September 25, 2007

The Shrinking Center Store

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By Tom Ryan

According the Willard Bishop, the arrival of smaller formats emphasizing freshness and the associated lifestyle (e.g. Tesco’s new U.S. chain) will cause the center store to shrink significantly, and force center-store suppliers to rethink their merchandising methods.

In September’s Willard Bishop Competitive Edge newsletter, managing partner Paul Weitzel writes that many of the progressive retail chains are testing – or soon will be testing – smaller formats with a greater focus on the perimeter and categories that stress freshness, convenience, prepared and healthy food alternatives. Referred to as “fresh stores” or “foodies,” the center store in these formats are up to 30 percent smaller than today’s typical center store.

At the same time, the industry awaits the arrival of the highly-efficient Tesco Fresh & Easy stores, which will offer only a fraction of categories available in a traditional grocery store, and “could drastically change grocery shopping here in the U.S.”

Willard Bishop already sees Tesco changing business and supply practices.

“They’re creating subsidiaries here in the U.S. to support their very different business model which leverages a closed-loop distribution system and vertical integration where possible,” writes Mr. Weitzel. “They have established tough margin expectations for suppliers, forcing some of them to walk away from the table.”

On the plus side, Willard Bishop finds room for improvement at the center store.

According to Willard’s Bishop’s 2007 Grocery SuperStudy, the center store is still the economic engine that drives total store performance – generating 72 percent of total store sales and all of the true gross profit contribution because the perimeter nets out at a loss.

But the study found a significant amount of space that isn’t adding any value. For instance, 58 percent of center store SKUs generates 95 percent of the sales – meaning the remaining 42 percent only contributes 5 percent. It also found that 29 percent of center store categories lose money, and more than 40 percent of center store SKUs sell fewer than three units per week.

According to Willard Bishop, center store suppliers will need to:

Get ahead of this trend and develop a plan to help guide retailers in the area of offering optimum variety in less space; i.e., 20 percent to 30 percent less space in new and converted stores. Suppliers will also need to rationalize internal assortments and tighten up long-term sales forecasts;
Move towards store-specific assortments in the new, smaller formats to help retailers personalize their stores and better connect with their target group of consumers. There will be fewer line extension opportunities for mainstream products and an increasing interest in natural, specialty, and healthier product alternatives;
Understand how they will intersect and connect with shoppers in-store.

“Now is the time to start planning for a changing retail environment,” Mr. Weitzel writes. “Expect more extremes on both the fresh side as well as the discount side.”

Discussion Questions: Do you also see the grocery center store shrinking? If so, how will center-store suppliers respond? Also, what do you think retailers should do with the slow-selling center store categories that customers count on them having from time to time?

Discussion Questions

Poll

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Liz Crawford
Liz Crawford

Yesterday the New York Times reported that Site-to-Store ordering for pick-up is exceeding retailers expectations. Wal-Mart.com’s chief executive claims that “It’s gone incredibly well. None of us expected to see it reach this percentage of sales at this point.” (NYT, 9.24.07)

Why? Online order for pick-up allows for a much greater selection of merchandise, while saving the consumer shipping costs. This is the Long Tail at work, in conjunction with bricks & mortar. Further, these consumers are more likely to buy impulse items once they are in the store itself.

Center store grocery may follow this trend. Online ordering through Peapod, Safeway online or any number of other grocery ordering systems have been at work for years. The difference here is–delivery to home or pick-up on the way home, plus the availability of many SKUs which are hard to keep stocked on valuable floor space. The mobile device allows for a shopper to order on the way home to pick-up en route, encouraging spontaneity & impulse purchases in-store (imagine triggered promotions ensue). Great news for savvy household replenishment suppliers.

Mary Baum
Mary Baum

Fascinating. This development is coming at the very time that packaged-goods manufacturers are realizing their marketing just isn’t getting through, and some very smart people are looking beyond the traditional to figure out how to be relevant.

What this discussion suggests is that the problem is bigger than communications.

Is it possible that the entire set of categories in the center store is becoming irrelevant?

My first inclination was to damn the whole lot of them as the over-processed, unhealthy product of our cheap-corn economy, but I realized that’s more perception than reality. There certainly is a lot of that on center-store shelves. But there are also fruits and vegetables in their own juices, in healthier forms than ever and tasting better than ever, and better soups and stocks and chilis. And who could cook without their particular favorite configuration of canned tomatoes–whole, diced, crushed, pureed, paste?

So we’re back to the communications problem, and it looks like the first place brands need to start is with the channel. Because this discussion does tell me that Tesco and other enlightened retailers see the center store as inimical to their ability to promote healthier lifestyles in the US–a perception that financially driven trade promotions will only reinforce.

Then I think Issue #2 is culling the line extensions. We have so fallen in love with the concept of brand-equity-as-insurance this century that we have sublimated the product to the brand; it’s a wonder we still have Iams and Ivory instead of P&G dog food and P&G soap. But then, P&G knows better–it makes the product the star that builds its own brand over time. As long as manufacturers keep the lines overly long and confusing for channel partners,they run the risk of buyers and merchandise managers deciding they don’t want to deal with a particular line at all.

But the bottom line here is that with Tesco and other formats thinking about eliminating the center store entirely, I can’t think of a bigger red flag for CPG manufacturers. It’s not just marketing that’s the problem, or incremental sales one way or another. If they lose distribution, that’s game over.

Camille P. Schuster, Ph.D.
Camille P. Schuster, Ph.D.

Stores providing fresh, nutritious, and tasty food will certainly be in demand for some consumers. Center store products will continue to be in demand for some consumers. Greater variety of items in the center store will be required to satisfy the needs of a variety of consumers. One store may not be able to be all things to all consumers. The question is what does each store in a specific geographic area need to provide to satisfy the needs of consumers. Some of the larger stores may need to stay that size, with a much smaller center store, but a more creative use of that space to satisfy other needs. Consumers want it all–just not in every store.

Ed Dennis
Ed Dennis

Heck, the center store has been shrinking for 15 years. The supermarket isn’t a grocery store and hasn’t been for fifteen years. When I can buy a bicycle, a lawnmower, electrical supplies, motor oil, etc, that pretty much tells me why the center store has shrunk. I honestly believe that a well run “grocery store” could be done in 25% of the footprint of a conventional supermarket. Heck, if you limited the assortment of beer and managed cooler/freezer space better you could come close in a c-store.

Now the real question arises. Did the center store actually shrink or did it become smaller as a % of the whole? I vote for the latter.

M. Jericho Banks PhD
M. Jericho Banks PhD

The elephant in the room is store brand products. Retailers have become extremely dependent on them for a variety of reasons, and they’re likely to be the last to go if the center store actually shrinks. However, the national-brand skus in the center store contribute a huge percentage of retailer bottom-line dollars through co-op agreements, market development funds, and other allowances as Ryan Mathews mentioned. Both of these factors, store brand profitability and national brand dollars, will vigorously resist shrinking the center store.

Willard Bishop reports are always quite good, but I’m interested in the methodology supporting the profitability figures quoted in Tom Ryan’s topic introduction. Since retailers are notoriously and historically secretive regarding the manufacturer dollars they receive, were those funds included in the determination of profitability for each sku? Or, was this part of the report based only on wholesale cost vs. retail price? If anyone knows the methodology for sure, please share.

It’s important, too, to remember that shrink and labor are significantly cheaper in the center store than in the perimeter departments, and vendors more often provide free labor in center store departments.

Thomas Mediger
Thomas Mediger

There is a customer for every format. The only thing that changes is the number of people who patronize a particular format. This causes many retailers issues when all they do is produce cookie cutter formats. All of the sudden, the larger population shifts its format preference and Mr./Mrs. Retailer is now struggling to try and correct their store image.

Mark stated that the shrinking center store may cause supercenters problems because of the speed to check out. I think it may be too quick to come to this conclusion, because a Supercenter varies greatly with respect to trying to provide many shorter shopping trips with one stop. Perfect for the family and for time crunched schedules. The only way Supercenters–or any retailer–gets hurt is if they over populate the retail landscape with formats that don’t fit the customers shopping needs.

Mark Lilien
Mark Lilien

The Willard Bishop study emphasizes the unprofitability of almost half the center store skus in supermarkets. For many retail businesses, not just supermarkets, profitability between skus and categories varies tremendously. Profitable retailers edit their promotions and assortments appropriately. Real estate costs are subject to auction pricing: supermarket leases have to be competitive versus other supermarkets as well as drug stores, home improvement stores, and every other form of retailing. So every foot of shelf space has to justify its assortment, either through direct profitability or indirectly (by attracting profitable shoppers). As a comparison, fifty years ago department stores like Macy’s sold white goods (refrigerators, stoves, washing machines, etc.) When certain department stores realized that white goods weren’t profitable, they used the space for apparel instead. Fears related to loss of customers (no more “one-stop shopping”) were outweighed by the profit increases. The competitive reduction for white goods strengthened the few remaining white goods players, like Sears.

Joe foran
Joe foran

Wasn’t Activity Based Costing supposed to bring about the demise of center store?

Or was that Collaborative Planning Forecasting and Replenishment that was supposed to do it?

Oh, wait, I know–it was Home Meal Solutions that was going to spell the demise of center store!

How many efficient assortment projects have manufacturers shown retailers where a retailer could remove half the SKUs in a category and sales would be unaffected? Change will not come from existing retailers; if you are managing a chain and you decided to eliminate half the center store SKUs, what would you replace them with? You can’t sell air. More importantly, how would you pay for the changes at retail, given that you just threw out a big source of revenue (CPG Manufacturers)? The dynamics within retailers today (having to make quarterly numbers for Wall Street) are prohibitive to the charges that such a change would take. Tesco can come in starting with a clean slate; the difficulty will be the limited ability to counter other retailers’ hi-lo promotions, something that the U.S. consumer is in love with.

Ryan Mathews

First let’s draw a distinction between sales and revenue. Clearly some of those “unproductive” SKUs Bishop has identified are still there because they drop significant dollars to the bottom line through slotting and/or merchandising allowances. In the abstract, could and/or should center store sets be smaller? Of course they should. But, again let’s look at the realities. Can traditional operators learn to offer the kinds of fresh perishable formats (some) consumers want and still hold margins and price points? I think the answer is probably, “No.”

Also, there are still plenty of consumers out there who are looking for cost effective belly fill rather than aspirational — and high priced — wellness products. So, despite our intellectual proclivities as an industry, once again there is no one right answer.

Traditional supermarkets have gotten too big, but a good deal of that growth has been to accommodate more and more fresh and prepared products. But, the center store is still the economic engine fueling the growth of the perimeter departments. Unless we are prepared to raise prices, we’re going to have to learn to better balance center store and fresh departments. No matter what anyone says, fresh is not–and shouldn’t be–the sole strategy for everyone.

Dr. Stephen Needel

We as an industry have been talking assortment management for at least the past 15 years. If there is the ability to reduce assortment, and hence space, in center store categories while maintaining sales, this should be done regardless of any other factor. A shrinking center store should not worry us–a shrinking center store without careful thought/research about what is reduced should.

Mark Hunter
Mark Hunter

The study by Willard Bishop is right on. Not only is the center-store shrinking but the entire store footprint is shrinking. This is going to put real pressure on the supercenter concept, primarily due to its inability to allow a shopper to get in and out quickly.

David Livingston
David Livingston

I think it is definitely shrinking. The skeletal remains of conventional supermarkets who just can’t seem to get perimeter departments right are littering our cities. Should they even try to correct center store problems? Times are changing. Maybe it’s time to find a better use for center store and shift away from groceries. We are already seeing in-store clinics. Maybe it’s time to move the bank, pharmacy, dry cleaners, nail salon, etc, to center store and use the perimeter for expanded fresh and prepared food offerings.

Herb Sorensen, Ph.D.
Herb Sorensen, Ph.D.

The economics of the center store are radically different than the rest of the store. You could wipe it out completely and replace the store with a Stew Leonard’s type store, doing ten times the sales volume, and carrying about 5% as many SKUs. However, the industry has consistently resisted this because the brands pay them handsomely to continue building center store aisles and stocking them. Remember, the global retail dollar in this business is 14 trillion dollars, of which the brands get 8 trillion dollars and the retailers get 6 trillion.

Tesco is definitely on the right track, but this is not the only way to do it–wiping out center store. One can build a Tesco type store (Fresh & Easy) and provide the “center of store” contiguous to, rather than surrounding, the super-C-store that Tesco is building.

Stephan Kouzomis
Stephan Kouzomis

There have been many grocery industry individuals waging the battle for supermarkets and other food chains, to wake up and smell ‘what is coming down the road’!…. Over 15 years, to be exact!

It shouldn’t had taken Tesco’s entry in the U.S. markets to finaly shake the bushes in our grocery industry. Or are the bushes still calm, in the U.S. grocery business?

Simply said, Tesco took a very strategic consumer marketing approach to the ‘future’ meal, fresh foods, produce and meats business!

And,interestingly, few supermarket chains in the U.S. took the initiative to understand this now greater accelerating movement in fresh, prepared and specialty foods.

More fascinating, ‘outside’ the grocery industry, i.e. foodie, produce, meat, and specialty foods shops took a very noted step in developing their fresh foods and meals, etc, businesses!

Yes, and to name a few, Publix, Gelson’s, some San Francisco based chains, Ukrop’s, Roche Bros., Marsh’s, Harris Teeter…acknowledged the future ‘right turn’ of the grocery business.

Now, the question to our industry is, is a ‘right angle’ turn, or 180 to 360 degree change going to keep the BBs, ‘X and Y generations from spending more outside the grocery outlets for meals and prepared foods?

Research suggests these shoppers are lost! Hmmmmmmmmmmm

Gary Ritzert
Gary Ritzert

Everyone wants to jump on the Tesco band wagon, but let’s not forget that there are many customers who want “choice” when they shop. There are many items that have low sales, but those items bring shoppers into the store for the rest of the items in their basket. I personally have changed stores from one of the “larger chains” because of their lack of choice/selection and found a store with a wide range of brands to choose from.

Many of the stores have gotten bigger to accommodate not only the fresh items, but also the non food items to allow them to compete more effectively with the “all in one” stores.

The center store footprint will undoubtedly change, but let’s not forget what the consumer wants along the way.

I still remember when everyone thought the European private label model would take over here in the U.S., but that did not happen. Private label has grown, but it’s not matching the European model.

15 Comments
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Liz Crawford
Liz Crawford

Yesterday the New York Times reported that Site-to-Store ordering for pick-up is exceeding retailers expectations. Wal-Mart.com’s chief executive claims that “It’s gone incredibly well. None of us expected to see it reach this percentage of sales at this point.” (NYT, 9.24.07)

Why? Online order for pick-up allows for a much greater selection of merchandise, while saving the consumer shipping costs. This is the Long Tail at work, in conjunction with bricks & mortar. Further, these consumers are more likely to buy impulse items once they are in the store itself.

Center store grocery may follow this trend. Online ordering through Peapod, Safeway online or any number of other grocery ordering systems have been at work for years. The difference here is–delivery to home or pick-up on the way home, plus the availability of many SKUs which are hard to keep stocked on valuable floor space. The mobile device allows for a shopper to order on the way home to pick-up en route, encouraging spontaneity & impulse purchases in-store (imagine triggered promotions ensue). Great news for savvy household replenishment suppliers.

Mary Baum
Mary Baum

Fascinating. This development is coming at the very time that packaged-goods manufacturers are realizing their marketing just isn’t getting through, and some very smart people are looking beyond the traditional to figure out how to be relevant.

What this discussion suggests is that the problem is bigger than communications.

Is it possible that the entire set of categories in the center store is becoming irrelevant?

My first inclination was to damn the whole lot of them as the over-processed, unhealthy product of our cheap-corn economy, but I realized that’s more perception than reality. There certainly is a lot of that on center-store shelves. But there are also fruits and vegetables in their own juices, in healthier forms than ever and tasting better than ever, and better soups and stocks and chilis. And who could cook without their particular favorite configuration of canned tomatoes–whole, diced, crushed, pureed, paste?

So we’re back to the communications problem, and it looks like the first place brands need to start is with the channel. Because this discussion does tell me that Tesco and other enlightened retailers see the center store as inimical to their ability to promote healthier lifestyles in the US–a perception that financially driven trade promotions will only reinforce.

Then I think Issue #2 is culling the line extensions. We have so fallen in love with the concept of brand-equity-as-insurance this century that we have sublimated the product to the brand; it’s a wonder we still have Iams and Ivory instead of P&G dog food and P&G soap. But then, P&G knows better–it makes the product the star that builds its own brand over time. As long as manufacturers keep the lines overly long and confusing for channel partners,they run the risk of buyers and merchandise managers deciding they don’t want to deal with a particular line at all.

But the bottom line here is that with Tesco and other formats thinking about eliminating the center store entirely, I can’t think of a bigger red flag for CPG manufacturers. It’s not just marketing that’s the problem, or incremental sales one way or another. If they lose distribution, that’s game over.

Camille P. Schuster, Ph.D.
Camille P. Schuster, Ph.D.

Stores providing fresh, nutritious, and tasty food will certainly be in demand for some consumers. Center store products will continue to be in demand for some consumers. Greater variety of items in the center store will be required to satisfy the needs of a variety of consumers. One store may not be able to be all things to all consumers. The question is what does each store in a specific geographic area need to provide to satisfy the needs of consumers. Some of the larger stores may need to stay that size, with a much smaller center store, but a more creative use of that space to satisfy other needs. Consumers want it all–just not in every store.

Ed Dennis
Ed Dennis

Heck, the center store has been shrinking for 15 years. The supermarket isn’t a grocery store and hasn’t been for fifteen years. When I can buy a bicycle, a lawnmower, electrical supplies, motor oil, etc, that pretty much tells me why the center store has shrunk. I honestly believe that a well run “grocery store” could be done in 25% of the footprint of a conventional supermarket. Heck, if you limited the assortment of beer and managed cooler/freezer space better you could come close in a c-store.

Now the real question arises. Did the center store actually shrink or did it become smaller as a % of the whole? I vote for the latter.

M. Jericho Banks PhD
M. Jericho Banks PhD

The elephant in the room is store brand products. Retailers have become extremely dependent on them for a variety of reasons, and they’re likely to be the last to go if the center store actually shrinks. However, the national-brand skus in the center store contribute a huge percentage of retailer bottom-line dollars through co-op agreements, market development funds, and other allowances as Ryan Mathews mentioned. Both of these factors, store brand profitability and national brand dollars, will vigorously resist shrinking the center store.

Willard Bishop reports are always quite good, but I’m interested in the methodology supporting the profitability figures quoted in Tom Ryan’s topic introduction. Since retailers are notoriously and historically secretive regarding the manufacturer dollars they receive, were those funds included in the determination of profitability for each sku? Or, was this part of the report based only on wholesale cost vs. retail price? If anyone knows the methodology for sure, please share.

It’s important, too, to remember that shrink and labor are significantly cheaper in the center store than in the perimeter departments, and vendors more often provide free labor in center store departments.

Thomas Mediger
Thomas Mediger

There is a customer for every format. The only thing that changes is the number of people who patronize a particular format. This causes many retailers issues when all they do is produce cookie cutter formats. All of the sudden, the larger population shifts its format preference and Mr./Mrs. Retailer is now struggling to try and correct their store image.

Mark stated that the shrinking center store may cause supercenters problems because of the speed to check out. I think it may be too quick to come to this conclusion, because a Supercenter varies greatly with respect to trying to provide many shorter shopping trips with one stop. Perfect for the family and for time crunched schedules. The only way Supercenters–or any retailer–gets hurt is if they over populate the retail landscape with formats that don’t fit the customers shopping needs.

Mark Lilien
Mark Lilien

The Willard Bishop study emphasizes the unprofitability of almost half the center store skus in supermarkets. For many retail businesses, not just supermarkets, profitability between skus and categories varies tremendously. Profitable retailers edit their promotions and assortments appropriately. Real estate costs are subject to auction pricing: supermarket leases have to be competitive versus other supermarkets as well as drug stores, home improvement stores, and every other form of retailing. So every foot of shelf space has to justify its assortment, either through direct profitability or indirectly (by attracting profitable shoppers). As a comparison, fifty years ago department stores like Macy’s sold white goods (refrigerators, stoves, washing machines, etc.) When certain department stores realized that white goods weren’t profitable, they used the space for apparel instead. Fears related to loss of customers (no more “one-stop shopping”) were outweighed by the profit increases. The competitive reduction for white goods strengthened the few remaining white goods players, like Sears.

Joe foran
Joe foran

Wasn’t Activity Based Costing supposed to bring about the demise of center store?

Or was that Collaborative Planning Forecasting and Replenishment that was supposed to do it?

Oh, wait, I know–it was Home Meal Solutions that was going to spell the demise of center store!

How many efficient assortment projects have manufacturers shown retailers where a retailer could remove half the SKUs in a category and sales would be unaffected? Change will not come from existing retailers; if you are managing a chain and you decided to eliminate half the center store SKUs, what would you replace them with? You can’t sell air. More importantly, how would you pay for the changes at retail, given that you just threw out a big source of revenue (CPG Manufacturers)? The dynamics within retailers today (having to make quarterly numbers for Wall Street) are prohibitive to the charges that such a change would take. Tesco can come in starting with a clean slate; the difficulty will be the limited ability to counter other retailers’ hi-lo promotions, something that the U.S. consumer is in love with.

Ryan Mathews

First let’s draw a distinction between sales and revenue. Clearly some of those “unproductive” SKUs Bishop has identified are still there because they drop significant dollars to the bottom line through slotting and/or merchandising allowances. In the abstract, could and/or should center store sets be smaller? Of course they should. But, again let’s look at the realities. Can traditional operators learn to offer the kinds of fresh perishable formats (some) consumers want and still hold margins and price points? I think the answer is probably, “No.”

Also, there are still plenty of consumers out there who are looking for cost effective belly fill rather than aspirational — and high priced — wellness products. So, despite our intellectual proclivities as an industry, once again there is no one right answer.

Traditional supermarkets have gotten too big, but a good deal of that growth has been to accommodate more and more fresh and prepared products. But, the center store is still the economic engine fueling the growth of the perimeter departments. Unless we are prepared to raise prices, we’re going to have to learn to better balance center store and fresh departments. No matter what anyone says, fresh is not–and shouldn’t be–the sole strategy for everyone.

Dr. Stephen Needel

We as an industry have been talking assortment management for at least the past 15 years. If there is the ability to reduce assortment, and hence space, in center store categories while maintaining sales, this should be done regardless of any other factor. A shrinking center store should not worry us–a shrinking center store without careful thought/research about what is reduced should.

Mark Hunter
Mark Hunter

The study by Willard Bishop is right on. Not only is the center-store shrinking but the entire store footprint is shrinking. This is going to put real pressure on the supercenter concept, primarily due to its inability to allow a shopper to get in and out quickly.

David Livingston
David Livingston

I think it is definitely shrinking. The skeletal remains of conventional supermarkets who just can’t seem to get perimeter departments right are littering our cities. Should they even try to correct center store problems? Times are changing. Maybe it’s time to find a better use for center store and shift away from groceries. We are already seeing in-store clinics. Maybe it’s time to move the bank, pharmacy, dry cleaners, nail salon, etc, to center store and use the perimeter for expanded fresh and prepared food offerings.

Herb Sorensen, Ph.D.
Herb Sorensen, Ph.D.

The economics of the center store are radically different than the rest of the store. You could wipe it out completely and replace the store with a Stew Leonard’s type store, doing ten times the sales volume, and carrying about 5% as many SKUs. However, the industry has consistently resisted this because the brands pay them handsomely to continue building center store aisles and stocking them. Remember, the global retail dollar in this business is 14 trillion dollars, of which the brands get 8 trillion dollars and the retailers get 6 trillion.

Tesco is definitely on the right track, but this is not the only way to do it–wiping out center store. One can build a Tesco type store (Fresh & Easy) and provide the “center of store” contiguous to, rather than surrounding, the super-C-store that Tesco is building.

Stephan Kouzomis
Stephan Kouzomis

There have been many grocery industry individuals waging the battle for supermarkets and other food chains, to wake up and smell ‘what is coming down the road’!…. Over 15 years, to be exact!

It shouldn’t had taken Tesco’s entry in the U.S. markets to finaly shake the bushes in our grocery industry. Or are the bushes still calm, in the U.S. grocery business?

Simply said, Tesco took a very strategic consumer marketing approach to the ‘future’ meal, fresh foods, produce and meats business!

And,interestingly, few supermarket chains in the U.S. took the initiative to understand this now greater accelerating movement in fresh, prepared and specialty foods.

More fascinating, ‘outside’ the grocery industry, i.e. foodie, produce, meat, and specialty foods shops took a very noted step in developing their fresh foods and meals, etc, businesses!

Yes, and to name a few, Publix, Gelson’s, some San Francisco based chains, Ukrop’s, Roche Bros., Marsh’s, Harris Teeter…acknowledged the future ‘right turn’ of the grocery business.

Now, the question to our industry is, is a ‘right angle’ turn, or 180 to 360 degree change going to keep the BBs, ‘X and Y generations from spending more outside the grocery outlets for meals and prepared foods?

Research suggests these shoppers are lost! Hmmmmmmmmmmm

Gary Ritzert
Gary Ritzert

Everyone wants to jump on the Tesco band wagon, but let’s not forget that there are many customers who want “choice” when they shop. There are many items that have low sales, but those items bring shoppers into the store for the rest of the items in their basket. I personally have changed stores from one of the “larger chains” because of their lack of choice/selection and found a store with a wide range of brands to choose from.

Many of the stores have gotten bigger to accommodate not only the fresh items, but also the non food items to allow them to compete more effectively with the “all in one” stores.

The center store footprint will undoubtedly change, but let’s not forget what the consumer wants along the way.

I still remember when everyone thought the European private label model would take over here in the U.S., but that did not happen. Private label has grown, but it’s not matching the European model.

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