Recession moves center-store to center-stage, probably for a long time

July 29, 2009

The great news for supermarkets in the midst of this recession is the rediscovery of the grand plateau in the middle of their shiny formats—the center-store.

The great news for supermarkets in the midst of this recession is the rediscovery of the grand plateau in the middle of their shiny formats—the center-store.  

So much energy has gone into sexing up the perimeter departments that packaged goods—both the fundamental and the intriguing—suffered from second-class status by retailers and therefore shoppers, who were more drawn to the service counters of deli, bakery, meat, seafood, prepared meals, cheese bars, olive bars, wine centers, floral and more.

After a five-year romance with the service darlings of the food store, consumers are once again attracted to the main aisles of stores. (They’re wheeling through them intently focused, courtesy of a crappy economy.) They’re eating home more, preparing more meals, eyeing more recipes, and investing personal meal prep time in order to save more money.

The recession accomplished what the likes of flat-screen televisions, floor ads, power seasonal aisles, refrigerated pastas adjacent to dry pastas, and other merchandising ideas couldn’t.  All of a sudden, savings are sexy and center-store has moved to center-stage.

We doubt retailers are complaining much. They get to focus more on packaged goods, and perhaps less on trickier perishables. They could possibly trim hours of service staff to help coax more desirable margins from perimeter departments. They could revel in the great strides of private labels, which give consumers value and retailers higher profit percentages. They also get to push brands around some more, waving the threat of PL in so many center-store categories.

A recent Wall Street Journal report credited the Willard Bishop LLC consultancy for a calculation that “these middle aisles can generate as much as 70% of weekly profit for a given store….But 10 years ago, before discounters began stealing business, these aisles accounted for 85% of profit, according to analysts.”

With so much at stake, chains have largely aimed to ‘befriend’ their shoppers in marketing messages, touting savings and recipes. Whether shoppers believe them, or simply choose the best available options with no more loyalty than before, time will tell.  Retailers will likely have to do much more to keep their shoppers in better times—or the likes of Walmart, Target, Aldi, Trader Joe’s and others will continue to siphon traffic.

In the end, we feel at that center-store carries the classic premise of value and saving money. It’s having its day now, but if consumers have been altered forever by this recession (as some studies suggest), it will remain important and will warrant greater strategic and executional attention by chains.