packaged goods (CPG), retail and healthcare companies. Only IRI offers the unique combination of integrated market information, automated and predictive analytics, innovative enabling technologies, and domain expertise. With IRI, leading retailers and manufacturers are able to quickly discover breakthrough insights driving smarter decisions and actions across the enterprise for breakthrough results. Companies around the world depend on IRI for improved productivity, stronger brands, and dramatic revenue growth. For more information, visit http://us.infores.com.

Source: Business Wire

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