Center-store profit zones

Store Equipment & Design, April, 2000 by Monica Buckley

Rethinking the grocery aisle brings customers--and their dollars--back to center store.

The center store is a place where much of the margin goes to the bottom line rather than lost to labor and shrink, yet overall industry sales there have been declining at a steady 3 percent annually for the last few years. In order to turn those numbers around, center-store design needs a total rethink; as author and merchandising guru Paco Underhill puts it, the industry is "looking for somebody to blow it up and start all over again."

Bill Lancaster, vice president of corporate sales at Associated Wholesale Grocers, Kansas City, Kan., says supermarket sales are down in 18 of 25 center-store categories, but it's not just because new, low-priced competitors are good at selling this merchandise; it's also, he says, "because we were asleep."

Retailers who have worked hard to put the supermarket back on the map as a place to "pick up dinner" may resent being told they've been nodding off, but Mike Needler, president and CEO of Findlay, Ohio-based Fresh Encounters, admits the independent's "eye has been off the ball." Perishables, he says, have been dominating the company's attention. Mike Jadrich, corporate manager of in-store solutions at Supervalu, Eden Prairie, Minn., echoes the experience of many planners whose vision has been trained on fresh programs. "We created a lot of excitement on that side of the store," he says, "then we come walking around [to the grocery aisles] and it's like, 'Oh, we're back in bland old grocery:" Supervalu, he says, is now concentrating on bringing excitement to the center, with major efforts going oward pet, grocery, frozen, HBC and general merchandise.

DEVELOPING DESTINATIONS

The first trap retailers must escape is the idea that "center store has these particular things in it, says Gerald Lewis, CEO at CDI Group, New York. Thinking of the center as a cluster of departments can help planners get "out of the box." Decide what departments you want to be famous for, based on your demographics and expertise, Lewis advises, and look at what the best-in-class retailers are doing to sell that category.

"Take some tips from them in terms of merchandising, fixturing and ambiance of the retail environment you create for those sections, so that in the drug aisle, for example, you create the feel of a drugstore, he says. "Then your customers don't feel they are second-class citizens in that part of the store."

Creating ambiance and differentiating a department from the rest of the store is accomplished by changing the light level, the floor design, the signage or the ceiling height, or by dropping an awning or trellis ver the area, Lewis says. Along with these elements, a careful analysis of pricing, housekeeping levels, service levels and depth of inventory must also be made.

Gary Lind, of Lind Design, College Point, N.Y., says he is creating just such departments for clients by "splitting the aisles, double-widing them and creating power centers for household cleaners, baby needs, snack and beverage, party aisle. And sales have been going up in those areas, because of the attention being paid to creating some interest in these center areas."

Lind says snack and beverage is a good example: "You double-width it, palletize it down the center, stack it high on either side. We might add some track lights or a suspended trellis that can be removed easily when the plan changes."

Christopher Studach of King Design, Portland, Ore., also sees the center store evolving into a series of interior departments. "Right now we still want to keep the convenience and simplicity of the shopping pattern that parallel rows offer, but we're breaking up those runs into groupings, with each grouping an interior department that specializes in a certain group of products that work well together in terms of sales."

Breaking up runs sacrifices shelf space, but adds interest and allows different areas to take on their own character. Endcaps gained offer opportunities to lend a department feel to the runs.

Flooring can be another tool, says Studach, though he adds that a commitment to a department is essential if flooring is used for differentiation, since it reduces flexibility. Changing the floor color and pattern signals entry to a new area, and can work together with other elements to create ambiance. Water jet or laser cutting can be used to cut out very complex patterns that can then be inlaid.

Glenn Gintert, president of GA Foods, Lowell, Ind., says the successful department arises from clear and helpful signage, distinguishing decor, product mix and even choice of music--in the Mexican area of Amelia's Market, Crown Point, Ind., which is owned by GA Foods, mariachi music fills the air. But the product selection has to be there, as well, he warns, or all the effort in decor will fail. At Amelia's, the Mexican, Italian and Chinese pavilions are easily recognizable; a pagoda and black-and-red flooring. along with hinese music, let the customer know this is where to get the ingredients for Chinese food.