Center Store Competition Heats Up

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December 6, 2010

The center store represents about two-thirds of total consumer packaged goods sales and private label offerings are making national brands work harder for every SKU placed and sold, according to Symphony IRI.

The research company’s current edition of Times & Trends, “Center Store: At Center Stage for Future CPG Success,” finds that the heart of the store is increasingly complex due in large part to private label success.

“The center store offers a wide range of very different products, so you can’t make an apples-to-apples comparison between trends in complex and distinctive center store segments, such as beauty care and carbonated beverages,” said John McIndoe, senior vice president of marketing of SymphonyIRI Group. “Increasing the complexity is the issue of private label and how it is reshaping the center store and lighting a fire under branded manufacturers, who are stepping up the intensity of their marketing game and getting results.”

The center store battleground is also expanding beyond grocery stores. For example, Walgreens is offering an increasingly expansive selection of center store products and is making the most of opportunities in underserved areas, such as in what it terms “food deserts.”

The Symphony IRI report offers action items for manufacturers and retailers seeking to protect and grow share across the center store.

“Too often, manufacturers and retailers devote time and resources to collecting critical information about shopper attitudes and behaviors and apply this information about past behaviors to future strategies,” said Susan Viamari, editor of Times & Trends. “This is akin to fighting a new war with old weapons. Innovative manufacturers and retailers must study these past behaviors but also incorporate additional information, such as macroeconomic data, and harness predictive analytics to accurately forecast future shopper preferences.”

The following are a few recommendations made in the Times & Trends report:

• Continually assess new growth opportunities and threats: Manufacturers should understand trip mix for their categories and brands, and ensure alignment with trip strategies of key retailer partners. In addition, they should assess potential share impact prior to and immediately following changes to pricing and promotional strategy. Retailers should align assortment, promotions and adjacencies with current and desired trip missions. They must also ensure adequate shelf space and optimal assortment across high-growth center store categories.
• Explore feasibility of collaborative marketing and merchandising plans: Manufacturers should work to secure optimal shelf space and placement by demonstrating category/brand value in building basket size and traffic. They should also merchandise and co-promote products with high purchase incidence in targeted trip types. Retailers should ensure assortment and store layout are reflective of purchase patterns associated with key trip missions. They should also look to provide affordable, multi-category solutions across categories/departments impacted by at-home and from-home rituals.
• Closely measure and monitor strategy execution: Manufacturers need to measure actual and projected sales growth in aggregate, across consumer segments and by store before and immediately following new product, pricing and merchandising strategy roll out. Retailers should carefully test pricing, promotion and merchandising changes prior to and immediately following program roll out, as well.

Read These Related Articles:

• Nielsen on the Global Future of Store Brands
• SymphonyIRI: Soaring PL Growth Threatens National Brands in Europe
• Nielsen: Global Private Label Phenomenon is Here to Stay
• Research: Consumer Frugality Persists in the Post-Recession
• Dearth of CPG Innovation Helps Fuel Private Label Growth

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